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DarioHealth(DRIO) - 2024 Q2 - Quarterly Report
DRIODarioHealth(DRIO)2024-08-08 10:05
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Financial Performance - Total revenues for Q2 2024 reached 6,255,000,aslightincreaseof1.686,255,000, a slight increase of 1.68% compared to 6,152,000 in Q2 2023[14]. - Gross profit for Q2 2024 was 2,756,000,upfrom2,756,000, up from 2,074,000 in Q2 2023, representing a 32.9% increase[14]. - Operating expenses increased to 18,947,000inQ22024,comparedto18,947,000 in Q2 2024, compared to 16,094,000 in Q2 2023, reflecting a 17.3% rise[14]. - The net loss for Q2 2024 was 13,610,000,animprovementfromanetlossof13,610,000, an improvement from a net loss of 16,585,000 in Q2 2023, indicating a 17.8% reduction in losses[14]. - For the six months ended June 30, 2024, the company reported a net loss of 20,785,comparedtoanetlossof20,785, compared to a net loss of 29,410 for the same period in 2023, indicating an improvement in financial performance[18]. - The company’s total revenues for the six months ended June 30, 2024, were 12.013million,comparedto12.013 million, compared to 13.218 million for the same period in 2023[61]. - The net loss for the six months ended June 30, 2024, was 20,785,adecreaseof20,785, a decrease of 8,625 compared to a net loss of 29,410forthesameperiodin2023[150].AssetsandLiabilities−Totalassetsincreasedto29,410 for the same period in 2023[150]. Assets and Liabilities - Total assets increased to 122,134,000 as of June 30, 2024, compared to 96,389,000onDecember31,2023,representingagrowthofapproximately26.796,389,000 on December 31, 2023, representing a growth of approximately 26.7%[9]. - Total current liabilities rose to 17,416,000 from 12,493,000,anincreaseofabout39.012,493,000, an increase of about 39.0%[12]. - Stockholders' equity increased to 68,055,000 from 58,144,000,reflectingagrowthofapproximately16.958,144,000, reflecting a growth of approximately 16.9%[13]. - Cash and cash equivalents decreased to 22,938,000 from 36,797,000,adeclineofabout37.736,797,000, a decline of about 37.7%[9]. - The accumulated deficit as of June 30, 2024, stands at 363,474, reflecting the ongoing financial challenges faced by the company[22]. - The company experienced a cash outflow of 24,473fromoperatingactivitiesforthesixmonthsendedJune30,2024,comparedtoanoutflowof24,473 from operating activities for the six months ended June 30, 2024, compared to an outflow of 14,393 in the prior year[18]. Revenue Recognition and Accounting - The Company recognizes revenue from tangible hardware upon transfer of control, typically at shipment, and recognizes revenue from fixed-price services ratably over the contract period[32]. - Revenue from the newly acquired Twill platform is recognized over time, as customers simultaneously receive and consume the benefits provided by the Company's performance[35]. - The Company applies ASC 606 for revenue recognition, which includes identifying contracts, performance obligations, and determining transaction prices[29]. - The balance of deferred revenues as of June 30, 2024, was 1,515,withanexpectedrecognitionofapproximately1,515, with an expected recognition of approximately 1,426 over the next 12 months[63]. Acquisitions and Partnerships - The company entered into a merger agreement with Twill, Inc., aiming to enhance its digital therapeutics offerings and expand its market reach[21]. - The acquisition of Twill was completed for a total consideration of 34.456million,including34.456 million, including 10 million in cash and various stock options and warrants[46][49][51]. - The total purchase price allocation for Twill included 19.435millioninidentifiedintangibleassets,with19.435 million in identified intangible assets, with 5.644 million attributed to technology and 13.791milliontocustomerrelationships[50].−TheCompanyhasenteredintocontractswithapreferredpartnerandahealthplanproviderfordatalicenseandimplementationservices,expandingitsstrategicpartnerships[37].StockandEquity−Thecompanyreportedstock−basedcompensationof13.791 million to customer relationships[50]. - The Company has entered into contracts with a preferred partner and a health plan provider for data license and implementation services, expanding its strategic partnerships[37]. Stock and Equity - The company reported stock-based compensation of 10,420 for the six months ended June 30, 2024, compared to 10,148intheprioryear[18].−Thetotalstock−basedcompensationexpensesforthesixmonthsendedJune30,2024,were10,148 in the prior year[18]. - The total stock-based compensation expenses for the six months ended June 30, 2024, were 10,420, compared to 10,148forthesameperiodin2023[111].−Thetotalnumberofpotentialcommonsharesrelatedtooutstandingoptions,warrants,andpreferredsharesexcludedfromdilutednetlosspersharecalculationswas33,782,788asofJune30,2024[114].OperationalChallenges−Thecompanyhasincurredrecurringlossesandnegativecashflowssinceinception,whichraisessubstantialdoubtaboutitsabilitytocontinueasagoingconcernforthenexttwelvemonths[23].−Thecompanybelievesitscurrentcashonhandwillnotbesufficienttofundprojectedoperatingrequirementsforoneyear,raisingsubstantialdoubtaboutitsabilitytocontinueasagoingconcern[184][185].−Thecompanyhasasignificantpresentneedforcapitaltoscaleupcommerciallaunchesandmeetsalestargets[165].−Thecompanyexpectstocontinuegeneratinglossesfortheforeseeablefutureduetoinsufficientrecurringrevenuesources[151].MarketandEconomicConditions−Thecompany’soperationsmaybeadverselyaffectedbypolitical,economic,andmilitaryinstabilityinIsrael,includingtheongoingconflictwithHamas[176][178].−Thecompany’scommercialinsurancedoesnotcoverlossesfromeventsassociatedwithwarandterrorism,whichcouldmateriallyaffectitsbusiness[181].−Themarketpriceofthecompany′scommonstockhasfluctuatedbetweenahighof10,148 for the same period in 2023[111]. - The total number of potential common shares related to outstanding options, warrants, and preferred shares excluded from diluted net loss per share calculations was 33,782,788 as of June 30, 2024[114]. Operational Challenges - The company has incurred recurring losses and negative cash flows since inception, which raises substantial doubt about its ability to continue as a going concern for the next twelve months[23]. - The company believes its current cash on hand will not be sufficient to fund projected operating requirements for one year, raising substantial doubt about its ability to continue as a going concern[184][185]. - The company has a significant present need for capital to scale up commercial launches and meet sales targets[165]. - The company expects to continue generating losses for the foreseeable future due to insufficient recurring revenue sources[151]. Market and Economic Conditions - The company’s operations may be adversely affected by political, economic, and military instability in Israel, including the ongoing conflict with Hamas[176][178]. - The company’s commercial insurance does not cover losses from events associated with war and terrorism, which could materially affect its business[181]. - The market price of the company's common stock has fluctuated between a high of 2.55 and a low of $0.92 from January 1, 2024, to August 2, 2024[187]. - The company has not experienced material changes in financial condition or results of operations that would explain the stock price volatility during the specified period[187].