DarioHealth Reports Third Quarter 2020 Results
NEW YORK, Nov. 12, 2020 /PRNewswire/ -- DarioHealth Corp. (Nasdaq: DRIO), a pioneer in the global digital therapeutics market, today reported financial results for the third quarter 2020 and provided a corporate and commercial update.
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"During the third quarter we achieved 14.2% sequential growth in our revenues, but more importantly, we made significant strides in penetrating the multiple verticals within the Business-to-Business-to-Consumer (B2B2C) channel with our digital therapeutics solutions," stated Erez Raphael, Chief Executive Officer of Dario. "Most notably, our recently announced partnership agreements with Vitality Group and HMC Healthworks provide access of our solutions to end users through their employers or benefits providers. We believe that our industry consumer engagement metrics and open architecture that allows for seamless integration with legacy systems are key differentiating factors relative to our competition that have resonated with customers and prospects alike.
"The execution of our multi-year, strategic plan has led to advanced late-stage contracting discussions with health plans, self-insured employers and providers. We are encouraged by the fact that we are pursuing multiple large opportunities, and we anticipate many of these agreements will close and launch in the near term. Furthermore, as our sales pipeline has grown during the third quarter, we believe that our ongoing investments in our U.S. commercial infrastructure have positioned Dario for a transformational year in 2021."
"We ended the third quarter with $37 million in cash on the balance sheet after completing a successful $28.6 million financing in July," Zvi Ben-David, Dario's Chief Financial Officer added. "This is the largest cash position in the Company's history. Our liquidity is sufficient to invest in research and development, expand our portfolio of chronic diseases and build the necessary sales and marketing infrastructure to drive further penetration of the B2B2C channel. We believe that we are funded to achieve our goals in the coming quarters."
Q3 2020 Operations Update and Recent Highlights
Opening B2B2C Channels: Commercial Development & Strategic Collaborations
-- In October 2020, we announced inclusion in Vitality's new Gateway Flex
offering, allowing Dario's digital therapeutics platform to be marketed
to Vitality's vast employer base that provides benefits solutions to 20
million people.
-- In September 2020, we announced a partnership agreement with HMC
Healthworks that extends DarioHealth's reach into HMC's vast
multi-employer client base through which HMC is currently managing more
than one million members.
-- In July 2020, we entered the U.K. RPM market through an agreement with
Williams Medical, making Dario's RPM platform available to healthcare
professionals throughout the U.K. and Ireland.
Clinical Evidence Development
-- In August 2020, we presented a poster at the Virtual Association of
Diabetes Care and Education Specialists 2020 Annual Conference. The
poster, entitled, "Impact of Digital Management on Clinical Outcome in
Patients with Chronic Conditions: Diabetes and Hypertension," details
results from an observational study of 345 participants with
hypertensive blood pressure at baseline who utilized the Dario digital
therapeutics platform. The study found that Dario's digital therapeutics
platform helped drive improved blood pressure at three months and
glycemic control at six months compared to baseline.
Corporate Developments
-- In September 2020, we appointed Eric Milledge as Chairman of Dario's
newly created Scientific Advisory Board (SAB). The SAB will work
alongside the company's research and development team and external
partners to develop and implement the Dario's strategic roadmap for its
technology platform.
-- In July 2020, we appointed Dennis Matheis, President of Optima Health, a
health plan with more than 850,000 members, to our Board of Directors,
further supporting Dario's ongoing transition to B2B2C.
-- In July 2020, we announced that we successfully raised gross proceeds of
$28.6 million through a private placement of common shares and
pre-funded warrants.
Third Quarter 2020 Results Summary
Financial Results for the Three Months Ended September 30, 2020:
Revenues for the third quarter ended September 30, 2020 were $2.04 million, a 14.2% sequential increase from second quarter ended June 30, 2020, and a 9.3% increase from $1.87 million in revenues in the third quarter ended September 30, 2019.
Revenues generated during the third quarter ended September 30, 2020 were derived mainly from the sales of our products and from the offering of our membership plans to our customers in the U.S.
At the end of the third quarter ended September 30, 2020, we accumulated deferred income of $1.28 million that we expect to recognize during the next four fiscal quarters.
Gross profit in the third quarter ended September 30, 2020 was $549,000, a decrease of $324,000, or 37%, compared to gross profit of $873,000 in the third quarter ended September 30, 2019. This decrease is mainly a result of a decrease in the average selling prices of our products in the third quarter ended September 30, 2020.
Total operating expenses for the third quarter ended September 30, 2020 were $7.15 million, an increase of $3.48 million, or 94.7%, compared with $3.7 million for the third quarter ended September 30, 2019. The increase in operating expenses was mainly due to the increase in marketing expenses and an increase in equity-based compensation to directors, employees and service providers.
Operating loss for the third quarter ended September 30, 2020 was $6.6 million, an increase of $3.8 million, or 136%, compared to a $2.8 million operating loss in the third quarter ended September 30, 2019. This increase was mainly due to the decrease in our gross profit and an increase in our operating expenses.
Net loss was $6.55 million, or $0.71 per common share, in the third quarter ended September 30, 2020, compared to a net loss of $2.8 million, or $1.11 per common share, in the third quarter ended September 30, 2019.
The company had cash and cash equivalents totaling $37 million at September 30, 2020.
Non-GAAP billings for the three months ended September 30, 2020 were $2.06 million, a 15.5% increase from $1.78 million reported in the three months ended September 30, 2019.
Non-GAAP adjusted net loss for the three months ended September 30, 2020 was $4.74 million, a 122% increase from a $2.14 million non-GAAP adjusted net loss for the three months ended September 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 Nine Months Ended September 30, 2020:
Revenue for the nine months ended September 30, 2020 was $5.5 million, a 4.6% decrease from $5.76 million for the nine months ended September 30, 2019. This decrease is mainly a result of a decrease in our direct to consumer revenues in the first six months of 2020 compared to the first six months of 2019. During the nine months ended September 30, 2020, we recorded an additional $62,000 as deferred revenues from revenues generated from our membership offering to our customers in the U.S.
Gross profit of $1.96 million was recorded for the nine months ended September 30, 2020, an increase of 11.8%, or $207,000, compared to gross profit of $1.76 million for the nine months ended September 30, 2019. This increase is mainly a result of an increase in revenues generated from our membership offering and a corresponding decrease in product sales.
Total operating expenses for the nine months ended September 30, 2020 were $22.8 million, an increase of $7.5 million, or 49.2%, compared with $15.3 million for the nine months ended September 30, 2019. The increase in operating expenses was mainly due to the increase in marketing expenses and an increase in equity-based compensation to directors, employees and service providers.
Operating loss for the nine months ended September 30, 2020 increased by $7.3 million to $20.8 million, compared to a $13.5 million operating loss for the nine months ended September 30, 2019. This increase is mainly a result from an increase in our equity-based compensation.
Net loss was $20.45 million for the nine months ended September 30, 2020 compared to a net loss of $13.56 million for the nine months ended September 30, 2019. The reason for the was mainly due to an increase in operating expenses.
Non-GAAP billings for the nine months ended September 30, 2020 were $5.56 million, a 12.3% decrease from $6.34 million in the nine months ended September 30, 2019.
Non-GAAP adjusted net loss for the nine months ended September 30, 2020 was $11.7 million, a 2.2% increase from a $11.5 million non-GAAP adjusted net loss for the nine months ended September 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."
Conference Call Details: Thursday, November 12, 9:00am EDT
Dial-in Number: 844-369-8770
International Dial-in: 862-298-0840
Conference ID: DarioHealth Third Quarter 2020 Earnings Call and Webcast
Webcast: https://www.webcaster4.com/Webcast/Page/2224/38235
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 November 26, 2020. To listen to the replay, dial 877-481-4010 (domestic) or 919-882-2331 (international) and use replay passcode 38235. The webcast replay will be available through February 12, 2021.
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 https://www.dariohealth.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 its consumer engagement metrics and open architecture are key differentiating factors relative to its competition that have resonated with customers and prospects alike, the growth of its sales pipeline, the belief that its ongoing investments in its U.S. commercial infrastructure have positioned Dario for a transformational year in 2021, that its liquidity is sufficient to invest in research and development, expand its portfolio of chronic diseases and build the necessary sales and marketing infrastructure to drive further penetration of the B2B2C channel and the belief that it is funded to achieve its goals in the coming quarters. 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 and depreciation of fixed assets. We believe these measures provide useful information to management and investors for analysis of our operating results.
DARIOHEALTH CORP.
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CONSOLIDATED BALANCE SHEETS
---
U.S. dollars in thousands
September 30, December 31,
2020 2019
Unaudited
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $
36,907 $
20,395
Short-term restricted bank deposits 179 191
Trade receivables 543 672
Inventories 1,572 1,414
Other accounts receivable and prepaid expenses 629 267
Total current assets 39,830 22,939
---
NON-CURRENT ASSETS:
Deposits 20 17
Operating lease right of use assets 541 765
Long-term assets 176 200
Property and equipment, net 577 648
Total non-current assets 1,314 1,630
---
Total assets $
41,144 $
24,569
---
DARIOHEALTH CORP.
---
CONSOLIDATED BALANCE SHEETS
---
U.S. dollars in thousands (except stock and stock data)
September 30, December 31,
2020 2019
Unaudited
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Trade payables $
1,999 $
1,656
Deferred revenues 1,285 1,223
Operating lease liabilities 285 317
Other accounts payable and accrued expenses 2,283 2,024
Total current liabilities 5,852 5,220
---
OPERATING LEASE LIABILITIES 258 455
STOCKHOLDERS' EQUITY
Common Stock of $0.0001 par value - Authorized: 160,000,000
shares at September 30, 2020 (unaudited) and December 31, 2019;
Issued and Outstanding: 7,892,308 and 2,235,649 shares at
September 30, 2020 (unaudited) and December 31, 2019,
respectively)
Preferred Stock of $0.0001 par value - Authorized: 5,000,000 shares at
September 30, 2020 (unaudited) and December 31, 2019; Issued and
Outstanding: 15,879 and 21,375 shares at September 30, 2020
(unaudited) and December 31, 2019, respectively
Additional paid-in capital 168,618 129,039
Accumulated deficit (133,584) (110,145)
Total stockholders' equity 35,034 18,894
---
Total liabilities and stockholders' equity $
41,144 $
24,569
---
DARIOHEALTH CORP.
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CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
---
U.S. dollars in thousands (except stock and stock data)
Three months ended Nine months ended
September
30 September 30
2020 2019 2020 2019
Unaudited
Unaudited
Revenues $
2,042 $
1,868 $
5,496 $
5,761
Cost of revenues 1,493 995 3,532 4,004
Gross profit 549 873 1,964 1,757
Operating expenses:
Research and development $
954 $
859 $
3,010 $
2,852
Sales and marketing 3,635 1,865 10,334 8,804
General and administrative 2,562 948 9,459 3,625
Total operating expenses 7,151 3,672 22,803 15,281
Operating loss (6,602) (2,799) (20,839) (13,524)
Total financial expenses (income), net (52) 6 (391) 39
Net loss $
(6,550) $
(2,805) $
(20,448) $
(13,563)
Deemed dividend $
930
$ $
2,991
$
Net loss attributable to holders of Common $
(7,480) $
(2,805) $
(23,439) $
(13,563)
Stock
Net loss per Common Stock:
Basic and diluted net loss per Common Stock $
(0.71) $
(1.11) $
(2.95) $
(5.52)
Weighted average number of shares of Common 7,328,420 2,536,513 4,856,115 2,455,092
Stock used in computing basic and diluted net
loss per Common Stock)
DARIOHEALTH CORP.
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CONSOLIDATED STATEMENTS OF CASH FLOWS
---
U.S. dollars in thousands
Nine months ended
September 30,
2020 2019
Unaudited
Cash flows from operating activities:
---
Net loss $
(20,448) $
(13,563)
Adjustments required to reconcile net loss to net cash used in operating
activities:
Stock-based compensation, common stock, and stock instead of cash 8,988 1,928
compensation to directors, employees, consultants, and service
providers
Depreciation 140 138
Change in operating lease right of use assets 224 160
Decrease (increase) in trade receivables 129 (351)
Decrease (increase) in accounts receivables and prepaid expenses and (338) 199
long-term assets
Increase in inventories (158) (96)
Increase (decrease) in trade payables 343 (1,168)
Increase (decrease) in other accounts payable and accrued expenses 311 (580)
Increase in deferred revenues 62 575
Change in operating lease liabilities (229) (115)
Net cash used in operating activities (10,976) (12,873)
Cash flows from investing activities:
---
Investment in deposit (4) (8)
Purchase of property and equipment (69) (79)
Net cash used in investing activities (73) (87)
Cash flows from financing activities:
---
Proceeds from issuance of Common Stock, warrants and warrant 27,548 6,558
exercises, net of issuance costs
Net cash provided by financing activities 27,548 6,558
Increase (decrease) in cash, cash equivalents and short-term restricted bank 16,499 (6,402)
deposits
Cash, cash equivalents and short-term restricted bank deposits at beginning 20,535 11,126
of the period
Cash, cash equivalents and short-term restricted bank deposits at end of the $
37,034 $
4,724
period
Reconciliation of Revenue to Billing (Non-GAAP)
---
U.S. dollars in thousands
Three Months Ended Nine Months Ended
S
eptember
30, September 30,
2020 2019 2020 2019
GAAP Revenue $2,042 $1,868 $5,496 $5,761
Add:
Change in Deferred $15 $(87) $62 $575
Revenue
Billings (Non-GAAP) $2,057 $1,781 $5,558 $6,336
Reconciliation of Operating Loss, Net Loss and Operating Expenses to Adjusted
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Operating Loss, Net Loss and Operating Expenses (Non-GAAP)
---
U.S. dollars in thousands
Three months ended September 30, 2020
GAAP Stock-Based Depreciation of Non-GAAP
Compensation Fixed Assets and
Expenses Deferred
Inventory
---
Cost of Revenues $
1,493 $
(4) $
(29) $
1,460
Gross Profit 549 4 29 582
Research and development 954 (145) (6) 803
Sales and Marketing 3,635 (518) (9) 3,108
General and Administrative 2,562 (1,143) (4) 1,415
Total Operating Expenses 7,151 (1,806) (19) 5,326
Operating Loss $
(6,602) $
1,810 $
48 $
(4,744)
Financing income (52) (52)
Net Loss $
(6,550) $
1,810 $
48 $
(4,692)
Three months ended September 30, 2019
GAAP Stock-Based Depreciation of Non-GAAP
Compensation Fixed Assets
Expenses
---
Cost of Revenues $
995 $
(25) $
(28) $
942
Gross Profit 873 25 28 926
Research and development 859 (87) (6) 766
Sales and Marketing 1,865 (136) (9) 1,720
General and Administrative 948 (370) (2) 576
Total Operating Expenses 3,672 (593) (17) 3,062
Operating Loss $
(2,799) $
618 $
45 $
(2,136)
Financing expenses 6 6
Net Loss $
(2,805) $
618 $
45 $
(2,142)
Nine months ended September 30, 2020
GAAP Stock-Based Depreciation of Non-GAAP
Compensation Fixed Assets
Expenses
---
Cost of Revenues $
3,532 $
(24) $
(87) $
3,421
Gross Profit 1,964 24 87 2,075
Research and development 3,010 (591) (18) 2,401
Sales and Marketing 10,334 (2,267) (25) 8,042
General and Administrative 9,459 (6,106) (10) 3,343
Total Operating Expenses 22,803 (8,964) (53) 13,786
Operating Loss $
(20,839) $
8,988 $
140 $
(11,711)
Financing income (391) (391)
Net Loss $
(20,448) $
8,988 $
140 $
(11,320)
Nine months ended September 30, 2019
GAAP Stock-Based Depreciation of Non-GAAP
Compensation Fixed Assets
Expenses
---
Cost of Revenues $
4,004 $
(82) $
(85) $
3,837
Gross Profit 1,757 82 85 1,924
Research and development 2,852 (198) (18) 2,636
Sales and Marketing 8,804 (231) (28) 8,545
General and Administrative 3,625 (1,417) (7) 2,201
Total Operating Expenses 15,281 (1,846) (53) 13,382
Operating Loss $
(13,524) $
1,928 $
138 $
(11,458)
Financing expenses 6 6
Net Loss $
(13,530) $
1,928 $
138 $
(11,464)
DarioHealth Corporate Contact:
Claudia Levi
Content & Communications Manager
claudia@mydario.com
+1-347-767-4220
Media Inquiries:
Investor Relations Contact:
Chuck Padala
chuck@lifesciadvisors.com
+1-646-627-8390
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