DarioHealth (DRIO) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue reached $6.3M, up 8.6% sequentially and 1.7% year-over-year, driven by B2B2C growth and the Twill acquisition.

• B2B2C recurring revenue grew 315% year-over-year and 60% sequentially, now representing 75% of total revenue and an annual run rate of $21.6M.

• Net loss for Q2 2024 was $13.6M, a 17.9% improvement year-over-year, aided by financial income from warrant revaluation and cost reductions.

• Gross margin improved to 44.1% in Q2 2024 from 33.7% in Q2 2023, reflecting higher B2B2C and Twill contributions.

• Workforce reduced by 30% in Q2 2024 to control operating expenses.

Financial highlights

• Q2 2024 revenue: $6.3M (+8.6% QoQ, +1.7% YoY); B2B2C revenue: $5.5M (+315% YoY, +60% QoQ).

• Q2 2024 gross profit: $2.8M (44.1% margin); six-month gross profit: $5.2M (43.2% margin).

• Q2 2024 net loss: $13.6M (vs. $16.6M Q2 2023); six-month net loss: $20.8M (vs. $29.4M prior year).

• Cash and equivalents at June 30, 2024: $22.9M, down from $36.8M at year-end 2023.

• Pro forma operating expenses reduced by 10% from Q1 to Q2 2024; targeting a 40% reduction from Q1 2024 to Q1 2025.

Outlook and guidance

• Expects B2B2C revenue growth above 50% year-over-year for 2024 and cash flow breakeven by end of 2025, driven by cost reductions and high-margin B2B2C growth.

• Operating expenses projected to decrease 24% GAAP and 40% non-GAAP from Q1 2024 to Q1 2025.

• Gross margin expected to reach 80% by Q1 2025, with B2B2C already at 82% in Q2.

• Pharma channel revenue expected to normalize by year-end as business model shifts to recurring revenue.

• Management believes current cash and facilities are sufficient for at least 12 months, but long-term going concern risk remains without additional capital.