DarioHealth Reports Results For Second Quarter 2019
NEW YORK and CAESAREA, Israel, Aug. 13, 2019 /PRNewswire/ --
-- Q2 2019 Revenue of $1.65 million, a 20% decline from Q2 2018
-- Record 1H 2019 Revenue of $3.89 million, a 2% increase over 1H 2018
-- Expense shift from D2C to B2B, resulting in a short-term decline in
Revenue and an expectation of significant reductions to Net loss in 2H
2019
-- Significantly advanced key 2019 initiative to expand growth strategy
solely from the direct-to-consumer (D2C) channel to include the more
scalable, lucrative business-to-business (B2B) channel
-- Launched FDA cleared Blood Pressure Monitor and Hypertension management
tool; additional functionality expands Dario's product offering, while
increasing potential average revenue per user (ARPU) and improving
patient care
-- Presented strong, supportive data at the American Diabetes Association
(ADA) Conference in June, highlighting improved in range readings for
blood glucose and lowered A1C levels for people with Type 2 Diabetes
-- Closed a $7.2 million financing with U.S. institutional investors,
providing capital for the Company's strategic growth initiatives
Global digital therapeutics innovator DarioHealth Corp. (Nasdaq: DRIO), today reported financial and operational results for the second quarter ended June 30, 2019.
CEO, Erez Raphael, stated, "During this quarter, we strengthened our platform technology by expanding its application to hypertensive patients, presenting new significant data for people with diabetes that supports meaningful clinical outcomes and increases the basic functionality through its use on the Android phone in Europe. All of these initiatives created a better technology for a broader patient base who benefit from active management of their chronic diseases.
During this quarter, we witnessed concrete evidence from our pipeline of payers, employers, and providers of their growing demand for value and accountability driven healthcare, enabled by the user-centric and evidence-based solutions that Dario provides.
As our focus shifts to take advantage of these market tailwinds and our business-to-business (B2B) pipeline activity accelerates, we will continue to support our direct-to-consumer (D2C) sales and marketing initiatives but with budgets weighted towards broader B2B business development. The resulting benefits will be measurable in terms of larger patient adoption, more certain revenue streams and lower customer acquisition costs.
While this evolution of our business model may result in reduced near term revenues such as in this quarter, we are confident that in the long term our product and this strategy will maximize its market adoption for patient-centric management of chronic diseases. We believe that the maturity of our B2B pipeline will soon allow us to resume the type of double-digit quarterly growth experienced in the first quarter of this year.
This balancing of resources from D2C to B2B has the additional benefit of a reduction in our burn-rate. As a result, we expect significant reductions in our net quarterly loss in the second half of 2019.
Management's continued acceptance of a portion of its compensation in shares is another ongoing contributor to a reduced cash burn and a reflection of our management's belief in Dario's future.
As we assess the global healthcare market and Dario's place in it, we are more confident than ever that we have built a platform technology which will deliver better care at a lower cost for patients with chronic diseases.
We are excited to share more developments over the remainder of the year as we continue executing our strategic plan, creating value for all stakeholders.
Financial Results for the Three Months Ended June 30, 2019:
Revenue for the second quarter ended June 30, 2019 was $1.65 million, a 20% decrease from $2.06 million in the second quarter ended June 30, 2018.
Revenue for the second quarter of 2019 included D2C sales in the U.S. and Australia, and product sales to distributors in Canada and the United Kingdom. We recorded an increase of $102,000 as deferred revenues from revenues generated from our membership offering to our customers in the U.S.
Gross profit of $326,000 was recorded for the three months ended June 30, 2019, a decrease of 38% or $196,000 compared to gross profit of $522,000 for the three months ended June 30, 2018. This decrease was attributed to lower sales and a one-time expense write-off of our old cartridge production mold for $82,000.
Operating loss for the second quarter of 2019 decreased by $431,000 to $5.36 million, as compared to a $5.8 million operating loss in the second quarter ended June 30, 2018.
Net loss attributable to holders of common stock decreased by $456,000 to $5.4 million in the second quarter of 2019, as compared to $5.8 million in the second quarter of 2018.
As of June 30, 2018, cash and cash equivalents totaled approximately $8 million.
Non-GAAP billings for the three months ended June 30, 2019 were $1.75 million, a 17% decrease from $2.1 million in the three months ended June 30, 2019. 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."
Financial Results for the Six Months Ended June 30, 2019:
Revenue for the six months ended June 30, 2019 was $3.9 million, a 2% increase from $3.8 million for the six months ended June 30, 2018. We recorded an additional $662,000 as deferred revenues from revenues generated from our membership offering to our customers in the U.S.
Gross profit of $884,000 was recorded for the six months ended June 30, 2019, a decrease of 18% or $190,000 compared to gross profit of $1,074,000 for the six months ended June 30, 2018. This decrease was affected by a one-time expense write-off of our old cartridge production mold for $82,000.
Operating loss for the six months ended June 30, 2019 increased by $2 million to $10.7 million, compared to an $8.7 million operating loss for the six months ended June 30, 2018.
Net loss was $10.76 million for the six months ended June 30, 2019 compared to a net loss of $8.76 million for the six months ended June 30, 2018. The increase in net loss for the six months ended June 30, 2019 compared to the six months ended June 30, 2018 was mainly due to an increase in operating expenses.
Non-GAAP billings for the six months ended June 30, 2019 were $4.55 million, a 18% increase from $3.86 million in the six months ended June 30, 2019. 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."
Financial Guidance
Dario believes its strategy of focusing more resources in the B2B channel, over time, will lead to broader penetration, higher revenues and greater operating leverage of its sophisticated platform technology for managing chronic diseases. While the B2B market involves longer sales cycles, and initially less predictable revenue streams, Dario will be announcing some new relationships in the coming months as evidence of our work that began in the second quarter of this year. As a result, the Company anticipates higher revenues and reduced losses in the second half of 2019 driven by both continued D2C channels and new B2B channel initiatives.
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 new initiatives relating to its platform technology created a better technology for a broader patient base, that it will continue to support its D2C sales and marketing initiatives but with a budget weighted towards broader B2B business development, its confidence that its product and strategy of focusing on its B2B channel will maximize the market adoption of its platform technology in the long run, its belief that the maturity of its B2B pipeline will soon allow it to resume the type of double-digit quarterly growth experienced in the first quarter of this year, that the rebalancing of its resources from D2C to B2B will reduce its burn-rate and that, as a result, it expects significant reductions in its net quarterly loss in the second half of 2019, its confidence that it has built a platform technology which will deliver better care at a lower cost for patients with chronic diseases and its belief that the execution of its strategic plan will create value for all of its stakeholders. 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(TM) 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
June 30, December 31,
2019 2018
Unaudited
ASSETS
CURRENT
ASSETS:
Cash and
cash
equivalents $
7,986 $
10,997
Restricted
bank
deposits 186 180
Trade
Receivables 278 168
Inventories 1,819 1,377
Other
accounts
receivable
and
prepaid
expenses 553 591
Total
current
assets 10,822 13,313
---
LEASE
DEPOSITS 44 43
OPERATING
LEASE
RIGHT OF
USE ASSET 749
PROPERTY
AND
EQUIPMENT,
NET 711 733
Total
assets $
12,326 $
14,089
---
DARIOHEALTH CORP.
---
CONSOLIDATED BALANCE SHEETS
---
U.S. dollars in thousands (except stock and stock data)
June 30, December 31,
2019 2018
Unaudited
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables $
2,384 $
2,574
Deferred revenues 1,398 736
Operating lease liability 277
Other accounts payable and accrued
expenses 1,664 1,854
Total current liabilities 5,723 5,164
---
OPERATING LEASE LIABILITY 509
STOCKHOLDERS' EQUITY
Common Stock of $0.0001 par value - 8 8
Authorized: 160,000,000 shares at June 30,
2019 (unaudited) and December 31,
2018; Issued and Outstanding: 42,859,386
and 36,607,755 shares at June 30,
2019 (unaudited) and December 31, 2018,
respectively
Preferred Stock of $0.0001 par value -
Authorized: 5,000,000 shares at June 30,
2019 (unaudited) and December 31,
2018; Issued and Outstanding: None at June
30, 2019 (unaudited) and December
31, 2018
Additional paid-in capital 106,098 98,171
Accumulated deficit (100,012) (89,254)
Total stockholders' equity 6,094 8,925
---
Total liabilities and stockholders' equity $
12,326 $
14,089
---
DARIOHEALTH CORP.
---
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
---
U.S. dollars in thousands (except stock and stock data
)
Three months ended
Six months ended
June 30
June 30
2019 2018 2019 2018
Unaudited
Unaudited
Revenues $
1,651 $
2,059 $
3,893 $
3,815
Cost of revenues 1,325 1,537 3,009 2,741
Gross profit 326 522 884 1,074
Operating expenses:
Research and development $
991 $
1,010 $
1,993 $
1,752
Sales and marketing 2,993 2,369 6,939 4,233
General and administrative 1,704 2,936 2,677 3,797
Total operating expenses 5,688 6,315 11,609 9,782
Operating loss (5,362) (5,793) (10,725) (8,708)
Financial expenses, net:
Revaluation of warrants
*)- 1
Other financial expense, net (20) (45) (33) (50)
Total financial expenses, net (20) (45) (33) (49)
Net loss $
(5,382) $
(5,838) $
(10,758) $
(8,757)
Deemed dividend related to
warrant exchange
$ $
493
$ $
493
Net loss attributable to
holders of Common Stock $
(5,382) $
(6,331) $
(10,758) $
(9,250)
Net loss per share
Basic and diluted loss per
share $
(0.13) $
(0.32) $
(0.27) $
(0.52)
Weighted average number of
Common Stock used in 42,519,825 19,801,891 39,654,408 17,758,064
computing basic and diluted
net loss per share
DARIOHEALTH CORP.
---
CONSOLIDATED STATEMENTS OF CASH FLOWS
---
U.S. dollars in thousands
Six months ended
June 30,
2019 2018
Unaudited
Cash flows from operating
activities:
---
Net loss $
(10,758) $
(8,757)
Adjustments required to reconcile
net loss to net cash used in
operating
activities:
Stock-based compensation and
Common Stock to service providers 1,310 2,651
Depreciation 93 101
Amortization of operating lease
right of use 130
Increase is trade receivables (110) (66)
Decrease in accounts receivables
and prepaid expenses 38 47
Decrease (increase) in inventories (442) 16
Increase (decrease) in trade
payables (190) 226
Increase (decrease) in other
accounts payable and accrued
expenses (131) 939
Increase in deferred revenues 662 50
Change in operating lease liability (93)
Change in fair value of warrants to
purchase shares of Common Stock (1)
Net cash used in operating
activities (9,491) (4,794)
Cash flows from investing
activities:
---
Maturities (investment) of
restricted bank deposit (6) 76
Investment in lease deposits (1)
Purchase of property and equipment (71) (23)
Net cash provided by (used in)
investing activities (78) 53
Cash flows from financing
activities:
---
Proceeds from issuance of Common
Stock, Preferred Stock and
warrants, net 6,558 6,034
of issuance cost
Net cash provided by financing
activities 6,558 6,034
Increase (decrease) in cash and
cash equivalents (3,011) 1,293
Cash and cash equivalents at the
beginning of the period 10,997 3,718
Cash and cash equivalents at the
end of the period $
7,986 $
5,011
Non-cash investing and financing
activities:
---
Payment for directors and
consultants under Shares for
Salary Program $
59 $
201
DARIOHEALTH CORP.
---
Reconciliation of Revenue to Billings (Non-GAAP)
---
U.S. dollars in thousands
Three Months Ended Six Months Ended
June 30, June 30,
2019 2018 2019 2018
GAAP Revenue $1,651 $2,059 $3,893 $3,815
Add:
Change in
Deferred $102 $50 $662 $50
Revenue
Billings (Non-
GAAP) $1,753 $2,109 $4,555 $3,865
Contacts:
DarioHealth Corporate Contact: Claudia Levi, Content & Communications Manager, claudia@mydario.com, +1-347-767-4220
For Media Inquiries: Catherine Polisi Jones, Polisi Jones Communications, cjones@polisijones.com, +1-917-330-8934
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SOURCE DarioHealth Corp.
