Q1 2025 DarioHealth Corp Earnings Call

Operator: Good morning, ladies and gentlemen, and welcome to the DarioHealth First Quarter 2025 Results Conference. At this time, all lines are in the end-only mode.

Good morning, ladies and gentlemen, and welcome to the Doctor or a health first quarter 2025 results conference call.

This time, all lives or we need that only mode. Following the presentation, we will conduct a question and answer session.

Operator: Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator.

Cut Barilla: If at any time during this call you require immediate assistance. Please press star zero for the operator. This call is being recorded on Wednesday may 14th 2025, I would now like to turn the conference over to cut Barilla Investor Relations manager of Dio Kat. Please go ahead.

Operator: This call is being recorded on Wednesday, May 14th, 2021.

Kat Parrella: I would now like to turn the conference over to Kat Parrella, Investor Relations Manager at Dario. Kat, please go ahead. Thank you, operator, and good morning, everyone. Thank you for joining us today for a discussion of DarioHealth's first quarter 2025 financial results.

Speaker Change: Thank you operator, and good morning, everyone. Thank you for joining us today for a discussion of cardio health first quarter 2025 financial result.

Kat Parrella: Leading the call today will be Erez Raphael, Chief Executive Officer of DarioHealth. He'll be joined by Lara Dodo, our Acting Chief Operating Officer.

Speaker Change: Leading the call today will be Erez, Raphael Chief Executive officer of Darryl how.

Speaker Change: They'll be joined by large auto our acting Chief operating officer, Lars remarks within prepared by our Chief Commercial Officer, Steven Nell thing.

Kat Parrella: Lara's remarks have been prepared by our Chief Commercial Officer, Steven Nelson, who is unable to attend today due to an injury requiring medical attention. Fortunately, he's expected to recover quickly, and we're grateful to Lara for joining us today on his behalf.

Speaker Change: Unable to attend today due to an injury requiring medical attention. Fortunately, we expect it to recover quickly and we're grateful to Laura for joining us today on his behalf.

Kat Parrella: 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 Wednesday, May 14, 2025.

Speaker Change: An audio recording and webcast replay for today's call will also be available online are detailed in the press release invite for this call.

Speaker Change: For the benefit of those who may be listening to the replay or archived webcast. This call is being held on Wednesday may 14th 2025.

Kat Parrella: This morning we issued a press release announcing our financial results for the first quarter of 2025. A copy of the release can be found on the Investor Relations page of DarioHealth's website.

Speaker Change: This morning, we issued a press release announcing our financial results for the first quarter of 2025, a copy of the release can be found on the Investor Relations page of Dario helps website.

Kat Parrella: 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 invocations 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 first quarter 2025 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.

Speaker Change: Actual events or results may differ materially from those projected as a result of changing market trends with this demand or the competitive nature of thought here.

Speaker Change: 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.

Speaker Change: 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 first quarter 2025 quarterly report on Form 10-K.

Speaker Change: 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.

Kat Parrella: 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-gap 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.

Speaker Change: In addition, certain non-GAAP financial measures may be discussed during this call.

Speaker Change: These non-GAAP measures are used by management to make strategic decisions forecast future results and evaluate the company's current appointment.

Speaker Change: 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.

Speaker Change: 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 Eric Raphael Yellow Cardinal health.

Erez Raphael: With that, I'll hand it over to Erez Raphael, CEO of DarioHealth. Good morning, everyone, and thanks for joining our call today. Over the past few years, DarioHealth has undergone a transformational shift, evolving into a leading healthcare technology company operating under a SaaS-like model. This evolution has solidified DarioHealth's position as a premier platform in the B2B2C market. spending sales to employers, health plans, and strategic partners while continuously enhancing our technology, product offering, and AI-powered capabilities. In the first quarter of 2025, we signed 14 new clients. We achieved 17.5% non-GAAP gross margins and maintained over 81% gross margins in our core B2B2C business.

Speaker Change: Morning, everyone and thanks for joining our call today.

Speaker Change: The past few years value health has undergone transformational shift evolving into a leading health care technology company operating under a SaaS like model. This evolution has solidified <unk> position as a premier platform in the beta BDC market expanding service to employers.

Speaker Change: Health plans and strategic partners, while continuously enhancing our technology product offering and AI powered capabilities.

Speaker Change: In the first quarter of 2025, we signed 14, new clients, we achieved $17 five non-GAAP gross margins and maintained over 81% gross margins now called B to B to C business.

Erez Raphael: Our operating expenses declined 35% year-over-year, demonstrating our continued progress toward a linear, more scalable model.

Speaker Change: Operating expenses declined 35% year over year, demonstrating our continued progress toward a linear more scalable model.

Erez Raphael: The acquisition and the seamless integration of Twill, Dario's most significant to date, 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 all-person care in an increasingly value-driven healthcare environment. We are focused on execution, turning this vision into measurable results. In Q1, we continue to build momentum across client acquisition, operational efficiency, platform integration, and strategic realignment. I would like to elaborate on the broader market context, whole person, multi-condition, leadership.

Speaker Change: The acquisition and the seamless integration of Twitter value most significant today.

Speaker Change: Our strengths our leadership in the industry, creating one of the most comprehensive clinically integrated digital health platforms.

Speaker Change: Now supporting five chronic conditions under a single unified brand, we are uniquely positioned to meet the growing demand for consumer centric.

Speaker Change: In an increasingly value driven health care environment, we are focused on execution. Turning this vision into measurable results in Q1, we continued to build momentum across client acquisition operational efficiency.

Speaker Change: Integration.

Speaker Change: Strategic realignment.

Speaker Change: I would like to elaborate on the broader market context.

Speaker Change: Multi condition leadership the market continues to shift the seasonably towards whole person digital health platform consolidation.

Erez Raphael: The market continues to shift decisively toward whole person, digital health, and platform consolidation. Employers and health plans are moving away from siloed point solutions and looking for trusted partners that can deliver multi-condition care at scale, with proven outcomes, seamless integrations, and measurable ROI. Dario is positioned ahead of this shift. With the integration of Twill, we now offer one of the most comprehensive and clinically integrated product portfolios in the industry, enabling unified platforms that support metabolic, behavioral, and musculoskeletal health. Our AI-powered platform now manages five different chronic conditions under a single brand, making Dario a true leader in the multi-conditioned whole-person care.

Speaker Change: Wireless and health plans are moving away from dialog point solutions and are looking for trusted partners that can deliver multi condition.

He is a proven outcomes seamless integrations and measurable ROI.

Speaker Change: <unk> always positioned ahead of this shift has.

Speaker Change: As the integration of Sweden, we now own one of the most comprehensive and clinically integrated product portfolios in the industry, enabling unified platform that supports metabolic behavior and.

Speaker Change: And muscular skeletal health.

Speaker Change: I followed that.

Paul now manage five different clinical conditions under a single brand, making value a true leader in the multi condition on whole person care.

Erez Raphael: The brief is more than just clinical, it's commercial. It allows us to engage multiple populations, expand within accounts, and deliver value across diverse benefits, structures, and risk-sharing models. And we are not doing it alone. Our strategic partnership with leading virtual providers like Rula in behavioral health and Medi-Obis in GLP-1 prescribing and chronic care allows us to deliver deeper, more personalized care while enabling scalability and cost-effective care. This is not theoretical, it's embedded into our client role, our platform strategy, and our day-to-day execution.

Speaker Change: The brief is more than just clinical.

Speaker Change: Sure.

Speaker Change: It allows us to engage.

Speaker Change: Appalachians.

Speaker Change: And within accounts and deliver value across diverse benefit structures and risk sharing models.

Speaker Change: We are not doing it alone of strategic partnerships with leading virtual providers like cooler in behavioral health and many obese and GSD, one describing and chronic care allows us to deliver deeper more personalised Carol.

Speaker Change: Enabling scalability and cost effectiveness.

Speaker Change: This is not the way to Ken it's embedded into our client blow our platform strategy and our day to day execution.

Erez Raphael: I would like to provide some strategic and operational update. We delivered $6.75 million in revenue this quarter, a 17% increase year-over-year, driven by recurring revenue and growth from our B2B2C challenge. The sequential revenue was lower compared to Q4, probably due to the shift in scope with large National Health Plan clients. What began as an initial implementation for a narrow population segment was ensourced We are now in a broader evaluation process, including an active RFP covering Dario's full-cap. Additionally, we experienced timeline extension in other projects due to tariff-related pressure. which impacts both algal sourcing and partner side execution.

Speaker Change: I would like to provide some strategic and operational update we delivered $6 $75 million in revenue this quarter, a 17% increase year over year, driven by solid revenue growth.

Speaker Change: Ill be the BTC challenge.

Speaker Change: Sequentially revenue was lower compared to Q4, primarily due to the shift in scope with large national health plan clients.

Speaker Change: It began as an initial implementation for a narrow population segment.

Speaker Change: In sourced.

Speaker Change: We are now in the both of our valuation process, including an active RFP.

Speaker Change: The thing that Leo's foods platform.

Speaker Change: Additionally, we experienced timeline extension in other project due to <unk> related question.

Speaker Change: Which impacts both our sourcing and plasma side of the fusion.

Erez Raphael: Despite these external factors, we continue to execute against focused, strategy-centered and platform differentiation, client quality, and commercial scalability. On the commercial side, we are seeing a meaningful traction across our commercial business. 14 new clients signed year-to-date, one national health plan, one regional health plan, 12 employers. Total client base now 97, up from 83 at the end of 2024. 80% plus of the new contracts are multi-conditioned. Average account agreement is three years with a renewal rate remains above 90%. Pipeline requirements underway, prioritizing high-quality long-term deals and phasing out lower-value transactional opportunities. Gross margin on a non-gap base expanded to 70.5%, up from 62.4% in the first quarter of 2024.

Speaker Change: Despite this external factors, we continue to execute against our focused strategy.

Speaker Change: Platform differentiation.

Speaker Change: Quality and commercial scalability.

Speaker Change: On the commercial side, we are seeing a meaningful traction across our commercial business.

Speaker Change: Putting new clients signed year to date, one National Health plan, one regional health plan.

Speaker Change: Most employers.

Speaker Change: Total client base now 97 up from 83 at the end of 2024.

Speaker Change: 80% plus of the new contracts are multi condition.

Speaker Change: And then as account agreement is three years with our renewal rate remains above 90%.

Speaker Change: I'll try and with vitamin.

And the way prioritizing high quality long term data and phasing out global value transactional opportunities.

Speaker Change: Gross margin on a non-GAAP basis expanded to 75% up from 62, 4% in the first quarter was 2024.

Erez Raphael: The core B2B2C business is sustainable at above 81% gross margins on a non-gap basis for the last four quarters in a row. Non-gap operating loss improved from $9.1 million to $5.8 million year-over-year, representing a 36% reduction. Continue to focus on narrowing the gap toward profitability. The commercial strategy supports a more predictable recurring revenue model and aligns with our long-term growth objectives.

Speaker Change: The call will be the data say business is sustainable.

Speaker Change: 81% gross margins on a non-GAAP basis for the last four quarters soon at all no.

Speaker Change: non-GAAP operating loss improved from $9 1 million to $5 million a year over year, representing 36% reduction continued to focus on narrowing the gap.

Speaker Change: Towards profitability.

Speaker Change: The commercial strategy supports a more predictable recurring revenue model and aligns with our long term growth objectives.

Erez Raphael: AI Transformation AI continues to be a major driver in Dowser's competitive advantage. Our approach, what we call AI cubed or AI in third power, leverages artificial intelligence in three key ways. One, operational efficiency, AI-powered automation. engagement, streamlines workflow, and significantly reduces cost to serve. Two, member engagement. AI-driven, hyper-personalized, delivers precise, proactive, and data-informed interventions that improve users' outcomes, satisfaction, and return 3. Customer value. AI-based analytics provide employers, health plans, and pharma clients with predictive insights and ROI visibility, enabling smarter, cost-effective healthcare decisions. With 25 years of use of data, 5 million patient records, and billions of engagement data points, the WAI-Cubed strategy is driving the measurable shift in how we operate in the legal environment.

Speaker Change: AI transformation.

Speaker Change: Yes. It continues to be a major driver of competitive advantage our approach what we call the IQ <unk>.

Speaker Change: Power liberally artificial intelligence in three key ways.

Speaker Change: One.

Speaker Change: Operational efficiency.

Speaker Change: Follow up information.

Speaker Change: Garrison engagements things science work so.

Speaker Change: Currently abuse this cost to serve.

Speaker Change: Two member engagement.

Speaker Change: Driven hyper personalized delivers precise blocked and data informed interventions.

Speaker Change: Pool users outcomes with restrictions and retention.

Speaker Change: Great customer value AI based analytics provide employers health plans and pharma clients with predictive insights.

Speaker Change: Visibility, enabling smelter cost effective optical decisions with 25 years of user data 5 million patients sic codes and billions of engagement data points daily like IQ strategy is driving the measure of that.

Speaker Change: Okay.

Speaker Change: We operate and deliver value.

Erez Raphael: This quarter, we continue enabling AI into care navigation, behavioral outreach, internal operations, and reporting, reducing manual overheads, and accelerating return to value for our clients. We expect these efficiencies to contribute to a further 15% to 20% reduction in operating expenses over the next 12 to 18 months, supporting scalable and profitable models.

Speaker Change: This quarter, we continued enabling AI into Kevin litigation.

Speaker Change: Footage internal operations and reporting reducing menu on overheads and accelerating time to value for our clients.

Speaker Change: We expect this <unk>.

Speaker Change: <unk> seems to contribute to a further 15% to 20% reduction in operating expenses over the next 12 to 18 months.

Speaker Change: Supporting scalable profitable model.

Erez Raphael: On the leadership side, the company executive leadership team significantly strengthened over the past year, continues to focus on improving execution, forecasting, and cost-functional alignment.

Speaker Change: On the leadership side the company executive leadership team significantly strength over the past year continues to focus on improving execution.

Speaker Change: Casting and cross functional teams.

Erez Raphael: Since June 2024, DarioHealth has added a new Chief Commercial Officer, a Chief Operating Officer, a Chief Human Resource Officer, and most recently, a new Chief Financial Officer, forming a unified and execution-focused team. This leadership group brings deep experience across healthcare technology and operations, and has already begun executing key transformation priorities across commercial strategy, cost structure, and platform evolution. With this team now in place, Dario is well-positioned to deliver on his strategic priorities, drive operating leverage, and support the company's next phase of growth.

Speaker Change: In June 2020, Philadelphia has added a new chief commercial officer, a chief operating officer.

Speaker Change: Human resource officer, and most recently, a new chief financial officer, forming a unified an execution focused team.

Speaker Change: His leadership ranks.

Speaker Change: Deep experience of course, healthcare technology and operations and has already begun executing key transformation priorities across commercial strategy cost structure and.

Speaker Change: Platform evolution.

Speaker Change: This team is now in place dollar is well positioned to deliver on our strategic priorities and drive operating leverage and support the company next phase of growth.

Erez Raphael: On the capital and cash flow, in Q1, we completed an equity raise and refinanced our debt. With a new structure, debt amortization is deferred from the end of 2025 to 2028, creating financial flexibility and supporting our multi-year goal of achieving cash flow positive from operations. We remain on track to achieve operational cash flow break-even run rate by the end of 2025, supported by existing account extension, new contract swings, and deep pipeline of near-term opportunities.

Speaker Change: On the capital and cash flow in Q1, we completed an equity raise and refinanced our debt.

Speaker Change: With the new structure.

Speaker Change: Debt amortization is differed from the end of 2025% to 2028, creating financial flexibility and supporting our multi year goal of achieving cash flow positive from operations.

Speaker Change: We remain on track to achieve operational cash flow breakeven.

Speaker Change: By the end of 2025.

Speaker Change: <unk> by existing account expansion, new contract swing and deep pipeline.

Speaker Change: Opportunities.

Erez Raphael: In summary, we are scanning intentionally, operating with discipline. and deepening platform values across partners. We have the right team, the right strategy, and the right momentum.

Speaker Change: In summary, we are.

Speaker Change: Scanning intentionally operating with discipline.

Speaker Change: And deepening platform values of correspondence.

Speaker Change: We have the right.

Speaker Change: Started gene and momentum.

Lara Dodo: With that, I'll turn over the call to Laura. Thank you, Erez. And good morning, everyone. Over the past 12 months, we've accelerated client growth, deepened our strategic partnerships, refined our go-to-market execution, and expanded our platform capabilities.

Speaker Change: With that I'll turn over the call to Lora.

Lora: Thank you, Eric and good morning, everyone.

Lora: Over the past 12 months, we've accelerated client quite deep industrial T. J partnerships refined our go to market execution and expanded our platform capabilities.

Lara Dodo: Year One 2025 marks another step forward in our evolution into a fully integrated, AI-powered digital health platform, purpose-built to drive long-term value for our clients and sustainable growth for Dario. We've signed 14 clients yet to date, including a national health plan, a regional plan, and 12 employer partners. More than 80% of those contracts are multi-condition, and our client renewal rate remains strong above 90%, reinforcing satisfaction and long-term platform value. That's not just a reflection of product performance. It's an indicator of our ongoing capability and strategic value. The employer market continues to consolidate around solutions that deliver measurable ROI, cost containment, and better health outcomes.

Lora: Q1, 2025 marks another step forward in our evolution into a fully integrated AI powered digital health platform.

Lora: To drive long term value for clients and sustainable growth for diarrhea.

Lora: We signed 14 clients the X date.

Lora: Creating a national health plan, a regional plan and 12 employer partners.

Lora: More than 80% of those contracts are multi condition and our clients with renewal rate remains strong at 590% reinforcing satisfaction and low 10 platform value.

Lora: That's not just a reflection of our product performance.

Lora: It is an indicator of our ongoing capability and strategic value.

Lora: And plenty of motto continues to consolidate around solutions that deliver measurable RLI cost containment and better outcomes.

Lara Dodo: Employees are telling us that they no longer want disconnected point solutions. Instead, they're looking for unified, clinically-integrated platforms that address multiple conditions through a consistent, consumer-centric experience. Gloria's GLP-1 companion solution remains a key entry point. uniquely supporting the full treatment journey from onboarding to behavioral reinforcement to structured off-boarding. It's more than content. It's an AI-informed experience integrated with prescribing, behavioral health, and outcomes monitoring. We stand apart in this space. While other offers behavioral overlays, Dario offers a prescriber-backed, remote-monitoring-enabled experience through our MIDI Orbis partnership, making our GLP-1 solution clinically complete and highly effective to self-insured employers.

Lora: Employers are telling us that they no longer want disconnect with point solutions.

Lora: They're looking for a unified clinically integrated platforms that address multiple conditions.

Lora: Consumer centric experience.

Lora: Sorry, a G. L. P. One compay installation remains a key entry point.

Lora: The supporting the first treatment journey.

Lora: Onboarding to behavioral reinforcement.

Lora: Should off boarding.

Lora: More than content. It is an AI and formed experience integrating with prescribing behavioral health and outcomes monitoring.

Lora: We stand apart from the space.

Lora: Well other office behavioral overlays Daria office at the scrap it backed remote monitoring enabled experience try maybe August partnership.

Lora: Making a G. L P. One Felicia Kenneth P complete and highly affected to self insured employers.

Lara Dodo: Our new product packaging and outcomes-based pricing models are resonating. We've simplified adoption through claims-based billing and smarter employee targeting using AI-driven stratification. This lowers the barrier to entry and aligns our incentives with client success. Our recent integration with RULA further strengthens our behavioral health capabilities, offering employers access to one of the largest therapy networks in the U.S. This combination allows us to provide a full continuum of behavioral support at a time when mental health remains a top priority for HR and benefit leaders.

Lora: Our new product packaging and outcomes based pricing models are resonating.

Lora: We've simplified adoption through claims based billing and smarter employee targeting using AI driven stratification. This law.

Lora: So is the barrier to entry and aligns our incentives with client success.

Lora: Our recent integration with a ruler further strengthens our behavioral health capabilities offering employers access to one of the largest therapy Netflix in the U S.

Lora: This combination allows us to provide a full continuum of behavioral support at a time when medical health remains a top priority for HR and benefit leaders.

Lara Dodo: Looking ahead to the back half of 2025, we expect expanded uptake of our GLP-1 and cardiometabolic bundles among mid-sized employers. Our modular packaging, combined with our ability to bundle physical and mental health services, is giving us an edge in the competitive RFP environment. We are actively tracking over three dozen employer opportunities for 2026, with expectations that some of these will be won and launched within 2025. Worth noting, of the 12 signs thus far for the year, five of those will begin in the second half of 2025. under pay-as-a-side. Demand continues to rise for scalable, flexible, and proven multi-condition platforms. Health plans are under pressure to reduce costs, improve outcomes, and best engage their members, especially across Medicare Advantage and Medicaid.

Lora: Looking ahead to the back half of 2025, we expect expanded uptake of <unk> in cardio metabolic bundles among mid sized employers.

Our modular packaging combined with our ability to bundle physical and mental health services is giving us an edge in a competitive RFP environment.

Lora: We are actively tracking over three dozen employer opportunities for 2026 with expectations that some of these will be one and launched within 2025.

Lora: With no Tang.

Lora: It felt fine thus far for the year five of those will begin in the second half of 2025.

Lora: On the payer side.

Lora: Demand continues to rise the scalable flexible and prove and mouser condition platforms.

Lora: Plans are under pressure to reduce costs.

Lora: The outcomes and better engage the members, especially across Medicare advantage and Medicaid.

Lara Dodo: A platform is purpose-built to support this transition. We're delivering value in two key ways. First, through condition-specific bundles that embed into existing health plan care models. And secondly, through platform-as-a-service arrangements that allow for deeper integration into payer infrastructure. We are actively engaged with multiple national and regional payers in high-value, long-term discussions. Two top-tier health plans are currently evaluating our full suite platform for deployment in 2026. This is a strong validation of the direction we're taking. And several others have initiated multi-condition pilots that we expect to mature into expanded relationships. With RULA as our behavioral health partner, we now offer in-network clinical integration for mental health, completing and complementing our AI-powered digital interventions.

Lora: Our platform is purpose built to support this transition.

Lora: We are delivering value in two key ways.

Lora: That's true condition specific bundles that embed into existing health plan can models and secondly to platform as a service arrangement that allows a deeper integration into <unk> infrastructure.

Lora: We are actively engaged with multiple national and regional payers and high value long term discussions.

Lora: Top tier health plans are currently evaluating our full suite platform for deployment in 2026. This is a strong validation of the direction we're taking.

Lora: And several others have initiated multi condition pilots that we expect to mature which expanded relationships.

Lora: With realized as a behavioral health partner, we now offer a network clinical integration for mental health, completing and complementing <unk> powered digital interventions.

Lara Dodo: This is particularly meaningful for Medicaid and Medicare Advantage populations where access gaps remain prominent. Our new Payer Ones expected to go live in Q3 and Q4, will begin contributing revenue in late 2025 and scale into 2026. Our plan also includes three platform-wide proposals with large plans under NDA, targeting a 2026 implementation horizon. If one of these are converted, it will represent a seven-figure annual recurring revenue opportunity and will position Dario as a core infrastructure partner for multiple years.

Lora: This is particularly meaningful for Medicaid and Medicare advantage populations, where accident gaps remain prominent.

Lora: Our new payer wins expected to go live in Q3, and Q4 will begin contributing revenue in late 2025 and scale into 2026.

Lora: Plaid plan also includes three platform what proposals with large plans under NDA.

Lora: Targeting a 2026 implementation horizon.

Lora: One of these are converted.

Lora: Represents a seven figure annual recurring revenue opportunity and will position <unk> as a core infrastructure partner for multiple years.

Lara Dodo: The Pharma Channel continues to evolve into a high-margin recurring revenue stream for us. We are seeing increased interest in DarioHealth's platform as a service model, which integrates prescribing, digital interventions, and real-world evidence. Our collaboration with Sanofi is now fully commercial and expanding. Pharma companies are embedding Dario into their patient support strategies, recognizing our ability to increase adherence, improve outcomes, and provide data-rich engagement insights. Five of the top 25 pharma and medical device manufacturers are in pilot or contracting phases with Dario today. With MediOrbis, we can now offer prescribing and remote monitoring, enabling pharma to build integrated, scalable care models around their therapeutics.

Lora: The pharma channel continues to evolve into a high margin recurring revenue stream for us.

Lora: We are seeing increased interest in Darius platform as a service model, which integrates prescribing.

Lora: Digital interventions and real world evidence.

Lora: Our collaboration with Sanofi is now fully commercial and expanding.

Lora: The company's embedding <unk> into the patient support strategies, recognizing our ability to increase adherence improve outcomes and provide data rich engagement insights.

Lora: Five of the top 25 pharma and medical device manufacturers.

Lora: In pilot or contracting phases with Daria T J.

Lora: With many of US we can now offer prescribing and remote monitoring enabling pharma to build integrated scalable cam models around the therapeutics.

Lara Dodo: This has become a differentiator in a crowded digital health landscape. We're no longer just enabling engagement. We're enabling care pathways. The 2026 pharma pipeline is maturing. We currently have two advanced stage platform opportunities, including multiple large market chronic indications, where Dario is positioned to be the digital backbone of next generation therapy support programming. These programs not only represent revenue expansion, they also serve as validation of our strategic positioning.

Lora: This has become a differentiator in a crowded digital health landscape.

Lora: We're no longer just enabling engagement, we're enabling care pathways.

Lora: The 2026 pharma pipeline is maturing we currently have two advanced stage platform opportunities, including multiple large market chronic indications with daria is positioned to be the digital backbone of next generation therapy support programming. These.

Lora: These programs not only represent revenue expansion.

Lora: Also serve as validation of our strategic positioning.

Lara Dodo: As we observe competitors moving towards public markets, it's important to reflect on how Dario stands out. Some of these competitors are scaling fast, but with generic solutions. Dario is scaling smart. deepening high-value relationships by enabling clinical continuity across multi-conditions and delivering on sustainable financial and health outcomes. Unlike companies that offer GLP-1 support in a silo, Dario provides a prescriptive end-to-end model. Our outcomes-based pricing ensures clients are only paying when we deliver value. And with claims-based integrations, we are easier to implement at scale. Finally, our platform isn't just clinically sound, it's evidence-backed. with a growing base of peer-reviewed publications.

Lora: As we observe competitors moving towards public markets, it's important to reflect on how daria stands out.

Lora: Some of these competitors are scaling fast like with generic solutions.

Lora: <unk> is scaling smart.

Lora: Deepening high value relationships by enabling clinical continuity across multi condition and delivering a sustainable financial and health outcomes.

Lora: Unlike companies that offer G. L. P. One support in a silo.

Lora: Daria provides a prescriptive end to end model.

Lora: Outcomes based pricing insurance clients are only paying when we deliver value and.

Lora: And with claims based integrations, we are easy to implement at scale.

Lora: Finally, our platform isn't just clinically sound.

Lora: Evidenced backed.

Lora: With a growing base of peer reviewed publications.

Lara Dodo: third-party validation, and regulatory-aligned design, Dario is raising the bar for clinical credibility in digital health. We believe that credibility will be the difference maker as more payers and employers scrutinize long-term outcomes and return on investment.

Lora: Third party validation and regulatory align design.

Lora: Sorry is raising the bar for clinical credibility and digital health.

Lora: We believe our credit, but any will be the difference maker as more payers and employers crystallized long term outcomes and return on investment.

Lara Dodo: We're also investing in scalability. We've strengthened our operating model, restructured our go-to-market teams, and deployed AI throughout internal and client-facing workflows. These changes are already improving forecast visibility and accelerating time to value. A commercial pipeline is the strongest and most qualified it's ever been. We're prioritizing recurring high-quality revenue and de-emphasizing lower-value transactional deals. As a result, we're building a more durable, predictable business.

Lora: We are also investing in scalability.

Lora: We've strengthened our operating model.

Lora: Restructuring I go to market teams.

Lora: And deployed AI.

Lora: <unk> internal and client facing workflows.

These changes are already improving forecast visibility and accelerating time to value.

Lora: Our commercial pipeline is the strongest and most qualified it's F N b.

Lora: We are prioritizing recurring high quality revenue and deemphasizing lower value transactional deals.

Lora: As a result, we are building a more durable predictable process.

Lara Dodo: Looking ahead further, 2026 is shaping up to be a breakout year. We have a robust pipeline of employer expansions, health plan launches, and pharma programs that will begin implementation in late 2025 and scale throughout 2026. Our ability to capture, convert and grow these opportunities is directly tied to the infrastructure investments and commercial strategy we've put in place during 2025. We're not chasing volume. We're building the infrastructure of tomorrow's digital care delivery today. One that works for employers, plans, and life science companies, and above all, for the people they are designed to serve.

Lora: Looking ahead further 2026 is shaping up to be a breakout here.

Lora: We have a robust pipeline of employer expansions.

Lora: 10 launches and pharma programs that will begin implementation in late 2025 full scale throughout 2026.

Lora: Our ability to capture confer and grow these opportunities is directly tied to the infrastructure investments and commercial strategy. We've put in place during 2025.

Lora: We're not chasing volume we're building the infrastructure of Tomorrow's digital care delivery.

Lora: One that works for employers plans and life science companies and above all for the people that are designed to serve.

Lara Dodo: In short, we are focused, differentiated, and executing against a clear strategy. As we scale deeper into 2025 and gear up for 2026, we're confident in our ability to drive sustained commercial growth, deliver measurable impact, and lead the industry forward.

Lora: And so we are focused differentiate us and executing against a clear strategy.

Lora: As we scale deeper into 2025 and gear up for 2026, we're confident in our ability to drive sustained commercial growth deliver measurable impact and lead the industry forward.

Erez Raphael: With that, I'll turn it back to Erez. Thank you, Laura. As we close today's call, it's clear that 2025 is off to a focused and disciplined start for DarioHealth. We are executing on our strategy, scaling our B2B2C business. Spending platform adoption across employers, health plans, and pharma, and driving measurable operational improvement. We have built one of the most comprehensive AI-powered platforms in digital health, supporting chronic conditions across metabolic, behavioral, and musculoskeletal... Our core business has now sustained non-GAAP gross margins above 81% for four consecutive quarters while operating expenses declined 35% year-over-year. remain on our track to achieve operational cash flow break-even run rate by the end of the year.

Erez Raphael: With that I'll turn it back to Erez.

Erez Raphael: Thank you Laura.

Erez Raphael: As we close today's call exclude the 2025.

Erez Raphael: Focused.

Erez Raphael: And disciplined stocked full value house.

Erez Raphael: We're executing on our strategy.

Erez Raphael: Turning to our <unk> business.

Erez Raphael: Spending platform adoption of course employers health plans and pharma and <unk>.

Erez Raphael: Diving measurable operational improvements.

Erez Raphael: We have built one of the most comprehensive I followed platforms and digital health supporting.

Erez Raphael: All the conditions to close the metabolic burden Moscow skeletal kev.

Erez Raphael: Our core business is now sustained non-GAAP gross margins above 81% for four consecutive quarters, while operating expenses declined 35% year over year.

Erez Raphael: Yeah.

Erez Raphael: Correct to achieve operational cash flow breakeven.

Erez Raphael: By the end of the year.

Erez Raphael: At the same time, we are seeing early signs of broader reset in the digital health market.

Erez Raphael: The same time, we are seeing early signs of broader research digital health market.

Erez Raphael: One of the Federal Sustainable Outcomes Driven Business Models. with Omada S1 file and under, like, hinge and sword reportedly preparing to go public. investor interest in returning to companies that can demonstrate scale retention and reward impact. The new wave gives us reason for optimism. We believe this next chapter will elevate the value of companies that combine clinical credibility, platform depth, and customer service. and Financial Dissidence. and we are confident that Dario is one of them. We have scaled with precision, not burn. We have built for integration, not fragmentation. And we are delivering both operational performance and long-term strategic value.

Erez Raphael: So is it fair to sustainably outcomes driven business models.

Erez Raphael: So my last one is fine.

Erez Raphael: Like hinge and sold it.

Erez Raphael: Ultimately.

Erez Raphael: I'm going to go public.

Erez Raphael: Investor interest in returning to companies that can demonstrate ken detention and level of impact.

Erez Raphael: The new way gives us reason for optimism.

Erez Raphael: We believe this next chapter with elevate the value of companies that combine clinical capability.

Speaker Change: One deck.

Erez Raphael: And financial discipline.

Erez Raphael: And we are confident that that was one of them.

Erez Raphael: We have scaled with precision not been we have been.

Erez Raphael: So integration no.

Erez Raphael: It looks like mutation.

Erez Raphael: Delivering both operational performance and long term strategic value.

Erez Raphael: Looking ahead, our priorities are clear. First Accelerating Strategic Commercial Growth. to deepen presence across employers' health plans. Benefit Administrators, and Life Science with high-value recurring partnerships. Second, lead the market shift to whole-person AI-powered care. Deliver scalable, personalized care across five chronic conditions with measurable impact. Third, drive toward profitability with precision. continue to expand margins, optimize cost structure, and deliver long-term operating levels. This isn't just a rebound for digital health. It's a reset, a return to fundamentals, and Dario is built for this moment.

Erez Raphael: Looking ahead, our priorities are clear.

Erez Raphael: First accelerating strategic commercial growth deepening presence to close employers health plans.

Erez Raphael: The benefit of new stay at home and life science with high value recurring partnerships.

Erez Raphael: Second.

Erez Raphael: Lead the market shift to whole person care.

Erez Raphael: Deliver a scalable personalized care to close five chronic conditions with measurable impact.

Erez Raphael: Third drive toward profitability with precision.

Erez Raphael: To expand margins optimize cost structure and deliver long term operating leverage.

Erez Raphael: This isn't just a rebound for digital health <unk>.

Erez Raphael: Great.

Erez Raphael: Our return to fundamentals and done it was built for this moment.

Erez Raphael: On behalf of our leadership team, I want to thank our employees, clients, and investors for your continued trust and partnership. We are energized by the momentum we have built, and we look forward to sharing our continued progress throughout 2020.

Erez Raphael: On behalf of our leadership team I want to thank our employees clients and investors.

Erez Raphael: For your continued trust and partnership.

Energized by the momentum we have built.

Erez Raphael: Look forward to showing continued progress throughout 2025.

Operator: With that, I want to hand over the call to the operator for Q&A session. Thank you.

Erez Raphael: With that I want to handle the call today operator.

Speaker Change: The Q&A session.

Speaker Change: Thank you ladies and gentlemen, we will now begin the question and answer session.

Operator: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star button followed by the number 1 on your telephone. You will hear a prompt that your hand has been raised. Should you wish to cancel your request, please press the star button followed by the number. And if you are using a speakerphone, please leave the handset before pressing. One moment, please, for our first question.

Speaker Change: Do you have a question. Please press the star button, followed by the number one on your telephone keypad, you'll hear a prompt that you had has been raised should you wish to cancel your request. Please press the star, but then followed by the number too.

Speaker Change: And if you are using a speaker phone. Please leave the handset before pressing any keys.

Speaker Change: One moment please for our first question.

Charles Rhyee: Your first question comes from Charles Rhyee from TD Securities. Please go ahead. Yeah, thanks for taking the questions. Hey, Erez, at the beginning, you kind of made mention, right, some of the timelines were, there's some timeline delays related, I think you said related tariffs. Can you explain that a little bit more, what's happening there? Yes, absolutely. Or maybe I'm just... So...

Speaker Change: Your first question comes from Charles <unk> from TD Securities. Please go ahead.

Speaker Change: Hi, yes, thanks, thanks for taking the questions.

Speaker Change: At the beginning you kind of made mentioned right.

Speaker Change: Some of the timelines were.

Speaker Change: Timeline delays related I think you said related to tariffs can you explain that a little bit more what's happening there.

Speaker Change: Yes, absolutely maybe I'm sorry.

Erez Raphael: Yes, so we mentioned it in the script and also in the press release. There is one large account that we had last year that is transforming, and it's transforming from a certain offering that we had on the mental health side into something that hopefully is going to be larger for the full and we are now in the process of changing it. So this is something that created a decline or revenue that was in the previous quarter but didn't show up in this quarter. So this is one thing. The other thing, it's not like something big on the tariff, but there are a couple of delays with a couple of accounts that were somehow related to tariff issues.

Speaker Change: Yeah. So we mentioned it in this in the script and also in the press release.

Speaker Change: There is one large account.

Speaker Change: We had lost that.

Speaker Change: It is transforming.

Speaker Change: It's transforming from a certain offering that we had.

Speaker Change: And on the mental health side.

Speaker Change: Two into something to that.

Speaker Change: It is going to be larger for the full suite and we are now in the process of changing it. So this is something that.

Speaker Change: It created.

Speaker Change: The decline in revenue.

Speaker Change: It was in the previous quarter, but Didnt show up in this quarter. So this is one thing.

Speaker Change: Other thing, it's not like something big on the target model.

Speaker Change: Some couple of delays.

Speaker Change: A couple of accounts that were somehow related to timing issues. It's not employers health plans. It's like mainly specific partnership that we had and this is also something to that.

Erez Raphael: It's not employers or health plans. It's like mainly specific partnership that we had, and this is also something that created some unexpected changes in the revenues of this quarter.

Created some unexpected changes in the revenues of this quarter or the expectations was the kidney.

Erez Raphael: The expectations were that we would grow sequentially, but it didn't happen due to these two reasons that we believe that it's going to be recovering in the next few quarters moving forward.

Speaker Change: Also sequentially, but he didn't happen due to this.

Speaker Change: That we believe that there's going to be.

Speaker Change: And in the next few quarters moving forward.

Charles Rhyee: Then maybe sticking with that, you know, if we think about on the partnership side, you know, obviously, both Twillin and Dario had partnerships with pharma. Pharma companies are facing potential tariffs coming. possibly soon. Is that, is that kind of, are you having any discussions with it there as they look to deal with, you know, those and, and obviously some other things that are going on in terms of Trump's efforts in, in maybe drug price controls, et cetera. Has that changed any of the discussions, maybe caused them to kind of pause activities as a result as they try to tackle some other issues?

Speaker Change: Then maybe sticking with that if we think about on the partnership side obviously.

Speaker Change: <unk> and Oreo had partnerships with pharma.

Speaker Change: Pharma companies are facing potential tariffs coming.

Speaker Change: Possibly soon.

Speaker Change: Is that is that kind of are you, having any discussions whether they're as they look to deal with those.

Speaker Change: Those and obviously some other things are going on in terms of.

<unk> efforts and maybe drug price controls et cetera, as that change any of the discussions maybe caused them to kind of pause activities as a result, as they try to tackle some other issues.

Erez Raphael: Partially yes, but just to remind you, the majority of the revenue that we have on the B2B side is coming from employers and health. So yes, there is some discussions there, and there are some slowdowns there that are related to that. But from the first place, the pharma channel is contributing this year somewhere between 5 to 10 percent of the revenues. So it's not going to be meaningful, even if pharma is going to go slower than what we anticipated.

Speaker Change: Partially yes, but just to remind you that majority of the revenue.

Speaker Change: To date, we have on the <unk> side, its stomach for employers and health plans, but yes. There is some discussions there and some slowdowns.

Speaker Change: Yeah.

Speaker Change: But related to that but from the first place the pharma Charlie is contributing this year with somewhere between 5% to 10% of the revenues and so.

Speaker Change: It's not going to be meaningful.

Speaker Change: Even if somebody is going to go away is going to go away.

Speaker Change: Slower than what we anticipated the other issue that I mentioned.

Erez Raphael: The other issue that I mentioned at the beginning of my answer was a large client that is actually a health plan that was on the mental side and is transforming the account. It's like an account that was running for three years, and in the renewal, we got into discussion about how it's going to be renewed, and we got into another process that hopefully is going to end up with renewing on the full suite. So this is the main reason why sequentially it didn't go up like it was supposed to. because the new business that started is a new business that came into this quarter and started to grow and we believe that the new business is going to continue to grow in Q2.

Speaker Change: At the beginning of my answer was with a large client that is actually a health plan that was on the rental side and the like transforming column.

Speaker Change: Jack I found it was running for three years and then they renew on we got into a discussion about how it's going to be and then we go through each line out of people.

Hopefully you can end up with the new England the full suite.

So this is like.

Speaker Change: The main reason why sequentially. It didn't go up as opposed to go.

Speaker Change: Got it at a business and the new business.

Speaker Change: The new business.

Speaker Change: He is a new business.

Speaker Change: The canyon to disclose that I started to grow.

Speaker Change: The new business is going to continue to grow in Q2, so the new business gain the retention of the users are selling is still very strong also the retention of day count. So one of the things that we disclosed in there.

Erez Raphael: So the new business came, the retention of the users and so on is still very strong. Also, the retention of the accounts, one of the things that we disclosed in the press release and in the script that the renewal rate is 90%. So it's a single account that relatively was big that came together with the tool acquisition that as part of a process for renewal is getting into something larger under RFP and it created a kind of a hole into this quarter. Got it. I understand that. Okay, that's helpful.

Speaker Change: In the press release and in the script that the.

Renewal rate is 90%.

<unk> found it relatively was big but Ken together with the twin acquisition.

Speaker Change: Is that a start of a close to school.

Speaker Change: You all is getting into something larger.

Speaker Change: <unk> and <unk>.

Speaker Change: The kind of the whole.

Speaker Change: And to this quarter.

Speaker Change: Got it understand that okay. That's helpful and.

Charles Rhyee: And maybe can you, you know, I know you guys talked last quarter about the, you know, the partnership now with Rula Health. Can you talk about how that's that how that's rolling out and and what percentage of your clients now have access to that and you know, maybe any update there would be helpful.

Speaker Change: Maybe can you I know you guys talked last quarter about.

The partnership now with a ruler health can you talk about how that's.

Speaker Change: How that's rolling out and what percentage of your clients now have access to that and maybe any update there would be helpful.

Lara Dodo: Hi, it's Lara speaking. Thanks for the question. Over Q1, we started to introduce that relationship in a systematic way, beginning with our existing book of business. We've already seen the adoption by – right now, I think we're live with about three or four in a roadmap of others to go onto it for the initial integration with Realist. So that work's underway and being well accepted.

Florida: I think Florida speaking thanks for the question.

Florida: The Q1, we started to introduce that relationship in a systematic way beginning with all existing because those that.

Florida: We've already seen on the adoption, but listen I think we live with about three or four and a roadmap about us to go onto it.

Florida: For the initial integration with real estate, that's what's underway and being well accepted and then we are looking at 40 based on campaigns on I'd also like to self relationship and direct to consumer as well so more to follow we spoke.

Lara Dodo: And then we are looking at border-based campaigns on – to also leverage that relationship in our direct-to-consumer as well. So more to follow. We – Erez spoke about some of the national plans where we're looking for deeper integration. Six-year ruler integration will be part of that conversation as well.

Florida: Spoke about some of the national plans, where we left off with deeper integration.

Florida: Stick here really integration will be part of that conversation as well so more to follow in the next Q.

Lara Dodo: So more to follow in the next Q.

Charles Rhyee: Great and maybe one last question for me.

Florida: Okay, Great and maybe one last question for me, if we think about sort of the path to.

Erez Raphael: If we think about sort of the path to cash flow break even by year end, can you just give us a sense then in terms of how we should think of, you know, which lever should we really be thinking that's going to be coming from? Is it, would you say it's a revenue driven or should we see expenses from current levels come down further? Just maybe help us bridge a little bit on getting there. Thank you. Yes, absolutely. It's a combination of the two, Charles. As we said also in the press release, we took down the OPEX down drastically between Q1 2024 when we acquired Twill into today.

Florida: Cash flow breakeven by year end can you just give us a sense that in terms of how we should think of.

Florida: Which levers or would you really be thinking that's going to be coming from is it would you say, it's a revenue driven or should we see expenses from current levels come down further just maybe help us bridge a little bit on getting there. Thank you.

Charles: Yes, absolutely it is a combination of the two Charles States.

Charles: As we said it also in the press release we.

Charles: Took a downbeat.

Charles: The opex.

Charles: And down domestically between Q1 2020 forward quite clearly into today and non-GAAP I think it was like $10 seven going to keep going at all into some of that is in the ranges of like 9 million by the end of the year that.

Erez Raphael: Non-GAP, I think it was like 10.7. It's going to keep going down to somewhere that is in the ranges of like $9 million by the end of the year. That alone will not take us to PSLO positive. In order to get to PSLO positive, we need to generate between $40 to $45 million yearly revenue. So it's more about getting the growth than keep working on the OPEX in order to get to this finish line. We are very excited about the gross margins of the B2B2C business, because for four quarters in a row it's about 81%.

Charles: Cologne with not take us to cash flow positive in order to get to physical positive we need to generate between $40 million to $45 million yearly along with it.

Charles: So it's more about getting the growth then.

Charles: Walking on the Opex in order to get to get to this to the finish line.

Charles: We are very well.

Charles: We are very excited about the gross margins of the beta beauty.

<unk> business grows for four quarters.

Charles: About 81% and if we're going to be.

Erez Raphael: And if we're going to keep getting more revenues coming from employers and health plans, the total merge of B2B2C versus B2C is going to be larger, and the gross margins are going to be higher. And that's also something that will contribute to this projection that eventually we want to get to operational cash flow run rate by the end of the year. So it's more like revenue, it's also gross margins, and it's also OPEX. It's a combination of both.

Charles: Adding more.

Charles: It's coming from employers and health plans with first line <unk> versus <unk> is going to be larger and the gross margins are going to be higher and that's also something that will contribute to this.

Charles: Projection that eventually when it get to operational cash flow run rate by the end of the year. So that's a smaller revenue base.

Gross margin say social effects, it's a combination of with me.

Charles Rhyee: And I'm sorry, just to clarify, when you say operational cash flow by year-end, are we talking like what we, the run rate as we're exiting December versus what the actual revenue and just see if that might be for the fourth quarter itself? It's more like December to January. That's the most accurate estimation that we can give. Yes, this is why we are saying this is how we see it. OK. Perfect, thanks. Thank you. Thank you, Chuck. Thank you for the question, Charles. And again, if you have a question, please press the start button followed by the number one on your telephone.

Speaker Change: And I'm, sorry, just to clarify when you say operating cash flow by year end or are we talking like.

Speaker Change: What the run rate as we are exiting December versus what the actual revenue and adjust EBITDA might be for the fourth quarter itself.

Speaker Change: It's more like December to January.

Speaker Change: Next I'll speculate transformation that we can give you. Yes. This is why we are saying.

Speaker Change: This is how we say okay, yes.

Speaker Change: Perfect. Thanks.

Speaker Change: Okay.

Speaker Change: Thank you Chuck.

Speaker Change: Yeah.

Speaker Change: Thank you for the question Charles and again, if you have a question. Please press the star, but then followed by the number one on your telephone keypad.

Operator: And if you wish to cancel your request, please press the star button followed by the number Again, if you have a question, please press the start button followed by the number.

Speaker Change: And if you wish to cancel your request. Please press the star about then followed by the number too.

Speaker Change: Again, if you have a question. Please press the star, but then followed by the number one.

David Grossman: And for our second question, we have here is David Grossman from... Please go ahead. Good morning. Thank you. Maybe Erez, I think in your prepared remarks you talked about the activity with Large Pharma. And I know there's been some transitions, you know, as a result of the tool acquisitions. So, you know, perhaps you could give us an update or a little more detailed update on what's going on with Large Pharma. I know you said it's only going to be 5 to 10% of this year's revenue, but perhaps you could talk about what's in the pipeline, you know, the types of deals and the scale of those deals.

Speaker Change: And for our second question. We have here is David Grossman from Stifel. Please go ahead.

Good morning.

Speaker Change: Thank you.

Speaker Change: Maybe Eric I think in your prepared remarks, you talked about.

Speaker Change: About the activity with large pharma.

Speaker Change: And I know theres been some transitions as a risk.

Speaker Change: Also the 12 acquisitions so.

Speaker Change: Perhaps you could give us an update or a little more detailed update on what's going on with large pharma I know you said, it's only going to be 5% to 10% of this revenue but.

Speaker Change: Perhaps you could talk about what's in the pipeline.

Speaker Change: The types of deals and the scale of those deals.

Erez Raphael: Yes, absolutely. So let's start with the one that we had in the past, which is Sanofi. Sanofi was on a certain strategic deal and we moved into a commercial deal. This one was up and running from November into this year, and we started to see revenue again after it was like zero for a while. We started to see again revenue in Q1. So this is one relationship. We had another two wins with, I would say, top pharma global companies. Big names that at the moment we cannot disclose the names, but very large companies that were signing up on what we are calling the DarioConnect, which is a former known as TwillCare.

Speaker Change: Yes, absolutely so let's start with the one that we had in the past, which is a which is sanofi.

Speaker Change: Sanofi was a certain strategic deal and we moved into a commercial me. This one.

Speaker Change: It was up and running from November into this year and we started to see revenue again, a state was like zero for a while we started to see again revenue in Q1.

Speaker Change: So this is one.

Speaker Change: Relationship.

Speaker Change: We had another two wins.

Speaker Change: I would say so.

So.

Speaker Change: The pharma globally companies.

Speaker Change: Uh huh.

Speaker Change: The big names at the moment, we cannot disclose the names that.

Speaker Change: Very larger companies that were signing up.

Speaker Change: What we are calling the <unk> connect which is formerly.

Speaker Change: Formerly known as well too.

Erez Raphael: And these two will start to contribute revenue from Q2 or Q3 and forward. The accounts are signed and the launch and how exactly it's going to contribute to the revenue, this is something that is not clear yet. We have some framework that we know what we are supposed to do and what is the potential revenue, but the launch didn't happen yet. One of them is in the ranges of like a half million to a million, and another one over the next two to three years should get to millions of dollars because it's a full platform, including GLP-1 and other.

Speaker Change: And this one is this too.

Speaker Change: We start contribute revenue from Q2 or Q3 and forward.

Speaker Change: The accounts are assigned.

Speaker Change: The launch and how exactly its going to contribute to the revenue. This is something that is not clear yet.

Speaker Change: We have some more.

Speaker Change: But we know what we're supposed to do and what is the potential revenue, but the launch didn't happen yet.

Speaker Change: One of them is in the range it looks like the house minions, two 1 million and the number one over the next two to three years should get to millions of dollars because it's a full platform, including GOP line and other elements. So I.

Erez Raphael: So I would say that if I'm looking into the pharma kind of channel, the revenue, if we're looking into this year, the majority of the revenue is going to come from three accounts. The three of them are very large, very large companies. One of them is Sanofi and the other two is in the size of Sanofi as well. Once it's going to be launched, probably we'll be able to disclose the names, but at the moment it's not doable. So if I'm looking into the entire revenue, I think that like 10% is a very reasonable estimation for how much it's going to contribute to the revenue of this year.

Speaker Change: I would tell you that if I'm looking into the.

Speaker Change: The pharma or kind of chairman.

Speaker Change: The revenue if we're looking into this year and the majority of the revenue is going to come from three accounts. The three of them are very large a very.

Speaker Change: The very large companies and one of them is Sanofi R&D, either too is and the size of Sanofi as well.

Speaker Change: Once it is going to be launched probably would be able to disclose the names.

But at the moment, it's all doable so.

Speaker Change: If I'm looking into the entire revenue I think that like.

Speaker Change: 10% is.

Speaker Change: Very reasonable estimation for how much it is going to contribute to the revenue of this year.

David Grossman: Okay.

Speaker Change: Okay, and just to be clear are the vast majority of the deals just.

Erez Raphael: And just to be clear, are the vast majority of the deals just extending the TWIL platform under the new terms and conditions that you had outlined previously or, you know, is the character of the new relationships? You mentioned GLP-1s. I assume that that's front and center for a lot of these companies, but anything else to add in terms of what these contracts may look like versus what they've looked like historically? Yes, so historically, the deal that we had with Sanofi was for cardiometabolic. And when we are looking into the deals that we have now, so there are two ways to contact with the pharma companies with the product that we have now.

Speaker Change: Spending the Twilio platform.

Speaker Change: Under the new terms and conditions that you had outlined previously or.

Speaker Change: Is the character of the new relationships.

Speaker Change: You mentioned G. L. P. One so I assume that that's front and center for a lot of these companies, but anything else to add in terms of what these contracts might look like versus what they look like historically.

Speaker Change: Yeah, So historically, the delta to where we Sanofi was for cardio metabolic.

Speaker Change: And when we're looking into the deals that we have now.

Speaker Change: So that two way to contact with the pharma companies with a product that we have now.

Erez Raphael: One of them is that we are selling the DarioConnect, and DarioConnect is allowing us to help pharma companies build communities on top of pharma and get users to the platform. So this is one. The second one is integrating into their care support for their users a mental health kind of management and support. So these are the two things that we are marketing to them. The way that we are contacting is that usually it's going to be, and this is why we made the changes in the business model, the way that we are contacting with them is that we are charging for a platform.

Speaker Change: One of them is that we are selling and get their dental clinics and diet. There next is allowing us to.

Speaker Change: To help pharma companies build communities and top of funnel and get users to the platform. But this is one the second one is integrating into the cancer, both familiar with us and mental.

Speaker Change: Mental health kind of management and support.

Speaker Change: These are the two things that we are marketing today.

Speaker Change: The way that we are contracting is that they use usually it's going to be and this is why we made the changes in the business model. The way that we are contracting with them is that we are charging forward platform.

Erez Raphael: So there is a level of setup fee, which is one time, and then there is a platform fee that should contribute on a recurring base to our revenue. So these are the two products. Both of them are kind of twill-based products that are very consumer-centric and are helping the farmer either manage the population on the mental side or help them get on different therapeutic areas, users to the platform, and help them get closer eventually to a prescription. That's the nature of the solution. Got it.

Speaker Change: So there is a level of setup fee, which is one time and then there is a platform fee that should contribute on a recurring base.

Speaker Change: So all of those.

Speaker Change: Revenue.

Speaker Change: These are the two products both of them are kind of clearly base for that that are very consumer centric and helping you to followed by either manage the population on the rental side or help them get on different therapeutic areas.

Speaker Change: Users to the platform and helping them get to close though too.

Speaker Change: Do they eventually to two K prescription.

Speaker Change: That's the nature of the solutions.

Speaker Change: Got it.

Erez Raphael: And, you know, I think you mentioned both in the press release and your prepared remarks about, you know, perhaps, you know, cleaning up some of the contracts that weren't really advantageous to you longer term. Can you mention the headwind that you're experiencing from that this year? Yeah, so, uh... Most of our contracts, and more than 90% of them, eventually are being renewed. And if we are looking into the book of business, the level of satisfaction is high. The headwind is mainly on launching the product and growing them up in the velocity that we wanted it to grow.

Speaker Change: I think you mentioned both in the press release and your prepared remarks about.

Speaker Change: Perhaps.

Speaker Change: No.

Speaker Change: Cleaning up some of the contracts that weren't really advantageous to longer term.

Speaker Change: Can you dimension the headwind that youre experiencing from that this year.

Speaker Change: Yes so.

Speaker Change: Most of our contracts and more than 90% of them eventually out of being renewed.

Speaker Change: And if you are looking into the book of business.

Speaker Change: The level of satisfaction.

Speaker Change: Hi.

Speaker Change: The headway and this is mainly on the launching the product and growing them up in the velocity that we wanted to grow.

Erez Raphael: We also had kind of issues with the way that the book of business is distributed between certain accounts. So despite a 90% renewal rate, if you have one account that is moving from model A to model B, that's something that creates a headwind. If I'm looking into the retention of the accounts, the retention of the users, our ability to ramp up users and to execute, I don't see a headwind there. So that's on high level. Okay, so you're, when you say transitioning, they're just transitioning to a different revenue model, and there's some disruption to revenue.

Speaker Change: We also had a kind of issues with the.

Speaker Change: The way to the book of business is distributed between certain accounts.

Speaker Change: So despite a 90% renewal rate if you wanted to call that is moving from model to model.

Speaker Change: That's something that create.

Speaker Change: Headwind.

Speaker Change: If I'm looking into the retention of day count the retention of the users the ability to ramp up users send to execute I don't see a headwind there.

Speaker Change: And so that's that's a.

Speaker Change: Thats on high level.

Speaker Change: Okay. So you're when you say transitioning they're just transitioning to a different revenue model and there is some disruption to revenue you are not actually.

Erez Raphael: You're not actually losing the client. Is that correct? Yes, in most of the cases we are not losing the clients and moving to a different model and different offering. That specific account is an account that we inherited together with the Twill acquisition and now we are in a very good discussion about enrolling on the, embarking on the full platform including what we have on the Metabolic. It's a very large insurance company, and it is one account that creates a difference in the revenues. If you look into the total business, the accounts that we signed last year, the launch of these accounts and the enrollment of these accounts, this is something that is working more or less according to the plan.

Louis: Louis and with clients.

Speaker Change: Correct.

Speaker Change: Yes in most of the assets are not losing declines and moving it to a different model in different post spin.

Speaker Change: Specifically the quality of the account.

Speaker Change: We inherited together with Statoil acquisition and now we are in a very big.

Speaker Change: Fashion about.

Enrolling on embarking on the full platform, including looking at the limit of <unk>.

Speaker Change: It's a very large insurance company.

Speaker Change: That's one.

Speaker Change: <unk> found that create additional incentive revenues, if you're looking to the close of the business that comes with you signed last year.

Speaker Change: Continental.

Speaker Change: The launch of these accounts in the enrollment of these accounts. This is something that is working more or less according to the plan.

David Grossman: Got it, got it.

Speaker Change: Got it got it and then in terms of the health plan.

Erez Raphael: And then, in terms of the health plan that... kind of going from a behavioral, you know, a small sliver of their behavioral growth to a you know, a full-platform RFP, what do you think the timing of that award may be? Yes, we think that it's going to contribute to the revenues of, once it's fixed, it's going to be probably Q3 revenue. Other than that, I just want to put things in perspective. We also disclosed. You know, without disclosing the names, we did disclose that we won another very large national health plan that is also going to launch on 7-1.

Speaker Change: That is.

Speaker Change: It is kind of growing from a behavior or a small sliver of their behavioral book to it.

Speaker Change: Our full platform RFP.

Speaker Change: The timing of the award maybe.

Speaker Change: Yes.

Speaker Change: Senior debt.

Speaker Change: Contribute to the revenues.

Speaker Change: Once it's fixed it's going to be probably Q3 revenues.

Speaker Change: Other than that I, just want to put.

Speaker Change: Put things in perspective, we also disclosed.

Speaker Change: Without disclosing the names we did disclose that we won a number of very large national.

Speaker Change: Okay.

Speaker Change: So going to launch on southern one so.

Erez Raphael: So between this one that is going to be refactored and the one that we are launching in 7.1 to the two large pharmas that I'm talking about, there is like four or five gigantic accounts that are all of them are going to contribute to the revenues of So if we look into the big picture, we are confident that the company's going to move into the next level of revenue with the implementation of all of them. Specifically, the answer to your question about this account, it's probably going to be like a Q3 getting back to this.

Speaker Change: So between this one that is going to be softer than the one that we're launching seven one.

Speaker Change: The two large pharma is that I'm talking about there is like four five gigantic accounts is that of all of them are going to contribute to the revenues of this year.

Speaker Change: If we look into the Big picture, we are confident that the company is going to move into the next level of revenue was the implementation of all of them are.

Speaker Change: Specifically the answer to your question about this account, it's probably going to be like.

Speaker Change: Q3.

Speaker Change: Getting back to the slides that.

Erez Raphael: that we had lost, and we're going to get it back in June.

Speaker Change: That we had lost and youre going to get to that in Q3.

David Grossman: And just in the context of those comments, I think to Charles' question, you talked about Achieving Breakeven. Hey, was that the month of December or was that for the fourth quarter? I didn't quite get that. It's more like the month of December into January, it's a bit hard to predict accurately, but that's where we are. And then just, again, back to the, you know, these new clients that you just talked about, how much visibility do you have on achieving? the revenue rate you need to achieve break-even by the end of the year. From an accounts perspective, I mentioned these four accounts, the one that we are restructuring, the huge national health plan that we already know that we are launching on 7.1, and there is the two pharma, and there is another one, which is a very large regional health plan that we are also kind of in a very late stage of contracting, but that's another large one that will probably also expand into a full insured business.

Speaker Change: And just in the context of those comments.

Speaker Change: And I think Charles question, you talked about.

Speaker Change: Achieving breakeven.

Speaker Change: Was that the month of December or was that for the fourth quarter I didnt quite get that.

Speaker Change: It's small like the months of December into January.

Speaker Change: It's a bit.

Speaker Change: Hard to predict accurately so where we see it yes okay.

Speaker Change: And then.

Speaker Change: Again back to the.

Speaker Change: These new clients that.

Speaker Change: You just talked about how much visibility you have on achieving.

Speaker Change: The revenue rate you need to achieve breakeven by the end of the year.

Speaker Change: Okay accounts perspective, and that's I mentioned, a small accounts are the ones that we are restructuring the huge national health plans that we already know that we are launching on seven line and there is the two polymer and there is another one which is a very larger regional health plans that are there.

Speaker Change: Also.

Speaker Change: Kind of are in the very late stage of <unk>, but that is another.

Speaker Change: Large one it will probably also expanding to a smaller insured business.

Erez Raphael: If all those are going to launch, we're going to get. If something is going to be delayed with the launch and so on, it's going to be, it's going to create a delay achieving this milestone. But we are confident that we're going to launch it. I mean, with all of them, we know exactly, we have things that are very well defined. So that's something that we have the business, it needs to be launched and we're going to get there. We are also trying to hedge by being very, very disciplined on our operations. So when we acquired Twill and we communicated with the market how our financial profile is going to look like, we were talking about getting to cash flow positive somewhere between 50 to 55 million.

Speaker Change: If all of those are going to launch we're going to get there.

Speaker Change: If something is going to be delayed with the launch of song it's going to be it's going to create the delay achieving this milestone.

Speaker Change: We are confident that we're going to launch it I mean is all of them, we know exactly where.

Speaker Change: Things that are very well defined so that's that's something.

Speaker Change: We.

Speaker Change: We have the business it needs to be launched.

Speaker Change: And youre going to get the we're also trying to hedge it.

Speaker Change: By being very very disciplined on our opex.

Speaker Change: When we acquired clean and we communicated was the market power financial profile is going to look like we were talking about getting to cash flow positive somewhere between 50% to $55 million and we were talking about opex of $10 million to $11 million.

Erez Raphael: And we were talking about OPEX of 10 to 11 million. These guys were looking into an OPEX of run rate of 36 million by Q4 this year. We implemented a lot of AI capabilities. We are making our operation much more efficient. And looking on other digital health companies and what they are doing, we have a very, very healthy financial profile when it comes to gross margins, when it comes to OPEX, and when it comes to efficiency. So I think that we created some margin of safety by optimizing efficiencies and give the company more flexibility in the timeline of getting these revenues.

Speaker Change: These guys were looking into an opex of fun rate of 36 million by Q4 this year.

Speaker Change: We implemented a lot of AI capabilities, we're making our way.

Operation much more efficient.

Speaker Change: And you know looking or not the digital health companies and what they are doing we have a very very healthy financial profile. When it comes to gross margins when it comes to Opex and when it comes to efficiency.

Speaker Change: Things that we.

Speaker Change: We created some margin of safety by optimizing efficiencies and give the company.

Speaker Change: <unk> mall.

Speaker Change: More stability in the timeline for getting this choppiness so to make them. So we're sure we have a hedging.

Erez Raphael: So to make one story short, we are hedging the risk of the revenue that is going to come from these accounts by being very disciplined also on the off. So that's the story on how we are planning to get to operational threshold positive run rate by the end of the year.

Speaker Change: The rest of the revenue that is going to come from these accounts by being very disciplined also on deal kicks in does that.

Speaker Change: <unk>.

Speaker Change: The story in.

Speaker Change: On how we are planning to get true operational cash flow positive run rate by the end of the year.

Speaker Change: Alright. Thank.

Erez Raphael: Thank you for that. And just one last thing, Erez. With the recent financing, can you give us a sense of what the fully diluted share count would look like once you turn profitable? So we did like an equity raise between December to January, and we also refinanced our debt like two weeks ago. So, with these two activities, we are very well funded to get to this point. Because we funded the company with the preferred shares, and if you go to our finance, you're going to see only the common shares, but including the preferred is converted into $99 million.

Speaker Change: Thank you for that.

Speaker Change: Just one last thing errors.

Speaker Change: With the recent financing.

Speaker Change: Give us.

Speaker Change: A sense of what the.

Speaker Change: Fully diluted share count would look like once you turn profitable.

Speaker Change: So we we did like the.

Speaker Change: With an equity raise between December to January.

Speaker Change: And we also refinance all the debt like two weeks ago.

Speaker Change: So as these two activities, we are very well funded.

Speaker Change: To get to this point and because of that we funded the company was a peso chess.

Speaker Change: If you go to Yahoo, finance, you're going to see one of the common shares, but including the preferred convert that you're looking to 19 9 million actually the company has been a low today.

David Grossman: Actually, the company is going to load today our corporate presentation, and in the corporate presentation, you can see a very accurate picture. of our top table. But to make our story short, you're looking into 1990. Okay, great.

Speaker Change: Corporate presentation, and then to Copel presentation, you can see a very accurate picture.

Speaker Change: So I'll stop there, but to make a long story short you're looking into 19 on me.

Speaker Change: Okay, great. That's it for me thanks very much.

Operator: That's it for me. Thanks very much. Thank you, Estonia. Thank you so much for the question, David.

Speaker Change: Thank you so much.

Speaker Change: Thank you so much for the question David and since there are no further questions. At this time. This also concludes today's call. Thank you for participating everyone may now disconnect. Thank you so much.

Operator: And since there are no further questions at this time, this also concludes today's call. Thank you for participating. Everyone may now disconnect. Thank you so much.

Jim: Thanks, Jim.