DarioHealth Reports First Quarter 2021 Results and Operational Highlights

NEW YORK, May 17, 2021 /PRNewswire/ -- DarioHealth Corp. (Nasdaq: DRIO), a pioneer in the global digital therapeutics market, today reported financial results for the first quarter of 2021 and provided a corporate and commercial update.

"During the first quarter, we delivered exceptional financial and operating results, driven by balanced contribution from organic growth and the acquisition of Upright Technologies, which we closed on February 2, 2021," stated Erez Raphael, Chief Executive Officer of Dario. "Our first quarter 2021 revenue of $3.6 million represents growth of 73% sequentially from the fourth quarter of 2020, and 116% year-over-year. Perhaps more importantly, our first quarter revenues, assuming we acquired Upright Technologies as of January 1, 2021, would have been $4.7 million. At the same time, our gross margin percentage, excluding acquisition related amortization, significantly improved to 44.7% of revenues, as compared to 24.2% in Q4 2020. With over $81 million of cash at the end of the first quarter of 2021, we believe that we are well funded to accelerate our growth trajectory.

"Our acquisition of Upright Technologies allows us to address one of the most significant pain points for health care payers – musculoskeletal and related pain conditions. This acquisition is being integrated in our operations and is already generating significant interest from potential customers in need of a novel MSK solution. We will continue to expand into additional chronic conditions supporting our vision of being the most comprehensive digital health solution in the industry. I am pleased with our increasing U.S. sales momentum during the first quarter of 2021.  We were especially encouraged by our enrollment, which exceeded 40% and was accomplished at a faster than anticipated rate. We look forward to a very successful year," Mr. Raphael concluded.

"The three pillars of our growth – pivot to Business-to-Business-to-Consumer (B2B2C), transition to a high margin software-as-a-service (SaaS) model, and expansion into additional chronic conditions – are serving us well and are clearly resonating in the marketplace," stated Rick Anderson, President and General Manager of North America. "We launched three accounts during the quarter, including two new employers. Our pipeline currently stands in excess of $700 million and growing especially in our employer market segment. We believe this speaks not only to the breadth and differentiation of our digital health offering, but also to the world-class team and support infrastructure that we have assembled in the U.S."

Q1 2021 and Recent Highlights

• Announced acquisition of Upright Technologies, expanding into the musculoskeletal and related pain condition markets;
• Observed first quarter 2021 revenue of approximately $4.7 million, assuming the acquisition of Upright Technologies closed on January 1, 2021;
• Announced the creation of a virtual clinic focused on diabetes in partnership with MediOrbis and including Dario's Remote Patient Monitoring (RPM) services;
• Appointed Claudia Rimerman Kraut as Vice President of Broker and Consultant Partnerships to lead Dario's benefit consultant and alliance outreach as part of the self-insured employers and managed care sales organization;
• Appointed digital health executive and innovator Chris Chan as Senior Vice President of Employer Sales, to lead growth initiatives in the US self-insured employer market;
• Selected to be the digital health provider by a self-insured, Fortune 500 subsidiary through Dario's previously announced partnership with Vitality Group; and
• Published a paper in Journal of Medical Internet Research (JMIR) Diabetes. The paper, "Role of Digital Engagement in Diabetes Care Beyond Measurement: Retrospective Cohort Study," detailing the results of a clinical study in which increased digital engagement resulted in 43% improvement in blood glucose levels.

First Quarter 2021 Results Summary

Revenues for the first quarter ended March 31, 2021 were $3.6 million, a 73% sequential increase from fourth quarter ended December 31, 2020, and a 116% increase from the $1.7 million in the first quarter ended March 31, 2020.

Revenues generated during the first quarter ended March 31, 2021 were derived mainly from the sales of DarioHealth's products and services and from the consolidated revenues of Upright commencing February 2, 2021.

Gross profit in the first quarter of 2021 was $1,081,000, an increase of $302,000, or 38.8%, compared to gross profit of $779,000 in the first quarter of 2020. Gross profit margin was 30.1% in the first quarter of 2021 as compared to 46.7% in the first quarter of 2020.

Pro-forma gross profit, excluding $526,000 of amortization of expenses related to the acquisition of Upright Technologies, was $1.6 million. Pro forma gross profit margin, excluding amortization of expenses related to the acquisition of Upright Technologies, was 44.7% in the first quarter of 2021, a sequential increase from 24.2% in Q4 2020.

Total operating expenses for the first quarter of 2021 were $15.4 million compared to $10.9 million for the first quarter of 2020, an increase of $4.5 million, or 41.6%. The increase resulted from an increase in our research and development activities, sales and marketing expenses, and from the consolidation of Upright Technologies, partially offset by a reduction in stock-based compensation.

Operating loss for the first quarter of 2021 was $14.3 million, an increase of $4.2 million, or 41.7%, compared to the $10.1 million operating loss in the first quarter of 2020. This increase was mainly due to the increase in our operating expenses.

Net loss was $15.0 million in the first quarter of 2021, an increase of $5.1 million, or 51.3%, compared to the $9.9 million net loss in the first quarter of 2020.

Cash and cash equivalents totaled $81.1 million at March 31, 2021. 

Non-GAAP billings for the three months ended March 31, 2021 were $3.69 million, a 116% increase from $1.71 million reported in the three months ended March 31, 2020. The increase is a result of higher sales generated and the consolidation of Upright revenues in the three months ended March 31, 2021 compared to the three months ended March 31, 2020. 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 18, 8:30am ET

Dial-in Number: 877-451-6152

International Dial-in: 201-389-0879

Conference ID:  DarioHealth First Quarter 2021 Results Call

Webcast: http://public.viavid.com/index.php?id=144917

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 June 18, 2021. To listen to the replay, dial 844-512-2921 (domestic) or 412-317-6671 (international) and use replay passcode 13719717. The webcast replay will be available for two months.

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™ 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, and 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 it is well funded to accelerate its growth trajectory, its intention to continue to expand into additional chronic conditions supporting its vision of being the most comprehensive digital health solution in the industry, its belief that its growing pipeline speaks to the breadth and differentiation of its digital health offering and its world-class team and support infrastructure that it has assembled in the U.S. 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™ 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.

Logo - http://mma.prnewswire.com/media/544126/DarioHealth_Logo.jpg

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

View original content:http://www.prnewswire.com/news-releases/dariohealth-reports-first-quarter-2021-results-and-operational-highlights-301292434.html

SOURCE DarioHealth Corp.