DRIO: A Torrent of New Contracts – News Nation USA

By John Vandermosten, CFA

NASDAQ: DRIO

READ THE FULL DRIO RESEARCH REPORT

Update progress

DarioHealth Corp. (NASDAQ:DRIO) has added a number of new customers since our last update, continuing its momentum with the B2B2C initiative. Recent victories include:

➢ RPM Contract with Coastal Family Health Center - June 2021

➢ Three New Employer Contracts Announced for wayForward - July 2021

➢ Selected to provide RPM for Alabama Regional Medical Services (ARMS) - July 2021

➢ Workplace Options Adds Dario's Global Behavioral Health Solution - July 2021

➢ National Employer Selects Dario's Behavioral Health Solution - August 2021

➢ Chosen by PeopleOne Health as Digital Behavioral Health Partner - August 2021

➢ Selected by Employer for Behavioral Health Services - September 2021

➢ Chosen by Northeast Regional Employer - September 2021

➢ Agreement with Global Employer for Metabolic Health Solutions and MSK - October 2021

➢ Agreement with the leading national health plan - October 2021

➢ Contract with a US national employer for the complete DTx suite for various conditions - October 2021

➢ Joins Virgin Pulse Partner Network - October 2021

➢ Contracts with suppliers in Hawaii and the Atlanta metropolitan area - November 2021

Recent B2B2C Wins

Dario continues to pursue his B2B2C strategy and has announced numerous victories. We find the national health plan and multi-condition agreements particularly attractive. Here is a summary of the partnerships and contracts that Dario has publicly announced to date in 2021.

Over the past few months, Dario has added many new clients in Remote Patient Monitoring (RPM), National Employer, Global Employer, Health Plan, and other categories as he continues to advance his B2B2C initiative. In his last update, Dario had a total of 39 clients,² with an acceleration in the count that builds on its recent acquisitions of Upright Technologies and wayForward. The number of users on Dario's platform has grown significantly and consisted of more than 197,000 members at the end of the second quarter. We anticipate this number to grow substantially as the announced contracts begin to enroll patients.

Darío's strategy

The numerous contracts announced are evidence of a successful evolution of Dario's strategy to build on the three pillars of growth:

➢ Transformation into a high-margin software-as-a-service (SaaS) business model;

➢ Transition to a provider of digital therapies from business to business to consumer (B2B2C); and

➢ Expansion to the offer of services that address multiple chronic conditions.

Over the past two years, the implementation of this strategy has led to the acquisition of two synergistic platforms, Upright Technologies in musculoskeletal (MSK) and wayForward in the behavioral health space, complemented by organic growth in hypertension and hypertension management. remote patient monitoring (RPM). Company research has shown that around 35% of corporate clients want to offer digital therapeutic services under multiple conditions to their employees, with a strong preference for offerings recently acquired by Dario.

Dario's marketing teams are aligned by customer type and channel rather than condition, allowing sales reps to offer the full platform. A potential customer interested in any of the offered terms can cross-sell, taking advantage of a strategy that will use the marketing team's time and efforts more efficiently. This approach will fundamentally enhance the opportunity set for Dario in a number of ways. You can achieve a:

➢ Better win rate due to expanded offering that addresses a wider range of customer needs;

➢ Increase in the eligibility rate for covered lives from 20% to 40%; and

➢ Expansion of the average revenue per user (ARPU) from $ 60 to $ 80 per member per month.

Success across these three parameters will lead to better margins, higher revenue growth, and an improved profit rate compared to the previous iteration of Dario Health. The company is focused on internal development of its product capabilities and has accumulated an order book of $ 900 million. Most prospects are on a normal schedule, with contracts beginning in January 2022. This means that announcements in the fourth quarter of 2021 will provide an indication of the long-term success of Dario's efforts to convert customer backlog. that generate income for the next year.

Alliances and initiatives

Virgin Pulse Network

On October 27, 2021, Dario announced that he had partnered with Virgin Pulse, the leading global provider of digital and live health and wellness solutions, making Dario's DTx platform available for contracts through Virgin Pulse for employers. and health plans around the world, specifically through Virgin Pulse's Homebase for Health solution. Dario's preconfigured benefits will be available to eligible employees and health plan members. Benefits will include support for diabetes, hypertension, weight management, MSK and behavioral health, again, powered by Dario's artificial intelligence engine to customize support for the management of each patient with one or multiple chronic conditions.

Workplace options

On July 27, 2021, Dario announced that it had partnered with Workplace Options (WPO), the world's largest independent provider of integrated solutions for employee wellness, to offer Dario's digital behavioral health solutions. WPO services allow access to the platform in all languages. Together with wayForward, recently acquired by Dario, Dario's offering is now tailored to multinational clients that have employees all over the world. These international employees will no longer experience a language barrier and will be able to access Dario's behavioral health platform. Also, Dario's potential customer base can expand accordingly. WPO language support will be fully integrated into the Dario API.

Workplace Options is an employee support service focused on wellness and provides information, resources, referrals, and consultation on a variety of topics, including dependent care and stress management. WPO has service centers in the US, Canada, UK, Ireland, Portugal, France, Belgium, UAE, Singapore, Japan, China, India, and Indonesia supporting more than 116,000 organizations and their 70 million of employees in more than 200 countries and territories.

MediOrbis

Adding to a list of victories in Dario's B2B2C initiative, the company announced on April 20, 2021 that it had partnered with MediOrbis, providing remote patient monitoring (RPM) services to MediOrbis for Medicare patients with diabetes. MediOrbis is a telehealth provider that specializes in chronic diseases. Covered members with Medicaid may receive, based on existing Medicare benefits, telehealth support provided by MediOrbis and RPM provided by DarioHealth. The virtual care program will also be available to Dario's approximately 75,000 members with diabetes, with 30% of these members over the age of 65. The virtual care program will also be marketed to qualified Medicare members who are not current Dario members, a population that the Centers for Medicare and Medicaid Services (CMS) estimates to be 20% of its 62 million beneficiaries.

Dario Move

On October 18, 2021, Dario announced that it would present Dario Move at HLTH 2021. Dario Move is the result of the integration of Dario's recently acquired MSK solution, Upright Technologies, which marks approximately 9 months since the acquisition. Solution integration is key, as Dario's mission is to provide a comprehensive and holistic digital therapeutic platform to business clients, who can then support employees in the most crucial times between doctor visits. Dario Move makes it easy for end users to improve their MSK health by combining adaptive software, technology and personal support and leverages acquired technologies: unique biofeedback sensor, evidence-based personalized exercise programs designed by physical therapists, real-time feedback , real-time support from coaches and physical therapists, and a highly personalized experience powered by Dario's artificial intelligence engine.

Summary

Dario has been active for the past two years implementing his new strategy and the pace of activity accelerated in 2021 with two acquisitions and several new deals announced in behavioral health, remote patient monitoring and other critical areas. Since June, we have 15 new customer relationships and collaborations with multiple networks to reach more users. The company has moved forward by strengthening its pillars of growth and has improved its ability to improve earning rates, eligibility and revenue per user. The efforts will consume substantial resources and we will increase our operating costs accordingly. We look forward to more contracts won that build on recent successes and converting build-up to long-term relationships.

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1. Compiled by Zacks Analyst in the public domain

2. With new hires, this number is likely to be 10 higher or roughly 49.

3. Dario's corporate presentation, September 2021.