DarioHealth(DRIO) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - For Q3 2024, DarioHealth reported revenue of $7.42 million, an 18.7$12.3 million, a 15.9% sequential decline from Q2 2024 [13] - Gross margins for the B2B2C business rose to 83%, with full business gross margins reaching 70% on a non-GAAP basis [13] Business Line Data and Key Metrics Changes - The core B2B2C business has become the main revenue driver, contributing significantly to the overall revenue growth [13] - DarioHealth secured 10 new client wins in Q3 2024, with expectations to secure 5 more clients by year-end, totaling 17 to 20 new clients for the second half of the year [12] Market Data and Key Metrics Changes - The company is expanding its reach into the employer and health plan channels, with major employers like Amazon and Google showing interest in Dario's platform [18] - A new contract with Centene in the Medicare Advantage market aims to promote healthy aging, expanding Dario's footprint to over 1 million eligible members starting in 2025 [20] Company Strategy and Development Direction - DarioHealth aims to position itself as a Software-as-a-Service business with high gross margins targeting over 80% and a strong recurring revenue model [11] - The acquisition of Twill has enhanced Dario's capabilities in behavioral health and personalized health solutions, making it a comprehensive platform in the market [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continued financial improvement, projecting a 69% reduction in non-GAAP operating losses from Q1 2024 to Q1 2025 [14] - The company is on track to achieve a cash flow breakeven run rate by the end of 2025 [30] Other Important Information - DarioHealth is focusing on integrating AI and data-driven personalization to enhance client engagement and clinical outcomes [29] - The company has restructured its budget, shifting funds from R&D to sales and marketing to drive revenue growth [46] Q&A Session Summary Question: Guidance for 2025 growth range for B2B2C revenue - Management indicated that with around 25 new clients this year, they expect to increase average revenue per client and aim for a run rate of $50 million by the end of next year [34] Question: Drivers for sequential growth in B2C revenue - Management confirmed that B2C revenue is expected to remain stable in the$8 million range, noting it is cash flow positive [35] Question: Contribution estimates from new pharma customers - New pharma clients are expected to contribute between $500,000 to$5 million, depending on their goals and engagement levels [38][40] Question: Status of prior pharma partners under the legacy model - Management is focused on converting existing contracts to the new subscription model to achieve more predictable revenue [41] Question: Key levers for OpEx improvement - Management highlighted that they have managed to maintain a similar OpEx level while integrating Twill, with expectations to reach a run rate of $41 million by Q1 2025 [44]