DarioHealth Corp. Q3 FY2025 earnings call

• Dario is a digital companion for whole person health with a multi-condition model, where over 50% of new clients this year chose the multi-condition solution. Its AI-powered engine combines various data to deliver measurable outcomes.
• Strong demand, with 45 new accounts signed year-to-date in 2025, exceeding the 2025 goal of 40 new accounts. Client base is over 125, including Fortune 100 employers and health plans.
• Partnerships are key: UnitedHealthcare launched Dario on its digital marketplace in a soft launch in 2025 with a full national rollout in January 2026; partnership with Solara Health led to launches with Primera Blue Cross and Aetna; partnership with Amwell led to Florida Blue offering Dario's solutions.
• Pharma services transitioned to a recurring revenue model, focusing on therapeutic areas like MASH (formerly NASH), with a F.A.I.R. framework to drive engagement.
• Operating expenses continue to decline due to process automation, organizational streamlining, and AI-based workflow, with an expectation of a 10%-15% improvement in operating expenses over the next twelve to fifteen months.

In the third quarter of 2025, revenues were $5 million, down from $5.4 million in the same period of 2025 and $7.4 million in 2024. The year-over-year decline was due to the nonrenewal of a large scope of work with a national health plan and the shift towards long-term annual recurring revenue. GAAP gross margin expanded to 60%, up from 55% in 2025 and 52% in 2024. Non-GAAP gross margin in the core B2B2C business remained above 80% since early 2024. Operating expenses for the first nine months of 2025 decreased by $17.2 million (31%) year-over-year, and for the third quarter, they decreased by $3.4 million (21) compared to the prior year period.

• Target of $12.4 million in new business for implementation in 2026, including committed annual recurring revenues and late-stage pipeline opportunities.
• Aim to reach run-rate cash flow breakeven by late 2026 to early 2027.
• Expect operating expenses to improve by 10%-15% over the next twelve to fifteen months as core processes are automated and efficiency is enhanced.

Q: Wanted to ask about your UnitedHealth national rollout starting in January 2026. Can you help us understand how much of the $12 million in new business expected to be implemented in '26 is coming from this client? And then can you, I guess, just speak to the overall opportunity you see with this client in 2026 and beyond?

A: Yeah. Hi. This is Steven Nelson. Yeah. I am happy to take that question. Two things. One is they have launched a digital marketplace for all their book of business. They're rolling it out in chunks. They soft announced that in Q3. We've been active in that pilot rollout, and now they're doing it with scale against their entire book. We don't get specific in terms of client segments and revenue by client by the book. But we're really encouraged by what they're doing. We were one of the few selected in terms of that digital marketplace. And as they roll that out, they're rolling it out in chunks, I believe, in membership books as they go quarter by quarter, with the formal rollout. So it's more of what they've done before to have a market. They've done a little bit of this in the past, but this is kind of a newer launch for them. I'd say quite innovative, to say the least. And this is a group-sponsored business where the group benefits people, members, consumers can go on and use their benefits to then purchase within a digital portfolio of products. So not necessarily built within their product. In direct form, more through a group type of plan. And so it's a pretty innovative launch. We're excited to be a part of it, and that will all kick off in a formal way in January.

Q: Thank you very much. Steven, you talked about adjusted product market fit. And in the press release, it also highlights the new performance-based pricing model. And I'm wondering between those two things, what are you finding is working for you better now than, say, twelve months ago?

A: Yeah. Two things. One is that we're really focused on which multi-condition offerings we're taking in the market for clients. So we're doing more around claims-based analytics. We're doing more around claims-based engagement. Trying to make sure that our product fits kind of what they're looking for. A solution, first of all. That's from the marketing to the presentation to the sales process to closing it and then reporting on it, engaging it, you know, etcetera with the clients. So I think that's one big broad thing. I think the second thing is, you know, we didn't do it all ourselves. I noted in the earnings release, specifically in my script, that we talked about how we added in a couple of key partners to round out our product solution where we didn't have to necessarily develop the R&D but they are presenting market opportunities for us, specifically most recently, Green Key around sleep. Again, partnering with what we have in cardiometabolic offering, tying that into sleep gets us into a different category. Doesn't increase our R&D expenditures, and allows us to go to market with a new offering. Again, product market fit, finding ways to reduce the cost of care for payers, specifically in the sleep category. We're looking at the same thing with OneStep recently announced around falls prevention, Medicare Advantage, One Step. So, again, we're trying to think differently about how our product and how the market, either through partners or our core bread and butter product, really goes towards certain segments. Strategically, we also went after some different accounts. So we went at certain accounts that were a certain size. Type, where they operate a certain way. Manufacturing, production, etcetera. So we tried to really make sure that our product, digital health being kind of how we engage people remotely, would fit with people and how their segments were, their employer segments were, etcetera. So one was really a detailed approach about the clients we were targeting. Two was the partners that we brought on to our product. And three is how we actually went to market to win.

Q: Hi, guys. This is Aiden on for David. Are you able to hear me?

A: Yes. We can hear you.

Q: Okay. Great. Sorry about that. I had some technical difficulties. But I wanted to ask on the new client wins, 45 already for the year, exceeding the target. Has anything changed in your approach for go-to-market? And what's resonating with these new clients?

A: I mean, our first biggest thing that I noted on the script, and obviously important for the market to note, is we doubled down with some of our key channel partners. And our channel partners really delivered in terms of the market that we're going after, the accounts we're going after, etcetera. So one would be our channel partners. We're a big difference than what we had from wins of last year at the same time. Two is our fit with them. I mean, I know there's a product market fit to the clients, but there's also one with our distribution partners as well. And that also has gone well. From how we're contracted with them to creating win-win agreements to making sure that we meet the needs on how they're reporting, how we engage, etcetera. So one big one would be our distribution channel partners for sure. Then I'd say, secondarily, just how we targeted. We are targeting without getting into the specific strategy and the detail of the strategy. I mean, we're going at it a certain way. We kind of pivoted to make sure that we could win in a differentiated way. Again, I don't want to get into all the details of that competitively, but I would say that we really thought about it differently, approached it differently, and won. And our channel partners are a big part of that. However, we had some other partnerships as well that weren't channel-specific that were just kind of at the table. Our consultant relationships that came through a couple of new ones that have been really favorable for us as well. And I'd say also a couple of different segments that we dipped into. We were dipping into the TPA segment for the first time in a while. We now have a PBM relationship for the first time. So we have some other different market segments that aren't channel partners but are good partners to go to business with. We're seeing some uplink in those as well.