DarioHealth Reports Strong Second Quarter 2021 Results and Operational Highlights
NEW YORK, Aug. 16, 2021 /PRNewswire/ -- DarioHealth Corp. (Nasdaq: DRIO), a pioneer in the global digital therapeutics market, today reported financial results for the second quarter of 2021 and provided a corporate and commercial update.
"During the second quarter and subsequent period, we saw increasing demand for our integrated multi condition digital therapeutics solution, driven in part by the expansion of our metabolic offering into musculoskeletal and pain conditions through the acquisition of Upright Technologies in February 2021 and into behavioral health through the acquisition of wayForward in June 2021," stated Erez Raphael, Chief Executive Officer of Dario. "We believe Dario's offering is the most comprehensive, fully-integrated hyper personalized digital therapeutics suite in the industry, as demonstrated by customer acceptance, and now market acceptance, as well as the fact that approximately two-thirds of our expanded sales pipeline is made of opportunities that include our complete chronic condition management platform."
"At the same time, the execution of our long term strategic operating plan resulted in several new employer clients, further penetration into the rapidly growing provider's remote patient monitoring (RPM) market, and we believe that a health plan contract is imminent. Equally as important, Dario continues to on-board new patients efficiently and enrollment trends remain strong. We believe that this bodes well for new clients anticipated throughout the remainder of the third and fourth quarter this year."
"We had solid financial performance, with Q2 2021 total revenue growth of 46% sequentially from the first quarter of 2021 and 194% over the comparable period in 2020. We also drove significant pro-forma gross profit margin expansion, to 49.4% in the second quarter of 2021, a sequential increase from 44.7% in the first quarter of 2021. Gross margin should continue to improve with scale due to our SaaS business model and Business-to-Business-to-Consumer (B2B2C) transformation. Finally, our balance sheet remains very strong, with $63.9 million of cash as of June 30, 2021. We believe that we are well funded to execute on our multi-faceted growth plan," Mr. Raphael concluded.
"Our integrated multi-condition digital therapeutics suite serves the ever-growing need of providers, employers, and health plans, a fact that is reflected in the continued growth of our pipeline, which now stands at more than $900 million and is buoyed by incremental growth in our employer pipeline. We are encouraged by the shift we have seen in our pipeline of healthcare providers from interest in point solutions for specific chronic conditions to demand for a hyper-personalized holistic, integrated service for chronic disease management. This trend leverages our sales effort not only by delivering the right multi-condition, single platform solution at the right time, but also by increasing the percentage of covered patients addressable by Dario's platform several fold," stated Rick Anderson, President and General Manager of North America. "We anticipate the first integration of musculoskeletal (MSK) into the Dario platform in the third quarter of 2021, and behavioral health in the fourth quarter of 2021, setting us up for what I anticipate will be a successful second half of the year and significant sales momentum heading into 2022."
Q2 2021 and Recent Highlights
Second Quarter 2021 Results Summary
Revenues for the second quarter ended June 30, 2021, were $5.26 million, a 46% sequential increase from first quarter ended March 31, 2021, and a 194% increase from the $1.8 million in the second quarter ended June 30, 2020.
Gross profit in the second quarter of 2021 was $1,508,000, an increase of $872,000, or 137%, compared to gross profit of $636,000 in the second quarter of 2020. Gross profit margin was 28.7% in the second quarter of 2021 as compared to 35.6% in the second quarter of 2020.
Pro-forma gross profit, excluding $1,092,000 of amortization of expenses related to the acquisition of Upright Technologies and wayForward, was $2.6 million. Pro-forma gross profit margin, excluding amortization of expenses related to the acquisition of Upright Technologies and wayForward, was 49.4% in the second quarter of 2021, a sequential increase from 44.7% in the first quarter of 2021.
Operating loss for the second quarter of 2021 was $18 million, an increase of $13.9 million, or 337%, compared to the $4.1 million operating loss in the second quarter of 2020. This increase was mainly due to the increase in our operating expenses.
Net loss was $17.8 million in the second quarter of 2021, an increase of $13.8 million, or 343%, compared to the $4 million net loss in the second quarter of 2020.
Non-Generally Accepted Accounting Principles (Non-GAAP) adjusted net loss for the three months ended June 30, 2021, was $10.6 million an increase of $7.5 million, or 239%, compared to the $3.1 million non-GAAP adjusted net loss in the second quarter of 2020.
Cash and cash equivalents totaled $63.9 million on June 30, 2021.
Non-GAAP billings for the three months ended June 30, 2021 were $5.13 million, a 186% increase from $1.79 million reported in the three months ended June 30, 2020. The increase is a result of higher sales generated and the consolidation of Upright revenues in the three months ended June 30, 2021, compared to the three months ended June 30, 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."
Financial Results for the Six Months Ended June 30, 2021:
Revenue for the six months ended June 30, 2021, was $8.9 million, a 156% increase from $3.5 million for the six months ended June 30, 2020.
Gross profit of $2.6 million was recorded for the six months ended June 30, 2021, an increase of 83%, or $1.2 million, compared to gross profit of $1.4 million for the six months ended June 30, 2020.
Pro-forma gross profit, excluding $1,618,000 of amortization of expenses related to the acquisition of Upright Technologies and WayForward, was $4.2 million. Pro-forma gross profit margin, excluding amortization of expenses related to the acquisition of Upright Technologies and WayForward, was 47.5% in the six months ended June 30, 2021.
Total operating expenses for the six months ended June 30, 2021, were $34.9 million, an increase of $19.3 million, or 123%, compared with $15.6 million for the six months ended June 30, 2020. The increase resulted from an increase in our research and development activities, sales and marketing expenses, stock-based compensation and from the consolidation of Upright Technologies and WayForward.
Operating loss for the six months ended June 30, 2021, increased by $18.1 million to $32.3 million, compared to a $14.2 million operating loss for the six months ended June 30, 2020. This increase is mainly due to the increase in our operating expenses.
Net loss was $32.7 million for the six months ended June 30, 2021, compared to a net loss of $13.9 million for the six months ended June 30, 2020. The reason for the was mainly due to an increase in operating expenses.
Non-GAAP billings for the six months ended June 30, 2021, were $8.8 million, a 152% increase from $3.5 million in the six months ended June 30, 2020.
Non-GAAP adjusted net loss for the six months ended June 30, 2021, was $19.8 million, a 184% increase from a $7.0 million non-GAAP adjusted net loss for the six months ended June 30, 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: Monday, August 16, 8:30am ET
Dial-in Number: 877-451-6152
International Dial-in: 201-389-0879
Conference ID: DarioHealth Second Quarter 2021 Results Call
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 September 16, 2021. To listen to the replay, dial 844-512-2921 (domestic) or 412-317-6671 (international) and use replay passcode 13722168. The webcast replay will be available for two months.
An updated corporate presentation can be found at https://dariohealth.investorroom.com/
About DarioHealth Corp.
DarioHealth Corp. (Nasdaq: DRIO) is a leading global digital therapeutics company revolutionizing how people with chronic conditions manage their health. DarioHealth offers one of the most comprehensive digital therapeutics solutions on the market - covering multiple chronic conditions including diabetes, hypertension, weight management, musculoskeletal and behavioral health within one integrated technology platform.
Dario's next-generation, AI-powered, digital therapeutic platform supports more than just an individual's disease. Dario provides adaptive, personalized experiences that drive behavior change through evidence-based interventions, intuitive, clinically proven digital tools, high-quality software, and coaching to help individuals improve health and sustain meaningful outcomes.
Dario's unique user-centric approach to product design and engagement creates an unparalleled experience that is highly rated by users and delivers sustainable results.
The company's cross-functional team operates at the intersection of life sciences, behavioral science, and software technology and utilizes a performance-based approach to improve its users' health.
On the path to better health, Dario makes the right thing to do the easy thing to do. To learn more about DarioHealth and its digital health solutions, or for more information, visit http://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 execute on its multi-faceted growth plan, that it offers the most comprehensive, fully-integrated hyper personalized digital therapeutics suit in the industry, the expected timing and execution of its health plan contract, its expectation that the new employer client contracts will contribute to revenue and the timing of the integration of MSK and behavioral health on the Dario platform. 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 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.
Cost of revenues (non-GAAP). Our presentation of non-GAAP cost of revenues excludes stock-based compensation expenses, amortization of acquisition related expenses and depreciation of fixed assets. 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.
Operating expenses (non-GAAP). Our presentation of non-GAAP operating expenses excludes stock-based compensation expenses and acquisition costs. 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, acquisition costs, amortization of acquisition related expenses and depreciation of fixed assets. We believe these measures provide useful information to management and investors for analysis of our operating results.
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