DarioHealth Reports Third Quarter 2018 Results

    - Earnings and business update call scheduled for 9:00 am ET today

    - Revenues in first 9 months grow to $5.7 million, a 58% increase year over year

    - Q3 revenues grow to $1.88 million, a 37% increase year over year, with an additional $335,000 in deferred revenues generated during the quarter

    - 82% of Q3 revenues were generated in the U.S. and more than 50% of U.S. revenues are recurring

    - Q3 gross profits increase 70% to $468,000 compared to Q3 2017

    - Q3 marks the first quarter of digital health membership offering

    Nov 13, 2018

    NEW YORK and CAESAREA, Israel, Nov. 13, 2018 /PRNewswire/ -- DarioHealth Corp. (NASDAQ: DRIO), a leading global digital health company with mobile health and big data solutions, today reported financial and operational results for the third quarter ended September 30, 2018.

    "We are excited to report that in the third quarter of 2018 we increased revenues by 37% compared to the third quarter of 2017, and in addition we have recorded an additional $335,000 in deferred revenues. This quarter represents a shift of our business from selling devices and disposables, into our digital health membership offering which provides higher margins. The deferred revenues are driven by our recently launched annual membership plan," stated Erez Raphael, CEO of DarioHealth.

    "During the third quarter, we continued growing all key parameters of the business including total number of patients on the platform, average revenue per patient per month (ARPU), number of CDEs (certified diabetes educators) on the platform, while also launching our one-year memberships program," Mr. Raphael continued.

    "We are particularly excited to report continued growth in our recurring revenues, with over 50% of our third quarter revenues in the U.S. being recurring. This increase in recurring revenues is an important part of our business model, as we expect it will improve predictability as we move forward," concluded Mr. Raphael.

    Olivier Jarry, President and Chief Commercial Officer of DarioHealth stated, "During the third quarter, DarioHealth has led negotiations with major business-to-business accounts in the U.S. and Canada including retail chains, clinic networks, and distributors. These are expected to translate into signed agreements and revenues in the fourth quarter. As a result of these efforts, we signed our largest product rollout agreement through a U.S. retailer to date with Giant Eagle. Millions Giant Eagle customers, through 214 in-store pharmacy locations will be able to sign up for online education and rewards through the DarioHealth Blood Glucose Monitoring System and smartphone application."

    Recent Operational Highlights

    • Prominent healthcare industry leaders joined DarioHealth including Yoav Shaked as Chairman of the Board, Olivier Jarry as President and CCO, and Glen Muller as Board Member
    • Entered agreement with Giant Eagle, one of America's largest supermarket chains, to offer a digital diabetes platform powered by Dario to Giant Eagle's 4.6 million customers 
    • Newly Released iPhone XS and XS Max Supported by Dario LC™ Blood Glucose Monitoring System 
    • Entered agreement with Attain Health to pilot DarioEngage for the management of cystic fibrosis related diabetes   
    • DarioEngage suite of products distributed through multiple channels and currently in use at more than 30 clinics and by nearly 100 certified diabetes educators

    Dario Health (PRNewsfoto/DarioHealth Corp.)

    Financial Highlights

    • First nine months revenues increase to $5.7 million, representing 58% growth year over year
    • Revenues of $1.88 million in the third quarter of 2018 represent 37% growth over the third quarter of 2017
    • Deferred revenues from services increase in the third quarter by $335,000 to $385,000 compared to the third quarter of 2017
    • Gross profits increase 70% to $468,000 compared to the third quarter of 2017
    • Fortified balance sheet with approximately $10 million fundraise

    Third Quarter 2018 Results Summary

    Revenue for the third quarter ended September 30, 2018 was $1.88 million, a 37% increase from $1.37 million in the third quarter ended September 30, 2017.

    Revenue for the third quarter of 2018 included direct-to-consumer sales in the United States and Australia, as well as sales in Germany, and product sales to distributors in the United Kingdom and Canada. We recorded an additional $335,000 as deferred revenues from revenues generated from our new membership offering to our customers in the U.S.

    Gross profit increased by $192,000, a 70% increase, to a gross profit of $468,000 in the third quarter of 2018, as compared to a gross profit of $276,000 in the third quarter of 2017.

    Operating loss for the third quarter ended September 30, 2018 increased by $952,000 to $3.93 million, as compared to a $2.98 million operating loss in the third quarter ended September 30, 2017. This increase was mainly due to an increase in our sales and marketing expenses.

    Net loss attributable to holders of common stock increased by $1.1 million to $4.06 million in the third quarter of 2018, as compared to $2.97 million in the third quarter of 2017.

    As of September 30, 2018, cash and cash equivalents totaled $11.4 million.

    Financial Results for the Nine Months Ended September 30, 2018:

    Revenue for the nine months ended September 30, 2018 was $5.7 million, a 58% increase from $3.6 million for the nine months ended September 30, 2017. We recorded an additional $385,000 as deferred revenues from revenues generated from our new membership offering to our customers in the U.S.

    Gross profit of $1.54 million was recorded for the nine months ended September 30, 2018, an increase of 108%, or $800,000, compared to a gross profit of $742,000 for the nine months ended September 30, 2017.

    Operating loss for the nine months ended September 30, 2018 increased by $1.2 million to $12.5 million, compared to a $11.3 million operating loss for the nine months ended September 30, 2017.

    Net loss was $12.8 million for the nine months ended September 30, 2018 compared to a net loss of $12.5 million for the nine months ended September 30, 2017. The increase in net loss for the nine months ended September 30, 2018 compared to the nine months ended September 30, 2017 was mainly due to the increase in our operating expenses partially offset by the increase in our gross profit, and the reduction in our financing expenses related to revaluation of warrants.

    Conference Call Details:

    Date: Tuesday, November 13, 2018
    Time: 9:00am ET
    Dial-in Number: 1-877-407-8035
    International Dial-in Number: 1-201-689-8035
    Webcast: http://www.investorcalendar.com/event/40657

    About DarioHealth Corp.

    DarioHealth Corp. (NASDAQ: DRIO) is a leading global digital health company serving its users with dynamic mobile health solutions. In today's day and age, knowledge of health and treatment is being democratized, and we believe people deserve to know everything about their own health and have the best tools to manage their condition. DarioHealth employs a revolutionary approach whereby harnessing big data, we have developed a novel method for chronic disease data management, empowering people to analyze and personalize self-diabetes management in a totally new way without having the disease slow them down. DarioHealth has a commercial office in New York with an R&D center in Caesarea, Israel. 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 the Company describes expected improvements in recurring revenues, when it describes expected signed agreements and revenues in the fourth quarter of 2018, and when it describes potential market opportunities.  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.

     

    DARIOHEALTH CORP.

    CONSOLIDATED BALANCE SHEETS

    U.S. dollars in thousands




    September 30,



    December 31,




    2018



    2017




    Unaudited





    ASSETS


















    CURRENT ASSETS:









    Cash and cash equivalents


    $

    11,427



    $

    3,718


    Short-term bank deposits



    184




    258


    Trade Receivables



    374




    282


    Inventories



    1,020




    1,184


    Other accounts receivable and prepaid expenses



    523




    604











    Total current assets



    13,528




    6,046











    LEASE DEPOSITS



    47




    42











    PROPERTY AND EQUIPMENT, NET



    758




    869











    Total assets


    $

    14,333



    $

    6,957


     

    DARIOHEALTH CORP.

    CONSOLIDATED BALANCE SHEETS

    U.S. dollars in thousands (except stock and stock data)





    September 30,



    December 31,



    2018



    2017




    Unaudited












    LIABILITIES AND STOCKHOLDERS' EQUITY


















    CURRENT LIABILITIES:









    Trade payables


    $

    2,203



    $

    1,852


    Deferred revenues



    385




    -


    Other accounts payable and accrued expenses



    1,334




    1,163











    Total current liabilities



    3,922




    3,015











    LIABILITY RELATED TO WARRANTS



    -




    1











    STOCKHOLDERS' EQUITY









    Common Stock of $0.0001 par value -
    Authorized: 160,000,000 shares at September 30, 2018
    (unaudited) and December 31, 2017; Issued and Outstanding:
    25,691,724 and 14,074,238 shares at September 30, 2018
    (unaudited) and December 31, 2017, respectively



    7




    7


    Preferred Stock of $0.0001 par value -
    Authorized: 5,000,000 shares at September 30, 2018
    (
    unaudited) and December 31, 2017; Issued and Outstanding:
    1,890,257 and 0 shares at September 30, 2018 (unaudited)
    and December 31, 2017, respectively



    *)-




    -


    Additional paid-in capital



    94,675




    74,892


    Accumulated deficit



    (84,271)




    (70,958)











    Total stockholders' equity



    10,411




    3,941











    Total liabilities and stockholders' equity


    $

    14,333



    $

    6,957


     

    *) Represents an amount lower than $1.

     

    DARIOHEALTH CORP.

    CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

    U.S. dollars in thousands (except stock and stock data)




    Three months ended

    September 30



    Nine months ended

    September 30




    2018



    2017



    2018



    2017




    Unaudited



    Unaudited















    Revenues


    $

    1,879



    $

    1,375



    $

    5,694



    $

    3,592


    Cost of revenues



    1,411




    1,099




    4,152




    2,850



















    Gross profit



    468




    276




    1,542




    742



















    Operating expenses:

















    Research and development


    $

    997



    $

    797



    $

    2,749



    $

    2,450


    Sales and marketing



    2,693




    1,677




    6,820




    5,707


    General and administrative



    709




    781




    4,506




    3,887



















    Total operating expenses



    4,399




    3,255




    14,075




    12,044



















    Operating loss



    (3,931)




    (2,979)




    (12,533)




    (11,302)



















    Financial income (expenses), net:

















    Revaluation of warrants




    *)-



    1




    1




    (1,169)


    Other financial (expense) income, net



    (132)




    5




    (288)




    (7)



















    Total financial income (expenses), net



    (132)




    6




    (287)




    (1,176)



















    Net loss


    $

    (4,063)



    $

    (2,973)



    $

    (12,820)



    $

    (12,478)



















    Deemed dividend related to warrant exchange agreement


    $

    -



    $

    -



    $

    493



    $

    -


    Net loss attributable to holders of Common Stock


    $

    (4,063)



    $

    (2,973)



    $

    (13,313)



    $

    (12,478)



















    Net loss per share


































    Basic and diluted loss per share


    $

    (0.17)



    $

    (0.30)



    $

    (0.67)



    $

    (1.40)


    Weighted average number of Common Stock
    used in computing basic and diluted net loss
    per share



    23,533,328




    9,950,443




    19,733,291




    8,931,460


     

    *) Represents an amount lower than $1.

     

    DARIOHEALTH CORP.

    CONSOLIDATED STATEMENTS OF CASH FLOWS

    U.S. dollars in thousands




    Nine months ended

    September 30,




    2018



    2017




    Unaudited









    Cash flows from operating activities:









    Net loss


    $

    (12,820)



    $

    (12,478)


    Adjustments required to reconcile net loss to net cash used in operating activities:









    Stock-based compensation and Common Stock to service providers



    3,284




    3,062


    Depreciation



    160




    155


    Increase in trade receivables



    (92)




    (193)


    Decrease (increase) in accounts receivables and prepaid expenses



    81




    (264)


    Decrease (increase) in inventories



    164




    (36)


    Increase in trade payables



    351




    171


    Increase in other accounts payable and accrued expenses



    457




    191


    Increase in deferred revenues



    385




    -


    Change in fair value of warrants to purchase shares of Common Stock



    (1)




    1,169











    Net cash used in operating activities



    (8,031)




    (8,223)











    Cash flows from investing activities:









    Maturity (investment) of (in) short-term bank deposits



    74




    (16)


    Maturity (investment) in lease deposits



    (5)




    3


    Purchase of property and equipment



    (49)




    (64)











    Net cash provided by (used in) investing activities



    20




    (77)











    Cash flows from financing activities:









    Proceeds from issuance of Common Stock and warrants, net of issuance cost



    15,720




    13,469


    Proceeds from exercise of options and warrants



    -




    (*-











    Net cash provided by financing activities



    15,720




    13,469











    Increase in cash and cash equivalents



    7,709




    5,169


    Cash and cash equivalents at the beginning of the period



    3,718




    1,093











    Cash and cash equivalents at the end of the period


    $

    11,427



    $

    6,262











    Non-cash investing and financing activities:









    Reclassification of warrants from liability to equity


    $

    -



    $

    8,655


    Payment for directors, employees and service providers under Stock for Cash Program


    $

    286



    $

    183


     

    *) Represents an amount lower than $1.

     

    DarioHealth Corporate Contact: Joao Mendes-Roter, VP Marketing, joao@mydario.com, 1-347-767-4220

    SOURCE DarioHealth Corp.


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