DarioHealth Reports Third Quarter 2017 Results

CAESAREA, Israel, Nov. 14, 2017 /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 three-month period ended September 30, 2017.

Third Quarter Financial Highlights

• Record revenues of $1,375,000, increased 89% compared to the third quarter of 2016
  
• Sequential quarterly revenue growth of 14% over the second quarter of 2017
  
• 70% of quarterly revenues derived from test strips and other consumables
  
• More than 10,500 Dario™ Blood Glucose Monitoring System devices sold in the U.S. reaching cumulative sales of more than 43,500
  
• Consumable strips growth of 40% over second quarter of 2017
  
• Cash burn decreased by $347,000 or 13% compared to the second quarter of 2017

Recent Key Business Highlights

• Launched its Dario App in Google Play, expanding its U.S. market reach
  
• Launched into the German market
  
• Gained CE Mark for iPhone 7 and iPhone 8 smart glucose meter
  
• Introduction of "Dario Engage" platform; delivers to health providers a personalized and robust solution to offer to their diabetes population

DarioHealth ramped its business-to-consumer market penetration and ended the third quarter of 2017 with an aggregate of 43,500 Dario Blood Glucose Monitoring System devices sold to-date. Key performance indicators of devices sold, active users and usage of consumable test strips all improved and continue to trend in a positive direction.

During the third quarter of 2017, DarioHealth continued to reduce its operating cash burn, demonstrating an improvement of $347,000 over the second quarter of 2017. DarioHealth determines operating cash burn by reference to net cash used in operating activities. DarioHealth also reduced its operating loss by $1.1 million from $4.1 million to $3.0 million. Management believes revenue growth will accelerate and operating losses will continue to decline as its recent initiatives in Android and a business-to-business strategy roll-out begin to gain traction.

DarioHealth continues to evolve and position itself for the future in digital health and personalized data management. The Company is investing in expanding its offerings in order to create greater long-term value.

On the business-to-business (B2B2C) side, DarioHealth is leveraging its direct-to-consumer success, by offering organizations an open platform that digitizes a better clinical approach for targeted healthcare. DarioHealth has officially launched its new corporate www.dariohealth.com website to showcase its first-class capabilities.

The new platform, called Dario Engage, helps healthcare providers in all aspects of user engagement, including enrollment, coaching and ongoing communications with the end-users. With tens of thousands of active users worldwide via its direct-to-consumer efforts, DarioHealth has built up an impressive knowledgebase and will use it to leverage as it expands its reach. The Company expects to partner with additional players that will be able to introduce the DarioHealth platform to payers and the self-insured market in the U.S., providing their users a fully connected and real-time solution combined with coaching services. As the market is transforming to value-based solutions where payers are looking to buy a fully integrated solution, DarioHealth's platform is well positioned to address this need.

Erez Raphael, Chairman and CEO of DarioHealth, commented, "We are pleased with the continued sequential quarterly growth and traction we are gaining in the U.S. It is encouraging to see our margins improve because of our growing customer base of loyal users. With our reduction in operating cash burn as we continue to increase our revenue over the past two quarters, we are proving we are able to scale our business while managing costs.

"We are excited for our near-term opportunities and longer-term prospects as we have positioned ourselves for success with our unique technology and direct marketing strategy. Recent business progress of gaining Android approval, CE Mark for iPhone 7 and iPhone 8 and the introduction of our Dario Engage business-to-business and coaching platform are all very exciting and expected to accelerate our growth over the next few quarters."

Financial Results for the Three Months Ended September 30, 2017:

Revenue for the three months ended September 30, 2017 was $1,375,000, an 89% increase from $728,000 for the three months ended September 30, 2016, and a 14% increase sequentially from the second quarter of 2017. The increase in revenues is mainly a result of continued market penetration into the United States.

Revenues were derived mainly from the sales of Dario™'s components, including the Smart Meter itself, through direct sales to consumers located mainly in the United States and Australia, through our on-line store and through distributors.

Gross profit of $276,000 was recorded in the third quarter ended September 30, 2017, an increase of $200,000 compared to a gross profit of $76,000 in the third quarter of 2016. This represented a gross profit of 20.0% as a result of increase in quantities sold and higher average sale prices, together with an increase in consumable sales. During this quarter the Company recorded a one-time write-off of old production fixtures and related inventories amounting to $102,000 that reduced our gross profit accordingly.

Research and development expenses increased by $138,000, or 21%, to $797,000 for the three months ended September 30, 2017, compared to $659,000 for the three months ended September 30, 2016. This increase was mainly due to increases in salaries.

Sales and marketing expenses increased by $149,000, or 10%, to $1,682,000 for the three months ended September 30, 2017 compared to $1,533,000 for the three months ended September 30, 2016. These increases were mainly due to growth of our sales and marketing activities in the United States and Australia, an increase in costs of online marketing campaigns, the cost related to marketing consultants and the costs associated with subcontractors, employee payroll and stock based compensation.

Operating loss for the three months ended September 30, 2017 increased by $263,000 to $3.0 million, compared to a $2.7 million operating loss in the three months ended September 30, 2016. This increase is mainly due to the increase in our operating expenses partially offset by the increase in the gross profit.

Net loss for the three months ended September 30, 2017 increased by $2.4 million to $3.0 million, compared to a net loss of $0.6 million for the three months ended September 30, 2016. This increase is mainly due to the reduction in financing income from revaluation of warrants.

As of September 30, 2017, cash and cash equivalents totaled $6.3 million.  

Financial Results for the Nine Months Ended September 30, 2017:

Revenue for the nine months ended September 30, 2017 was $3,592,000, an 83% increase from $1,965,000 for the nine months ended September 30, 2016.

Gross profit of $742,000 was recorded for the nine months ended September 30, 2017, an increase of $925,000 compared to a gross loss of $183,000 for the nine months ended September 30, 2016. This represented a gross profit of 20.7% as a result of increase in quantities sold and higher average sale prices, together with an increase in consumable sales. During this quarter the Company recorded a one-time write-off of old production fixtures and related inventories amounting to $102,000 that reduced our gross profit accordingly.

Research and development expenses increased by $0.9 million, or 55%, to $2.5 million for the nine months ended September 30, 2017 compared to $1.6 million for the nine months ended September 30, 2016.

Sales and marketing expenses increased by $2.5 million, or 79%, to $5.7 million for the nine months ended September 30, 2017 compared to $3.2 million for the nine months ended September 30, 2016.

Operating loss for the nine months ended September 30, 2017 increased by $4.0 million to $11.3 million, compared to a $7.3 million operating loss for the nine months ended September 30, 2016.

Financial income of $7.5 million was recorded in the nine months ended September 30, 2017, compared to a financial income of $0.2 million in the nine months ended September 30, 2016. This change was mainly due to reversing the warrant revaluation expense recorded in the fourth quarter of 2016, due to a price protection feature included in warrants issued to investors in March and August 2016. This price protection feature expired on March 8, 2017, and as a result we cancelled the liability related to these warrants by recording financial income of $7.4 million.

Net loss was $3.8 million for the nine months ended September 30, 2017 compared to a loss of $7.0 million for the nine months ended September 30, 2016. The decrease in net loss for the nine months ended September 30, 2017 compared to the nine months ended September 30, 2016 was mainly due to our financial income related to revaluation of warrants.

DarioHealth will host a third quarter 2017 conference call today at 9:00 AM ET.

Conference Call Details:

Date: Tuesday, November 14, 2017
Time: 9:00 AM ET
Dial-in Number: (888) 567-1603
International Dial-in Number: (404) 267-0368

Webcast: http://www.investorcalendar.com/event/2249319824

Participants are recommended 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 February 14, 2018. To listen to the replay, dial (877) 481-4010 (domestic) or (919) 882-2331 (international) and use replay ID 22493. The webcast replay will be available through February 14, 2018.

About DarioHealth Corp.

DarioHealth Corp. (NASDAQ: DRIO) is a leading global digital health company serving tens of thousands of users with dynamic mobile health solutions. We believe people deserve the best tools to manage their treatment, and harnessing big data, we have developed a unique way for our users to analyze and personalize their diabetes management. With our smart diabetes solution, users have direct access to track and monitor all facets of diabetes, without having the disease slow them down. The acclaimed Dario™ Blood Glucose Monitoring System all-in-one blood glucose meter and native smartphone app gives users an unrivaled method for self-diabetes management. DarioHealth is headquartered in Caesarea, Israel with a regional office in Burlington, Massachusetts. 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 it describes expectations for revenue growth and decline in operating losses, expectations for business to consumer and business to business channels, expectations for Dario Engage, and the impact of Android clearance.  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 Corporate Contact:Shmuel Herschberg, Marketing Director, shmuel@mydario.com, +1-914-775-5548

DarioHealth Public Relations Contact:Terese Kelly, Rosica PR, terese@rosica.com, +1-201-843-5600

DarioHealth Investor Relations Contact:Stephen Hart, Hayden IR, DRIO@HaydenIR.com, +1-917-658-7878

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SOURCE DarioHealth Corp.