Good morning, ladies and gentlemen, and welcome to the DarioHealth Fourth Quarter 2024 Results Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. [Operator Instructions] This call is being recorded on Monday, March 10, 2025. I would now like to turn the conference over to Kat Parrella, Investor Relations Manager at Dario. Please go ahead.

Thank you, operator, and good morning, everyone. Thank you for joining us today for a discussion of DarioHealth's fourth quarter and full year 2024 financial results. Leading the call today will be Erez Raphael, Chief Executive Officer of DarioHealth. He'll be joined by Steven 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, March 10, 2025. This morning we issued a press release announcing our financial results for the fourth quarter of 2024. The 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 2024 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 Raphael, CEO of DarioHealth.

Thank you, Kat. Good morning, everyone, and thank you for joining our call this morning. Over the past year, DarioHealth has undergone a transformational shift, evolving into a leading healthcare technology company operating under a satellite model. This evolution has solidified Dario's position as a premier platform in the B2B2C market, expanding sales to employers, health plans, and strategic partners, while continuously enhancing our technology, product offering and AI-powered capabilities. The acquisition and the seamless integration of Twill, that are 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, and increasingly value driven healthcare environment. How the market is evolving and why Dario 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 [indiscernible] solutions are no longer sustainable. Dario wants a platform that delivers multi-condition care, proven ROI, and seamless integration with the existing systems. Dario is positioned ahead of this shift. The Twill 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 powered platform now supports five chronic conditions making Dario a leader in whole-person care. One of the growing behavioral health and cardiometabolic offerings, including partnerships with virtual providers organizations like MediOrbis and Rula, which Stephen will cover later, allows us to serve broader population while delivering scalable, cost-effective care solutions. The second major shift…

Thank you, Erez. And good morning, everyone. I am thrilled to share our Q4 and full year 2024 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-1 solutions, reinforcing our growing demand for behavioral and lifestyle support for GLP-1 users. Our solution supports people at every stage of their GLP-1 treatment, from onboarding and staying engaged to offboarding 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…

Thank you, Steven. As we conclude today's discussion, it's clear that 2024 was a transformational year for DarioHealth. 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 Twill, deepening our employers' and health plans relationships, and strengthening our position in the GLP-1 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 ahead, our strategy for 2025 will 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 payer and the pharma markets. Our goal is to increase our total number of accounts by 50%, with GLP-1 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 fragmented point solutions toward integrated multi-condition platforms that deliver better outcomes and cost efficiencies. This shift has only been reinforced by GLP-1 adoption, which underscores the importance of holistic whole-person care. Dario is uniquely positioned to capitalize on this transition with AI-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 2025. With continued operational discipline and AI-driven efficiencies, we believe we can drive longterm 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.

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

Thanks for taking the questions. Erez, I just wanted to ask sort of on the GLP-1 support programs, you talked about, obviously, able to help on board as well as support through treatment and then 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-1 support solution.

Yes. Thanks, Charles, for the question. So last year we won like 10 accounts that have the GLP-1 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 about them. 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 off-boarding. More results we have on the onboarding 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.

And I know you're not giving 2025 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 the GLP-1 program will be as a percent of total revenue?

Yes, so last week, as we mentioned on the call, we were like winning 36 accounts. This year we are targeting to grow 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-1. We think that the GLP-1 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. Steven, if you want to add something?

Yes, I'll add. I think In the GLP-1 space, one of the things that we announced in January, I believe, actually, was our prescribing partner MediOrbis. 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, etc. 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-1, 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-1, 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, etc. 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-1 is 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.

Yes, maybe one more on GLP-1 just real quickly, how many employers are electing to have MediOrbis 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 on the pharmacy benefit side. Just curious if that's being actually [Multiple Speakers]

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 when we evaluated some of our business wins and losses. So 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-1 offering, programmatically speaking, in our cardio metabolic suite was strong already. What we needed to do was just have that option. That's all we really needed 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.

Got it. 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 any of the other cardiometabolic conditions. And have any of those discussions been going on with existing health plan partners?

Yes. So I did announce today we noted towards something of the future, which was that we --we’re 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 to a 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 with 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 of our partners in their own behavioral health strategies. That'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.

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?

Health plan revenue in 2025. Erez [indiscernible].

May be I’ll take this one. We are not guiding for how 2025, 2026 are going to look like. In general, the growth rate that you mentioned is something that we are targeting in all the channels. 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 cardio metabolic. We need to remember that Dario built the cardio metabolic solution for many years and we have one of the most advanced cardio metabolic solutions and Twill have built a very advanced behavioral health solution. Both of them are being sold in the market as a standalone and also as a full suite. So I don't think that from a win perspective or revenue perspective, that 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.

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

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 number of accounts. So we want to grow by at least another 50 accounts this year. So that's the communication that we had with the market.

Understood. Okay, thanks for the clarification. Appreciate it.

Yes, absolutely. Thank you.

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

Thank you, Erez and Steven. Just a big picture questions and please flesh out any sub topics 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-1 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.

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, 5,000, 10,000 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 times to 5 times 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're 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 done by 35%. This trend is going to continue into 2025. We think that by Q4 2025, we're going to cut it by another 20%. So I think that a very effective cost management plus very engaging product, plus very, 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.…

And Erez, if I could add. What I'd add just to your question in terms of the strategic moat. So Erez has covered where we are in terms of a company being mindful, profitable, et cetera. That's our goal where we're stated, where we're at run rate, et cetera. On target, want to execute there too. Outline what we have, differentiator around GLP-1 to pivot. We have D2C 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, etc. 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, etc. So we have a good learning ground. Another strategic mote though is being multi-conditioned. 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-conditioned platform as we grow and scale, it's a strategic more for us. And the market is starting to meet us there. I think 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 moat 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.

Okay. Thank you, Erez and Steven. All the best.

Thank you.

Thank you, Ashok.

[Operator Instructions] Your next question comes from David Grossman with Stifel. Your line is now open.

Good morning. Thank you. Erez, you spoke several times about vendor validation. Perhaps you could share some statistics on the trends in customers taking multiple solutions, whether that be metabolic, taking behavioral, vice versa, or GLP-1s.

Yes, so when we are talking about multi-condition, it's not necessarily 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 bought this full suite on an integrated base. And we need to remember that we integrated the product only in 2024, and everything is under the same brand as of Q4 2024. 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 3 times to 5 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 are large clients, as I said, we're going to win between three to five accounts that are going to cross-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 large client, National Health Plan, that is going to take in one shot the entire full suite, that's the expectation that we have for the next few months. That's in general the statistic that we have. We don't think that we're going to see large accounts that are like hundreds of thousands of users like health plans, but they're 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.

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 the more direct to consumer type relationships or are the potential relationships broader or different than that?

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 data-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 is 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 Twill Care 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 funnel and this is something that the 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 Twill they had such -- they had some agreement 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 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 to Sanofi. 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’s going 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 $1.5 million. Most of them are employers.

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 into what you meant by that?

Yeah, I'll take that one. Two things. One is that, today we, Dario, in terms of our product mix being billed 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 can 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 all of it here on the call, but I'm sure as many of you know, there's 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 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, et cetera. So differentiation and ease of business and differentiation on how we can get after a bigger revenue pool for ourselves as well.

Got it. Thanks very much. Good luck.

You bet. Thank you.

Thank you, David.

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.