DarioHealth Corp.

Greetings and welcome to the Dario Health fourth quarter and full year 2020 financial results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Glenn Garmont of LifeSci Advisors. Thank you. Glenn, you may begin.

Thank you, Daryl, and good morning, everyone. Thank you for joining us today for a discussion of DarioHealth's fourth quarter and full-year financial and operating results. Leading the call today will be Erez Raphael, Chief Executive Officer of DarioHealth. He's joined by Rick Anderson, President and General Manager of North America, and Zee Ben-David, Chief Financial Officer. After the prepared remarks, we'll open the call for Q&A. An audio recording and webcast replay for today's conference 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 recorded on March 9, 2021. This morning, we issued a press release announcing our financial results for the fourth quarter 2020. A copy of the release can be found on the investor relations page of the company's website. Actual events or results may differ materially from those projected as a result of changing market trends, reduced demand, and the competitive nature of Dario Health's industry. Such forward-looking statements and their implications 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 annual report on Form 10-K for the year ended December 31, 2020. 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 today and in the company's filings with the SEC. Certain non-GAAP financial measures may be discussed during this call. These non-GAAP measures are used by management to make strategic decisions, forecast future results, and evaluate the company's current performance. Management believes the presentation of these non-GAAP financial measures are useful for investors' understanding and assessment of the company's ongoing core operation and prospects for the future. A reconciliation of these non-GAAP measures to the most comparable GAAP measures is included in today's press release regarding our quarterly and year-end results. And with that, I'd like to introduce Erez Raphael, Chief Executive Officer of Dario Health. Erez?

Thank you, Glenn, and thanks, everyone, for joining our call this morning. Also joining me today, Steve and David, our Chief Financial Officer, and Rick Anderson, the President and the General Manager for North America. So 2020 was an exciting year for us. and I think it was an exciting time for all those that are part of the healthcare industry as the industry is transforming widely these days and we are even super excited to be at the forefront of these amazing changes happening in the healthcare industry and like we are doing in every earning call, I would like to refer to our progress By referring to our three main pillars that we keep mentioning every earning call, I think for the last six or seven quarters, this is something that helps us communicate the progress that we are doing with the transformation that we are having. And it also helps us to focus on capturing the huge opportunity that we are experiencing these days. The three main pillars are number one, the transformation into a SaaS, software as a service, where we are generating high margin recurring revenues. Number two is the transformation into B2B2C. And number three is the expansion into multi-chronic conditions. So 2020 was a very foundational year for us. I'll start with the B2B2C. We put a lot of effort in 2020 in order to build the infrastructure to be not only a B2C company, but also a B2B company. We started the year with only six employees that are operating in the U.S. in front of employers, health plans, and providers. And as of now, we are close to 30. We also signed eight different agreements along the year. with the last three months where we won two big Fortune 500 employers. And even further than that, we managed to win over RFIs, over our main competition, which speaks to the overall offering and the great product that we have. When we started 2020, we knew that we have a great product, As you can see on the App Store, Amazon, we are top rated and we are considered one of the best products in the market. But we had during 2020 to package the product in a way that we can take it to the B2B market and this is what we did. And with these recent wins, we were very confident that we can start and generate a meaningful Thank you very much. Operating as a digital therapeutics company, when we are providing a solution that is extremely user-centric and consumer-centric, we need to provide, for personalization, we need to provide a very comprehensive solution for our users, and it doesn't make sense that we will operate in silos like the traditional healthcare industry. companies in the traditional healthcare industry will focus on one single condition. We have seen companies that did only diabetes or hypertension. When moving into digital therapeutics and when dealing with a personalized solution, we need to provide multiple chronic conditions, and that's what we put as a target, and we are very happy and proud to complete the acquisition of Upright Technologies at the beginning of February. And the more we are making progress with the PMI, the more confident we are about making the right decision with regards to this acquisition. Just as a reminder, Upright was acquired as a company that have 90,000 active paying users. This is a company that is scaled. When we are looking into the mascal skeletal space and looking into other companies in the space. There are not too many companies that are having more than 50,000 active paying users. Hinge that just raised money at the $3 billion valuation is one of them. Next in line in terms of users, actually it's Upright. So Upright is sharing the same philosophy that we have. Combining together hardware, software and service in order to drive behavioral change. and they are doing a great job creating change in the behavior of users. And in terms of the synergies that we see into the B2B market, this is a perfect match for us and we started to hear very first, very positive comments from our potential clients and existing clients. So this was a very good move from our perspective and the fact that we did this transactional acquisition as an equity only speaks to the fact that we got here real partners that want to work together with us and build this company as a multi-billion dollar company. So the actual PMI, the post-merger integration activities are moving forward great. So if we are looking on the overall three pillars, each of them have some kind of contribution into the main parameters that define our business. Elements that related to recurring revenue, gross margins, we still see the overall objective of the business to exceed the 70% gross margins moving forward. And we're gonna see an improvement in the gross margins already in Q1. We believe, and in terms of the eligible population, when we started with diabetes, we had an access for a potential employer for eight to 10% of the population. Hypertension expands it into 20 to 25. With MSK, we exceed the 40% for all the conditions together. So in terms of account utilization, Multi-condition makes our overall commercial efforts much more effective. And also in terms of the cost per acquisition, the transformation into B2B2C is something that should improve or reduce drastically the cost per acquisition per user. And the fact that we are selling more conditions makes that the cost per acquisition per user per condition is even lower. So each of these pillars have its own contribution into our financial profile and our ability to grow. And I think that the combination of the three of them together create even a kind of exponential impact on the financial profile of the company and also on the overall ability to grow. And I know that in 2020, we haven't seen A significant growth in terms of the revenue between 2019 to 2020. But we should look into 2020 as a foundational year. And we should look into the progress in this foundation that was done, the accounts that we won. And I'm sure that in 2021, we're going to see the impact of all the three pillars and the parameters that I just mentioned in a very, very significant way. Moving forward. So I'd like now to drill down into the B2B2C transformation, and I'll hand it over to Rick to elaborate more on that. Rick?