DarioHealth (DRIO) Q4 2024 Earnings Call March 10, 2025 04:41 PM ET Company Participants Kat Parrella - Investor Relations ManagerErez Raphael - Chief Executive OfficerSteven Nelson - Chief Commercial OfficerCharles Rhyee - Managing DirectorAshok Kumar - Head of Equity ResearchDavid Grossman - Managing Director Operator Good morning, ladies and gentlemen, and welcome to the DarioHealth Fourth Quarter twenty twenty four Results Conference Call. This call is being recorded on Monday, 03/10/2025. I would now l ...

DarioHealth Corp. (NASDAQ:DRIO) Q4 2024 Earnings Conference Call March 10, 2025 8:30 AM ET Company Participants Kat Parrella - Investor Relations Manager Erez Raphael - Chief Executive Officer Steven Nelson - Chief Commercial Officer Conference Call Participants Charles Rhyee - TD Cowen Ashok Kumar - ThinkEquity David Grossman - Stifel Operator Good morning, ladies and gentlemen, and welcome to the DarioHealth Fourth Quarter 2024 Results Conference Call. At this time, all lines are in listen-only mode. Foll ...

Core Insights - DarioHealth Corp. reported significant financial improvements for the fourth quarter and full-year 2024, with total revenue reaching $27.0 million, a 32.9% increase from $20.4 million in 2023, driven by strong growth in its B2B2C business [4][26][27] Financial Performance - Total revenue for 2024 was $27.0 million, up 32.9% from $20.4 million in 2023 [4][26] - Recurring revenues from the B2B2C segment grew to $20.0 million in 2024, a 300% increase from $5 million in 2023 [27] - Gross profit for 2024 was $13.3 million, a 122% increase from $6.0 million in 2023 [28] - Operating loss for 2024 was $57.7 million, slightly higher than the $56.2 million loss in 2023, primarily due to increased operating expenses [31] Business Model and Strategy - Dario has transitioned to a SaaS-like model with high-margin, recurring revenues based on multi-year contracts [2] - The acquisition of Twill Inc. has enhanced Dario's position in the digital health market, allowing it to support five chronic conditions under a unified brand [3] - The company secured 36 new clients in 2024, bringing the total client base to 83, with a forecast of 50% net client growth in 2025 [6][11][15] Market Trends and Demand - There is a growing demand for comprehensive chronic care solutions, particularly those that complement GLP-1 therapies, as employers and health plans seek long-term support beyond medication [7][10] - Dario's AI-driven platform is positioned to meet the increasing demand for efficiencies in digital health, leveraging data from 5 million patients to enhance engagement and outcomes [10] Operational Efficiency - The company implemented cost-management strategies that led to a 35% reduction in operating loss from Q1 2024 to Q4 2024 [5] - Dario anticipates an additional 20% reduction in operating expenses by Q4 2025 through further consolidation and AI tool implementation [5][40] Client Engagement and Retention - Dario maintains a client renewal rate above 90%, indicating strong value and impact of its solutions [12] - The company’s contracts are primarily structured as three-year agreements, providing long-term stability [12] Future Outlook - Dario aims to accelerate growth by expanding its reach into mid-sized employers and maximizing existing collaborations with health plans [15] - The company expects to achieve an operational cash flow breakeven run rate by the end of 2025 [5][40]

Business Growth and Client Acquisition - DarioHealth has signed over 100 total contracts as of now, indicating rapid scaling of its B2B2C model [559]. - In the fiscal year 2024, the B2B2C channel added 36 new employers and health plan clients, bringing the total client base to 83 [574]. - The company has expanded its solutions beyond diabetes to include hypertension, pre-diabetes, musculoskeletal health, and behavioral health [559]. - The company has entered into contracts with a preferred partner and a health plan provider for data licensing and implementation services [575]. Financial Performance - Revenues for the year ended December 31, 2024, amounted to $27,040, an increase of 33.2% compared to $20,352 for the year ended December 31, 2023, driven by growth in the commercial channel and the consolidation of Twill's revenues [584]. - Gross profit for the year ended December 31, 2024, was $13,267, representing 49.1% of revenues, compared to $5,984 or 29.4% of revenues for the year ended December 31, 2023 [588]. - Net loss for the year ended December 31, 2024, was $42,747, a decrease of 28.2% from the net loss of $59,427 for the year ended December 31, 2023 [600]. - As of December 31, 2024, the company had incurred an accumulated deficit of $390,343 since inception [611]. - The company expects to continue incurring losses until it achieves profitability through successful product development and commercialization [611]. Cash Flow and Capital Management - Cash and cash equivalents as of December 31, 2024, were approximately $27,764, down from $36,797 at December 31, 2023 [612]. - Net cash used in operating activities increased to $38.562 million for the year ended December 31, 2024, compared to $30.379 million in 2023, primarily due to increased operating expenses and working capital [636]. - Net cash used for investing activities rose to $8.934 million in 2024, significantly higher than $547, attributed to the acquisition of Twill [637]. - Net cash provided by financing activities was $38.531 million for the year ended December 31, 2024, compared to $18.253 million in 2023, driven by private placements [638]. - The company expects to meet its contractual obligations totaling $4.884 million, with $3.948 million due within one year [640]. Mergers and Acquisitions - The company acquired Upright for a total consideration of 1,687,612 shares of common stock and options to purchase up to 100,193 shares [560]. - DarioHealth paid $10.0 million in cash as part of the merger with Twill, along with additional stock options and warrants [561]. - Research and development expenses increased by $3,931 to $24,179 for the year ended December 31, 2024, primarily due to higher payroll and consulting expenses related to the consolidation of Twill [590]. - Sales and marketing expenses rose by $2,565 to $26,350 for the year ended December 31, 2024, mainly due to increased payroll and consulting expenses from the Twill acquisition [592]. - General and administrative expenses increased by $2,342 to $20,482 for the year ended December 31, 2024, largely due to higher payroll and acquisition costs associated with Twill [594]. Regulatory and Accounting Changes - The FASB issued ASU 2023-07, effective January 1, 2024, enhancing segment reporting disclosures, particularly on significant segment expenses [644]. - ASU 2023-09, effective January 1, 2025, requires disaggregated information on effective tax rate reconciliation and income taxes paid, currently under evaluation [645]. - ASU 2024-03 mandates additional disaggregated disclosures for certain expense categories, effective after December 15, 2026, with early adoption permitted [646]. - The company adopted the fiscal year standard for segment disclosures on a retrospective basis starting January 1, 2024 [644]. - The impact of ASU 2023-09 on financial statement disclosures is currently being evaluated by the company [645]. - The company is assessing the effects of adopting ASU 2024-03 on its disclosures [646]. - No quantitative or qualitative market risk disclosures are applicable at this time [647].

Core Insights - DarioHealth Corp. has announced a strategic collaboration with Rula Health to enhance access to mental health support for employers and their workforce nationwide [1][2][3] - The partnership allows Dario to leverage Rula's network of over 15,000 providers, covering over 120 million commercial lives through major insurance networks [1][7] - This collaboration aims to accelerate the adoption of Dario's behavioral health solutions in the employer channel and boost sales growth in the B2B2C segment [2][3] Company Overview - DarioHealth is a leader in the digital health market, focusing on chronic condition management through a user-centric digital therapeutics platform [5] - The company's solutions include personalized interventions driven by data analytics and coaching for various health issues, including behavioral health [5][6] - DarioHealth provides its solutions globally to health plans, self-insured employers, and consumers [6] Rula Health Overview - Rula Health offers a network of over 15,000 licensed providers, providing next-day therapy and 24/7 crisis support [7] - The platform allows patients to quickly match with providers, confirm insurance costs, and track their progress [7][8] - Rula Health accepts most major insurance networks, covering over 120 million lives [8]

Core Insights - DarioHealth Corp. has signed a contract with a major healthcare system to provide AI-powered chronic care management solutions, expected to contribute to 15 new client signings in 2025, marking a significant step towards achieving its net new client goal for that year [1][2][3] Company Developments - The new contract is set to go live in the first quarter of 2025, reinforcing the recognition of digital health solutions among healthcare professionals [2][3] - Dario's solutions are designed to enhance care delivery for chronic conditions such as diabetes, hypertension, musculoskeletal pain, and mental health challenges, reflecting confidence from self-insured employers in the company's value proposition [3][4] Industry Trends - The digital health landscape is evolving, with collaborations between digital health companies and healthcare systems becoming critical for expanding access to technology-enabled care [6] - Recent industry shifts, including improved coverage and stronger clinical evidence, are accelerating the adoption of digital wellness and self-care therapies, which have historically faced skepticism [5][6] Clinical Effectiveness - Dario's platform has demonstrated effectiveness in reducing A1C levels for diabetes patients by 2.3 points and decreasing anxiety and depression by 28-30% over eight weeks through its behavioral health platform, Dario Mind [4] - The company aims to bridge the gap between traditional care models and scalable digital interventions by combining AI-driven personalization with a seamless user experience [4][8] User-Centric Approach - Dario's user-centric platform offers continuous and customized care, empowering individuals to adapt their lifestyles for sustainable behavior change, which drives user satisfaction and retention [8] - The company provides its solutions globally to health plans, self-insured employers, and consumers, emphasizing a holistic approach to chronic condition management [9]

Core Viewpoint - DarioHealth Corp. will release its financial results for the 4th quarter of 2024 on March 10, 2025, and will host a conference call to discuss these results [1][2]. Group 1: Conference Call Details - The conference call is scheduled for March 10, 2025, at 8:30 am Eastern Time [3]. - Participants can join via a domestic dial-in number (1-800-717-1738) or an international number (1-646-307-1865) [3]. - A replay of the call will be available approximately two hours after the event until March 24, 2025 [3]. Group 2: Company Overview - DarioHealth Corp. is a leader in the digital health market, focusing on chronic condition management through a user-centric digital therapeutics platform [4]. - The platform provides personalized interventions for conditions such as diabetes, hypertension, weight management, musculoskeletal pain, and behavioral health [4]. - DarioHealth's approach aims to empower users to make sustainable lifestyle changes, enhancing user satisfaction and retention [5]. Group 3: Market Reach - DarioHealth offers its solutions globally to health plans, self-insured employers, care providers, and consumers [6].

Core Insights - DarioHealth Corp. has appointed Lawrence (Larry) B. Leisure to its Board of Directors, bringing extensive healthcare leadership and digital health innovation experience to the company [1][5] - Mr. Leisure's background includes roles in managed care, health policy, and value-based care models, which will support Dario's expansion in payer and employer markets [1][5] - DarioHealth is focused on AI-driven digital health solutions for chronic conditions, offering a user-centric platform that promotes continuous and customized care [6][7] Company Overview - DarioHealth Corp. is a leader in digital health, providing solutions for chronic condition management through a multi-chronic condition digital therapeutics platform [6] - The platform delivers personalized interventions driven by data analytics and coaching for conditions such as diabetes, hypertension, and behavioral health [6][7] - DarioHealth's approach aims to disrupt traditional episodic healthcare by empowering users to make sustainable lifestyle changes [7] Leadership and Experience - Mr. Leisure has a diverse background in healthcare consulting, having served in senior roles at Towers Perrin, PricewaterhouseCoopers, and Accenture, as well as leadership positions at Kaiser Foundation Health Plan and UnitedHealth Group [2][3] - He co-founded the Employer Health Innovation Roundtable, representing over six million lives, and holds advisory roles at prestigious institutions [3] - His educational background includes a BA in Economics from Stanford University and an MBA in Finance from UCLA Anderson [4]

Core Viewpoint - DarioHealth Corp. successfully closed a $25.6 million private placement of convertible preferred stock, primarily funded by existing shareholders, aimed at extending its cash runway and supporting its strategic plan to achieve operational cash flow positivity by the end of 2025 [1][2][3] Financial Position - The private placement is expected to enhance Dario's financial position, with a proforma cash balance of $40.6 million as of the end of Q3 2024, including the proceeds from the offering [2] - The financing will enable the company to continue building high-margin, scalable recurring revenues across B2B and pharma channels [4][9] Transaction Details - The company issued 18,805 shares of convertible preferred stock at $1,000 per share with a conversion price of $0.73, and 6,800 shares at $1,000 per share with a conversion price of $0.83 [5] - Holders of the preferred stock will receive a 10% dividend payable in common stock each quarter for the first four quarters, totaling up to 40% [6] Shareholder Confidence - More than half of the newly issued convertible preferred shares were purchased by existing shareholders, indicating strong confidence in the company's strategy and performance [3][9] - The participation of accredited healthcare investors further underscores this confidence [9] Strategic Growth - The financing is aligned with the company's long-term growth strategy focused on high-margin, scalable recurring revenues [4][9] - The company aims to maintain its growth trajectory and strengthen its position in the digital health market [4]

Company Collaboration and Strategy - DarioHealth Corp announced a collaboration with MediOrbis to enhance its GLP-1 behavior change solution by adding prescribing capabilities, creating a fully integrated medical weight loss program [1] - The collaboration aims to meet growing employer demand for weight-loss medication coverage and expand Dario's addressable market in the digital health sector [1] - The partnership positions Dario to drive recurring revenue and expand its market presence in both employer and direct-to-consumer channels [1][4] Market Trends and Employer Demand - 44% of large employers now cover obesity drugs, reflecting a growing trend in employer-sponsored health benefits [2] - The rising costs of GLP-1 medications highlight the need for strategic plan designs that combine medication use with behavior change programs to ensure sustainable clinical outcomes and maximize ROI [2] - Employers are increasingly seeking holistic, cost-effective weight management solutions, creating opportunities for Dario to optimize outcomes and ROI through its integrated offerings [2][3] Product and Service Enhancements - Dario's GLP-1 behavior change solution now includes virtual physician oversight and prescribing capabilities, enabling seamless access to care throughout the weight loss journey [1][3] - The enhanced solution supports employees before, during, and after GLP-1 medication use, ensuring sustainable weight loss through lifelong healthy lifestyle modifications [2][3] - The collaboration strengthens Dario's ability to provide personalized, high-quality virtual care that complements its behavior change programs, delivering meaningful health outcomes [4] Industry and Market Positioning - The GLP-1 market is rapidly expanding, with employers demanding solutions that drive long-term health improvements and cost savings [4] - Dario's end-to-end GLP-1 solution, combining virtual prescribing with behavior change programs, positions the company to capture opportunities in both employer and direct-to-consumer markets [4] - The collaboration with MediOrbis allows Dario to innovate and develop clinical programs that address obesity and other chronic conditions, impacting employee health and productivity globally [4] Company Overview - DarioHealth Corp is a leading digital health company offering a user-centric, multi-chronic condition digital therapeutics platform [5] - The platform delivers personalized interventions for diabetes, hypertension, weight management, musculoskeletal pain, and behavioral health, driven by data analytics and one-on-one coaching [5] - Dario's solutions are highly rated and provided globally to health plans, self-insured employers, care providers, and consumers [7]