DarioHealth(DRIO) - 2023 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenues for Q2 2023 were $6.15 million, a decrease from $6.8 million in Q2 2022, attributed to delays with a strategic partner [6][12] - Pro forma gross margin improved to 51.5% in Q2 2023 from 36.1% in Q2 2022, driven by a shift from B2C to B2B revenue [17] - Non-GAAP operating loss reduced to $7.5 million in Q2 2023 from $11.1 million in Q2 2022 [38] Business Line Data and Key Metrics Changes - B2B revenue accounted for approximately 63% of total revenue in Q2 2023, reflecting a strategic shift towards the B2B market [18] - B2C revenue remained consistent with the previous two quarters, allowing the company to maintain a self-funded innovation platform [19] - The company has achieved 10 consecutive quarters of growth in recurring B2B2C revenue [24][34] Market Data and Key Metrics Changes - The partnership with Sanofi has been enhanced to strengthen strategic alignment and accelerate revenue share [2][25] - The Aetna partnership is expected to expand from a population of 10 million to approximately 30 million lives, increasing revenue opportunities [40] - The company anticipates additional health plans through partners like Solera, contributing to revenue growth in late 2023 and 2024 [21][44] Company Strategy and Development Direction - The company is transitioning to a multi-tenant Software-as-a-Service model for the healthcare industry, focusing on partnerships to drive growth [12][34] - The strategy emphasizes a consumer-first approach with a multi-chronic condition platform, validated by real-world data [15][36] - The company aims for an average gross margin of 70% by 2024, leveraging its B2B focus [17] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the business model despite current revenue scaling challenges, citing strong consumer traction and market fit [33][34] - The company expects B2C revenue to grow throughout the year, albeit at a slower rate than initially anticipated due to delays with Aetna and Sanofi [22] - Management highlighted the increasing focus on cost and ROI among customers in the current macroeconomic environment [21][78] Other Important Information - The company maintains a strong cash position of $52.6 million, providing a runway through 2025 [38] - The partnership with Sanofi is expected to expand beyond the current $30 million contract, indicating a strong future growth potential [25] Q&A Session Summary Question: Can you provide details on the process that led to the expansion of the partnership? - The expansion involves increasing conditions covered and expanding populations, with ongoing conversations for existing customers [29] Question: What is the potential revenue impact from the expanded partnership with the large regional health plan? - The revenue opportunity is expected to increase by about 20% due to the expanded membership [68][70] Question: What is the current state of the employer market? - The economy is impacting organizations differently, with some facing pressure due to high medical renewal rates, which are affecting decision-making [77][78] Question: How is AI being utilized in the business? - The company has been using AI for personalization and recommendations, which enhances user engagement and improves outcomes [79][80]