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DarioHealth Reports Record Results For First Quarter 2019

CAESAREA, Israel, May 13, 2019 /PRNewswire/ -- Global digital therapeutics innovator DarioHealth Corp. (Nasdaq: DRIO), today reported record financial and operational results for the first quarter ended March 31, 2019.

CEO, Erez Raphael, stated, "Our strong financial performance in the first quarter of 2019 was driven by the increased contribution of our higher-margin, digital therapy subscriptions as a percentage of revenue, as the company's business transforms from being driven by medical devices to software-as-a-service (SaaS).

We believe there is a growing global healthcare emphasis on value and accountability enabled by user-centric evidence-based solutions. DarioHealth's pioneering digital therapeutics subscription offerings are geared towards the engaged consumer and are driving the company's improved financial performance.

We continue to see growth acceleration across our membership in user numbers, average revenue per user per month (ARPU), as well as unit margin increases in the unit economics of our membership offering.

We view these improving indicators as validation of our strategy to accommodate increasing digital personalization of healthcare through our shift from a med device-enabled, glucose monitoring app model to a comprehensive, chronic condition management subscription that helps achieve the lifestyle changes and provider access required to meaningfully improve chronic conditions and their costs.

One illustration of this is the value-based care payment initiatives launched recently by the U.S. Department of Health and Human Services (HHS) intended to transform primary care delivery and reduce national healthcare costs, 20% of which goes to the treatment of diabetes.

Our scalable digital therapy platform is built for integration by large organizations such as retailers, health insurance companies, clinics, pharmaceutical and medical device manufacturers, and nutrition companies seeking access to health and cost benefits for their users, enabled by healthcare digitization, personalization and evidence-based care.

Our plan is to meet the surge of demand for data-driven therapeutics, especially dealing with chronic conditions, and we expect to accelerate revenue and increase revenue attributed to monthly subscribers through the implementation of certain broad marketing and branding initiatives in tandem with our ongoing sales and marketing optimization efforts."

First Quarter 2019 Results Summary

Revenues for the first quarter ended March 31, 2019 were $2.24 million, representing a record amount the company has ever achieved in a quarter, a 28% increase from $1.76 million in the first quarter ended March 31, 2018, and a 32% increase sequentially from the fourth quarter of 2018.

During the first quarter ended March 31, 2019, we recorded an additional $560,000 as deferred revenues from revenues generated from our new membership offering to our customers in the U.S., a 60% sequential increase from the fourth quarter of 2018.

Gross profit in the first quarter of 2019 increased by $6,000, or 1%, to $558,000 compared to $552,000 in the first quarter of 2018, and a sequential increase of 150% compared to a gross profit of $223,000 in the fourth quarter of 2018.

Operating loss for the first quarter ended March 31, 2019 increased by $2.4 million to $5.36 million, compared to $2.9 million in the first quarter ended March 31, 2018. This increase is mainly due to the increase in our operating expenses.

Net loss attributable to holders of common stock increased by $2.5 million to $5.4 million in the first quarter of 2019, compared to $2.9 million in the first quarter of 2018.

As of March 31, 2019, cash and cash equivalents totaled $6.96 million.

Non-GAAP billings for the three months ended March 31, 2019 were $2.8 million, a 60% increase from $1.76 million in the three months ended March 31, 2018, and a 37% sequential increase from $2.05 million in the fourth quarter of 2018. A reconciliation of GAAP to non-GAAP measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures."

A Company investor presentation is available at: http://mydario.investorroom.com/

About DarioHealth Corp.

DarioHealth Corp. (NASDAQ: DRIO) is a leading global Digital Therapeutics (DTx) company revolutionizing the way people manage their health across the chronic condition spectrum. By delivering evidence-based interventions that are driven by data, high quality software and coaching, we developed a novel approach that empowers individuals to adjust their lifestyle in a personalized way. Our Cross Functional Team operates at the intersection of life sciences, behavioral science and software technology to deliver highly engaging therapeutic interventions. Already one of the highest rated diabetes solutions, its user-centric approach is loved by tens of thousands consumers around the globe. DarioHealth is rapidly moving into new chronic conditions and geographic markets.

Cautionary Note Regarding Forward-Looking Statements

This news release and the statements of representatives and partners of DarioHealth Corp. (the "Company") related thereto contain or may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as "plan," "project," "potential," "seek," "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate" or "continue" are intended to identify forward-looking statements. For example, the Company is using forward-looking statements in this press release when the Company states that its subscription offerings are driving the improved financial performance of the company, that it views the growth in users, ARPU and unit margin as validation of the Company's strategy to shift to a comprehensive, chronic condition management subscription model, its belief that its user-centric, data evidence based solution is pioneering the space of DTx and fulfilling the expectations of global healthcare systems for value, accountability and strong customer empowerment and its plans to meet the surge of demand for data-driven therapeutics, especially dealing with chronic conditions, and its expectation for an acceleration in revenues, and an increase in revenues attributed to monthly subscribers, through the implementation of certain broad marketing and branding initiatives in tandem with its ongoing sales and marketing optimization efforts. Readers are cautioned that certain important factors may affect the Company's actual results and could cause such results to differ materially from any forward-looking statements that may be made in this news release. Factors that may affect the Company's results include, but are not limited to, regulatory approvals, product demand, market acceptance, impact of competitive products and prices, product development, commercialization or technological difficulties, the success or failure of negotiations and trade, legal, social and economic risks, and the risks associated with the adequacy of existing cash resources. Additional factors that could cause or contribute to differences between the Company's actual results and forward-looking statements include, but are not limited to, those risks discussed in the Company's filings with the U.S. Securities and Exchange Commission. Readers are cautioned that actual results (including, without limitation, the timing for and results of the Company's commercial and regulatory plans for Dario™ as described herein) may differ significantly from those set forth in the forward-looking statements. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

Non-GAAP Financial Measures

We have provided in this release financial information that has not been prepared in accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies. We use these non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with peer companies, many of which present similar non-GAAP financial measures to investors.

Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures provided in the financial statement tables below.

Billings (non-GAAP). We define billings as revenue recognized in accordance with GAAP plus the change in deferred revenue from the beginning to the end of the period and adjustment to the deferred revenue balance due to adoption of the new revenue recognition standard less any deferred revenue balances acquired from business combination(s) during the period. We consider billings to be a useful metric for management and investors because billings drive future revenue, which is an important indicator of the health and viability of our business. There are a number of limitations related to the use of billings instead of GAAP revenue. First, billings include amounts that have not yet been recognized as revenue and are impacted by the term of security and support agreements. Second, we may calculate billings in a manner that is different from peer companies that report similar financial measures. Management accounts for these limitations by providing specific information regarding GAAP revenue and evaluating billings together with GAAP revenue.

 

 

 

DARIOHEALTH CORP.


CONSOLIDATED BALANCE SHEETS


U.S. dollars in thousands











March 31,



December 31,




2019



2018




Unaudited





ASSETS


















CURRENT ASSETS:









Cash and cash equivalents


$

6,958



$

10,997


Short-term restricted bank deposits



185




180


Trade Receivables



252




168


Inventories



1,924




1,377


Other accounts receivable and prepaid expenses



545




591











Total current assets



9,864




13,313











LEASE DEPOSITS



45




43











OPERATING LEASE RIGHT OF USE ASSET



792




-











PROPERTY AND EQUIPMENT, NET



732




733











Total assets


$

11,433



$

14,089


 

 

 

DARIOHEALTH CORP.


CONSOLIDATED BALANCE SHEETS


U.S. dollars in thousands (except stock and stock data)











March 31,



December 31,




2019



2018




Unaudited












LIABILITIES AND STOCKHOLDERS' EQUITY


















CURRENT LIABILITIES:









Trade payables


$

2,977



$

2,574


Deferred revenues



1,296




736


Operating lease liability



267




-


Other accounts payable and accrued expenses



2,478




1,854











Total current liabilities



7,018




5,164











OPERATING LEASE LIABILITY



550




-











STOCKHOLDERS' EQUITY









Common Stock of $0.0001 par value –
Authorized: 160,000,000 shares at March 31, 2019 (unaudited) and December
31, 2018; Issued and Outstanding: 36,821,173 and 36,607,755 shares at March
31, 2019 (unaudited) and December 31, 2018, respectively



8




8


Preferred Stock of $0.0001 par value -
Authorized: 5,000,000 shares at March 31, 2019 (unaudited) and December 31,
2018; Issued and Outstanding: None at March 31, 2019 (unaudited) and
December 31, 2018



-




-


Additional paid-in capital



98,487




98,171


Accumulated deficit



(94,630)




(89,254)











Total stockholders' equity



3,865




8,925











Total liabilities and stockholders' equity


$

11,433



$

14,089


 

 

 

DARIOHEALTH CORP.


CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS


U.S. dollars in thousands (except stock and stock data)






Three months ended

March 31




2019



2018




Unaudited









Revenues


$

2,242



$

1,756


Cost of revenues



1,684




1,204











Gross profit



558




552











Operating expenses:









Research and development


$

1,002



$

742


Sales and marketing



3,946




1,864


General and administrative



973




861











Total operating expenses



5,921




3,467











Operating loss



(5,363)




(2,915)











Financial expenses, net:









Revaluation of warrants



-




(1)


Other financial expense, net



13




5











Total financial expenses, net



13




4











Net loss


$

(5,376)



$

(2,919)











Net loss attributable to holders of Common Stock


$

(5,376)



$

(2,919)











Net loss per share


















Basic and diluted loss per share


$

(0.15)



$

(0.20)


Weighted average number of Common Stock used in computing basic and diluted
net loss per share



36,757,154




14,943,032


 

 

 

DARIOHEALTH CORP.


CONSOLIDATED STATEMENTS OF CASH FLOWS


U.S. dollars in thousands








Three months ended

March 31,




2019



2018




Unaudited









Cash flows from operating activities:









Net loss


$

(5,376)



$

(2,919)


Adjustments required to reconcile net loss to net cash used in operating activities:









Stock-based compensation and Common Stock to service providers



257




230


Depreciation



46




53


Operating lease exchange rate differences



25




-


Decrease (increase) is trade receivables



(84)




82


Decrease (increase) in accounts receivables and prepaid expenses



46




38


Decrease (increase) in inventories



(547)




272


Increase (decrease) in trade payables



403




(740)


Increase in other accounts payable and accrued expenses



683




219


Deferred revenues



560




-


Change in fair value of warrants to purchase shares of Common Stock



-




(1)











Net cash used in operating activities



(3,987)




(2,766)











Cash flows from investing activities:









Maturities (investment) of short-term restricted bank deposit



(5)




70


Investment in lease deposits



(2)




(3)


Purchase of property and equipment



(45)




(12)











Net cash provided by (used in) investing activities



(52)




55











Cash flows from financing activities:









Proceeds from issuance of Common Stock and warrants, net of issuance cost



-




6,034











Net cash provided by financing activities



-




6,034











Increase (decrease) in cash and cash equivalents



(4,039)




3,323


Cash and cash equivalents at the beginning of the period



10,997




3,718











Cash and cash equivalents at the end of the period


$

6,958



$

7,041











Non-cash investing and financing activities:


















Payment for directors and consultants under Shares for Salary Program


$

59



$

85


 

 

 

DARIOHEALTH CORP.



Reconciliation of Revenue to Billings (Non-GAAP)



U.S. dollars in thousands










Three Months Ended

December 31,





2019


2018














GAAP Revenue


$2,242


$1,756





Add:









Change in Deferred Revenue


$560


-














Billings (Non-GAAP)


$2,802


$1,756














 

 

 

DarioHealth Corporate Contact: Joao Mendes-Roter, VP Marketing, joao@mydario.com,  1-347-767-4220

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SOURCE DarioHealth Corp.