DarioHealth Corp. Q1 FY2026 earnings call

Growth Strategy & Channel Ecosystem Expansion

• DarioHealth is executing a two-layer growth strategy focused on scalable channel partnerships (to access large volumes of covered lives via single commercial relationships) and a multi-condition platform (to capture a larger share of each account's population).
• The company entered the contracting stage for its largest ever channel partnership with a major Northeastern U.S. hospital network, which will add approximately 65 million additional covered lives and 3,500 employer relationships, bringing total distribution reach to over 175 million covered lives when combined with existing partnerships.
• 10 new accounts were added in Q1 2026, most via channel partners and all outside the traditional annual employer benefit cycle, demonstrating that the partner-led model is generating continuous opportunity rather than only seasonal demand. Extensions are in progress with long-term partners Aetna (three-year) and Centene (four-year).
• As of end-Q1 2026, total commercial pipeline reached ~$127 million across 241 open opportunities, with increasing average opportunity size driven by channel partnerships and multi-condition platform adoption. There are also 11 active state-level opportunities through the U.S. Rural Health Transformation Program.
• The company closed 2025 with nearly $13 million in contracted and late-stage business, which has a total contracted ARR/late-stage value of $30 million, with the largest accounts on track to launch by July 1 2026.

Platform Evolution: Moving Closer to Care Delivery

• A key new strategic step is expanding the platform beyond digital member engagement to directly participate in care delivery, outcomes-based contracting, and claims-based revenue models, leveraging Dario's deep library of over 100 peer-reviewed clinical studies (the largest in its digital health category) to support this shift.
• The company is partnering with clinical care providers to add a care delivery layer, rather than building full clinical capabilities internally, creating a more efficient path to new revenue: Dario identifies and engages at-risk members, while partners deliver interventions, close care gaps, and enable reimbursable care events.
• The company expanded its strategic partnership with Green Key Health to integrate Green Key's clinical sleep service pathway into the Dario platform, creating a national diagnostic and telehealth pathway for obstructive sleep apnea that improves holistic cardiometabolic outcomes and creates new revenue tied to medical spend.

Data & AI Competitive Advantage

• DarioHealth is fully vertically integrated, owning its FDA-cleared connected device hardware, proprietary clinical data set, and AI platform, with no reliance on third-party licensed technology.
• The company holds over 13 billion proprietary real-world longitudinal clinical data points, collected over a decade, that cannot be quickly replicated by general-purpose AI models.
• Its proprietary ValueIQ AI engine, trained on this unique data set, is already deployed and has delivered up to a 40% improvement in member retention and up to a 55% lift in active sessions compared to control groups, with early results confirming AI-driven measurable behavioral change.

Strategic Review Process

• A strategic review process, launched in September 2025 in response to unsolicited inbound interest, remains active. The special board committee is evaluating all options including sale, merger, strategic combination, or continued standalone execution, with updates to come only when there is material development to share.

Dario Health reports total Q1 2026 revenue of $5.6 million, which is up 7.7% sequentially from $5.2 million in Q4 2025, but down year-over-year due to a deliberate exit from non-recurring pharmaceutical revenue that is no longer part of the core business model. Over 80% of total Q1 2026 revenue comes from partner-driven B2B2C channels, which maintain an 80% non-GAAP margin for the ninth consecutive quarter. The remaining ~20% of revenue comes from direct-to-consumer channels, which grew 42% year-over-year and 24% quarter-over-quarter, driven by strong demand for the company's MSK product. Total operating expenses for Q1 2026 were $10.5 million, down 21% year-over-year and 8% sequentially. Non-GAAP operating expenses were $8.7 million, down 18% year-over-year and 3% sequentially. GAAP operating loss was $7.3 million, an improvement of 22% year-over-year and 15% sequentially, while non-GAAP operating loss was $5.3 million, an improvement of 8% year-over-year and 11% sequentially. Gross loss margin was 57% in Q1 2026, flat year-over-year and up 300 basis points sequentially from 54% in Q4 2025.

• The company confirmed that all implementations of 2025-signed large accounts remain substantially on time and on track, with revenue from these accounts expected to be recognized primarily in the second half of 2026 and into 2027, leading to material revenue acceleration in H2 2026 compared to H1 2026.
• Management expects to continue reducing non-GAAP operating loss through the full 2026 calendar year, driven by operating efficiency gains, high-margin B2B2C channel growth, and a materially reset lower cost structure compared to 2025.
• Management expects the new care delivery expansion strategy to create additional revenue and profit pool opportunities starting in 2027, with most active health system proposals targeting January 2027 launch, primarily in the Medicare Advantage and Medicaid segments.
• Direct-to-consumer revenue is expected to deliver strong full-year 2026 growth compared to 2025, driven by ongoing demand for the company's popular MSK product.

• All forward-looking statements, including revenue growth projections, implementation timelines, and strategic outcome expectations, are subject to material risks and uncertainties that could cause actual results to differ materially from projections, many of which are outside the company's control. Key risks are disclosed in the company's periodic SEC filings, including its Form 10-K.
• Large enterprise account implementations require complex custom technical, operational, and integration work, so final revenue contribution timing and magnitude may differ from initial projections.
• The strategic review process has no set timeline or guaranteed outcome, and there is no assurance that it will result in a transaction or any other value-creating outcome for shareholders.

Q: How does the new care delivery expansion partnership model work economically, and how does it differ from Dario's existing revenue arrangements?

A: The model is referral-based: Dario identifies and engages members in need of clinical intervention, while the partner delivers the actual care. Dario already has existing market proposals that request this enhanced care capability, so the model addresses direct customer demand. It also opens new profit pools including claims-based billing, which Dario first launched in January 2026. The model aligns well with Dario's existing outcomes-based Clinical Milestones product, which already ties payment to meeting specific clinical targets rather than just engagement metrics, and enhances Dario's ability to support health plans' HEDIS and STAR rating requirements.

Q: How many active health system care delivery opportunities are in the pipeline, and what is the expected timing for revenue from these opportunities?

A: There are currently 7 to 10 active proposals with health systems for this care delivery model, all targeting January 2027 business. Most of these opportunities are for Medicare Advantage plans, with some in Medicaid and additional opportunities tied to the Rural Health Transformation Program, where Dario already has 11 active state-level bids. Full details of the newly announced Green Key Health expanded partnership will be shared publicly next week.

Q: What magnitude of revenue acceleration can be expected in the second half of 2026 from 2025's contracted accounts?

A: Dario does not provide specific detailed revenue guidance, but confirms that $30 million in contracted ARR and late-stage business is on track, with the largest accounts scheduled to launch by July 1, 2026. All implementations are progressing as planned, and the company expects material sequential revenue growth in the second half compared to the first half of 2026 as these accounts go live and scale.

Q: What is driving the strong recent growth in Dario's direct-to-consumer revenue?

A: Most direct-to-consumer growth is driven by high consumer demand for Dario's MSK product, which is popular both in the U.S. and international markets. Strong consumer demand for the MSK product has also generated new B2B demand from U.S. clinics, which Dario is currently exploring, and management expects continued strong DTC growth for the full year 2026.