DarioHealth Reports First Quarter 2020 Results
NEW YORK, May 12, 2020 /PRNewswire/ -- DarioHealth Corp. (Nasdaq: DRIO), a pioneer in the global digital therapeutics market, today reported financial results for the first quarter 2020 and provided a corporate and commercial update.
http://mma.prnewswire.com/media/544126/DarioHealth_Logo.jpg
"In the first quarter of 2020, Dario executed in line with its multi-year strategic operating plan of creating a best in class digital health solution with a strong economic profile, including recurring revenues and high margins. With additional clinical data, an expansion of our platform and new interest from both clients and partners, we believe we have set the foundation for penetration into multiple Business-to-Business-to-Consumer (B2B2C) channels in the second half of this year. Irrespective of the global pandemic, we successfully expanded our remote care offering by partnering with MediOrbis to provide our 50,000 users additional ways to engage using a full-service telemedicine network of physicians," said Erez Raphael, DarioHealth's Chief Executive Officer. "To build on our success in the first quarter, I am thrilled that Dr. Manejwala has joined the team as Chief Medical Officer. He brings decades of experience working with patients to achieve behavioral changes that potentially result in health improvement. In addition, he has spent the last decade working with health plans and other payors to deliver value added clinical programs at the intersection of chronic conditions and behavioral health."
"In a world that is trying to avoid unnecessary physician office visits, urgent care visits, and inpatient treatments, Dario has empowered its members by bringing healthcare solutions to their mobile devices. More importantly, as a new normal emerges post COVID-19, we believe that Dario is well-positioned to thrive in this environment."
"We believe that we continue to be successful in expanding our B2B2C sales channels with new contracts beginning to show 'green shoots' and revenues continuing to grow from our membership services, with increasing margins," Zvi Ben-David, Dario's Chief Financial Officer, Secretary and Treasurer added.
Business Update Q1 2020 and Recent Highlights
Opening B2B2C Channels: Commercial Development & Strategic Collaborations
-- Established more partnerships in multiple channels: retailers,
self-insured employers, healthcare providers (including chronic
condition management companies) and insurers.
-- Signed partnership with Vitality Group, a global health and wellness
company committed to making people healthier, by providing a menu of
services, such as DarioHealth, for employers to choose from when
building a benefits plan for their employees.
-- Expanded service offering to include Behavior Health coaching for
stress, anxiety and loneliness, conditions which have increased
drastically due to COVID-19 social distancing restrictions including
"shelter-in-place" and "stay-at-home" orders.
-- Executed partnership with value-based telemedicine provider MediOrbis,
which expanded our service offering with integration of a full-service
telemedicine network to deliver access to specialty care physicians with
expertise in chronic disease management.
Clinical Evidence Development
-- Presented new clinical study outcomes at the Advanced Technologies &
Treatments for Diabetes conference, which showed 40-50% reductions of
both hypoglycemic and high glycemic events in people with type 1 and
insulin dependent type 2 diabetes using Dario's digital therapeutics
platform.
Management Appointments
-- Strengthened management team with appointment of digital health veteran
Rick Anderson as President and General Manager, North America (January
2020).
-- Appointed Yadin Shemmer and Adam K. Stern as new board members (March
2020).
-- Omar Manejwala, M.D., Chief Medical Officer, and Barbara Stark as Senior
Vice President and Head of Managed Markets (March 2020).
First Quarter 2020 Results Summary
Revenues for the first quarter ended March 31, 2020 were $1.67 million, a 7.3% sequential decrease from fourth quarter ended December 31, 2019, and a 25.6% decrease from the $2.24 million in the first quarter ended March 31, 2019.
Revenues generated during the first quarter ended March 31, 2020 were derived mainly from the sales of DarioHealth's components and from the offering of our membership plans to our customers in the U.S. Revenue declines are attributed to lower spending in the Direct-to-Consumer (DTC) channel and shifting efforts to the larger B2B2C channels which we anticipate will drive growth later this year.
At the end of the first quarter ended March 31, 2020, we had accumulated deferred income of $1.27 million, the majority of which we expect to recognize during the remainder of 2020.
Revenues from membership services were $778,000, or 46.7% of revenues for the first quarter ended March 31, 2020, compared to $608,000, or 27.1% of revenues for the first quarter ended March 31, 2019. This increase in revenues from membership services contributed to the increase in our margins.
Gross profit in the first quarter ended March 31, 2020 was $779,000, an increase of $221,000, or 39.6%, compared to gross profit of $558,000 in the first quarter ended March 31, 2019. Our gross profit increased from 24.9% in the first quarter ended March 31, 2019 to 46.7% in the first quarter ended March 31, 2020. The increase was mainly due to the increase in revenues generated from our membership plans.
Total operating expenses for the first quarter ended March 31, 2020 were $10.9 million, an increase of $5.0 million, or 84%, compared with $5.9 million for the first quarter ended March 31, 2019. The increase in the operating expenses is mainly due the increase in equity-based compensation to directors, employees and service providers, to $6.3 million in the first quarter ended March 31, 2020 compared to $243,000 in the first quarter ended March 31, 2019.
Non-GAAP operating expenses excluding equity-based compensation for the first quarter ended March 31, 2020 were $4.6 million, compared with non-GAAP operating expenses, excluding equity-based compensation, of $5.7 million for the first quarter ended March 31, 2019, a reduction of $1.1 million. This reduction was mainly due the reduction in our digital marketing activity in the DTC channel.
Operating loss for the first quarter ended March 31, 2020 was $10.1 million, an increase of $4.7 million, or 89%, compared to the $5.4 million operating loss in the first quarter ended March 31, 2019. This increase was mainly due to the increase in stock-based compensation partially offset by the increase in our gross profit.
Net loss attributable to holders of common stock was $11.1 million or $1.57 per share in the first quarter ended March 31, 2020, compared to the $5.4 million net loss or $2.92 per share in the first quarter ended March 31, 2019.
We had cash and cash equivalents totaling $15.8 million at March 31, 2020.
Non-GAAP billings for the three months ended March 31, 2020 were $1.7 million, a 39% decrease from $2.8 million reported in the three months ended March 31, 2019. The decrease is a result of the decrease in our digital marketing expenses in the three months ended March 31, 2020 compared to the three months ended March 31, 2019.
Non-GAAP adjusted net loss for the first quarter ended March 31, 2020 was $3.5 million, a 31.5% decrease from a $5.1 million non-GAAP adjusted net loss for the three months ended March 31, 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."
Conference Call Details: Tuesday, May 12 8:30am EDT
Dial-in Number: 1-844-369-8770
International Dial-in: 1-862-298-0840
Conference ID: DarioHealth First Quarter 2020 Earnings Call and Webcast
Webcast: https://www.webcaster4.com/Webcast/Page/2224/34665
Participants are asked to dial-in approximately 10 minutes prior to the start of the event. A replay of the call will be available approximately two hours after completion through May 26, 2020. To listen to the replay, dial 1-877-481-4010 (domestic) or 1-919-882-2331 (international) and use replay passcode 34665. The webcast replay will be available through August 12, 2020.
About DarioHealth Corp.
DarioHealth Corp. (Nasdaq: DRIO) is a leading, global digital therapeutics company revolutionizing the way people with chronic conditions manage their health. By delivering evidence-based interventions that are driven by data, high-quality software and coaching, we empower individuals to make healthy adjustments to their daily lifestyle choices to improve their overall health. Our cross-functional team operates at the intersection of life sciences, behavioral science and software technology to deliver highly engaging therapeutic interventions. Dario is one of the highest-rated diabetes solutions in the market, and its user-centric MyDario(TM) mobile app is loved by tens of thousands of consumers around the globe. DarioHealth is rapidly moving into new chronic conditions and geographic markets, using a performance-based approach to improve the health of users managing chronic disease. To learn more about DarioHealth and its digital health solutions, For more information, visit http://mydario.investorroom.com/.
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 it discusses its belief that it is has positioned its platform to potentially drive substantial revenue growth in the second half of this year, when it states its belief that it expects to recognize the majority of its deferred revenue during the remainder of 2020, its belief that it has set the foundation for penetration into multiple B2B2C channels in the second half of this year which it expects will drive growth later this year, its belief that Dario is well-positioned to thrive in the post-COVID-19 environment, and its belief that it continues to be successful in expanding its B2B2C sales channel, as well as continuing to grow revenues and increasing margins as a result of its membership services. 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.
Operating expenses (non-GAAP). Our presentation of non-GAAP operating expenses excludes stock-based compensation expenses. Due to varying available valuation methodologies, subjective assumptions, and the variety of equity instruments that can impact a company's non-cash operating expenses, we believe that providing non-GAAP financial measures that exclude non-cash expense provides us with an important tool for financial and operational decision making and for evaluating our own core business operating results over different periods of time.
Net loss (non-GAAP). Our presentation of adjusted net loss excludes the effect of certain items that are non-GAAP financial measures. Adjusted net loss represents net loss determined under GAAP without regard to stock-based compensation expenses, deferred inventory and depreciation of fixed assets. We believe these measures provide useful information to management and investors for analysis of our operating results.
DARIOHEALTH CORP.
---
CONSOLIDATED BALANCE SHEETS
---
U.S. dollars in thousands
March 31, December 31,
2020 2019
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $
15,826 $
20,395
Short-term restricted bank deposits 187 191
Trade receivables 774 672
Inventories 1,221 1,414
Other accounts receivable and prepaid expenses 485 267
Total current assets 18,493 22,939
---
NON-CURRENT ASSETS:
Deposits 17 17
Operation lease right of use assets 685 765
Long-term assets 209 200
Property and equipment, net 630 648
Total non-current assets 1,541 1,630
---
Total assets $
20,034 $
24,569
---
DARIOHEALTH CORP.
---
CONSOLIDATED BALANCE SHEETS
---
U.S. dollars in thousands (except stock and stock data)
March 31, December 31,
2020 2019
Unaudited
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables $
1,239 $
1,656
Deferred revenues 1,265 1,223
Operating lease liabilities 293 317
Other accounts payable and accrued
expenses 1,433 2,024
Total current liabilities 4,230 5,220
---
OPERATING LEASE LIABILITIES 378 455
STOCKHOLDERS' EQUITY
Common Stock of $0.0001 par value -
Authorized: 160,000,000 shares at March
31, 2020 (unaudited) and December 31,
2019; Issued and Outstanding: 3,103,570
and 2,235,649 shares at March 31, 2020
(unaudited) and December 31, 2019,
respectively **)
Preferred Stock of $0.0001 par value -
Authorized: 5,000,000 shares at March 31,
2020 (unaudited) and December 31, 2019;
Issued and Outstanding: 21,363 and 21,375
shares at March 31, 2020 (unaudited) and
December 31, 2019, respectively
Additional paid-in capital 136,738 129,039
Accumulated deficit (121,312) (110,145)
Total stockholders' equity 15,426 18,894
---
Total liabilities and stockholders' equity $
20,034 $
24,569
---
DARIOHEALTH CORP.
---
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
---
U.S. dollars in thousands (except stock and stock data)
Three months ended
March 31
2020 2019
Unaudited
Revenues $
1,667 $
2,242
Cost of revenues 888 1,684
Gross profit 779 558
Operating expenses:
Research and development $
1,231 $
1,002
Sales and marketing 4,091 3,946
General and administrative 5,571 973
Total operating expenses 10,893 5,921
Operating loss (10,114) (5,363)
Total financial expenses
(income), net (222) 13
Net loss $
(9,892) $
(5,376)
Deemed dividend $
1,275
$
Net loss attributable to
holders of Common Stock $
(11,167) $
(5,376)
Net loss per share:
Basic and diluted net loss per
share $
(1.57) $
(2.92)
Weighted average number of
Common Stock used in
computing basic and diluted
net loss per share **) 3,090,790 1,839,221
DARIOHEALTH CORP.
---
CONSOLIDATED STATEMENTS OF CASH FLOWS
---
U.S. dollars in thousands
Three months ended
March 31,
2020 2019
Unaudited
Cash flows from operating
activities:
---
Net loss $
(9,892) $
(5,376)
Adjustments required to reconcile
net loss to net cash used in
operating activities:
Stock-based compensation, common
stock, and stock instead of cash
compensation to directors,
employees, consultants and service
providers 6,356 257
Depreciation 46 46
Change in operating lease right of
use assets 80 23
Increase in trade receivables (102) (84)
Decrease (increase) in accounts
receivables and prepaid expenses
and long-term assets (227) 46
Decrease (increase) in inventories 193 (547)
Increase (decrease) in trade
payables (417) 403
Increase (decrease) in other
accounts payable and accrued
expenses (523) 683
Increase in deferred revenues 42 560
Change in operating lease
liabilities (101)
Net cash used in operating
activities (4,545) (3,989)
Cash flows from investing
activities:
---
Purchase of property and equipment (28) (45)
Net cash used in investing
activities (28) (45)
Cash flows from financing
activities:
---
Net cash provided by financing
activities
Decrease in cash, cash equivalents
and short-term restricted bank
deposits (4,573) (4,034)
Cash, cash equivalents and short-
term restricted bank deposits at
beginning of the period 20,535 11,126
Cash, cash equivalents and short-
term restricted bank deposits at
end of the period $
15,962 $
7,092
Reconciliation of Revenue to Billing (Non-GAAP)
---
U.S. dollars in thousands
Three Months
Ended
March 31
2020 2019
GAAP Revenue 1,667 2,242
Add:
Change in deferred
revenue 42 560
Billing (Non-GAAP) 1,709 2,802
Reconciliation of Operating Loss, Net Loss and Operating Expenses to Adjusted Operating Loss, Net Loss and Operating Expenses (Non-GAAP)
---
U.S. dollars in thousands
Three months ended March 31, 2020
Stock-Based Depreciation
Compensation of Fixed
Expenses Assets and
Deferred
GAAP Inventory Non-GAAP
---
Cost of Revenues $
888 $
(15) $
(43) $
830
Gross Profit 779 (15) (43) 837
Gross Margin
Research and development 1,231 (337) (2) 892
Sales and Marketing 4,091 (1,551) 2,540
General and Administrative 5,571 (4,453) (16) 1,102
Total Operating Expenses 10,893 (6,341) (18) 4,534
Operating Loss $
(10,114) $
(6,356) $
(61) $
(3,697)
Financing income (222) (222)
Net Loss $
(9,892) $
(6,356) $
(61) $
(3,475)
Three months ended March 31, 2019
GAAP Stock-Based Depreciation
Compensation of Fixed
Expenses Assets Non-GAAP
---
Cost of Revenues $
1,684 $
(14) $
(29) $
1,641
Gross Profit 558 (14) (29) 601
Research and development 1,002 (45) 957
Sales and Marketing 3,946 (49) 3,897
General and Administrative 973 (149) (17) 807
Total Operating Expenses 5,921 (243) (17) 5,661
Operating Loss $
(5,363) $
(257) $
(46) $
(5,060)
Financing expenses 13 13
Net Loss $
(5,376) $
(257) $
(46) $
(5,073)
DarioHealth Corporate Contact:
Claudia Levi
Content & Communications Manager
claudia@mydario.com
+1-347-767-4220
Media Inquiries:
Investor Relations Contact:
Matthew Picciano
MPicciano@lifesciadvisors.com
+1-646-889-1200
View original content:http://www.prnewswire.com/news-releases/dariohealth-reports-first-quarter-2020-results-301057443.html
SOURCE DarioHealth Corp.
