DRIO — DarioHealth Corp.

Summary of DarioHealth (DRIO) Q1 2026 Earnings Call

1. Key Financial Results and Metrics

• Revenue: Q1 2026 revenue was $5.6 million, a sequential increase from $5.2 million in Q4 2025, marking the second consecutive quarter of revenue growth. However, this reflects a year-over-year decline due to a strategic shift away from non-recurring pharmaceutical revenue.
• Gross Margin: Gross margin was 57%, consistent year-over-year and up from 54% in Q4 2025. The non-GAAP gross margin for B2B2C remained at approximately 80%.
• Operating Expenses: Total operating expenses were $10.5 million, down 21% year-over-year and 8% sequentially, driven by operational efficiencies.
• Operating Loss: The operating loss was $7.3 million, improving 22% year-over-year and 15% sequentially. Non-GAAP operating loss was $5.3 million, an 8% improvement year-over-year.
• Cash Position: As of March 2026, DarioHealth held $20 million in cash and short-term deposits, with net cash used in operations decreasing to $6 million from $6.7 million year-over-year.

2. Strategic Updates and Business Highlights

• Channel Expansion: DarioHealth is expanding its channel ecosystem, with a new partnership expected to access approximately 65 million additional covered lives, bringing total distribution reach to over 175 million.
• Account Growth: In Q1 2026, 10 new accounts were added, primarily through channel partners, indicating a shift towards a scalable partner-led model.
• Care Delivery Strategy: The company is moving closer to care delivery, partnering with health systems to enhance clinical outcomes and explore outcomes-based revenue models. This includes deepening integration with GreenKey Health for obstructive sleep apnea services.
• DarioIQ AI Engine: The AI engine is reportedly improving member engagement, with early results showing up to 40% improvement in retention and 55% lift in active sessions.

3. Forward Guidance and Outlook

• DarioHealth expects revenue growth to accelerate in the second half of 2026 as accounts signed in 2025 transition to recognized revenue. There is confidence in achieving significant growth due to several large accounts launching by mid-2026.
• The company has a robust commercial pipeline of approximately $127 million across 241 open opportunities, indicating strong demand for its multi-condition platform.

4. Challenges and Points of Concern

• Year-over-Year Revenue Decline: The decline in year-over-year revenue is a concern as it reflects a strategic pivot that may take time to stabilize.
• Implementation Risks: The transition from signing new accounts to onboarding and scaling operations poses risks, particularly with large accounts that require extensive integration.
• Market Competition: The competitive landscape in digital health is intensifying, and DarioHealth must continue to differentiate its offerings to maintain its market position.

5. Notable Q&A Insights

• Expansion into Care: Management clarified that DarioHealth will act as a referral partner to health systems, enhancing care delivery while exploring claims-based billing opportunities.
• Pipeline Activity: There are currently 7 to 10 active proposals with health systems, primarily targeting Medicare Advantage, indicating a focused strategy on expanding into care delivery.
• Consumer Revenue Growth: The direct-to-consumer segment saw a 42% year-over-year increase, largely driven by demand for the MSK product, which is gaining traction both domestically and internationally.

Overall, DarioHealth is demonstrating positive momentum in revenue growth and strategic partnerships, while also navigating challenges related to its transition in business model and competitive pressures.