DarioHealth Corp.

Good morning, and welcome to the DART South first quarter 2023 results call. All participants may listen on the phone. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your questions, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Chuck Padala. Please go ahead.

Thank you, Operator, and good morning, everyone. Thank you for joining us today for a discussion of Dario Health's first quarter 2023 financial results. Leading the call today will be Arez Rafael, CEO of Dario Health, and he'll be joined by Rick Anderson, President. 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 a cheap archived webcast, this call is being held on May 11, 2023. This morning we issued a press release announcing our financial results for the first quarter of 2023. 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 in 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 2023 quarterly report form 10Q 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 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 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. With that, I'd like to introduce Erez Raifayel, CEO of Dario Health. Erez?

Thank you, Chuck, and thanks to all of you for joining this morning call. Q1 financial results continue to demonstrate the success of the multiyear strategy we implemented in the last few years. We continue to see the trend of financial profile improvement that we saw in Q3 and Q4 of 2022. We moved our business from direct to consumer to B2B and from single point solution to an integrated multi chronic condition platform. Let's re-examine the strategy, the market trend against the strategy, and the indications for success in the financial results we are reporting today. First, our transformation from direct to consumer to B2B. We have succeeded and continue to succeed in making significant advances in the financial profile of the company. This is because of the significant reduction in the cost per member acquisition, the ability to scale, and more efficient economic model per member on the platform. Key indicators for financial results for the success of this strategy is evident in that 70% of revenues came from B2B. Also, the continuation of the sequential improvement in our gross margins and a significant reduction in the company burn rate. Second is the multi-condition strategy in our B2B business where we manage five different conditions on one integrated platform. This strategy is not only aligned with the market, but also ahead of the macro digital health market trends of consolidation and consumer centricity. In fact, our current model is better suited to the global financial macro environment we are all facing today. The market trends of customers looking for an innovative digital solution with more conditions and from smaller number of vendors and adopting solutions through partners continues. The majority of our new contracts continue to be multi-conditions. We generate more revenue per customer than a single chronic condition point solution. We believe our platform has strategic advantage because it is not only covers large number of conditions, but does so through an integrated user experience with high member engagement. We're also seeing a real world evidence in our voice of customer data. which focuses on ROI, a trend to which we'll certainly position us as a value differentiator to benefit from, as recently demonstrated in the clinical data published by Sanofi earlier this week. Another strategy is accelerating penetration through partnership, which is an approach we have been executing on for the last few quarters to accelerate both the sales cycle and the accounts into implementation. We have collected meaningful list of partners, including Solera, Virgin Pulse, Alliant, Sanofi, and Aetna that are looking to accelerate our footprint further. This quarter, we added significant new partners and secured new customers through these partners. We announced a very significant new partnership with Amwell, one of the largest telehealth companies in the country, with 90 million people having access to their platform. Rick will elaborate about this significant deal for us. In addition to that, we announced our first customer through the co-promotion efforts under our strategic partnership with Sanofi. This is a multi-condition agreement with the pharmacy benefit manager. Third, we demonstrated tight collaboration on real-world data and clinical evidence with Sanofi through the presentation of the first Sanofi conducted study earlier this week. We are very excited about this study and what it represents not only for Dario, but to the digital health industry as a whole. We believe our partnership strategy, including the traction we saw in the first quarter, will drive accelerating revenue in the second half of 2023 and even more in 2024. Let's take a deep dive into the financial results. Q1 shows continued improvement of the company financial profile, a trend we demonstrated in Q3 and Q4 of 2022. We are presenting a real evidence that shows that the model is working and creating a long-term shareholder value. Let's start by looking into the revenues and its components. First quarter 2023 revenue was $7.07 million, a sequential increase of 3.8% compared to the Q4 of 2022. This is 12.3% decrease compared to the revenues of 8.06 million in the first quarter of 2022. This decrease resulted mainly from lower B2C revenues in Q1 2023, which is part of our previously discussed strategy to manage the B2C business to a break even to a decrease investment in B2C customer acquisition cost. We believe we will see revenues acceleration as we continue to get signed accounts launched. Another important metric is the gross margins. 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. The former gross margins was above 60% for the first quarter of 2023, up from 58% of revenues in the fourth quarter of 2022. As I mentioned, in the last few calls, we are targeting an average gross margins of above 60% for 2023 and above 70% for 2024. Looking at operating loss, we are seeing a poor operating leverage on the infrastructure that we have built and real economic advantage for multi-condition approach. We continue to reduce the cash used in operating activities in the first quarter with only 4.76 million used. Further reduce net loss excluding stock-based compensation, acquisition-related expenses and depreciation. for the first quarter of 2023 to 6.8 million, compared to 10 million for the first quarter of 2022, and 9.6 million in the fourth quarter of 2022. Looking into the balance sheet, we also have a strong cash position. The former cash balance, as of the end of Q1, inclusive of the private placement funds and the loan refinancing, was $61 million, which leaves us with a significant runway to execute on our strategies. With that, I want to hand over the call to Rick to elaborate on the commercial aspect.