DarioHealth(DRIO) - 2025 Q1 - Quarterly Report

Financial Performance - Total revenues for Q1 2025 were $6.752 million, a 17.3$5.758 million in Q1 2024[22] - Gross profit for Q1 2025 was $3.882 million, compared to$2.432 million in Q1 2024, reflecting a significant improvement[22] - Operating loss for Q1 2025 was $9.409 million, reduced from$17.855 million in Q1 2024, indicating better cost management[22] - Net loss attributable to common shareholders for Q1 2025 was $14.066 million, compared to$9.209 million in Q1 2024, showing an increase in losses[22] - For the three months ended March 31, 2025, DarioHealth reported a net loss of $9,227,000, compared to a net loss of$7,175,000 for the same period in 2024, indicating an increase in losses of approximately 28.6%[27] - The company recorded tax expenses of $22 thousand for the three months ended March 31, 2025, compared to income tax of$1,994 thousand for the same period in 2024, reflecting a decrease of approximately 98.90%[128]. - The basic net loss per share for common stock was $(0.14) for the three months ended March 31, 2025, compared to$(66.78) for the same period in 2024, showing an improvement of approximately 79.09%[132][134]. Cash Flow and Liquidity - Cash and cash equivalents as of March 31, 2025, were $27.854 million, slightly up from$27.764 million at the end of 2024[16] - The company used approximately $6,673,000 in cash for operating activities during the three months ended March 31, 2025, a decrease from$13,110,000 used in the same period in 2024, reflecting a 49.1% improvement in cash flow usage[27] - DarioHealth's cash, cash equivalents, and restricted cash at the end of the period were $27,854,000, down from$35,041,000 at the end of March 2024, representing a decrease of 20.5%[27] - The company intends to fund future operations through cash on hand and additional offerings of debt or equity securities, highlighting the need for ongoing capital[29] Assets and Liabilities - Total current liabilities increased to $19.155 million as of March 31, 2025, from$16.635 million at the end of 2024[19] - Total assets decreased to $115.600 million as of March 31, 2025, down from$118.884 million at the end of 2024[16] - DarioHealth has an accumulated deficit of $404,409,000 as of March 31, 2025, indicating ongoing financial challenges since inception[29] - The allowance for credit losses increased from$163,000 at the beginning of the period to $191,000 by the end of March 31, 2025, reflecting a rise of 17.2$4,737,000 in Q1 2025 from $3,470,000 in Q1 2024, a growth of 36.5$1,088,000 in fiscal year 2024, which was recorded as a reduction in revenue[50] - The Company expects to recognize approximately $1,305,000 in deferred revenue over the next 12 months[54] Stock and Equity - The company raised approximately$22,422,000 from the issuance of 17,307 Series C, 4,000 Series C-1, and 1,115 Series C-2 preferred shares at a purchase price of $1,000 per share[99] - The company accounted for deemed dividends of$2,194,000 and $744,000 for the Series C, C-1, and C-2 preferred stock for the three-month periods ended March 31, 2025, and March 31, 2024, respectively[101] - The company issued 7,055 and 11,750 Series D and D-1 preferred shares in December 2024, raising approximately$18,805,000[101] - As of March 31, 2025, there were 25,605 shares of Series D, D-1, D-2, and D-3 preferred stock outstanding, convertible into approximately 36,533,135 shares of Common Stock[113] - The company modified the terms of Series B, B-1, and B-3 preferred shares, resulting in a deemed contribution of $12,194,000[109] Expenses - Research and development expenses for Q1 2025 were$4.108 million, down from $6.642 million in Q1 2024, indicating a focus on cost reduction[22] - The total stock-based compensation expenses for the three-month period ended March 31, 2025, amounted to$2,342,000, compared to $6,858,000 for the same period in 2024[122] - During the three months ended March 31, 2025, the Company recorded share-based compensation expenses of$65 related to a consulting firm[96] - The company recorded share-based compensation expenses of $893,000 for the three-month period ended March 31, 2024, and$0 for the same period in 2025[99] Debt and Financing - The Company refinanced its existing $25,000,000 credit facility to a new$30,000,000 facility on May 1, 2023[59] - The interest rate on the Avenue Loan Facility is set at the higher of 4.50% plus the prime rate or 12.50%[60] - The Company recorded remeasurement expenses related to the Avenue Loan of $270,000 for the three months ended March 31, 2025[66] - The Company refinanced its existing$30,000 credit facility with a new $32,500 credit agreement, allowing for an additional draw of up to$17,500[138] - The additional $17,500 Term Loan includes$2,500 subject to revenue and gross margin thresholds and $15,000 at the discretion of the Agent and Lenders[138] Shareholder Actions - The Compensation Committee approved a grant of 575,000 restricted shares of Common Stock and warrants to purchase up to 1,050,000 shares of Common Stock in February 2025[97] - The Company appointed Chen Franco-Yehuda as CFO, issuing her 500,000 restricted shares vesting over three years[138] - Stockholders approved the issuance of 33,956,850 shares of Common Stock from the conversion of 25,605 shares of Series D Preferred Stock[138] Miscellaneous - The Company has a liability to pay future royalties to the Israeli Innovation Authority amounting to 3$954 as of March 31, 2025[88] - The Company recorded remeasurement income of $1,085 and$9,156 related to the Pre-Funded Warrants for the three-month periods ended March 31, 2025, and March 31, 2024, respectively[75] - The fair value of the Avenue Loan Facility was estimated using a discount rate of 19% as of March 31, 2025[82] - The fair value of the Orbimed Warrant liability was estimated using the Monte-Carlo simulation valuation technique, with a stock price of $0.61 and volatility of 88.4% as of March 31, 2025[84]