DarioHealth Corp. [DRIO] Filings

10-Q 1 drio-20240630x10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


☒	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the quarterly period ended June 30, 2024

☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

	For the transition period from to

Commission File No. 001-37704

DarioHealth Corp.

(Exact name of registrant as specified in its charter)

Delaware	45-2973162
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)


322 W. 57th St. #33B
New York, New York	10019
(Address of Principal Executive Offices)	(Zip Code)

(972)-4 770-6377

(Registrant’s telephone number, including area code)

n/a

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of exchange on which registered
Common Stock, par value $0.0001 per share	DRIO	The Nasdaq Capital Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

☐	Large accelerated filer	☐	Accelerated filer
☒	Non-accelerated filer	☒	Smaller reporting company
		☐	Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of August 5, 2024, the registrant had 30,028,280 shares of common stock outstanding.

When used in this quarterly report, the terms “DarioHealth,” the “Company,” “we,” “our,” and “us” refer to DarioHealth Corp., a Delaware corporation, our subsidiaries LabStyle Innovation Ltd., an Israeli company, Twill Inc., a Delaware company, PsyInnovations Inc., a Delaware company, and DarioHealth India Services Pvt. Ltd., an Indian company. “Dario” is registered as a trademark in the United States, Israel, China, Canada, Hong Kong, South Africa, Japan, Costa Rica and Panama. “DarioHealth” is registered as a trademark in the United States and Israel.

Table of Contents

DarioHealth Corp.

Quarterly Report on Form 10-Q

TABLE OF CONTENTS

		Page

Cautionary Note Regarding Forward-Looking Statements		3

PART 1 - FINANCIAL INFORMATION

Item 1.	Interim Consolidated Financial Statements (unaudited)	F-1

	Interim Consolidated Balance Sheets	F-2 – F-3

	Interim Consolidated Statements of Comprehensive Loss	F-4

	Interim Statements of Stockholders’ Equity	F- 5 – F-6

	Interim Consolidated Statements of Cash Flows	F-7

	Notes to Interim Consolidated Financial Statements	F-8 – F-35

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4

Item 4.	Control and Procedures	14

PART II - OTHER INFORMATION		15

Item 1A.	Risk Factors	15

Item 5.	Other Information	18

Item 6.	Exhibits	18

SIGNATURES		19

Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

Certain information set forth in this Quarterly Report on Form 10-Q, including in Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and elsewhere herein may address or relate to future events and expectations and as such constitutes “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Statements which are not historical reflect our current expectations and projections about our future results, performance, liquidity, financial condition, prospects and opportunities and are based upon information currently available to us and our management and their interpretation of what is believed to be significant factors affecting our business, including many assumptions regarding future events. Such forward-looking statements include statements regarding, among other things:

●

our current and future capital requirements and our ability to satisfy our capital needs through financing transactions or otherwise;

●

our product launches and market penetration plans;

●

the execution of agreements with various providers for our solution;

●

our ability to maintain our relationships with key partners, including Sanofi U.S. Services Inc. (“Sanofi”);

●

our ability to complete required clinical trials of our product and obtain clearance or approval from the United States Food and Drug Administration (the “FDA”), or other regulatory agencies in different jurisdictions;

●

our ability to maintain or protect the validity of our U.S. and other patents and other intellectual property;

●

our ability to retain key executive members;

●

our ability to internally develop new inventions and intellectual property;

●

that our financial position raises substantial doubt about our ability to continue as a going concern;

●

interpretations of current laws and the passages of future laws; and

●

acceptance of our business model by investors.

Forward-looking statements, which involve assumptions and describe our future plans, strategies, and expectations, are generally identifiable by use of the words “may,” “should,” “would,” “could,” “scheduled,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” “seek,” or “project” or the negative of these words or other variations on these words or comparable terminology. Actual results, performance, liquidity, financial condition and results of operations, prospects and opportunities could differ materially and perhaps substantially from those expressed in, or implied by, these forward-looking statements as a result of various risks, uncertainties and other factors. These statements may be found under the section of our Annual Report on Form 10-K for the year ended December 31, 2023 (filed on March 28, 2024) entitled “Risk Factors” as well as in our other public filings.

In light of these risks and uncertainties, and especially given the start-up nature of our business, there can be no assurance that the forward-looking statements contained herein will in fact occur. Readers should not place undue reliance on any forward-looking statements. Except as expressly required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or any other reason.

Table of Contents

DARIOHEALTH CORP. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED FINANCIAL STATEMENTS

AS OF June 30, 2024

UNAUDITED

INDEX

		Page
Interim Consolidated Balance Sheets		F-2 – F-3

Interim Consolidated Statements of Comprehensive Loss		F-4

Interim Statements of Stockholders’ Equity		F-5 – F-6

Interim Consolidated Statements of Cash Flows		F-7

Notes to Interim Consolidated Financial Statements		F-8 – F-35

F-1

Table of Contents

DARIOHEALTH CORP. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands


	June 30,		December 31,
	2024		2023
	Unaudited
ASSETS

CURRENT ASSETS:
Cash and cash equivalents	$	22,938	$	36,797
Short-term restricted bank deposits		859		292
Trade receivables, net		6,731		3,155
Inventories		5,133		5,062
Other accounts receivable and prepaid expenses		3,679		2,024

Total current assets		39,340		47,330

NON-CURRENT ASSETS:
Deposits		6		6
Operating lease right of use assets		1,547		967
Long-term assets		134		143
Property and equipment, net		1,334		899
Intangible assets, net		22,346		5,404
Goodwill		57,427		41,640

Total non-current assets		82,794		49,059

Total assets	$	122,134	$	96,389

The accompanying notes are an integral part of the unaudited interim consolidated financial statements.

F-2

Table of Contents

DARIOHEALTH CORP. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands (except stock and stock data)


	June 30,		December 31,
	2024		2023
	Unaudited
LIABILITIES AND STOCKHOLDERS’ EQUITY

CURRENT LIABILITIES:
Trade payables	$	3,351	$	1,131
Deferred revenues		1,515		997
Operating lease liabilities		884		111
Other accounts payable and accrued expenses		6,475		6,300
Current maturity of long-term loan		5,191		3,954

Total current liabilities		17,416		12,493

NON-CURRENT LIABILITIES
Operating lease liabilities		1,118		885
Long-term loan		23,440		24,591
Warrant liability		12,054		240
Other long-term liabilities		51		36

Total non-current liabilities		36,663		25,752

STOCKHOLDERS’ EQUITY
Common stock of $0.0001 par value - authorized: 160,000,000 shares; issued and outstanding: 30,024,275 and 27,191,849 shares on June 30, 2024 and December 31, 2023, respectively		3		3
Preferred stock of $0.0001 par value - authorized: 5,000,000 shares; issued and outstanding: 40,331 and 18,959 shares on June 30, 2024 and December 31, 2023, respectively		*) -		*) -
Additional paid-in capital		431,526		407,502
Accumulated deficit		(363,474)		(349,361)

Total stockholders’ equity		68,055		58,144

Total liabilities and stockholders’ equity	$	122,134	$	96,389

*) Represents an amount lower than $1.

The accompanying notes are an integral part of the unaudited interim consolidated financial statements.

F-3

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

U.S. dollars in thousands (except stock and stock data)


	Three months ended				Six months ended
	June 30,				June 30,
	2024		2023		2024		2023

	Unaudited				Unaudited
Revenues:
Services	$	4,660	$	4,149	$	8,820	$	9,406
Consumer hardware		1,595		2,003		3,193		3,812
Total revenues		6,255		6,152		12,013		13,218

Cost of revenues:
Services		960		1,625		1,925		3,102
Consumer hardware		1,306		1,359		2,504		2,699
Amortization of acquired intangible assets		1,233		1,094		2,396		2,175
Total cost of revenues		3,499		4,078		6,825		7,976

Gross profit		2,756		2,074		5,188		5,242

Operating expenses:
Research and development	$	6,810	$	5,222	$	13,452	$	10,387
Sales and marketing		7,132		6,460		14,042		12,800
General and administrative		5,005		4,412		11,740		8,483

Total operating expenses		18,947		16,094		39,234		31,670

Operating loss		16,191		14,020		34,046		26,428

Total financial expenses (income), net		(2,581)		2,565		(11,267)		2,982

Loss before taxes		13,610		16,585		22,779		29,410

Income Tax		—		—		1,994		—

Net loss	$	13,610	$	16,585	$	20,785	$	29,410

Other comprehensive loss:
Deemed dividend (contribution)	$	(8,706)	$	1,691	$	(6,672)	$	1,691

Net loss attributable to common shareholders	$	4,904	$	18,276	$	14,113	$	31,101

Net loss per share:

Basic and diluted loss per share of common stock	$	0.08	$	0.58	$	0.27	$	1.03
Weighted average number of common stock used in computing basic and diluted net loss per share		39,830,793		28,186,345		37,778,087		27,879,881

The accompanying notes are an integral part of the unaudited interim consolidated financial statements.

F-4

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

INTERIM STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED)

U.S. dollars in thousands (except stock and stock data)


							Additional				Total
	Common Stock			Preferred Stock			paid-in		Accumulated		stockholders’
Three Months Ended June 30, 2024	Number	Amount		Number	Amount		capital		deficit		equity
Balance as of March 31, 2024 (unaudited)	29,439,740	$	3	41,381	$	*)-	$	436,600	$	(358,570)	$	78,033

Exercise of options	4,688		*)-	—		—		*)-		—		*)-
Extinguishment of preferred stock in connection with preferred stock modification	—		—	—		—		(11,786)		11,786		—
Deemed dividend related to issuance of preferred stock	—		—	—		—		3,080		(3,080)		—
Issuance of warrants to service providers	—		—	—		—		2,001		—		2,001
Conversion of preferred stock to common stock	376,810		*)-	(1,050)		*)-		—		—		—
Stock-based compensation	203,037		*)-	—		—		1,561		—		1,561
Modification of warrants	—		*)-	—		—		70		—		70
Net loss	—		—	—		—		—		(13,610)		(13,610)

Balance as of June 30, 2024 (unaudited)	30,024,275	$	3	40,331	$	*)-	$	431,526	$	(363,474)	$	68,055

							Additional				Total
	Common Stock			Preferred Stock			paid-in		Accumulated		stockholders’
Six Months Ended June 30, 2024	Number	Amount		Number	Amount		capital		deficit		equity
Balance as of December 31, 2023 (audited)	27,191,849	$	3	18,959	$	*)-	$	407,502	$	(349,361)	$	58,144

Exercise of options	6,709		*)-	—		—		*)-		—		*)-
Extinguishment of preferred stock in connection with preferred stock modification	—		—	—		—		(11,786)		11,786		—
Deemed dividend related to issuance of preferred stock	—		—	—		—		5,114		(5,114)		—
Issuance of warrants to service providers	—		—	—		—		2,028		—		2,028
Stock-based compensation	2,048,907		*)-	—		—		8,392		—		8,392
Conversion of preferred stock to common stock	776,810		*)-	(1,050)		*)-		—		—		—
Issuance of preferred stock, net of issuance cost	—		—	22,422		*)-		20,206				20,206
Modification of warrants	—		*)-	—		—		70		—		70
Net Profit	—		—	—		—		—		(20,785)		(20,785)

Balance as of June 30, 2024 (unaudited)	30,024,275	$	3	40,331	$	*)-	$	431,526	$	(363,474)	$	68,055

*) Represents an amount lower than $1.

The accompanying notes are an integral part of the unaudited interim consolidated financial statements.

F-5

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DARIOHEALTH CORP. AND ITS SUBSIDIARIES

INTERIM STATEMENTS OF STOCKHOLDERS’ EQUITY (UNAUDITED) (Cont.)

U.S. dollars in thousands (except stock and stock data)


							Additional				Total
	Common Stock			Preferred Stock			paid-in		Accumulated		stockholders’
Three Months Ended June 30, 2023	Number	Amount		Number	Amount		capital		deficit		equity
Balance as of March 31, 2023 (unaudited)	25,875,295	$	3	3,557	$	*)-	$	370,702	$	(298,675)	$	72,030

Exercise of options	4,800		*)-	—		—		*)-		—		*)-
Extinguishment of preferred stock in connection with preferred stock modification	—		-	—		—		984		(984)		—
Deemed dividend related to issuance of preferred stock	—		—	—		—		707		(707)		—
Issuance of warrants to service providers	—		—	—		—		595		—		595
Issuance of warrants related to loan agreement, net of issuance cost	—		—	—		—		1,389		—		1,389
Stock-based compensation	472,199		*)-	—		—		4,697		—		4,697
Issuance of common stock and preferred stock, net of issuance cost	355,743		*)-	15,402		*)-		16,278		—		16,278
Release of common stock related to earnout consideration	76,637		*)-	—		-		—		—		—
Net loss	—		—	—		—		—		(16,585)		(16,585)

Balance as of June 30, 2023 (unaudited)	26,784,674	$	3	18,959	$	*)-	$	395,352	$	(316,951)	$	78,404

							Additional				Total
	Common Stock			Preferred Stock			paid-in		Accumulated		stockholders’
Six Months Ended June 30, 2023	Number	Amount		Number	Amount		capital		deficit		equity
Balance as of December 31, 2022 (audited)	25,724,470	$	3	3,567	$	*)-	$	365,846	$	(285,850)	$	79,999

Exercise of options	4,800		*)-	—		—		*)-		—		*)-
Extinguishment of preferred stock in connection with preferred stock modification	—		—	—		—		984		(984)		—
Deemed dividend related to issuance of preferred stock	—		—	—		—		707		(707)		—
Issuance of warrants to service providers	—		—	—		—		1,225		—		1,225
Issuance of warrants related to loan agreement, net of issuance cost	—		—	—		—		1,389		—		1,389
Stock-based compensation	619,442		*)-	—		—		8,923		—		8,923
Conversion of preferred stock to common stock	3,582		*)-	(10)		—		—		—		—
Issuance of common stock and preferred stock, net of issuance cost	355,743		*)-	15,402		*)-		16,278		—		16,278
Repurchase and retirement of common stock	76,637		*)-	—		—		—		—		*)-
Net loss	—		—	—		—		—		(29,410)		(29,410)

Balance as of June 30, 2023 (unaudited)	26,784,674	$	3	18,959	$	*)-	$	395,352	$	(316,951)	$	78,404

F-6

Table of Contents

DARIOHEALTH CORP. AND ITS SUBSIDIARIES

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands


	Six months ended
	June 30,
	2024		2023

	Unaudited
Cash flows from operating activities:
Net loss	$	(20,785)	$	(29,410)
Adjustments required to reconcile net loss to net cash used in operating activities:
Stock-based compensation		10,420		10,148
Depreciation and impairment		648		191
Change in operating lease right of use assets		425		135
Amortization of acquired intangible assets		2,516		2,238
Decrease (increase) in trade receivables, net		(247)		1,595
Increase in other accounts receivable, prepaid expense and long-term assets		(1,171)		(476)
Decrease (increase) in inventories		(71)		2,042
Decrease in trade payables		(190)		(871)
Decrease in other accounts payable and accrued expenses		(3,034)		(865)
Decrease in deferred revenues		(224)		(531)
Change in operating lease liabilities		(417)		(90)
Change in fair value of warrant liability		(12,643)		—
Non-Cash financial expenses		204		1,501
Other		96		—

Net cash used in operating activities		(24,473)		(14,393)

Cash flows from investing activities:
Purchase of property and equipment		(85)		(220)
Purchase of short-term investments		—		(4,996)
Proceeds from redemption of short-term investments		—		5,033
Payments for business acquisitions, net of cash acquired		(8,796)		—

DarioHealth Corp. [DRIO] Filings
10-Q	[2024-08-08]
10-Q	[2024-05-15]
10-K	[2024-03-28]
10-Q	[2023-11-02]
10-Q	[2023-08-10]
10-Q	[2023-05-11]
10-K	[2023-03-09]
10-Q	[2022-11-14]
10-Q	[2022-08-15]
10-Q	[2022-05-12]
10-K	[2022-03-22]
10-Q	[2021-11-15]
10-Q	[2021-08-16]
10-Q	[2021-05-17]
10-K	[2021-03-09]
10-Q	[2020-11-12]
10-Q	[2020-08-12]
10-Q	[2020-05-12]
10-K	[2020-03-17]
10-Q	[2019-10-28]
10-Q	[2019-08-13]
10-Q	[2019-05-13]
10-K	[2019-03-25]
10-Q	[2018-11-13]
10-Q	[2018-08-09]
10-Q	[2018-05-15]
10-K	[2018-03-19]
10-Q	[2017-11-14]
10-Q	[2017-08-14]
10-Q	[2017-05-15]
10-K	[2017-03-22]
10-Q	[2016-11-10]
10-Q	[2016-08-11]
10-Q	[2016-05-11]
10-K	[2016-02-08]
S-1	[2016-01-15]
10-Q	[2015-11-13]
S-1	[2015-09-21]
10-Q	[2015-08-12]
10-Q	[2015-05-14]
S-1	[2015-04-08]
10-K	[2015-03-24]
10-Q	[2014-11-14]
S-1	[2014-10-15]
10-Q	[2014-08-14]
10-Q	[2014-05-14]
S-1	[2014-03-20]
10-K	[2014-03-04]
10-Q	[2013-11-12]
10-Q	[2013-08-14]
S-1	[2013-07-10]
10-Q	[2013-05-14]
S-1	[2013-01-16]