DarioHealth Corp.

Greetings and welcome to the Dario Health fourth quarter 2022 results 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, Glenn Gourmand. Please go ahead, sir.

Thank you, Operator, and good morning, everybody. Thank you for joining us today for a discussion of Dario Health's fourth quarter and full year 2022 financial results. Leading the call today will be Erez Rafael, Chief Executive Officer of Dario Health. He'll be joined by Rick Anderson, President. After the prepared remarks, we'll 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 on March 9th, 2023. This morning, we issued a press release announcing our financial results for the fourth quarter and full year 2022. A copy of the release can be found on the investor relations page of Dario Health's website. Actual events or results may differ materially from those projected as a result of changing market trends, reduced demand, or the competitive nature of Dario Health's industry. 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. The forward-looking statements discussed on this call are subject to other risks and uncertainties, including those discussed in the risk factor section and elsewhere in the company's 2022 annual report on Form 10-K filed this morning. 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. 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 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. And with that, I'd like to introduce Arez Rafael, Chief Executive Officer of Dario Health. Arez?

Thank you, Glenn, and thanks. to all of you for joining this morning call. For the last three years, we have implemented a multi-year strategy, and when exploring our 2022 financial results, and specifically the last two quarters of the year, it is hard not to see the success of our strategy as it's being reflected in our numbers. Before we deep dive into our actual results, I would like to reemphasize our strategy. First, our multi-chronic condition strategy where we manage five different conditions on one integrated platform this strategy is not only aligned but the head of the macro digital health market trend of consolidation and consumer centricity in fact our current model is better suited to the financial macro environment where we are facing today the consolidation of conditions into one integrated platform enables less vendors and more conditions especially in a market that looks to save money and be more efficient while better caring for its patients. Employers and buyers are looking for best-of-suit solutions backed by clinical evidence. Also, our clinical outcomes data suggests that an integrated model is better than a separated single-point solution. Second is our transformation from direct-to-consumer to B2B. This change has resulted in a significant improvement in the financial profile of the company, Because of the significant reduction in the cost per acquisition, the ability to scale and more efficient economic model to remember that is getting on the platform. Overall, our multi-dimensional strategy of multiple conditions and moving to B2B model increases revenue stability while establishing a dependency that is difficult to break. In other words, it will take several vendors to replace our integrated solution. And overall impact is more one way to execute on our strategic plan with a significant reduction in the financial risk profile of the company. Let's take a deep dive into the financial results. Q4 shows continuation in the improvement of the financial profile of the company and continues the trend we demonstrated in Q3. We are presenting a real evidence that shows that our model is working and creating a long-term shareholder value. Let's start by looking into the revenues and its components. Full year of 2022 revenues is $27.6 million, increased 34.8% over $20.5 million in 2021. As the pivot to B2B model, more than offset managed wind down of B2C. More interestingly, full year 2022 B2B revenues is greater than 59% of the total revenue versus just 4% for the full year of 2021. Overall B2B growth year-over-year is 1,800%. Another important metric is gross margin. This is where results are even more exciting as we are showing a true software-driven business with a SaaS, software-as-a-service-oriented characteristics. For former gross profit was 58.1% of revenues for the fourth quarter of 2022, up significantly from 22% of revenues for the fourth quarter of 2021. As mentioned in the last few calls, we are targeting an average of 60% gross margins for 2023 to reach our goal of 70% gross margins by 2024. Looking at the operating loss, we are seeing true operating leverage of the infrastructure that we have built and real economic advantage for multi-product line approach. We demonstrated 58.4% reduction in operating loss in the fourth quarter of 2022 compared to the fourth quarter of 2021. It is also 38.2% reduction in operating loss compared to the third quarter of 2022. Notably, operating loss in the fourth quarter on a non-GAAP basis declined by more than 60% to only $6 million compared to $15 million in the fourth quarter of 2021. The underlying reasons for this economic advantage of multi-condition is the improvement of the following key parameters. We have more eligible population for every account that we are signing on. We have higher ARCU, average revenue per user. And overall, we can generate between 4 to 8x more dollars for every account compared to a single condition platform. Looking into our balance sheet, we ended the fourth quarter in a strong financial position with cash and equivalents of $49.3 million. We also continue to improve our financial profile of the company. Losses are declining, and we believe that this momentum will continue into 2023 which is something that will extend our overall run rate before handing over the call to rick few highlights on the commercial side we achieve our goal of 100 accounts by the end of 2022 we believe that we are positioned to accelerate growth in 2023 and 2024 as the overall foundation for client wins is improving with larger sales team and meaningful partnerships that should give us a significant larger access to clients. In fact, we effectively multiplied our commercial capacity by multiple points. We have made and continue to make substantial progress in building our relationship with Sanofi, which we believe can take us to the next level in terms of this relationship. Our relationship with Aetna is progressing and we recognize revenue this quarter and anticipate accelerating revenues throughout 2023 and beyond. Additionally, we are working on another, at least one, strategic partnership that will help us expand our commercial outreach. With that, I want to hand over the call to Rick to elaborate on the commercial side.