DarioHealth Corp.

Greetings and welcome to the Dario Health Corporation's second quarter 2021 results conference call. At this time, all participants are in a listen-only mode. A brief 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 your host, Chuck Padala. Thank you, Chuck. You may begin.

Thank you, Operator, and good morning, everybody. Thank you for joining us today for a discussion of Dario Health's second quarter 2021 financial results. Leading the call today will be Erez Rafael, CEO of Dario Health. He will be joined by Zvi Ben-David, CFO, and Rick Anderson, President and General Manager of North America at Dario Health. After the prepared remarks, we will open the call for Q&A. 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 and recorded on August 16th, 2021. This morning, we issued a press release announcing our financial results for the second quarter 2021. A copy of the release can be found on the investor relations page of Dario Health's website. Actual events or results may differ material from those projected as a result of changing market trends, reduced demand, and competitive nature of Dario Health's industry. Such forward-looking statements and the implications may involve known and unknown risks, uncertainties, and other factors that may cause actual results or performance that 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 2021 annual report and Form 10-K, as well as the second quarter 2021 10-Q filed this morning. Additional information concerning factors that could cause results to differ materially from our forward-looking statements, as described in greater detail in the company's press release issued today and in the company's filing with the SEC. In addition, certain non-GAAP financial measures may be discussed during this call. These non-GAAP measures are used by management to make strategic decisions, forecast future results, and evaluate the company's current performance. Management believes the presentation of these non-GAAP financial measures is useful for investors' understanding and assessment of the company's ongoing core operation and prospects for the future. A reconciliation of these non-GAAP measures comparable gap 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, Chuck. Thanks, everyone, for joining our call this morning. So we're reporting this morning material advances in each of our three pillars that define our strategy. On the multi-condition front, We believe that we have all the right components in place, and furthermore, we also have a very good validation from customers on the acceptance of the idea of multi-conditions under one platform. On the transition to B2B2C, we see the bearing fruits, and in terms of the transformation into a SaaS high growth margins, we are showing a significant improvement also in this quarter. So Rick and myself will discuss today how the strategy that we have is well-timed into today's healthcare market and digital health market specifically. And given the client feedback that we see, we are super confident that the strategic initiatives that we were choosing is putting Dario in a very good position in a place where we can scale And we can create a compounding growth and improvement of our financial results moving forward. So looking into our actual results for this quarter, for quarter two, we generated approximately $5.3 million, which is a growth of 46% over the previous quarter sequentially. And it's almost 200%, 194% year-over-year increase comparing to quarter two of 2020. On the gross margins, we also drove a significant performer gross margin expansion. And in Q2, we reported 49.4%, a sequential growth from 44.7%. And if we look back into the second quarter of 2020, the number was only 34.9%. So also here, we see a very nice improvement. And this is due to the fact that we continue the transformation into the B2B2C, and also launching more membership programs. And overall, as we stated in previous calls, the objective of the business is to go north to 70%, so we expect that in the next few quarters we're going to see this trend continues. On the multi-condition strategy, we had our vision that when building a digital therapeutics company, that deal with chronic condition, we need to deal with the co-morbidities. And we were always talking about personalization, and we expanded it into what we are calling hyper-personalization. Hence, when we are dealing with a patient that have one disease and have co-morbidity, we need to create one integrated experience that is driven by one AI engine and AI journey. And this is what we did, and we integrated things together And we are very excited to report today that it's not just that we are growing our pipeline from 700 million to 900 million. We also report that 66%, two-thirds of the opportunities clients that we have in our pipeline are looking into buying for the full suite. So given the overall transformation in the healthcare market and specifically the digital therapeutics market, We think that by choosing this strategy and to manage multi-condition under one platform, one experience, one hyper-personalization experience, this is something that increases our value proposition and also increases the demand for the platform. And we see that with the very good feedback that we are getting from our potential clients. In terms of the metabolic and the diabetes, that is something that on the level of ARPU, average revenue per user, we think that this is still going to be the backbone of our pipeline, and this is what we see when we are analyzing our pipeline. But overall, the behavioral health, the physical therapy, the MSK, are components that added to our overall portfolio, and we believe that's something that is going to improve our win rate moving forward in terms of winning accounts. On the B2B2C transformation, we gained a considerable traction on the self-insured employer market and also on the healthcare provider segment, as was demonstrated by market acceptance. And the long-awaited health plans contract was delayed mainly for logistics reasons. Nonetheless, we remain confident that the agreement is imminent And in parallel, we also see this pipeline of health plan keep growing. In some opportunities, we also have demand for the full platform and not for a single condition. So also here we are still very positive that we are heading into the right direction. On the implementation side, as we reported in previous quarters, we still see a very strong capability to enroll users to the platform. We are still north to a 40% enrollment rate. On the retention, we believe that our users will complete the full year with 80% retention rate, which is the numbers that we have seen for many years on the direct-to-consumer where we have a lot of experience. So if we are considering the rapid success with employers and providers, the increase in terms of the percentage of those clients that would like to address a multi-condition under one platform, plus the strong implementation capabilities, with high enrollment rate, we are very positive that we will keep creating a very positive momentum into the second half of 2021, and further than that, also into 2022. So overall, we believe that looking into the financial profile, more conditions should generate higher ARPU, average revenue per user, because on average, users have more than one condition. We are also touching more users because the eligible members under one account that can use one or more of our products is much wider. When we started with diabetes, it was 8%. Now we are looking to numbers that are as high as 40% of members under one account that's eligible to our product. And in parallel, the win rate among all the opportunities, we believe that this is something that will grow because of the many of multiple conditions that we have. So with all these parameters improving under the same investment into sales and marketing, we believe that this is something that will improve drastically the financial profile of the company in the next few quarters. With that, I would like to hand over the call to Rick to elaborate more into the commercial strategy.