DarioHealth Corp. — FY2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023. This filing reports annual results; it does not provide a clear standalone fourth-quarter income statement or cash flow. Financial amounts below are in U.S. dollars unless stated otherwise.
Business context
DarioHealth sells digital health programs, devices, coaching and related services for chronic conditions, including diabetes, hypertension, weight management, musculoskeletal health and behavioral health. It is shifting from direct-to-consumer sales toward business-to-business-to-consumer contracts with employers, health plans and partners. The company reported more than 100 signed contracts and approximately 120 employer populations active on its platform.
Financial results and liquidity
| Metric | FY2023 | FY2022 |
|---|---|---|
| Revenue | $20.352 million | $27.656 million |
| Gross profit / gross margin | $5.984 million / 29.4% | $9.655 million / 34.9% |
| Operating loss | $56.189 million | $56.810 million |
| Net loss | $59.427 million | $62.193 million |
| Net loss per common share, basic and diluted | $1.93 | $2.54 |
| Cash used in operating activities | $30.379 million | $47.845 million |
| Cash and cash equivalents at year-end | $36.797 million | $49.357 million |
Revenue fell about 26%, mainly because of lower consumer and strategic-partnership revenue. B2B2C commercial revenue increased to $5.005 million from $3.593 million, while strategic-partnership revenue declined to $7.054 million from $12.784 million and consumer revenue to $8.293 million from $11.279 million. Lower operating expenses and net financing expenses helped narrow the net loss. Sales and marketing expense declined to $23.785 million from $30.323 million; R&D rose to $20.248 million from $19.649 million, and G&A rose to $18.140 million from $16.493 million.
Reported gross margin declined, partly reflecting lower revenue from strategic partnerships. Excluding acquired-technology amortization, management reported gross margin of 51.0% versus 50.7% in 2022; this is a non-GAAP-style comparison and should not be confused with reported GAAP margin. Management also reported non-GAAP adjusted loss of $31.375 million versus $35.495 million and EBITDA of negative $51.204 million versus negative $51.973 million.
At December 31, 2023, audited balance-sheet figures show current assets of $47.330 million, current liabilities of $12.493 million, total assets of $96.389 million, total liabilities of $38.245 million and stockholders’ equity of $58.144 million. The company had an accumulated deficit of $349.361 million. Its long-term loan had a reported fair value of $28.545 million, including $3.954 million classified as current; the secured facility carries interest at the higher of 12.5% or prime plus 4.5%. A further $10 million tranche was discretionary and subject to lender approval. Financing cash flow was $18.253 million in 2023, versus $61.940 million in 2022.
Material developments, outlook and risks
- Twill acquisition: Closed February 15, 2024, after year-end. Consideration included $10 million cash and pre-funded warrants for up to 10,000,400 common shares, as well as employee options and other equity-linked awards. The warrants are subject to ownership limits and stockholder-approval provisions.
- Post-year-end financing: The company reported approximately $22.422 million of gross proceeds from a February 2024 Series C preferred-stock offering. These proceeds were not part of December 31, 2023 cash.
- Management outlook: Management expects potential annualized cost synergies of up to 30% within two years following the Twill acquisition and targets an accelerated path to profitability in 2025. These are expectations, not guarantees. The filing also says management believes resources can support operations through 2025, dependent on sales execution; the financial-statement note states liquidity is expected to cover at least 12 months from issuance. Continued losses and cash use may require additional financing.
- Key risks: Sustained losses, negative operating cash flow, uncertain commercial adoption and revenue growth, dependence on strategic and commercial partners, high customer concentration, secured debt and lender requirements, potential dilution from preferred stock, warrants and equity awards, and integration of Twill. The filing identifies Israel’s security situation and possible operational disruption as risks. One customer represented 29.9% of FY2023 revenue and 66.5% of year-end receivables.
- Other items: The company reported $121,000 of inventory write-downs in 2023 and no material pending litigation. The auditor issued an unqualified opinion on the financial statements and identified the liquidity/going-concern assessment as a critical audit matter. Management reported effective disclosure controls and internal control over financial reporting; the auditor did not express an opinion on internal-control effectiveness.
Investor verification priorities
- Reconcile the different liquidity horizons stated by management—at least 12 months from issuance and through 2025—and assess the sales, cash-burn and financing assumptions behind them.
- Review Twill’s purchase consideration, warrant and equity-award dilution, integration costs, expected synergies and progress toward the 2025 profitability target.
- Track quarterly revenue by channel, recurring commercial revenue, customer launches and renewals, and the concentration of revenue and receivables.
- Confirm the outstanding debt balance, interest and amortization terms, covenant or milestone compliance, and availability of any discretionary loan tranche.
- Assess potential dilution and conversion terms for Series B and Series C preferred stock, warrants and other equity-linked securities; verify stockholder approvals required for issuance or exercise.
- Compare reported GAAP margins and losses with management’s adjusted measures, including the assumptions and exclusions used in those non-GAAP calculations.