Core Insights - DarioHealth Corp. reported second quarter 2025 revenue of $5.4 million, down from $6.3 million in Q2 2024 and $6.8 million in Q1 2025, primarily due to a shift in scope with a large national health plan client that was not renewed [1][10][12] - The company is focusing on signing new B2B2C clients to drive sustainable annual recurring revenue (ARR) growth, rather than relying on one-time revenues, which contributed to the revenue decline [2][3] - DarioHealth has adjusted its cash flow breakeven estimates to late 2026 to early 2027, reflecting slower onboarding and revenue recognition from new clients [2][3] Financial Performance - Revenue for Q2 2025 was $5.4 million, a decrease of 14% year-over-year and 20% quarter-over-quarter [10][12] - Gross profit for Q2 2025 was $3.0 million, an increase of 8% year-over-year, with a gross margin of 55%, up from 44% in Q2 2024 [11][12] - Operating loss narrowed by 43% year-over-year to $9.2 million in Q2 2025, with operating expenses decreasing by 36% to $12.2 million [15][24] Strategic Developments - The company signed 21 new clients year-to-date, including a top U.S. healthcare institution and two regional health plans, and is on track to achieve a total of 40 new clients by the end of 2025 [6][12] - DarioHealth is building a recurring revenue business with a strong pipeline of $53 million in commercial opportunities, with over $5 million in advanced stages towards ARR [5][12] - The company is enhancing its AI capabilities to drive operational efficiencies and improve patient engagement, expecting a 15% reduction in operating expenses over the next 12 to 15 months [9][12] Market Position and Future Outlook - DarioHealth is entering the $150 billion sleep apnea market through a partnership with GreenKey Health and has launched a GLP-1 + cardiometabolic solution deal with a national benefit administrator [12][24] - The company anticipates that two new health plan clients will represent multi-million-dollar opportunities, with a full-suite national health plan set to launch in the second half of 2025 [3][6] - DarioHealth's business model is designed for efficient scaling, supported by operational efficiencies and a focus on high-margin, multi-condition platform contracts [5][7]

[PART 1 - FINANCIAL INFORMATION](index=6&type=section&id=PART%201%20-%20FINANCIAL%20INFORMATION) [Item 1. Condensed Consolidated Interim Financial Statements (unaudited)](index=6&type=section&id=Item%201.%20Condensed%20Consolidated%20Interim%20Financial%20Statements%20(unaudited)) This section presents DarioHealth Corp.'s unaudited condensed interim financial statements, including balance sheets, income, equity, and cash flow statements, highlighting continued net losses and going concern doubts [Condensed Consolidated Interim Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Interim%20Balance%20Sheets) Balance Sheet Items (in thousands) | Balance Sheet Items (in thousands) | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Assets** | | | | Cash and cash equivalents | $21,954 | $27,764 | | Total current assets | $32,170 | $40,529 | | Total assets | $108,325 | $118,884 | | **Liabilities & Equity** | | | | Total current liabilities | $9,754 | $16,635 | | Total liabilities | $44,339 | $46,865 | | Total stockholders' equity | $63,986 | $72,019 | - Total assets decreased from **$118.9 million** at the end of 2024 to **$108.3 million** as of June 30, 2025, primarily driven by a reduction in cash and cash equivalents and trade receivables[16](index=16&type=chunk) [Condensed Consolidated Interim Statements of Comprehensive Loss](index=9&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Comprehensive%20Loss) Income Statement (in thousands) | Income Statement (in thousands) | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $5,369 | $6,255 | $12,121 | $12,013 | | Gross profit | $2,964 | $2,756 | $6,846 | $5,188 | | Total operating expenses | $12,164 | $18,947 | $25,455 | $39,234 | | Operating loss | $(9,200) | $(16,191) | $(18,609) | $(34,046) | | Net loss | $(12,990) | $(13,610) | $(22,217) | $(20,785) | | Basic and diluted loss per share | $(0.18) | $(0.08) | $(0.33) | $(0.27) | - Revenues for Q2 2025 decreased by **14.2%** year-over-year, while operating expenses were significantly reduced by **35.8%**, leading to a smaller operating loss compared to Q2 2024[22](index=22&type=chunk) [Condensed Consolidated Interim Statements of Changes in Stockholders' Equity](index=10&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Changes%20in%20Stockholders'%20Equity) - Total stockholders' equity decreased from **$72.0 million** at the end of 2024 to **$64.0 million** as of June 30, 2025. The decrease was primarily driven by the net loss of **$22.2 million** for the six-month period, partially offset by capital raised from stock-based compensation and issuance of preferred stock[24](index=24&type=chunk) [Condensed Consolidated Interim Statements of Cash Flows](index=13&type=section&id=Condensed%20Consolidated%20Interim%20Statements%20of%20Cash%20Flows) Cash Flow Summary (in thousands) | Cash Flow Summary (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | $(12,704) | $(24,473) | | Net cash used in investing activities | $(75) | $(8,881) | | Net cash provided by financing activities | $6,939 | $20,206 | - Cash used in operating activities for the first six months of 2025 was nearly halved compared to the same period in 2024, reflecting improved operational efficiency. Cash from financing activities decreased significantly, primarily due to lower proceeds from preferred stock issuance in 2025 compared to 2024[30](index=30&type=chunk) [Notes to Condensed Consolidated Interim Financial Statements](index=14&type=section&id=Notes%20to%20Condensed%20Consolidated%20Interim%20Financial%20Statements) - The company has incurred recurring losses and negative cash flows since inception, with an accumulated deficit of **$423.0 million** as of June 30, 2025. These conditions raise substantial doubt about its ability to continue as a going concern[35](index=35&type=chunk)[36](index=36&type=chunk) - On April 30, 2025, the company refinanced its debt with a new credit agreement from Callodine Commercial Finance for up to **$50 million**, initially borrowing **$32.5 million**. This new facility matures in April 2030[76](index=76&type=chunk)[172](index=172&type=chunk) - As of June 30, 2025, the company did not meet one of the financial covenants under the new Callodine credit agreement and has notified the lender of its intention to utilize an equity cure to address the event of default[84](index=84&type=chunk)[85](index=85&type=chunk) - Revenue from the Commercial B2B2C channel, a key strategic area, decreased to **$3.5 million** in Q2 2025 from **$5.5 million** in Q2 2024[55](index=55&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=51&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses the company's whole-person digital health platform, analyzing Q2 and H1 2025 financial performance, noting decreased Q2 revenue, improved gross margin, reduced operating expenses, recent debt refinancing, and ongoing liquidity challenges [Business Overview](index=51&type=section&id=Business%20Overview) - DarioHealth operates as a global digital health company with a mission to deliver a comprehensive, whole-person health platform that integrates physical health (chronic conditions like diabetes, hypertension) and mental health needs[159](index=159&type=chunk)[161](index=161&type=chunk)[162](index=162&type=chunk) - The company's business model targets four primary market segments: Direct-to-Consumer (D2C), medium-to-large employers, health plans, and pharmaceutical companies, with B2B channels now accounting for **three-fourths** of revenues[166](index=166&type=chunk) [Recent Developments](index=53&type=section&id=Recent%20Developments) - The company added **21** new clients in the first half of 2025, progressing towards its annual goal of **40** new clients[171](index=171&type=chunk) - On May 1, 2025, DarioHealth closed a new debt financing facility for up to **$50 million** with Callodine, drawing an initial **$32.5 million** to refinance existing debt and provide operational flexibility[172](index=172&type=chunk) - In June 2025, the company announced a strategic commercial agreement with GreenKey Health to expand its solutions into the sleep apnea market[180](index=180&type=chunk) [Results of Operations](index=57&type=section&id=Results%20of%20Operations) Metric (in thousands) | Metric (in thousands) | Q2 2025 | Q2 2024 | Change | | :--- | :--- | :--- | :--- | | Revenues | $5,369 | $6,255 | -14.2% | | Gross Profit | $2,964 | $2,756 | +7.5% | | Gross Margin | 55.2% | 44.1% | +11.1 ppt | | Operating Expenses | $12,164 | $18,947 | -35.8% | | Net Loss | $(12,990) | $(13,610) | -4.6% | - The decrease in Q2 2025 revenue was primarily due to a decline in revenues from the pharma channel[182](index=182&type=chunk) - Operating expenses across R&D, Sales & Marketing, and G&A all saw significant year-over-year decreases, attributed mainly to efficiency and post-merger integration activities resulting in lower payroll and consulting expenses[187](index=187&type=chunk)[189](index=189&type=chunk)[191](index=191&type=chunk) [Non-GAAP Financial Measures](index=61&type=section&id=Non-GAAP%20Financial%20Measures) Non-GAAP Adjusted Loss (in thousands) | Non-GAAP Adjusted Loss (in thousands) | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Net loss - as reported | $(12,990) | $(13,610) | $(22,217) | $(20,785) | | Non-GAAP adjusted loss | $(6,363) | $(10,671) | $(12,174) | $(19,749) | - The Non-GAAP adjusted loss, which excludes items like stock-based compensation and revaluation of warrants, showed significant improvement, decreasing by **39%** for the second quarter and **38%** for the first six months of 2025 compared to the prior year periods[203](index=203&type=chunk) [Liquidity and Capital Resources](index=65&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the company had **$22.0 million** in cash and cash equivalents, down from **$27.8 million** at the end of 2024[204](index=204&type=chunk) - Management has concluded that the current cash on hand is insufficient to fund projected operating requirements for the next twelve months, which raises substantial doubt about the company's ability to continue as a going concern[235](index=235&type=chunk) - The company has a significant present need for capital and may be unable to continue activities without material alterations to its business plan if additional funding is not secured[235](index=235&type=chunk) [Cash Flows](index=73&type=section&id=Cash%20Flows) Cash Flow (in thousands) | Cash Flow (in thousands) | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Cash used in operating activities | $(12,704) | $(24,473) | | Cash used in investing activities | $(75) | $(8,881) | | Cash provided by financing activities | $6,939 | $20,206 | - Net cash used in operating activities decreased by **48.1%** in the first half of 2025 compared to the same period in 2024, mainly due to a decrease in operating expenses from efficiency and post-merger integration activities[238](index=238&type=chunk) [Item 4. Controls and Procedures](index=73&type=section&id=Item%204.%20Control%20and%20Procedures) Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting identified during the quarter - The company's CEO and CFO concluded that as of June 30, 2025, disclosure controls and procedures were effective at a reasonable assurance level[242](index=242&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[243](index=243&type=chunk) [PART II - OTHER INFORMATION](index=76&type=section&id=PART%20II%20-%20OTHER%20INFORMATION) [Item 1A. Risk Factors](index=76&type=section&id=Item%201A.Risk%20Factors) This section highlights key risks, including revenue concentration, geopolitical risks from Israel operations, substantial doubt about going concern due to insufficient cash, potential debt covenant breaches, and extreme stock price volatility with Nasdaq delisting risk - A major customer accounted for **16.4%** of accounts receivable and **9.3%** of revenue in Q2 2025, posing a significant concentration risk[249](index=249&type=chunk) - The company's current cash on hand is not sufficient to fund projected operating requirements for the next year, raising substantial doubt about its ability to continue as a going concern[255](index=255&type=chunk) - As of June 30, 2025, the company was not in compliance with a financial covenant under its Credit Agreement and is pursuing an equity cure, the success of which is not guaranteed[259](index=259&type=chunk) - The company is not in compliance with Nasdaq's minimum bid price requirement of **$1.00** per share and has until September 15, 2025, to regain compliance or face delisting[264](index=264&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=82&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) During Q2 2025, the company issued **525,000** common shares to service providers as compensation, claiming exemption from registration under Section 4(a)(2) of the Securities Act - In Q2 2025, the company issued **525,000** shares of common stock to certain service providers as compensation in lieu of cash, claiming exemption from registration under Section 4(a)(2) of the Securities Act[268](index=268&type=chunk) [Item 5. Other Information](index=82&type=section&id=Item%205.%20Other%20Information.) On August 8, 2025, following stockholder approval, the company increased its authorized common stock from **160 million** to **400 million** shares by filing a Certificate of Amendment - On August 8, 2025, the company increased its authorized common stock from **160 million** to **400 million** shares after receiving stockholder approval[269](index=269&type=chunk)[270](index=270&type=chunk) [Item 6. Exhibits](index=83&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Form 10-Q, including amendments to the Certificate of Incorporation, preferred stock designations, officer certifications, and XBRL data files - The report includes several filed exhibits, such as the Certificate of Amendment to increase authorized shares, various amended certificates for preferred stock, and required officer certifications under Sarbanes-Oxley[274](index=274&type=chunk)

Core Viewpoint - DarioHealth Corp. will release its financial results for the second quarter of 2025 on August 12, 2025, and will host a conference call to discuss these results [1][2]. Company Overview - DarioHealth Corp. is a leader in the digital health market, focusing on chronic condition management through a user-centric digital therapeutics platform [4]. - The platform provides personalized interventions driven by data analytics and coaching for conditions such as diabetes, hypertension, weight management, musculoskeletal pain, and behavioral health [4]. Conference Call Details - The conference call is scheduled for August 12, 2025, at 8:30 a.m. Eastern Time, with dial-in options for domestic and international participants [3]. - A replay of the call will be available approximately three hours after the event and can be accessed until August 26, 2025 [3]. User-Centric Approach - DarioHealth's platform offers continuous and customized care, aiming to disrupt traditional episodic healthcare approaches [5]. - This approach promotes sustainable behavior change and enhances user satisfaction and retention [5]. Global Reach - DarioHealth provides its solutions to health plans, self-insured employers, care providers, and consumers globally [6].

Core Viewpoint - DarioHealth Corp. and GreenKey Health have formed a strategic partnership to address the $150 billion sleep apnea market, which affects over 29 million Americans, by providing an integrated chronic care solution that combines behavioral health, sleep, and cardiometabolic care [1][4]. Group 1: Collaboration Details - The collaboration combines Dario's AI-powered health solutions with GreenKey's sleep-first approach to obstructive sleep apnea management [2]. - The immediate focus is on engaging large payers and building a national network of service providers through targeted outreach and thought leadership [3]. - The partnership aims to secure payer contracts and enhance awareness through a multi-channel marketing plan targeting various healthcare plans and self-funded employers [2][3]. Group 2: Market Opportunity - The sleep apnea market is significant, with up to 80% of moderate to severe cases undiagnosed, leading to over $150 billion in annual costs due to related health issues [4]. - There is a growing demand for integrated solutions as payers shift towards value-based care, which the collaboration aims to fulfill [4]. Group 3: Expected Outcomes - The joint solution is designed to improve member health outcomes, reduce healthcare costs, and increase productivity through better sleep health and effective comorbidity management [6]. - The collaboration is expected to provide actionable data insights to continuously optimize program performance [6]. - By aligning behavioral health and sleep strategies with cardiometabolic interventions, the partnership offers a comprehensive approach to chronic care management [5].

Company Overview and Investment Thesis - DarioHealth Corp offers a comprehensive and unified product offering, covering 6 conditions with navigation technology[9] - The company leverages massive data assets, having invested in understanding and evaluating over 13 billion user data points[9] - The company operates in a fast-growing industry with over $170 billion market opportunity[9] - The company provides significant value to payers, with a concrete 5X ROI (over $5,000 ROI per user from 89 studies)[10] Market and Solution - Chronic diseases account for 75% of aggregate US healthcare spending[12] - 60% of adults in the US have a chronic disease, and 40% have two or more[12] - The company's solution supports member needs across multiple conditions on one integrated digital platform[17] Growth and Financial Performance - The company's B2B revenue growth exceeds 6x with 85+ customers added since 2020[10] - The company's B2B2C revenue trajectory has grown significantly, reaching $21.8 million in 2024 Q3 RR[35] - The company is executing a faster path to profitability, targeting 2H 2025, one year faster than the original target[65] - The company has achieved significant synergies post-Twill acquisition, with a 111% increase in revenue and a 23% reduction in operating loss in Q3 2024 (GAAP)[67]

Core Insights - DarioHealth Corp. has presented new research demonstrating sustained outcomes for GLP-1 users and an 89% accuracy in AI-driven blood glucose predictions, indicating the company's strong position in the digital health market [1][2][6] Group 1: Research Findings - A significant reduction in eA1c levels from 9.0% to 6.7% was observed in GLP-1 users, with sustained results for six months post-medication discontinuation [2][8] - Users of Dario's platform maintained stable outcomes without significant weight or glucose rebound after stopping GLP-1 medication, addressing a critical challenge in chronic condition management [4][8] - The studies highlight the importance of integrated digital tools in enhancing medication adherence and optimizing health outcomes [5][6] Group 2: AI and Personalization - Dario's AI research achieved an 89% accuracy in predicting future blood glucose levels, utilizing user behavior and activity data [7][10] - The company's next-generation AI platform aims to provide personalized interventions based on real-time behaviors and clinical data, enhancing chronic condition management [6][9] - Age was identified as a significant factor influencing outcomes, with older adults showing stronger results through increased engagement in lifestyle activities [14] Group 3: Commercial Strategy - Dario is actively leveraging its research findings in discussions with payers and self-insured employers to offer integrated solutions for chronic condition management, particularly in GLP-1 optimization [3][10] - The company believes its platform can maximize return on investment for health plans and employers implementing GLP-1 programs, thereby enhancing commercial value [6][10]

Financial Data and Key Metrics Changes - In Q1 2025, the company reported revenue of $6.75 million, a 17% increase year-over-year driven by recurring revenue growth from B2B2C channels [10] - Non-GAAP gross margins improved to 70.5%, up from 62.4% in Q1 2024, while core B2B2C business maintained gross margins above 81% for four consecutive quarters [12][35] - Non-GAAP operating loss decreased from $9.1 million to $5.8 million year-over-year, representing a 36% reduction [13] Business Line Data and Key Metrics Changes - The company signed 14 new clients in Q1 2025, including one national health plan, one regional health plan, and 12 employers, increasing the total client base to 97 from 83 at the end of 2024 [12][19] - Over 80% of new contracts are multi-condition, with an average contract length of three years and a renewal rate above 90% [12][19] Market Data and Key Metrics Changes - The market is shifting towards whole person digital health and platform consolidation, with employers and health plans seeking trusted partners for multi-condition care [8][20] - The company is actively engaged with multiple national and regional payers, with discussions ongoing for high-value long-term contracts [25] Company Strategy and Development Direction - The company is focused on executing a strategy centered on platform differentiation, client quality, and commercial scalability [11] - The integration of Twilio has strengthened the company's position, allowing it to support five chronic conditions under a unified brand [7][8] - The company aims to achieve operational cash flow breakeven by the end of 2025, supported by existing account extensions and new contracts [17][36] Management's Comments on Operating Environment and Future Outlook - Management noted a broader reset in the digital health market, emphasizing the importance of sustainable outcomes-driven business models [36] - The company is confident in its ability to drive sustained commercial growth and deliver measurable impact, with a robust pipeline of employer expansions and health plan launches expected in 2026 [32][34] Other Important Information - The company completed an equity raise and refinanced its debt, deferring debt amortization to 2028, which provides financial flexibility [17] - The leadership team has been strengthened with new appointments, enhancing execution and cross-functional alignment [16] Q&A Session Summary Question: Can you explain the timeline delays related to tariffs? - Management explained that delays were due to a large account transforming its offering and some specific partnerships affected by tariff issues, which impacted revenue expectations [42][43] Question: How is the partnership with RULA Health rolling out? - The company has begun systematic integration with existing clients, with positive adoption and plans for broader campaigns [48][49] Question: What is the path to cash flow breakeven by year-end? - Management indicated that achieving breakeven will be a combination of revenue growth and further reductions in operating expenses [51][53] Question: Can you provide an update on large pharma activities? - Management confirmed ongoing discussions with large pharma companies, with new contracts expected to contribute revenue in Q2 or Q3 [59][61] Question: How is the company managing contract transitions? - Management clarified that most contracts are being renewed, and transitions to different revenue models are not resulting in client losses [66][68]

Financial Data and Key Metrics Changes - In Q1 2025, the company reported revenue of $6.75 million, a 17% increase year over year driven by recurring revenue growth from B2B2C channels [11] - Non-GAAP gross margins improved to 70.5%, up from 62.4% in Q1 2024, with core B2B2C business sustaining above 81% gross margins for four consecutive quarters [14][37] - Non-GAAP operating loss decreased from $9.1 million to $5.8 million year over year, representing a 36% reduction [14] Business Line Data and Key Metrics Changes - The company signed 14 new clients in Q1 2025, including one national health plan, one regional health plan, and 12 employers, increasing the total client base to 97 from 83 at the end of 2024 [13][21] - Over 80% of new contracts are multi-condition, with an average contract length of three years and a renewal rate above 90% [13][21] Market Data and Key Metrics Changes - The market is shifting towards whole person digital health and platform consolidation, with employers and health plans seeking trusted partners for multi-condition care [9][22] - The company is actively engaged with multiple national and regional payers, with two top-tier health plans evaluating the full suite platform for deployment in 2026 [27][28] Company Strategy and Development Direction - The company is focused on executing a strategy centered on platform differentiation, client quality, and commercial scalability, leveraging AI to enhance operational efficiency and member engagement [15][33] - The integration of Twilio has strengthened the company's position in the industry, allowing it to support five chronic conditions under a unified brand [7][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving operational cash flow breakeven run rate by the end of 2025, supported by existing account extensions and a deep pipeline of near-term opportunities [19][38] - The company is optimistic about the reset in the digital health market, emphasizing the importance of clinical credibility and financial discipline [38][40] Other Important Information - The company completed an equity raise and refinanced its debt, deferring debt amortization to 2028, which provides financial flexibility [19] - The leadership team has been strengthened with new appointments, enhancing execution and cross-functional alignment [18] Q&A Session Summary Question: Can you explain the timeline delays related to tariffs? - Management indicated that delays were due to a large account transforming its offering and some specific partnerships affected by tariff issues, which impacted revenue expectations [44][45] Question: How is the partnership with RULA Health rolling out? - The integration with RULA Health is underway, with initial adoption by a few clients and plans for broader campaigns [51][52] Question: What will drive the path to cash flow breakeven? - Achieving breakeven will be a combination of revenue growth and further reductions in operating expenses, with a focus on increasing gross margins from B2B2C business [54][56] Question: Can you provide an update on large pharma activities? - The company has signed new deals with large pharma companies, including Sanofi, and expects these to contribute revenue in Q2 or Q3 [62][65] Question: What is the impact of cleaning up contracts on revenue? - Most contracts are renewed, but transitioning to different revenue models for some accounts has created temporary headwinds [70][72]

Core Insights - DarioHealth Corp. reported a revenue of $6.75 million for Q1 2025, marking a 17% increase year-over-year but an 11.2% decrease sequentially due to a shift in scope with a large national health plan client [2][12][5] - The company is strategically positioned to capitalize on trends in healthcare, including the expansion of GLP-1 therapies and the integration of AI in healthcare solutions [2][3] - DarioHealth signed 14 new clients year-to-date, increasing its total client count to 97, with over 80% of new contracts being multi-condition [3][5] Financial Performance - Gross margin improved to 57.5% on a GAAP basis and 70.5% on a non-GAAP basis, reflecting operational efficiencies [4][5] - Total operating expenses decreased by 35% year-over-year to $13.3 million, with non-GAAP operating expenses at $10.6 million [4][17] - The GAAP operating loss decreased by 47% to $9.4 million compared to Q1 2024, while the non-GAAP operating loss narrowed to $5.8 million [7][19] Strategic Initiatives - The company is undergoing an AI transformation aimed at automating workflows and reducing costs, with an expected further 15-20% reduction in operating expenses over the next 12-18 months [6][11] - DarioHealth is focusing on building durable, recurring revenue through high-quality collaborations while phasing out low-margin business [8][9] - Key collaborations have been established to expand Dario's multi-condition offerings, enhancing its value-based care model [9][14] Leadership and Operational Focus - DarioHealth has strengthened its executive leadership team, which is focused on improving execution and operational efficiency [10] - The company has refinanced its debt and raised equity, enhancing its balance sheet and extending its cash runway [11][21] - DarioHealth aims to achieve operational cash flow breakeven by the end of 2025, supported by existing account expansions and new contract wins [5][11]

Financial Performance - Total revenues for Q1 2025 were $6.752 million, a 17.3% increase from $5.758 million in Q1 2024[22] - Gross profit for Q1 2025 was $3.882 million, compared to $2.432 million in Q1 2024, reflecting a significant improvement[22] - Operating loss for Q1 2025 was $9.409 million, reduced from $17.855 million in Q1 2024, indicating better cost management[22] - Net loss attributable to common shareholders for Q1 2025 was $14.066 million, compared to $9.209 million in Q1 2024, showing an increase in losses[22] - For the three months ended March 31, 2025, DarioHealth reported a net loss of $9,227,000, compared to a net loss of $7,175,000 for the same period in 2024, indicating an increase in losses of approximately 28.6%[27] - The company recorded tax expenses of $22 thousand for the three months ended March 31, 2025, compared to income tax of $1,994 thousand for the same period in 2024, reflecting a decrease of approximately 98.90%[128]. - The basic net loss per share for common stock was $(0.14) for the three months ended March 31, 2025, compared to $(66.78) for the same period in 2024, showing an improvement of approximately 79.09%[132][134]. Cash Flow and Liquidity - Cash and cash equivalents as of March 31, 2025, were $27.854 million, slightly up from $27.764 million at the end of 2024[16] - The company used approximately $6,673,000 in cash for operating activities during the three months ended March 31, 2025, a decrease from $13,110,000 used in the same period in 2024, reflecting a 49.1% improvement in cash flow usage[27] - DarioHealth's cash, cash equivalents, and restricted cash at the end of the period were $27,854,000, down from $35,041,000 at the end of March 2024, representing a decrease of 20.5%[27] - The company intends to fund future operations through cash on hand and additional offerings of debt or equity securities, highlighting the need for ongoing capital[29] Assets and Liabilities - Total current liabilities increased to $19.155 million as of March 31, 2025, from $16.635 million at the end of 2024[19] - Total assets decreased to $115.600 million as of March 31, 2025, down from $118.884 million at the end of 2024[16] - DarioHealth has an accumulated deficit of $404,409,000 as of March 31, 2025, indicating ongoing financial challenges since inception[29] - The allowance for credit losses increased from $163,000 at the beginning of the period to $191,000 by the end of March 31, 2025, reflecting a rise of 17.2%[40] Revenue Breakdown - Revenue from Commercial - Business-to-Business-to-Consumer (B2B2C) increased to $4,737,000 in Q1 2025 from $3,470,000 in Q1 2024, a growth of 36.5%[52] - DarioHealth's major customer accounted for 19.1% of the company's revenue for the three months ended March 31, 2025, compared to 8.5% and 16.5% for the same period in 2024[40] - The Company recognized a price concession of $1,088,000 in fiscal year 2024, which was recorded as a reduction in revenue[50] - The Company expects to recognize approximately $1,305,000 in deferred revenue over the next 12 months[54] Stock and Equity - The company raised approximately $22,422,000 from the issuance of 17,307 Series C, 4,000 Series C-1, and 1,115 Series C-2 preferred shares at a purchase price of $1,000 per share[99] - The company accounted for deemed dividends of $2,194,000 and $744,000 for the Series C, C-1, and C-2 preferred stock for the three-month periods ended March 31, 2025, and March 31, 2024, respectively[101] - The company issued 7,055 and 11,750 Series D and D-1 preferred shares in December 2024, raising approximately $18,805,000[101] - As of March 31, 2025, there were 25,605 shares of Series D, D-1, D-2, and D-3 preferred stock outstanding, convertible into approximately 36,533,135 shares of Common Stock[113] - The company modified the terms of Series B, B-1, and B-3 preferred shares, resulting in a deemed contribution of $12,194,000[109] Expenses - Research and development expenses for Q1 2025 were $4.108 million, down from $6.642 million in Q1 2024, indicating a focus on cost reduction[22] - The total stock-based compensation expenses for the three-month period ended March 31, 2025, amounted to $2,342,000, compared to $6,858,000 for the same period in 2024[122] - During the three months ended March 31, 2025, the Company recorded share-based compensation expenses of $65 related to a consulting firm[96] - The company recorded share-based compensation expenses of $893,000 for the three-month period ended March 31, 2024, and $0 for the same period in 2025[99] Debt and Financing - The Company refinanced its existing $25,000,000 credit facility to a new $30,000,000 facility on May 1, 2023[59] - The interest rate on the Avenue Loan Facility is set at the higher of 4.50% plus the prime rate or 12.50%[60] - The Company recorded remeasurement expenses related to the Avenue Loan of $270,000 for the three months ended March 31, 2025[66] - The Company refinanced its existing $30,000 credit facility with a new $32,500 credit agreement, allowing for an additional draw of up to $17,500[138] - The additional $17,500 Term Loan includes $2,500 subject to revenue and gross margin thresholds and $15,000 at the discretion of the Agent and Lenders[138] Shareholder Actions - The Compensation Committee approved a grant of 575,000 restricted shares of Common Stock and warrants to purchase up to 1,050,000 shares of Common Stock in February 2025[97] - The Company appointed Chen Franco-Yehuda as CFO, issuing her 500,000 restricted shares vesting over three years[138] - Stockholders approved the issuance of 33,956,850 shares of Common Stock from the conversion of 25,605 shares of Series D Preferred Stock[138] Miscellaneous - The Company has a liability to pay future royalties to the Israeli Innovation Authority amounting to 3% of sales from related products, totaling $954 as of March 31, 2025[88] - The Company recorded remeasurement income of $1,085 and $9,156 related to the Pre-Funded Warrants for the three-month periods ended March 31, 2025, and March 31, 2024, respectively[75] - The fair value of the Avenue Loan Facility was estimated using a discount rate of 19% as of March 31, 2025[82] - The fair value of the Orbimed Warrant liability was estimated using the Monte-Carlo simulation valuation technique, with a stock price of $0.61 and volatility of 88.4% as of March 31, 2025[84]