DarioHealth Corp. (Nasdaq: DRIO) a leader in the global digital health market, today announced its financial results for the third quarter of 2024, highlighting substantial improvements in financial performance and business momentum.
The Company delivered revenue growth and multiple key client wins, laying a solid foundation for 2025. These achievements not only demonstrate continued progress in financial metrics, but also reflect the successful execution of long-term strategic initiatives aimed at driving sustainable growth.
“Our third quarter included strong execution of our multi-year strategic plan of being a profitable provider of comprehensive chronic care management solutions which engage members and improve outcomes at a reduced cost of care,” said Erez Raphael, CEO of Dario. “Our efforts to streamline costs following the Twill merger, combined with revenue growth across multiple channels, have positioned us for ongoing success. We’re seeing clear progress in our transformation, and we remain focused on achieving profitability run rate by the end of 2025.”
The Company reported improvement across all key financial metrics, both sequentially and year-over-year. Q3 revenue reached $7.42 million, an increase of 18.7% from Q2 2024 and a 111% increase compared to Q3 2023, driven primarily by growth in the Company’s core Business-to-Business-to-Consumer (B2B2C) business.
Through continued optimization of revenue channels and a transition to recurring revenue models, gross margins for the B2B2C business rose to 83%, with full business gross margins reaching 52% and pro-forma gross margins reaching 70.3% (on a non-Generally Accepted Accounting Principles (GAAP) basis).
Following the recent acquisition of Twill, Dario implemented focused cost-management strategies, reducing GAAP operating expenses to $15.9 million, a 16% sequential reduction from Q2 2024 and non-GAAP operating expenses to $12.3 million, a 15.9% reduction from Q2 2024.
“We are not just growing; we believe that we are improving the quality and predictability of our revenues,” said Steven Nelson, Chief Commercial Officer at Dario. “Securing 10 new clients this quarter, combined with diversifying our revenue streams, ensures that we are on a path for sustained success in 2025 and beyond.”
The Company reported a 25.7% reduction in GAAP operating losses sequentially, lowering such losses to $12 million, and 33.3% reduction in non-GAAP operating losses, lowering such losses to $7.1 million.
Looking ahead, Dario expects this positive trend in financial performance to continue, driven by ongoing revenue growth, increasing gross margins due to positive mix shift and operating leverage related to our reduced fixed expenses. The Company anticipates a 38% reduction in total operating expenses between Q1 2024 and Q1 2025, alongside a 49% reduction in operating losses and a 59% reduction in non-GAAP operating losses respectively, paving the way to achieve cash flow breakeven run rate by the end of 2025.
Business Highlights
In Q3, the Company enhanced its commercial momentum by securing 10 new clients, positioning itself for strong growth in 2025. Dario focused on not only increasing revenues but also making them more sustainable by diversifying across channels and clients. This effort included transforming the pharma channel—previously the Company’s only non-recurring revenue stream—into a recurring revenue model.
- Health Plans: The Company partnered with National Medicare Health Plan Partners and Twill by Dario to promote healthy aging and launched large-scale cardiometabolic programs in the Medicaid space.
- Employers: Dario signed contracts with seven new employers, primarily for cardiometabolic solutions, and secured its first health system as an employer contract. Additionally, the Company announced a new AARP benefit granting access to millions of AARP members for health and well-being programs starting in January 2025.
- Pharma and Medical Device: Dario closed two new deals, including a major contract with one of the top six global pharmaceutical companies and an agreement with a medical device company. The Company expects these contracts will contribute to revenue in the near term and are structured under the Company’s new “platform services subscription fee” model, offering an annual recurring revenue stream.
Additionally, this quarter marked the completion of the integration of Twill’s capabilities into Dario’s full multi-condition platform. The combined behavioral health, well-being, navigation, and engagement technologies now create the most comprehensive solution in the digital health market under the Dario brand.
“We are excited about the growing opportunities for our artificial intelligence (AI) capabilities, especially as data becomes an increasingly vital asset in our business model,” Erez Raphael added. “By integrating generative AI and microservices, we believe we are poised to revolutionize areas like drug discovery, consumer engagement, and personalization, with our proprietary data setting us up for both internal and external monetization.”
With its market-leading expertise, Dario is well-positioned to capitalize on these emerging trends and continue delivering value to its stakeholders.
Third Quarter 2024 Results Summary
Revenues for the third quarter ended September 30, 2024, were $7.42 million, an 111% increase from $3.52 million for the third quarter ended September 30, 2023, and an increase of 18.7% from $6.26 million for the second quarter of 2024. The increase compared to the quarter ended September 30, 2023, resulted from an increase in revenues from the B2B2C channel and the consolidation of Twill revenues.
B2B2C, employers and health plans recurring revenues for the third quarter ended September 30, 2024, were $5.44 million compared to $1.29 million in the quarter ended September 30, 2023, representing an increase of 320%, and compared to $5.54 million in the second quarter of 2024, representing a decrease of 1.9% sequentially.
Gross profit for the third quarter ended September 30, 2024, was $3.9 million, an increase of $3.3 million or 534%, compared to gross profit of $610,000 for the third quarter of 2023, and an increase of 41% from $2.76 million for the second quarter of 2024. The reason for this increase is the increase in our B2B2C revenues. Gross profit as a percentage of revenues increased to 52.2% in the third quarter of 2024, from 17.3% in the third quarter of 2023, and 44.1% in the second quarter of 2024.
Pro-forma gross profit, excluding $1.34 million of amortization expenses related to the acquisition of technology, was $5.2 million, or 70.3% of revenues, for the three months ended September 30, 2024, compared to pro-forma gross profit of $1.7 million, or 48.8% of revenues, for the three months ended September 30, 2023, and a pro-forma gross profit of $4.0 million, or 63.8% of revenues, for the three months ended June 30, 2024. 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.”
Total operating expenses for the third quarter ended September 30, 2024, were $15.9 million compared to $16.2 million for the third quarter ended September 30, 2023, and $18.9 million for the second quarter of 2024, a decrease of $0.25 million, or 1.5%, compared to the third quarter of 2023, and a decrease of $3 million, or 16%, compared to the second quarter of 2024. The decrease compared to the third quarter ended September 30, 2023, resulted mainly from reduction in operating expenses. The decrease compared to the second quarter of 2024 resulted mainly from a decrease in operating expenses and stock-based compensation expenses.
Total operating expenses excluding stock-based compensation, acquisition related expenses and depreciation for the third quarter of 2024 were $12.3 million compared to $10.9 million for the third quarter of 2023, and $14.7 million for the second quarter of 2024.
Operating loss for the third quarter of 2024 was $12 million, a decrease of $3.5 million, or 23%, compared to $15.5 million for the third quarter of 2023, and a decrease of $4.2 million, or 25.7%, compared to $16.2 million for the second quarter of 2024. The decrease compared to the third quarter of 2023 was due to the increase in the gross profit. The decrease compared to the second quarter of 2024 was mainly due to the decrease in operating expenses.
Financing expenses were $0.3 million for the third quarter of 2024, compared to financing expenses of $0.2 million for the third quarter of 2023. The reason for this increase was due to changes in variable items included in the financing expenses.
Net loss was $12.3 million in the third quarter of 2024, a decrease of $3.4 million, or 21.6%, compared to a net loss of $15.7 million in the third quarter of 2023, and a decrease of $1.3 million, or 9.4%, compared to $13.6 million in the second quarter of 2024.
Net loss excluding stock-based compensation, acquisition related expenses and depreciation for the third quarter of 2024 was $7.4 million compared to a loss of $9.3 million for the third quarter of 2023, and a net loss of $8.1 million in the second quarter of 2024.
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.”
About DarioHealth Corp.
DarioHealth Corp. (Nasdaq: DRIO) is a leading digital health company revolutionizing how people with chronic conditions manage their health through a user-centric, multi-chronic condition digital therapeutics platform. Our platform and suite of solutions deliver personalized and dynamic interventions driven by data analytics and one-on-one coaching for diabetes, hypertension, weight management, musculoskeletal pain and behavioral health.
Our user-centric platform offers people continuous and customized care for their health, disrupting the traditional episodic approach to healthcare. This approach empowers people to holistically adapt their lifestyles for sustainable behavior change, driving exceptional user satisfaction, retention and results and making the right thing to do the easy thing to do.
Dario provides its highly user-rated solutions globally to health plans and other payers, self-insured employers, providers of care and consumers. To learn more about Dario and its digital health solutions, or for more information, visit http://dariohealth.com.
