DarioHealth Q2 Earnings Call Highlights
Key Points
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- Q2 revenue fell to $5.2 million as DarioHealth continued moving away from pharmaceutical services toward recurring B2B2C revenue, but gross margin improved to 62% and net loss narrowed to $7.9 million.
- The company reported $13.1 million in contracted and late-stage annual recurring revenue, with most conversion expected in the second half of 2026 and during 2027 as customer implementations and enrollment mature. Channel partnerships now generate about 75% of new accounts, supporting more than 180 signed employer and health-plan customers.
- DarioHealth is expanding its AI and care offerings, including DarioIQ, an integrated GLP-1 program, Dario Women and Dario Sleep. After a July financing, pro forma cash totaled $36.8 million, providing additional runway to scale operations and pursue positive cash flow.
DarioHealth (NASDAQ:DRIO) reported second-quarter 2026 revenue of $5.2 million, down from $5.6 million in the first quarter and $5.4 million a year earlier, as the company continued to shift away from pharmaceutical services revenue toward recurring B2B2C business.
Chief Financial Officer Chen Franco said the transition affected near-term reported revenue but was intended to improve the quality and predictability of the company’s revenue base. Gross margin rose to 62% from 57% in the prior quarter and 55% in the year-earlier period. DarioHealth’s non-GAAP B2B2C gross margin remained approximately 80% for the 10th consecutive quarter, according to Franco.
The company reduced operating expenses by 8% sequentially and 21% year over year. Operating loss improved 11% from the first quarter and 30% from the prior-year quarter. Net loss narrowed to $7.9 million from $13 million a year earlier.
Contracted Revenue and Implementation Timing
DarioHealth ended the quarter with approximately $13.1 million in contracted and late-stage annual recurring revenue, with more than 80% tied to multi-condition programs. Chief Operating Officer Lara Dodo said the company expects that contracted revenue to begin converting more visibly during the second half of 2026, with most of the contribution expected in 2027 as implementations and enrollment mature.
Dodo said the company’s enterprise contracts generally require a four-to-five-quarter progression from signing to full run-rate revenue. Program launches depend on plan-year cycles and open-enrollment windows, while eligible members enroll over subsequent quarters.
During the question-and-answer session, Chief Executive Officer Erez Raphael said the sequential revenue decline also reflected additional “cleanup” following the company’s transformation and closure of its pharmaceutical channel. He said management expects revenue momentum to build between the third and fourth quarters, with further acceleration anticipated in the first quarter of 2027.
Channel Partnerships and Account Growth
DarioHealth said approximately 75% of new accounts now come through channel partners, a shift from its former predominantly direct-sales approach. The company said channel distribution provides access to more employers and health plans while reducing customer-acquisition costs and shortening sales cycles.
As of the end of the second quarter, DarioHealth had more than 180 signed employer and health-plan accounts. Five were Fortune 50 companies, while approximately 25% of its B2B2C clients were from the Fortune 500. The company said it had served more than a dozen health-plan customers over the preceding four quarters, including three national carriers.
Recent commercial wins included a new Fortune 50 employer with more than 100,000 eligible employees for diabetes and hypertension programs. Through its partnership with Amwell, DarioHealth also signed a major Arizona-focused health insurer, giving the insurer’s administrative-services-only employer book access to the company’s cardiometabolic offering.
Dodo also highlighted expansion within existing accounts. One of the five largest U.S. health insurers added hypertension services to an existing behavioral-health program, an expansion that DarioHealth said could approximately triple its revenue opportunity with that customer. The company also expanded its hypertension program through its Solera partnership to cover a broader range of patient acuity.
AI and New Care Offerings
Management emphasized its DarioIQ artificial-intelligence capabilities, which are trained on what the company said are approximately 13 billion proprietary real-world data points. Raphael said DarioIQ is being deployed across the existing customer base to improve member engagement, retention and clinical outcomes.
Based on current experience, the company believes DarioIQ could increase recurring revenue from existing customers by roughly 10% to 15% over time. Raphael clarified that this potential revenue contribution is separate from the $13.1 million in contracted and late-stage annual recurring revenue, which represents new business or condition expansions.
Raphael also said the company is using agentic AI in internal operations, including functions ranging from client acquisition and member enrollment to member management. Management cited those initiatives as a contributor to lower operating expenses.
During the quarter, DarioHealth launched an integrated GLP-1 program that combines its AI-powered engagement platform with licensed-provider evaluations and access to FDA-approved GLP-1 therapies when clinically appropriate. The offering is planned for DarioHealth’s direct-to-consumer store, employer programs and health-plan marketplaces.
The company also introduced Dario Women, targeting members navigating perimenopause and menopause, and Dario Sleep, focused on obstructive sleep apnea. Dodo said both programs are expected to begin contributing revenue in the fourth quarter.
Cash Position and Outlook
As of June 30, DarioHealth had $14 million in cash equivalents and short-term deposits. Including $22.8 million in net proceeds from a registered direct financing completed in July, the company reported a pro forma cash position of $36.8 million.
Franco said the financing provides runway to pursue commercial opportunities and advance toward positive cash flow. Management said it expects its existing technology platform, commercial organization and operating infrastructure to provide operating leverage as customer implementations, multi-condition expansions, AI initiatives and provider-backed care offerings scale.
About DarioHealth (NASDAQ:DRIO)
DarioHealth (NASDAQ:DRIO) is a digital health company specializing in chronic disease management through a smartphone-based care platform. Its core solution combines connected devices—such as glucose meters, blood pressure monitors and smart scales—with real-time data analytics and personalized coaching. The platform is designed to support individuals living with diabetes, hypertension, weight management challenges and other cardiometabolic conditions, offering continuous monitoring, tailored insights and behavioral nudges aimed at improving clinical outcomes.
The Dario platform integrates artificial intelligence and machine learning to deliver personalized guidance and education.
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