Earnings call transcript: DarioHealth Q4 2024 beats EPS expectations

DarioHealth Corp (DRIO) reported its fourth-quarter 2024 earnings, surpassing expectations with an EPS of -$0.08 compared to the forecast of -$0.2267. The company also exceeded revenue forecasts, reporting $7.6 million against the anticipated $7.51 million. According to InvestingPro data, the stock has shown significant momentum with a 13.6% return over the past week, though it remains 61% below its 52-week high of $1.93. The company’s current market capitalization stands at approximately $30 million.

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Key Takeaways

• DarioHealth’s Q4 revenue grew 110% year-over-year.
• The company achieved a significant increase in B2B2C recurring revenue, up 400% year-over-year.
• Pro forma gross profit improved to 72%, with B2B2C gross margins around 80%.
• DarioHealth aims for operational cash flow breakeven by the end of 2025.

Company Performance

DarioHealth demonstrated strong performance in Q4 2024, with total revenue for the year reaching $27.03 million, a 32.9% increase from $20.4 million in 2023. The company has capitalized on the growing demand for multi-condition digital health solutions, enhancing its market position through strategic partnerships and innovative product offerings.

Financial Highlights

• Revenue: $7.6 million in Q4 2024, up from $3.62 million in Q4 2023.
• Earnings per share: -$0.08, exceeding the forecast of -$0.2267.
• Pro forma gross profit margin increased to 72%.

Earnings vs. Forecast

DarioHealth’s actual EPS of -$0.08 was significantly better than the forecast of -$0.2267, marking a positive surprise of approximately 64.7%. The company’s revenue also exceeded projections, contributing to investor confidence and a subsequent rise in stock price.

Market Reaction

Following the earnings announcement, DarioHealth’s stock experienced a 3.27% increase, reflecting investor optimism. The stock’s movement aligns with its improved financial performance and strategic advancements in digital health solutions.

Outlook & Guidance

Looking forward, DarioHealth targets a 50% growth in total accounts for 2025 and expects its GLP-1 solutions to at least double. The company plans to continue optimizing its cost structure, aiming for operational cash flow breakeven by the end of 2025.

Executive Commentary

CEO Erez Rafael emphasized the company’s focus on profitability, stating, "We are building the business toward profitability." He also highlighted the role of AI in healthcare, noting, "AI is revolutionizing healthcare and Dario is uniquely positioned to lead this transformation."

Risks and Challenges

• Competition in the digital health sector could impact market share.
• Economic uncertainties may affect client growth and spending.
• Rapid technological changes require continuous innovation and adaptation.

Q&A

During the earnings call, analysts inquired about the effectiveness of DarioHealth’s GLP-1 support program and strategies for multi-condition solution adoption. The company also detailed its claims-based billing and outcome-driven pricing models, which are expected to enhance client engagement and revenue growth.

Full transcript - DarioHealth Corp (DRIO) Q4 2024:

Conference Operator: Good morning, ladies and gentlemen, and welcome to the DarioHealth Fourth Quarter twenty twenty four Results Conference Call. This call is being recorded on Monday, 03/10/2025. I would now like to turn the conference over to Kat Perella, Investor Relations Manager at Dario. Please go ahead.

Kat Perella, Investor Relations Manager, DarioHealth: Thank you, operator, and good morning, everyone. Thank you for joining us today for a discussion of DarioHealth’s fourth quarter and full year twenty twenty four financial results. Leading the call today will be Erez Rafael, Chief Executive Officer of Dario Health. He’ll be joined by Stephen Nelson, Chief Commercial Officer. An audio recording and webcast replay for today’s call will also be available online as detailed in the press release invite for this call.

For the benefit of those who may be listening to the replay or archived webcast, this call is being held on Monday, 03/10/2025. This morning, we issued a press release announcing our financial results for the fourth quarter of twenty twenty four. A copy of the release can be found on the Investor Relations page of DarioHealth’s website. Actual events or results may differ materially from those projected as a result of changing market trends, reduced demand or the competitive nature of DarioHealth’s industry. Such forward looking statements and their implications may involve known and unknown risks, uncertainties and other factors that may cause actual results or performance to differ materially from those projected.

The forward looking statements discussed on this call are subject to other risks and uncertainties, including those discussed in the Risk Factors section and elsewhere in the company’s fourth quarter twenty twenty four quarterly report on Form 10 K. Additional information concerning factors that could cause results to differ materially from our forward looking statements are described in greater detail in the company’s press release issued this morning and in the company’s other filings with the SEC. In addition, certain non GAAP financial measures may be discussed during this call. These non GAAP measures are used by management to make strategic decisions, forecast future results and evaluate the company’s current performance. Management believes the presentation of these non GAAP financial measures is useful for investors’ understanding and assessment of the company’s ongoing core operations and prospects for the future.

A reconciliation of these non GAAP measures to the most comparable GAAP measures is included in this morning’s press release. With that, I’ll hand it over to Erez Rafael, CEO of DarioHealth.

Erez Rafael, Chief Executive Officer, DarioHealth: Thank you, Kath. Good morning, everyone, and thank you for joining our call this morning. Over the past year, DarioHealth has undergone the transformational shift, evolving into a leading healthcare technology company operating under SaaS like model. This evolution has solidified Dario position as a premier platform in the B2B2C market, expanding sales to employers, out plans and strategic partners, while continuously enhancing our technology, product offering and AI powered capabilities. The acquisition and the seamless integration of Twill, value most significant today, has strengthened our leadership in the industry, creating one of the most comprehensive clinically integrated digital health platforms.

Now supporting five chronic conditions under a single unified brand, we are uniquely positioned to meet the growing demand for consumer centric, whole person care in an increasingly value driven healthcare environment. How the market is evolving and why Dalio is well positioned? The healthcare industry is experiencing major shifts. Two key trends are driving our growth. First, the move toward whole person digital health and vendor consolidation.

Employers and health plans are demanding fewer, more integrated solutions that addresses multiple chronic conditions in a single platform. Point solutions are no longer sustainable. Bayer swans platform that delivers multi condition care, proven ROI and seamless integration with the existing systems. Embayo is positioned ahead of this shift. The Twil acquisition has created one of the most comprehensive product portfolio in the industry, enabling us to deliver a multi condition solution across metabolic, behavioral and musculoskeletal health.

Our AI powers platform now supports five chronic conditions, making value a leader in whole person care. One of the growing behavioral health and cardiometabolic offering, including partnerships with virtual providers organizations like Mediobis and Rula, which Stephen will cover later, allows us to serve broader population while delivering scalable, cost effective care solutions. The second major shift is the rise of GLP-one therapy and the need for a long term behavioral and lifestyle support. The rapid adoption of GLP-one medications has transformed the healthcare landscape and our clients recognize that the medication alone is not enough. Employers and health plans are prioritizing comprehensive solutions that ensure sustainable weight loss, metabolic health and cost control.

Valio has emerged as a leader in the GLP-one companion space, supporting members before, during and after treatment. Our integrated behavioral, metabolic and digital coaching approach is a key differentiator, helping employers and payers manage those significant costs associated with the GLP-one treatment, which ensure long term health improvements. The demand is directly reflected in our commercial success. 10 of our new client wins in 2024 were directly tied to GLP-one solutions. Our GLP-one companion model that is now including also prescription capabilities has been instrumental in securing those contracts as organizations seek comprehensive solutions that addresses obesity and metabolic health while controlling costs.

AI is a major driver of our competitive advantage. AI is revolutionizing healthcare and value is uniquely positioned to lead this transformation. Our approach called AI Cubed, meaning AI, the third power leverages efficient intelligence in three key ways. The first is operational efficiency, AI powered automation, scaled engagement, enhancement, member interactions and reduces operational costs. Number two is member engagement, AI drive hyper personalized delivers precise, proactive and data driven interventions, improving users outcomes and retention.

And number three, customer value. AI backed analytics provides employers, health plans and pharma clients with predictive insights enabling smarter cost effective healthcare decisions. This twenty five years of users data collected by Dalio and the companies we acquired with 5,000,000 patients record and billions of data points, Dalio’s iCubed strategy is a game changer that drives engagement, operational efficiency and improved clinical and financial outcomes. We also reported today a strong financial and business performance for 2024. Our full year 2024 results highlight the success of our strategy.

The total revenue reached in 2024 was $27,000,000 30 2 point 9 percent increase from $20,400,000 in 2023. Q4 revenue grew by more than 110% compared to Q4 twenty twenty three and two point four percent sequentially compared to Q3 twenty twenty four, reflecting continued business expansion. B2B2C, Employers and Health Plans recurring revenue grew by approximately 400% year over year with 35% of debt growth coming from organic expansion. Pro form a gross profit for the full business increased from 51% to 72%. Gross margins for our B2B2C business was about 80% for the last three quarters, reinforcing our trajectory towards sustainable profitability.

We reduced our pro form a operating expenses by 35% from Q1 twenty twenty four to Q4 twenty twenty four and anticipate a further 20% reduction in our operating expenses by successful $25,600,000 capital raise in January 2025 combined with our pro form a cash balance of $34,500,000 as of 12/31/2024 provides us with the strong financial position to continue executing on our strategy. Looking ahead, our plan to grow in 2025, as we look ahead, we plan to accelerate client growth and expand our business. In 2024, we won 36 new employers and health plans contracts bringing the total client base to 83 organizations. Based on our pipeline and continued market demand, we are targeting a 50% net client growth in 2025, significantly expanding our footprint across employer softness and some typical partnerships. With a financial profile and market leading AI powered platform and a clear strategy for expansion, we are well positioned to drive sustainable long term growth in the next few years.

With that, I’ll turn over the call to Stephen Nesson, who will walk you through the commercial execution and client growth in a more detail.

Stephen Nelson, Chief Commercial Officer, DarioHealth: Thank you, Erez, and good morning, everyone. I am thrilled to share our Q4 and full year ’20 ’20 ’4 results, marking one of the most transformational years in DarioHealth’s history. Over the past months, we have accelerated client growth, expanded our partnerships, enhanced our product offering and strengthened our financial foundation. We’ve continued to execute our vision of delivering a fully integrated AI powered digital health platform and we’re seeing the impact of this strategy in both our commercial momentum and our financial performance. As we enter 2025, we are well positioned for continued success and I’m looking forward to walking you through the key highlights from our past year and the opportunities ahead.

Our client growth and expansion in 2024 was a record breaking year with 36 new contracts signed, bringing our total book of business to 83 clients across employers, health plans and pharma. Among these, 10 wins were directly tied to GLP-one solutions, reinforcing our growing demand for behavioral and lifestyle support for GLP-one users. Our solution supports people at every stage of their GLP-one treatment from onboarding and staying engaged to off boarding successfully. This approach helps prevent weight regain and ensures long term health improvements. By combining personalized digital health interventions with behavioral health coaching, we help clients optimize treatment effectiveness while reducing unnecessary cycles, ultimately driving better health outcomes and lowering long term costs.

Additionally, our client renewal rate remained above 90% underscoring the strong value and impact of our platform. This high retention rate reflects the effectiveness of our SaaS like model in delivering measurable ROI, driving sustained engagement and ensuring long term revenue predictability. These key factors position Dario for scalable, profitable growth in the evolving digital health landscape. 2025 is already showing strong momentum with nine new client wins in just the first two months through both direct deals and strategic partnerships. This rapid start underscores our confidence in sustained accelerating revenue growth.

Now let’s discuss our business channel updates starting with the Employer segment. Employer channel remains a key growth engine for Dario as mid size and large employers increasingly consolidate digital health vendors in favor of integrated multi condition platforms that drive better outcomes and cost savings. Our GLP-one companion solution has been a major entry point as employers rank GLP-one medications as their number one healthcare expense. Dario’s comprehensive approach supports the full consumer journey, onboarding, active engagement during treatment and structured offboarding, ensuring sustained clinical outcomes while reducing unnecessary treatment cycles. Our new product packaging is already paying off, helping us win more deals and tailor solutions to different employers’ needs.

Employers want solutions that improve health and save money. Dario makes this easy by tying our pricing to real results and simplifying how they pay. Employers demand ROI driven digital health solutions and Dario is delivering by integrating clinical outcomes based payment models and seamless claims based billing making adoption even easier. Our strategy for employers in 2025 is direct and focused. We will expand employer adoption by leading with cardiometabolic and GLP-one solutions, addressing both the cost and long term health management challenges employers face.

We will scale behavioral health services by integrating one of the largest virtual therapy networks in The U. S, ensuring employers can provide comprehensive support to their employees. Friday, we announced our new strategic collaboration with Rula, a leader in high quality behavioral health services. This partnership gives Dario members direct access to Rula’s extensive network of over 15,000 providers, covering 120,000,000 commercial lives. By combining Rula’s provider network with our AI driven digital behavioral health solutions, we are making it easier than ever for employers to offer seamless high quality mental health care.

This is a major step forward in expanding Dario’s behavioral health solutions and accelerating adoption across the employer market. We are simplifying how employers adopt Dario solutions by using claims data for smarter employee targeting, seamless billing and clear proof of impact. And we will drive sales execution through a refined go to market approach focused on targeting employer segments, accelerating pipeline conversion and deepening existing client relationships. The opportunity in the employer market is massive with a growing client base and expanding product portfolio and a commercial model built for scalability, Dario is positioned to lead the next phase of digital health adoption, driving sustainable revenue growth and long term employer partnerships in 2025 and beyond. Shifting now to our health plan strategy.

The health plan channel is a critical growth driver for Dario as payers increasingly seek scalable, multi condition digital health solutions that drive better outcomes, reduce cost and improve member engagement. We are approaching health plans in two key ways. First, by supporting their existing lines of business with multi condition digital health bundles, allowing payers to seamlessly integrate Dario solutions into their care models and provide comprehensive chronic disease management to their members. Second, by leveraging our platform to solve payer specific challenges within their infrastructure and product offerings, providing a platform as a service model that enhances operational efficiencies, engagement and clinical outcomes. Our dual approach is gaining strong traction with active engagement from all our partners.

One major payer has already committed to transitioning to Dario Mine this year, which will enhance our revenue for the second half of twenty twenty five. Additionally, we expect to add a full suite offering with one of the largest insurance companies in The U. S. Market by mid year, which will also contribute to revenue this year. Medicare Advantage and Medicaid are rapidly shifting to digital first care, especially in areas where Dario already excels, cardiometabolic and behavioral health.

This creates a major growth opportunity for Dario as we strengthen partnerships with national payers and expand our presence in government sponsored programs. By integrating our solutions more deeply into existing health plans, we are aligning with commercial, Medicare Advantage and Medicaid’s increased focus on managing chronic conditions through digital health. Expanding behavioral health access is a critical part of this transformation and our recently announced collaboration with Rola strengthens our ability to support payers by combining Dario’s AI driven engagement with one of the most extensive behavioral health provider networks in the country. Because Rula is an in network provider for most major health plans, this integration makes it even easier for payers to adopt Dario’s behavioral health solutions, streamlining access to ensuring members get the care they need. Moving forward, we will continue embedding our multi condition digital health solutions into payer products and benefits.

We are rapidly scaling our Platform as a Service model, giving payers the AI driven tools they need to solve key challenges, making Dario’s technology even more essential to their business. Dario is at the forefront of digital health revolution for payers, setting new industry standards for innovation and impact. With a strong foundation, expanding partnerships and measurable impact, we are set to drive deeper adoption and long term revenue growth. Now let’s dive into another exciting area of growth, our Pharma and Medical Devices segment. This channel continues to evolve into a high value reoccurring revenue stream for Dario, reinforcing our position as a trusted digital health partner for leading pharmaceutical companies.

As pharma increasingly prioritizes digital engagement and patient centered care, we are seeing two primary ways they are leveraging Dario’s platform to drive impact. First, pharma companies are engaging with Dario through our Platform as a Service model, which has been further enhanced through our partnership with MediOrbis. This allows pharma to integrate virtual care, prescribing capabilities and remote patient monitoring into their own therapeutic programs, creating a more seamless and comprehensive approach to patient management. As pharma moves toward more direct models of patient support, Dario’s scalable digital infrastructure provides customized solutions that improve real world patient support, streamlined access to care and enhanced long term adherence. This platform as a service model is gaining traction with several leading pharma companies already exploring how Dario’s expanded capabilities can deliver end to end digital health solutions, further strengthening our position in this high value market.

Our collaboration with Sanofi has already transitioned into a commercial reoccurring revenue model, providing a blueprint for how Pharma can leverage Dario’s platform to create sustainable digital first patient support solutions. Five major pharma and medical device companies including Sanofi are already using this model. This shows strong and growing demand for digital health tools that support their treatments. Second, pharma medical device companies are increasingly turning to DarioMind as a digital therapeutic solution to support patients before, during and after treatment. This approach ensures that patients receive the mental health and lifestyle interventions needed to improve adherence, enhance outcomes and create a more holistic care experience.

With our new partnership with RULA, we’re further strengthening the behavioral health ecosystem available to patients, giving them access to a broad provider network alongside Dario’s digital interventions. Since RULA is in network with most major health plans, pharma partners can now integrate behavioral health support more seamlessly into patient engagement strategies, driving better adherence and long term treatment success. With virtual care prescribing and digital therapeutics now part of our platform, Dario is transforming how pharma and medical device companies connect with and support patients. As we close out 2024, it’s clear that Dario has entered a new phase of growth, execution and market leadership. We have expanded our reach, strengthened our financial foundation and positioned ourselves at the forefront of digital health innovation.

The results speak for themselves. Our strategy is working and we are just getting started. The increasing demand for whole person multi condition care combined with our ability to drive meaningful health and financial outcomes puts us in a strong position to accelerate growth in 2025 and beyond. Looking ahead, we remain focused on scaling our commercial success, deepening client relationships and continuing to innovate with AI driven solutions that maximize engagement and efficiency. With strong revenue streams, expanding partnerships and a clear path to long term profitability, Dario is ready to deliver sustained value for our customers, members and shareholders.

With that, I will turn it back to you, Erez.

Erez Rafael, Chief Executive Officer, DarioHealth: Thank you, Steven. As we conclude today’s discussion, it’s clear that 2024 was transformational year for DalioHealth. We are entering 2025 with strong momentum and solid financial foundation and a clear strategic vision that sets us apart in the healthcare technology space. We have successfully executed our strategy, expanding our B2B2C business, integrating Twin, dipping our employers and health plans relationships and strengthening our position in the GLP-one market. We have built a comprehensive AI powered whole person digital health platform that delivers real value to our clients by improving health outcomes and reducing costs.

At the same time, we have strengthened our financial profile and business model making Dario a more efficient, scalable and sustainable company. Revenue growth combined with disciplined expense management has positioned us for a long term profitability and our ability to drive recurring revenue across all channels, including pharma provides greater financial predictability and stability. Looking at our strategy for 2025, we’ll focus on three key priorities. Number one, accelerating commercial growth. We aim to expand our employers and health plans adoption, deepen existing partnerships and increase penetration in the parent and the pharma market.

Our goal is to increase our total number of accounts by 50% with GLP One solutions remaining a key driver as employers and health plans recognize the need for cost management and long term behavioral and lifestyle support beyond the medication alone. Second one is leading the market shift to whole person digital health. The market is moving away from augmented point solutions toward integrated multi condition platforms that deliver better outcomes and cost efficiencies. This shift has only been reinforced by GLP-one adoption, which underscores the importance of holistic whole person care. Calio is uniquely positioned to capitalize on this transition with a AR powered multi condition approach.

Number three is driving operational efficiencies and profitability. We’ll continue to optimize our cost structure and take OpEx down by another 20% by Q4 of this year, scale our SaaS like model and remain on track for operational cash flow breakeven by the end of twenty twenty five. With continued operational discipline and AI driven efficiencies, we believe we can drive long term sustainable profitability. We have the right strategy, the right team, the right momentum to continue delivering profitable, scalable growth in the years ahead. I want to take the moment to thank our employees, partners and investors for your continued support.

We’re incredibly excited about what’s ahead and I look forward to sharing the progress throughout 2025.

Conference Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Your first question comes from Charles Rhyee with TD Cowen. Your line is now open.

Charles Rhyee, Analyst, TD Cowen: Thanks for taking the questions. Erez, just wanted to ask sort of on the GLP-one support programs, you talked about obviously able to help sort of onboard as well as support through treatment and then sort of the off boarding part. Curious to the extent that what number of patients or members have you seen successfully off board given sort of this idea that for most people this could end up being sort of a lifetime treatment? And perhaps what percentage of existing customers have elected to add the GLP-one support solution?

Erez Rafael, Chief Executive Officer, DarioHealth: Yes. Thanks Charles for the question. So last year we won like 10 accounts that have the GLP-one solution. But for the B2C, we had a few hundreds of users that already used it. So with the B2C users that were launched even before, we have seen a few hundreds that we already have some data modem.

And actually, we did a specific study that will be eventually presented on the ADA that will provide the exact numbers and that’s something that we’re going to publish in June of this year. So we have already some results on the on the off boarding, more results we have on the on boarding and our ability to help users go through the onboarding of the process with the side effects and so on and retain on the drug. And also we have the capability to predict those that will be able to go through the onboarding and get the effect based on data that we collected over time. So we have some data and that data will be published on a very organized study on June of this year.

Charles Rhyee, Analyst, TD Cowen: And I know you’re not giving 25 guidance, but any way to kind of give us some rough sense on what to expect maybe broad strokes for your expectations for growth this year? And maybe in that context, how big of a percentage do you think GLP-one the GLP-one program will be as a percent of total revenue?

Erez Rafael, Chief Executive Officer, DarioHealth: Yes. So last week, as we mentioned on the call, we were like winning 36 accounts. This year, we are targeting to go by more than 50 accounts. And that’s obviously something that will impact more 2026 when we are looking into account because in 70% of the cases, the wins are going to generate the revenue the year after. We think that a third of what we were signing last year was related to GLP-one.

We think that the GLP-one alone is going to at least double this year in terms of the number of accounts and how we are penetrating it to the market. So we think that this is something that will have a big part of our revenues. Stephen, if you want to add something?

Stephen Nelson, Chief Commercial Officer, DarioHealth: Yes, I’ll add. I think in the GLP-one space, one of the things that we announced in January, I believe actually was our prescribing partner in Medi Orbis. And that allows the employer if they want to, if they want to, to prescribe accordingly as a part of their benefit design in general or add controls etcetera. So I think it’s one point to reference and again I could go further if you’d like me to, but I won’t unless you ask. And then the second point that I think is probably as relevant is, just because you’re asking about GLP-one.

And I talked about it within today’s discussion as well, which is where is it headed? And clinically there’s a lot of information coming out about GLP-one, especially targeting end of year. And so as more clinical information and other information comes out on where it impacts and what it impacts, I think that’s going to change the dynamic of it being only weight loss oriented today. Again, I’m not a doctor, professional, etcetera like that, but I think there’s a lot coming down the path as well regarding clinical and clinical efficacy around other ways that GLP-one has also used. So weight loss is one thing and chronic conditions are another and there’s a lot of data this year that I think will be released just to kind of round that out.

Charles Rhyee, Analyst, TD Cowen: Maybe one more on GLP-one just real quickly. How many employers are electing to have Mediolaris prescribe it because my understanding is that if you have a dedicated sort of prescribing network, that kind of can impact sort of rebate calculations for on their pharmacy benefit side. Just curious if that’s

Stephen Nelson, Chief Commercial Officer, DarioHealth: being actually Real easy right now, no. We just launched it in January. So we’re taking it out and discussing it with all of them. It was a key part of our last year, we evaluated some of our business wins and losses, because we evaluate those as well. We needed that capability.

We pinpointed that as a capability need that we had to have in our product. Again, as we kind of discussed today, very focused effort on execution, what we exactly need to bring to the market and round out. Our GLP-one offering programmatically speaking in our Cardiometabolic suite was strong already. What we needed to do is just have that option. That’s all we really need was a capability.

So time will tell on how many pick up the option. And also time will tell where the product then, as I mentioned earlier, goes in terms of clinical care. So we’ll be prepared for the future as well.

Charles Rhyee, Analyst, TD Cowen: Got it. And maybe just a couple of questions on the health plan side. It sounds like on the health plan side, the big focus has been behavioral health. Maybe talk about sort of the opportunities to expand offerings through the health plan side, such as weight loss or the other cardiometabolic conditions? And have any of those discussions been going on with existing health plan partners?

Stephen Nelson, Chief Commercial Officer, DarioHealth: Yes. So I did announce today we noted towards something of the future, which was that we were expecting to sign a large health plan in the back half of the year. I think that’s pretty innovative actually whenever we come out with what we’re doing with them and how they’re doing in the market. It is full suite, so it is all products. It’s also very encouraging, get the size and scale of having a full suite offering that allows us to do something with them.

So, yes, I think there’s some opportunities there. I think that we’re trying to be focused on what is our product market fit for now. And our best product market fit for now is enabling what would be our self care members in behavioral health, the ability to get their therapist if they need it. And doing that with the payers in mind, since they have their own therapist networks or one that we partner with that they do have a contract with today, we can close the loop of members. So if you need to see a therapist, you should see a therapist.

And now we can help you see a therapist. And after you see the therapist, the luxury of this is we’ll take you back and then we’ll put you back into our content world and understand how you are, where you are in self care again. So we closed the loop now in behavioral health. So we’re with them today in behavioral health. We’re trying to expand with all our partners in their own behavioral health strategies.

It’s why we’re focused on that as our first priority. But no doubt our second priority is where and how we can expand in cardiometabolic and we will have an expansion use case of that this year.

Charles Rhyee, Analyst, TD Cowen: Okay, thanks. Maybe last question here. Last quarter, you guys had talked about expecting about 35% growth in the health plan revenue in health plan revenue in 2025. Is this still the right target to think of?

Stephen Nelson, Chief Commercial Officer, DarioHealth: Half time revenue in 2025. Ares, do we go Ares?

Erez Rafael, Chief Executive Officer, DarioHealth: Maybe I’ll take this one. We are not guiding for how 2025, ’20 ’20 ’6 are going to look like. In general, the growth rate that you mentioned is something that we are targeting in all the channels. So that’s generally what we are expecting. One more correction that I want to make.

So you talked about the previous question, you assumed that you see more behavioral health that we are selling to health plan. I think that from a revenue perspective and also from a win rate perspective, I don’t think that behavioral health is going to be greater than the Cardometabolic. We need to remember that Dario built the Cardometabolic solution for many years and we have one of the most advanced Cardometabolic solution and Twil have built a very advanced behavioral health solution. Both of them are being sold in the market as a stand alone and also as a full suite. So I don’t think that from a win perspective or revenue perspective, the behavioral health is going to be greater than the metabolic.

I think that eventually when we are looking on the average revenue per user, the metabolic is larger in terms of revenue.

Charles Rhyee, Analyst, TD Cowen: Great. And then just lastly, can you just remind us sort of your expectations for reaching breakeven? Is it still year end of this year? Just want to just confirm that.

Erez Rafael, Chief Executive Officer, DarioHealth: Yes. Operational breakeven run rate by the end of this year, this is going to be the objective. Just to your point on the 35%, I think that in the previous call, we talked about 35% growth in the total accounts that we are winning. And this year, this call, we updated the number that is going to be 50% growth in the total land of accounts. So we want to go by at least another 50 accounts this year.

That’s the communication that we had with the market.

Charles Rhyee, Analyst, TD Cowen: Understood. Okay. Thanks for the clarification. I appreciate it.

Erez Rafael, Chief Executive Officer, DarioHealth: Yes, absolutely. Thank you.

Conference Operator: Your next question comes from Ashok Kumar with ThinkEquity. Your line is now open.

Ashok Kumar, Analyst, ThinkEquity: Thank you, Erez and Stephen. Just a big picture questions and please flush out any subtopics that would be of interest to investors. Again, the first question is again from a business perspective, right, how significant do you see the role of GLP-one treatments in your strategy and growth opportunities? And two, as digital health continues to evolve, what differentiates your business model and financial profile? And how do these factors position the company for long term profitability?

Thank you.

Erez Rafael, Chief Executive Officer, DarioHealth: Thank you so much. So maybe I’ll start with the second question. We have seen digital health companies evolving, but I think that when we are looking into the market and the valuations and so on, there was a general disappointment about the financial profile of these companies, their ability to build a viable business. And I think that here the way that we designed our product offering and also the way that we designed the organization is that we are building the business toward profitability. And the differentiator is number one in the ability to drive outcomes per patient.

And number two is by helping our employers, specifically those that are 3,000, five thousand, 10 thousand employees to sign up on a full suite is something that is much more cost effective for them and it’s also cost effective for us. So eventually we are generating between 4 to 5 x more dollars for every account that we are signing on. So if you are combining this capability with a very strong engagement capability, eventually you are looking into very high revenue in ROI that we are getting for every account that we are signing on. And if you combine it with a very effective cost management, we showed how on an integrated base we took the cost between Q1 to Q4 to Q4 down by 35%. This trend is going to continue into 2025.

We think that by Q4 of twenty twenty five, we’re going to cut it by another 20%. So I think that a very effective cost management plus very engaging product plus very strong unit economic when it comes to an account and also to a user. That’s something that put us in a position that we are going to create probably one of the first viable businesses in digital health. This one is regarding your second question. Getting back to your first question about the GLP-one, the two major trends that we see now that are going to push the revenue up and help us get a more significant portion in the market is number one, the fact that our clients are looking into more whole solution and whole personal solution like multi condition, that’s number one.

And number two is the continuous adoption of GLP-one. If you’re looking into the all the surveys that have been done among employers, you’re going to see that the largest expense is on the GLP-one drugs and this whole thing need to be managed in a way that they can eventually get the most effective ROI from deploying these drugs and this is something exactly what we can help them doing and we can help them show an immediate cost reduction once they are adopting us. It’s for GLP-one and also for the other conditions that we are running. So we think that the GLP-one is going to be a larger and larger portion of the revenue that we’re going to generate this year and the year after. We already signed 10 accounts last year and this year we think that we’re going to at least double it when it comes to GLP-one.

So that one is going to be large in terms of the revenues as well.

Stephen Nelson, Chief Commercial Officer, DarioHealth: And Erez, if I could add. What I’d add just to your question in terms of the strategic moat. So, Ares covered where we are in terms of a company being mindful, profitable, etcetera. That’s our goal where we’re stated, where we’re at, run rate, etcetera, on target, want to execute there. Two, outline what we have differentiated around GLP-one to pivot.

We have B2C kind of helping us our business model understand where we go and how we go as well. And then we also have learning from that to enable our B2B2C business. And that is a differentiator. We learn from that market, we then take it to the market hardened better etcetera. That is a differentiator.

We can leverage that data and those experiences to make our product more viable for the areas in wholesale distribution, employers, health plans, etcetera. So we have a good learning ground. Another strategic motto is being multi condition. We have to harness that. And the more we can harness that as a responsible company, in terms of being mindful of how we grow and where we grow as a profitable entity, having other areas we can grow our multi condition platform as we grow and scale, it’s a strategic mode for us and the market is starting to meet us there.

I think so there’s a lot around digital health for that as well, but we can add value to them, partner solution, integrate with other partners, just like we announced. We don’t have to build it all ourselves. We can find other partners to bring it in and make sure that our multi solution, multi condition platform is viable for all of our three target segments in ways that helps their business. So just to kind of round that out in terms of the remote, if you will, because you asked about where we stand strategic differentiation. I think just for clarity, it’s being responsible towards our business model for sure.

But in terms of the market, it’s converting what we do D2C to B2B2C and it’s having multi condition to really go to the market.

Ashok Kumar, Analyst, ThinkEquity: Okay. Thank you, Eruditus, and all the best.

Stephen Nelson, Chief Commercial Officer, DarioHealth: Thank you.

Erez Rafael, Chief Executive Officer, DarioHealth: Thank you, Ashok.

Conference Operator: Your next question comes from David Grossman with Stifel. Your line is now open.

David Grossman, Analyst, Stifel: Good morning. Thank you. Eris, you spoke several times about vendor consolidation. Perhaps you could share some statistics on the trends in customers taking multiple solutions, solutions, whether that be metabolic, taking behavioral or vice versa or GLP-1s?

Erez Rafael, Chief Executive Officer, DarioHealth: Yes. So when we are talking about multi condition, it’s not necessarily the both metabolic and behavioral health. You have like clients that are taking diabetes and also hypertension and also weight loss. I would say that today more than 50% of the accounts that we are signing on are taking more than one condition. Okay.

That’s something that we’re already seeing. It’s a very strong trend and most of it is in the metabolic, those that are taking diabetes and hypertension, hypertension and weight loss and all this kind of stuff. When it comes to full suite, Dario, all the metabolic plus the behavioral health, at the moment, we don’t have any account that both this full suite on an integrated base. And we need to remember that we integrated the product only in 2020, ’20 ’20 ’4 and everything is under the same brand as of Q4 of twenty twenty four. We do have clients that were signing on the behavioral health and are now in a very, very advanced process to take also the metabolic and we have those that are on the metabolic that are also taking the behavioral health solution.

And that’s something that we see as will happen this year with loud accounts at least three to five times. This is the statistic that we expect. We think that in order to sell the full suite in one shot like both of the metabolic plus the behavioral health to one client, we think that it’s going to be easier when we are looking into the employer size that is between 2,500 employees to 10,000 or 15,000 employees and this is something that we expect that will happen this year because we already see all the RFPs and all the demand that is coming in. So I think that eventually if I’m going to look into a potential 50 wins this year, I think that at least third of them are going to be for the full suite. And I think that from the existing clients that we have that our large cloud client, as I said, we’re going to win between three to five accounts that are going to co sell from a single condition into a full suite.

We don’t think that the huge you know what, there is one exception. We are working on a very, very, very loud client, National Health Plan that is going to take in one shot the entire full suite that’s the expectation and that we have for the next few months. But that’s in general the statistic that we have. We don’t think that we’re going to see, loud accounts that are like hundreds of thousands of users like health plans that are going to take everything in one shot. The statistic there is going to be more gradual.

They’re going to sign up on a single condition and then expand into more conditions.

David Grossman, Analyst, Stifel: Got it. Thanks for that clarification. So just going back also to your comments about some of the strategic relationships with large pharma. Perhaps you could update us on the status of Sanofi and the other strategic relationships in the pipeline? Are they primarily geared what they’re trying to do with GLP-1s and perhaps a more direct to consumer type relationships?

Or are the potential relationships broader or different than that?

Erez Rafael, Chief Executive Officer, DarioHealth: Yes. So for Sanofi, we’re very clear both in the press release and also in the script that the existing relationship that was more like clinical and diet oriented has been transformed to be more commercial oriented. And that’s something that I mean the account didn’t generate revenue last year almost at all and this year it’s going to get back to revenues starting from Q1 because it’s under a different commercial agreement. So we expect it will continue the revenue generation this year. Just to remind the audience when we are selling the Twilcare or what we are calling today Dario Connect, it’s a solution that we are selling to pharma company that is helping them with the top of finance and this is something that Sanofi selected for one of the drugs and that’s something that has been launched and generating revenue starting from Q1.

So this account has been transformed. When we acquired Twil, they had such they had some agreements with pharma companies that we are transforming as well. So we’re going to see this pharma channel generating recurring revenue is something that will happen that will happen this year after last year was almost zero in terms of pharma because we were transforming everything into a recurring revenue model. So that’s with regards Cusanofi. The other things that we expect is that that’s something that is very important for us to stabilize the revenue in a way that we are more predictable.

And I think that if we’re looking like one or two years back, we had like a situation that single or two accounts were contributing like 70% or 50% of our B2B revenues. We expect that in 2025, we’re going to change it and more broadly in 2026, because we’re going to sign more accounts, we’re going to see accounts that are more coming from employers and that’s something that will help us stabilize or make the revenues much more predictable. We do have a few large relationships that we are working on. We think that two or three of them are going to be signed this year. One of them is a national health plan that want to take the full suite.

But the majority of the revenue is going to start and come from a relatively small to medium account. So we’re going to see a lot of accounts that are somewhere between $300,000 to $1,500,000 Most of them are employers.

David Grossman, Analyst, Stifel: Got it. And just one last thing. I think in your prepared remarks, you explained or you talked a little bit about tying pricing to results and claim based billing. Can you just explain that or go into a little more detail on what you meant by that?

Stephen Nelson, Chief Commercial Officer, DarioHealth: Yes, I’ll take that one. Two things. One is that today, we Dario in terms of our product mix being build out to the market, we only have a certain percentage that we actually process in terms of a claim. And now we’re allowing our clients, which would be employers or health plans, we’re ramping up the ability, so it could be paid as a claim. Today, our services are paid out of the administration side of the house.

Majority of all of our programming is paid for from health plans or from employers through the admin side of their budgets. We’re now moving to a side to enhance our billing options to get involved with the claim based side of the budgets. And I don’t want to get into the all of it here on the call, but I’m sure as many of you know, there is the claim side of the equation and the admin side of the equation when you look at health insurance. And now we’re starting to play towards the claim side of the equation using that data to help us target better, engage more, report out and I’d say get to the last thing which I’ll come to now which is the outcomes. We need to look at the claims.

There’s a lot we can do to tie our programming simpler to existing clinical milestones that the employee needs to meet. And when they meet that clinical milestone, then we get paid. It’s really a way for us to partner a lot more around our product in a direct way that shows the impact. And so for us, it’s kind of a good way to kind of turn another option to engage people. We have one of those already in market today with the health plan and we are discussing how and where we roll those out to other health plans and or discussing how and where we roll those that pricing model out specifically to employers.

And I think both of those are going to be a little bit differentiated than what’s in the market today from a pricing perspective without going into all the details, we think we can win there. So to recap, getting more on the claims side of the equation for both targeting, analyzing and processing ourselves in terms of us receiving revenue, that’s important too. And then secondarily, getting closer using that claims, claims basis, claims knowledge, get closer to outcomes, which can also tie to like without getting into a value based payments, value based payment models, etcetera. So differentiation in ease of business and differentiation on how we can get after a bigger revenue pool for ourselves as well.

David Grossman, Analyst, Stifel: Got it. Thanks very much. Good luck.

Stephen Nelson, Chief Commercial Officer, DarioHealth: You bet. Thank you.

Erez Rafael, Chief Executive Officer, DarioHealth: Thank you, Dave.

Conference Operator: There are no further questions at this time. Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.

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