DRIO 10-K & 10-Q changes, risk factors and insider trading
DarioHealth Corp. · Nasdaq · Surgical & Medical Instruments & Apparatus · CIK 1533998 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Our indebtedness under the Callodine loan facility subjects us to financial covenants and other restrictions that could adversely affect our liquidity, operational flexibility and financial condition.”
New heading “Our dependence on SaaS business model, third-party services and network infrastructure could adversely affect our business and results of operations.”
New heading “Changes in U.S. laws or policies, including trade policies and tariffs, could adversely affect our business and results of operations.”
New heading “Our strategic review process may not result in a transaction and may create additional risks and uncertainties for our business.”
New heading “Our outcomes-based contracts and reimbursement arrangements may not achieve expected results and may expose us to financial and operational risks.”
New heading “Our use of AI and machine learning, including in DarioIQ and DarioSHIFT, exposes us to risks related to model accuracy, bias, privacy, intellectual property, cybersecurity, third-party dependencies, evolving regulation, and reputational harm, any of which could materially adversely affect our business, results of operations, or stock price.”
New heading “We face significant competition in the digital health and connected health device markets, which may limit our ability to grow our business.”
New heading “There can be no assurance that we will be able to maintain continued Nasdaq listing criteria.”
Removed heading “We were formed in August 2011 and are thus subject to the risks associated with new businesses.”
Removed heading “We may be subject to claims for rescission or damages in connection with certain sales of shares of our securities.”
Removed heading “Our revenues are concentrated with a major customer, and our revenues may decrease significantly if we were to lose our major customer.”
Removed heading “The success of our Dario product will depend on the acceptance of Dario in the healthcare market.”
Removed heading “If Dario fails to satisfy current or future customer requirements, we may be required to make significant expenditures to redesign the product, and we may have insufficient resources to do so.”
Removed heading “We rely in part on a small group of third-party distributors to effectively distribute our products.”
Removed heading “We rely upon Software-as-a-Services, or SAAS, technologies from third parties to operate our business, and interruptions or performance problems with these technologies may adversely affect our business, financial condition and results of operations.”
Removed heading “The SaaS pricing model is evolving and our failure to manage its evolution and demand could lead to lower than expected revenue and profit.”
Removed heading “Our results of operations may fluctuate significantly due to the timing of our recognition of SaaS revenues.”
Removed heading “Any damage, failure or disruption of our SaaS network infrastructure or data centers could impair our ability to effectively provide our solution, harm our reputation and adversely affect our business.”
Removed heading “We may not generate the expected benefits of our acquisition of Twill.”
Removed heading “We may be unable to complete required clinical trials, or we may experience significant delays in completing such clinical trials, which could significantly delay our targeted product launch timeframe and impair our viability and business plan.”
Removed heading “We are subject to the risk of reliance on third parties to conduct our clinical trial work.”
Removed heading “We face intense competition in the digital support solution and the self-monitoring of blood glucose market, and as a result we may be unable to effectively compete in our industry.”
Removed heading “If third-party payors do not provide adequate coverage and reimbursement for the use of our products and services, our revenue will be negatively impacted.”
Removed heading “Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.”
Removed heading “Our officers and directors may exert significant influence over our affairs, including the outcome of matters requiring stockholder approval.”
Largest changes
Outside of the United States, we operate our business internationally, presently insee in full comparisonEurope, AustraliaIsrael andCanada.India and offer our products in Europe, Canada, and Mexico. The international operation of our business requires significant management attention, which could negatively affect our business if it diverts their attention from their other responsibilities. In the event that we are unable to manage the complications associated with international operations, our business prospects could be materially and adversely affected. In addition,asongoingageopoliticalresulttensionsofand conflicts, including thecrisisRussia-Ukraine conflict and other regional conflicts, have resulted inUkraine,sanctions,bothexport controls, supply chain disruptions, and economic uncertainty in certain markets. For example, the UnitedStatesStates, the European Union andtheotherEUjurisdictions haveimplementedimposed sanctions against certain Russian and Belarusian individuals andentities,entities.asSuchwellgeopoliticalwith respect to Belarus,developments and related sanctions or trade restrictions mayimpactadverselytheaffect economic and political stability inthecertainEU.regions,IfincludingtheEurope,EUwhichexperiencescouldeconomicnegativelyand political instability as a result of these current tensions,impact our business, including our revenue,profitabilityprofitability, cash flows andcash flows, and operations could be adversely affected.operations. In addition, doing business with foreign customers subjects us to additional risks that we do not generally face in the United States. These risks and uncertainties include:
“Several countries, principally in the Middle East, still restrict doing business with Israel and Israeli companies, and additional countries may impose restrictions on doing business with Israel and Israeli companies, whether as a result of hostilities in the region or otherwise. Also, the Israeli government imposes restrictions on doing business with certain countries. In addition, there have been increased efforts by activists to cause companies and consumers to boycott Israeli goods and cooperation with Israeli-related entities based on Israeli government policies. …”see in full comparison
“Our ability to access the remaining availability under the facility is subject to the achievement of specified revenue thresholds and other conditions. The credit agreement contains financial and operational covenants and other restrictions that may limit our ability to incur additional indebtedness, grant liens, make investments, or engage in certain strategic transactions. …”see in full comparison
“Our indebtedness under the Callodine loan facility subjects us to financial covenants and other restrictions that could adversely affect our liquidity, operational flexibility and financial condition.”see in full comparison
“Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions.”see in full comparison
“Our use of AI and machine learning, including in DarioIQ and DarioSHIFT, exposes us to risks related to model accuracy, bias, privacy, intellectual property, cybersecurity, third-party dependencies, evolving regulation, and reputational harm, any of which could materially adversely affect our business, results of operations, or stock price.”see in full comparison
Full comparison: every changed paragraph (166)
We were formed in August 2011 and are thus subject to the risks associated with new businesses.
We were formed in August 2011 as a new business and, commencing from 2015, we entered the commercialization stage of our technology. As such, this limited operating history may not be adequate to enable you to fully assess our ability to develop commercialize and achieve market acceptance of the Dario digital platform. We commenced a commercial launch of the free Dario Smart Diabetes Management application in the United Kingdom in late 2013 and commenced an initial soft launch of the full Dario Smart Diabetes Management Solution (including the app and the Dario Blood Glucose Monitoring System) in selected jurisdictions in March 2014 with the goal of collecting customer feedback to refine our longer-term roll-out strategy and continued to scale up launch during 2014 in the United Kingdom, the Netherlands and New Zealand, in 2015 in Australia, Israel and Canada and in 2016 in the United States. These efforts have not generated sufficient revenues, and we will need to generate additional revenues over the next years. Therefore, we are, and expect for the foreseeable future to be, subject to all the risks and uncertainties, inherent in a new business and the development and sale of new medical devices and related software applications. As a result, we may be unable to fully develop, obtain regulatory approval for, commercialize, manufacture, market, sell and derive material revenues in the timeframes we project, if at all, and our inability to do so would materially and adversely impact our viability as a company. In addition, we still must establish many functions necessary to operate a business, including finalizing our managerial and administrative structure, continuing product and technology development, assessing and commencing our marketing activities, implementing financial systems and controls and personnel recruitment.
Accordingly, you should consider our prospects in light of the costs, uncertainties, delays and difficulties frequently encountered by companies in their initial revenue generating stages, particularly those in the medical device and mobile health fields. In particular, potential investors should consider that there is a significant risk that we will not be able to:
In the event that we do not successfully address these risks, our business, prospects, financial condition, and results of operations could be materially and adversely affected.
According to our management’s estimates, based on our current cash on hand and further based on our budget and the assumption thatrelated initialto our commercial sales will commence during our anticipated timeframes,sales, we believe that we will have sufficient resources to continue our activities throughfor 2025.at least a period of twelve months from the date of the issuance of this 10K.
Since we might be unable to generate sufficient revenue or cash flow to fund our operations for the foreseeable future, we will need to seek additional equity or debt financing to provide the capital required to maintain or expand our operations. We may also need additional funding for developing products and services, increasing our sales and marketing capabilities, and promoting brand identity, as well as for working capital requirements and other operating and general corporate purposes. Moreover, the regulatory compliance arisingthat outcomes ofwith being a publicly registered company hasincurs dramatically increased oursignificant costs.
We currently have a credit facility in place with Avenue Venture Opportunities Fund L.P. and Avenue Venture Opportunities Fund II, L.P., of which $30 million was made available in May 2023. However, there can be no assurance that we will be able to raise sufficient additional capital on acceptable terms, or at all. If such financing is not available on satisfactory terms, or is not available at all, we may be required to delay, scale back or eliminate the development of business opportunities and our operations and financial condition may be materially adversely affected. As of December 31, 2024, we have drawn down $30 million of the credit facility.
Debt financing,financing ifobtained obtained,by mayus involveinvolves agreements that include liens on our assets, covenants limiting or restricting our ability to take specific actions, such as incurring additional debt,debt. couldThis increaseincreases our expenses and requirerequires that our assets be provided as a security for such debt. Debt financing would also be required tomust be repaid regardless of our operating results. We currently have a credit facility in place, of which $32.5 million was made available in April 2025. However, there can be no assurance that we will be able to raise sufficient additional capital on acceptable terms, or at all. If such financing is not available on satisfactory terms, or is not available at all, we may be required to delay, scale back or eliminate the development of business opportunities and our operations and our financial condition may be materially adversely affected. As of December 31, 2025, we have drawn down $32.5 million of the credit facility.
If we raise additional funds through collaborations and licensing arrangements, we may be required to relinquish some rights to our technologies or candidate products, or to grant licenses on terms that are not favorable to us.
Since our inception, we have engaged primarily in research and development activities and in 2015 entered the commercialization stage. We have financed our operations primarily through private placements, public offerings of common stock and certain credit facilities, and have incurred losses in each year since inception including net losses of $42,747,000$41,714,000 and $59,427,000$42,747,000 in 20242025 and 2023,2024, respectively. Our accumulated deficit atas of December 31, 20242025 was approximately $390,343,000.$452,078,000. We do not know whether or when we will become profitable. Our ability to generate revenue and achieve profitability depends uponon, among other things, our ability,ability aloneto grow our contracted member base, expand utilization among existing customers, retain and renew contracts, manage operating expenses. There can be no assurance that we will achieve or withsustain others, to commercialize our digital health engagement platform. We may be unable to achieve this goal.profitability.
Our indebtedness under the Callodine loan facility subjects us to financial covenants and other restrictions that could adversely affect our liquidity, operational flexibility and financial condition.
In April 2025, we entered into a credit facility with Callodine Commercial Finance, LLC (“Callodine”) providing for borrowings of up to $50.0 million, of which $32.5 million was funded at closing. In November 2025, we entered into an amendment to the facility that, among other things, reset certain financial covenants, waived financial covenant testing for the second and third quarters of 2025, modified liquidity requirements to include a $10.0 million minimum consolidated unencumbered liquid assets covenant, imposed enhanced reporting obligations under certain liquidity thresholds, increased the exit fee and clarified that a portion of the remaining availability under the facility is uncommitted and subject to the lenders’ discretion.
Our ability to access the remaining availability under the facility is subject to the achievement of specified revenue thresholds and other conditions. The credit agreement contains financial and operational covenants and other restrictions that may limit our ability to incur additional indebtedness, grant liens, make investments, or engage in certain strategic transactions. If we fail to comply with the covenants or other requirements under the loan facility, or if our operating performance does not meet required thresholds, the lenders could declare an event of default and accelerate repayment of outstanding amounts, which could materially adversely affect our liquidity and financial condition. There can be no assurance that we would be able to obtain additional waivers, amendments or refinancing on acceptable terms, or at all.
In addition, the facility includes warrant coverage and a conversion feature that may result in dilution to our stockholders. Our ability to service our indebtedness and comply with the terms of the credit agreement depends on our future operating performance and our ability to generate sufficient cash flow, which are subject to economic, competitive, regulatory and other factors beyond our control.
We may be subject to claims for rescission or damages in connection with certain sales of shares of our securities.
In March 2016, the Securities and Exchange Commission declared effective a registration statement that we filed to cover 66,667 shares 76,667 warrants to purchase common stock, 76,667 shares of common stock underlying such warrants, and underwriters’ warrants to purchase up to 7,172 shares of common stock. Sales of approximately 2,778 shares of common stock, approximately 12,778 shares of common stock underlying warrants and approximately 1,278 shares of common stock underlying underwriters’ warrants may not have been made in accordance with Section 5 of the Securities Act of 1933, as amended. Accordingly, the purchasers of those securities may have rescission rights or be entitled to damages. The amount of such liability, if any, is uncertain. In the event that we are required to make payments to investors as a result of these unregistered sales of securities, our liquidity could be negatively impacted.
Our revenues are concentrated with a major customer, and our revenues may decrease significantly if we were to lose our major customer.
Due to our limited operating history, we have a limited customer base and have depended on a major customer for a significant portion of our revenue. As of December 31, 2024, our major customer accounted for 41.6% of our accounts receivable balance. If the customer were to terminate the agreement, or if we fail to adequately perform under the agreement, and if we are unable to diversify our customer base, our revenue could decline, and our results of operations could be adversely affected.
There is no assurance that our digital health engagement platform will succeed or beachieve adoptedbroad adoption by healthcare providers.providers, employers, health plans or other enterprise customers.
Our product offering consists of our digital health engagement platform, which is designed to provide digital health solutions across cardiometabolic and behavioral health conditions, through which we digitally engage users, assist them in monitoring chronic conditions and provide coaching, support, digital communications, connected devices, data analytics and alerts. We primarily generate revenue under a Business-to-Business-to-Consumer (“B2B2C”) model by contracting with employers, health plans and other enterprise customers, who in turn make our solutions available to their eligible members.
While we have entered into agreements with employers and health plans in the United States, enterprise adoption of digital health solutions is subject to lengthy sales cycles, budget constraints, procurement processes, clinical validation requirements and competitive evaluations. In addition, even where contracts are executed, revenue realization depends on member eligibility, enrollment rates, engagement levels, utilization and contract renewals, all of which are outside our direct control.
Accordingly, the success of our platform depends on our ability to attract new enterprise customers, retain and expand existing customer relationships, demonstrate clinical and economic value, and achieve sufficient enrollment and sustained utilization by members. We cannot assure that prospective customers will adopt our platform, that existing customers will renew or expand their contracts, or that eligible members will enroll in or continue to use our solutions at anticipated levels. If adoption, enrollment, engagement or renewal rates are lower than expected, or if customers reduce the scope of their agreements, our revenue growth may be adversely affected, and our business, financial condition and operating results could be materially and adversely impacted.
Our product offering consists of our digital health engagement platform, where we digitally engage with Dario users, assist them in monitoring their chronic illnesses and provide them with coaching, support, digital communications, and real-time alerts, trends and pattern analysis. We expect that our digital health engagement platform may be leveraged by our potential partners, such as clinics, health care service providers, employers, and payers for scalable monitoring of people with diabetes in a cost-effective manner, which we expect will open for us additional revenue streams. While we have begun to execute agreements with employers and health plans in the United States, we have not yet seen wide adoption of our platform. Therefore, the success of our digital health engagement platform will depend entirely on our potential partners’ adoption of the platform and we cannot assure you that our potential partners will do so, or, if adopted, that they will continue to use the platform continually and for an extended period of time. If we cannot encourage potential partners to utilize our digital health engagement platform we may not succeed in marketing the product to our potential partners, the failure of which may materially and adversely affect our business and operating results.
The success of our Dario product will depend on the acceptance of Dario in the healthcare market.
Dario has been CE marked since 2013, enabling us to commercialize in 32 countries across Europe as well as in certain other countries worldwide. It was also approved by the regulatory authorities in Australia, New Zealand, Canada, Israel and South Africa, and most recently in December 2015, we received FDA clearance. As a result, we have a limited history of commercializing Dario and commenced selling Dario in the United States in 2016. We have limited experience engaging in commercial activities and limited established relationships with physicians and hospitals as well as third-party suppliers on whom we depend for the manufacture of our product. We are faced with the risk that the marketplace will not be receptive to Dario over competing products and that we will be unable to compete effectively. Factors that could affect our ability to establish Dario or any potential future product include:
We cannot assure you that Dario or any future product will gain broad market acceptance. If the market for Dario or any future product fails to develop or develops more slowly than expected, or if any of the technology and standards supported by us do not achieve or sustain market acceptance, our business and operating results would be materially and adversely affected.
We mayare beoften faced with lengthy customer evaluation and approval processes associated with the adoption of our digital health engagement platform. Consequently, we may incur substantial expenses and devote significant management effort and expense into developing customer adoption of our platform which may not result in revenue generation. We must also obtain regulatory approvals of Dario in certain jurisdictions as well as approval for insurance reimbursement in order to initiate sales of Dario, each of which is subject to risk and potential delays, and neither of which may actually occur. As such, we cannot accurately predict the volume or timing of any future sales.
If Dario fails to satisfy current or future customer requirements, we may be required to make significant expenditures to redesign the product, and we may have insufficient resources to do so.
Dario is designed to address an evolving marketplace and must comply with current and evolving customer requirements in order to gain market acceptance. There is a risk that Dario will not meet anticipated customer requirements or desires. If we are required to redesign our products to address customer demands or otherwise modify our business model, we may incur significant unanticipated expenses and losses, and we may be left with insufficient resources to engage in such activities. If we are unable to redesign our products, develop new products or modify our business model to meet customer desires or any other customer requirements that may emerge, our operating results would be materially adversely affected, and our business might fail.
We expect to derive substantially all of our revenues from sales of products derived from our principal technology, which is our digital health engagement platform. Our initial product utilizing this technology is Dario. As such, any factor adversely affecting sales of our digital health engagement platform, including the product release cycles, regulatory issues, market acceptance, product competition, performance and reliability, reputation, price competition and economic and market conditions, would likely harm our operating results. We may be unable to develop other products utilizing our technology, which would likely lead to the failure of our business.
We are dependent upon third-party manufacturers and supplierssuppliers, making us vulnerable to supply shortages and problems and price fluctuations, which could harm our business.
We do not own or operate manufacturing facilities for clinical or commercial production of theour Dario Blood Glucose Monitoring System,products, and we lack the resources and the capability to manufacture theour Dario Blood Glucose Monitoring Systemproducts on a commercial scale. Therefore, we rely on a limited number of suppliers who manufacture and assemble certain components of theour Dario Blood Glucose Monitoring System.products. Our suppliers may encounter problems during manufacturing for a variety of reasons, including, for example, failure to follow specific protocols and procedures, failure to comply with applicable legal and regulatory requirements, equipment malfunction and environmental factors, failure to properly conduct their own business affairs, and infringement of third-party intellectual property rights, any of which could delay or impede their ability to meet our requirements. Our reliance on these third-party suppliers also subjects us to other risks that could harm our business, including:
We rely in part on a small group of third-party distributors to effectively distribute our products.
We depend in part on medical device distributors for the marketing and selling of our products in certain territories in which we have launched product sales. We depend on these distributors’ efforts to market our products, yet we are unable to control their efforts completely. These distributors typically sell a variety of other, non-competing products that may limit the resources they dedicate to selling Dario. In addition, we are unable to ensure that our distributors comply with all applicable laws regarding the sale of our products. If our distributors fail to effectively market and sell Dario, in full compliance with applicable laws, our operating results and business may suffer. Recruiting and retaining qualified third-party distributors and training them in our technology and product offering requires significant time and resources. To develop and expand our distribution, we must continue to scale and improve our processes and procedures that support our distributors. Further, if our relationship with a successful distributor terminates, we may be unable to replace that distributor without disruption to our business. If we fail to maintain positive relationships with our distributors, fail to develop new relationships with other distributors, including in new markets, fail to manage, train or incentivize existing distributors effectively, or fail to provide distributors with competitive products on attractive terms, or if these distributors are not successful in their sales efforts, our revenue may decrease and our operating results, reputation and business may be harmed.
In several of our principal target markets, we utilize online and digital marketing in order to create awareness toof Dario.Dario and our products. Our management believes that using online advertisement through affiliate networks and a variety of other pay-for-performance methods will beis superior for marketing and generating sales of Darioour products rather than utilizing traditional, expensive retail channels. However, there is a risk that our marketing strategy could fail. Because we plan to use non-traditional retail sales tools and to rely on healthcare providers to educate our customers about Dario,our products, we cannot predict the level of success, if any, that we may achieve by marketing Darioour products via the internet.Internet. The failure of our online marketing efforts would significantly and negatively impact our ability to generate sales.
Our Dario application,applications, which isare a key to our business model, isare currently available viaon Apple’sthe Apple App Store and via Google’s Android platforms and maybe in the futureGoogle viaPlay additional platforms.Store. If we are unable to achieve or maintain a good relationship with each of Apple and Google or similar platforms, or if the Apple App Store or the Google Play Store or any other applicable platformplatform, werewhich we may use in the future, become unavailable for any prolonged period of time, our business will suffer.be negatively impacted.
A key component of theour Darioavailable Solutionsolutions is anare iPhone or Android applicationapplications, which includesinclude tools to help diabeticour patientscustomers and users manage their disease.conditions. ThisThese applicationapplications isare compatible with Apple’s iOS and with Google’s Android platforms and may in the future become compatible via additional platforms. If we are unable to make our Dario Smart Diabetes Management applicationapplications compatible with these platforms, or if there is any deterioration in our relationship with either Apple or Google or others afterplatforms we may offer our applicationapplications is available,on, our business would be materially harmed.
We are subject to each of Apple’s and Google’s standard terms and conditions for application developers, which govern the promotion, distribution, and operation of games and other applications on their respective storefronts.stores. Each of Apple and Google has broad discretion to change its standard terms and conditions, including changes which could require us to pay to have our Dario applicationapplications available for downloading. In addition, these standard terms and conditions can be vague and subject to changing interpretations by Apple or Google. We may not receive any advance warningnotice of such changes. In addition, each of Apple and Google has the right to prohibit a developer from distributing its applications on its storefrontstore if the developer violates its standard terms and conditions. In the event that either Apple or Google ever determines that we are in violation of itstheir standard terms and conditions, including by a new interpretation, and prohibits us from distributing our Dario Management applicationapplications on itstheir storefront,store, it would materially harm our business.
Additionally, we will rely on the continued function of the Apple App Store and the Google Play Store as digital storefrontsstores where our Dario applicationapplications may be obtained. There have been occasions in the past when these digital storefrontsstores were unavailable for short periods of time or where there have been issues with the in-app purchasing functionality within the storefront.store. In the event that either the Apple App Store or the Google Play Store is unavailable or if in-app purchasing functionality within the storefrontstores is non-operational for a prolonged period of time, it would have a material adverse effect on the ability of our customers to secure the Dario Smart Diabetes Management application,applications, which would materially harm our business.
Our dependence on SaaS business model, third-party services and network infrastructure could adversely affect our business and results of operations.
Our business depends on the performance, availability, scalability and correct pricing of our SaaS offerings and related third-party and internal SaaS infrastructure, and any disruption, misalignment of pricing or demand, or revenue recognition impacts associated with our SaaS model could adversely affect our business, financial condition and results of operations.
We rely upon Software-as-a-Services, or SAAS, technologies from third parties to operate our business, and interruptions or performance problems with these technologies may adversely affect our business, financial condition and results of operations.
We rely on hosted SaaS applications from third parties in order to operate critical functions of our business, including platform delivery, enterprise resource planning, customer relationship management, billing, project management and accounting and financial reporting. If these services become unavailable due to extended outages, interruptions or because they are no longer available on commercially reasonable terms, our expenses could increase, our ability to manage finances could be interrupted and our processes for managing sales of our platform and products and supporting our customers could be impaired until equivalent services, if available, are identified, obtained and implemented, all of which could adversely affect our business, financial condition and results of operations.
The SaaS pricing model is evolving and our failure to manage its evolution and demand could lead to lower than expected revenue and profit.
We deriverely mostheavily on subscription-based SaaS offerings for a substantial portion of our revenue growthgrowth, fromand subscription offerings and, specifically, SaaS offerings. This businessthis model depends heavily on achieving economies of scale because the initial upfront investmentinvestments isin costlyinfrastructure, implementation and thecustomer acquisition are significant while associated revenuerevenues isare recognized on a ratable basis.basis over the subscription term. If we fail to achieve appropriate economies of scalescale, or if we fail to manageanticipate or anticipatemanage the evolution and demand of the SaaS pricing model,and thenpackaging or customer demand for our businessSaaS solutions, our revenues, margins and overall operating results could be adversely affected.
Our results of operations may fluctuate significantly due to the timing of our recognition of SaaS revenues.
WeIn may experience volatility inaddition, our reported revenuesresults andmay operating resultsfluctuate due to the differences in timing of revenue recognition betweenunder our SaaS offeringsdelivery and our traditional on-premise software and hardware sales.model. SaaS revenues are generally recognized ratably over the life of the subscriptions.subscription Inor contrast,at revenue from our on-premise softwareengagement, and hardwarea sales is generally recognized in full at the time of delivery. Accordingly, the SaaS delivery model creates risks related to the timing of revenue recognition not associated with our traditional on-premise software delivery model and hardware sales. Ameaningful portion of oursuch SaaSrevenues revenueconsists results fromof the recognition of deferred revenuerevenues relating to subscription agreements entered into duringfrom prior reporting periods. AAs a result, a decline in new or renewed subscriptions in any period may not be immediately reflected in our reported financial results for that period, but may resultlead into alower declinerevenues inand ouroperating revenueincome in future reporting periods. If any of our assumptions aboutregarding revenuecustomer fromadoption, renewal rates, usage patterns, or other inputs to our SaaS delivery model prove incorrect, our actual results may varydiffer materially from thoseour anticipated, estimated, or projected.expectations.
Our SaaS offerings also depend on both third-party hosted applications that support critical aspects of our operations - such as platform delivery, enterprise resource planning, customer relationship management, billing, project management, accounting and financial reporting - and on our own SaaS network infrastructure and data centers, which are vulnerable to damage, failure and disruption. These systems and facilities could be affected by human error, telecommunications failures or outages (including from third-party providers), computer viruses or cyber-attacks, break-ins or other security incidents, acts of terrorism, sabotage or vandalism, natural disasters, power loss and other unforeseen events. Any extended outage, degradation in performance, security breach or loss of data, or the unavailability of such services on commercially reasonable terms could interrupt or impair our ability to deliver our solutions, process and report financial information, manage sales and support functions, or otherwise operate our business. Such events could damage our reputation, require us to provide service credits or refunds, increase our costs, delay or prevent us from gaining new or additional business from existing customers, or cause customers to reduce or terminate their use of our solutions, any of which could adversely affect our business, financial condition and results of operations.
Any damage, failure or disruption of our SaaS network infrastructure or data centers could impair our ability to effectively provide our solution, harm our reputation and adversely affect our business.
Our SaaS network infrastructure is a critical part of our business operations. Our clients access our solution through standard web browsers, smart phones, tablets and other web-enabled devices and depend on us for fast and reliable access to our solution. We serve all of our clients from our data centers located in the United-States. Our SaaS network infrastructure and data centers are vulnerable to damage, failure and disruption.
In the future, we may experience issues with our computing and communications infrastructure, or data centers caused by the following factors:
•human error;
•telecommunications failures or outages from third-party providers;
• computer viruses or cyber-attacks;
•break-ins or other security breaches;
•acts of terrorism, sabotage, intentional acts of vandalism or other misconduct;
•tornadoes, fires, earthquakes, hurricanes, floods and other natural disasters;
•power loss; and
•other unforeseen interruptions or damages.
If our SaaS network infrastructure or our clients’ ability to access our solution is interrupted, client and employee data from recent transactions may be permanently lost, and we could be exposed to significant claims by clients, particularly if the access interruption is associated with problems in the timely delivery of funds payable to employees or tax authorities. Further, any adverse changes in service levels at our data centers resulting from damage to or failure of our data centers could result in disruptions in our services. Any significant instances of system downtime or performance problems at our data centers could negatively affect our reputation and ability to attract new clients, prevent us from gaining new or additional business from our current clients, or cause our current clients to terminate their use of our solution, any of which would adversely impact our revenues. In addition, if our network infrastructure and data centers fail to support increased capacity due to growth in our business, our clients may experience interruptions in the availability of our solution. Such interruptions may reduce our revenues, cause us to issue refunds to clients or adversely affect our retention of existing clients, any of which could have a negative impact on our business, operating results or financial condition.
Management's Discussion & Analysis (MD&A)
Removed heading “Production Lines”
Removed heading “Contractual Obligations”
Largest changes
“On August 15, 2025, we did not meet one of the financial covenants under the Callodine Credit Agreement. Upon an Event of Default (as defined in the Callodine Credit Agreement) under the Callodine Credit Agreement, interest shall accrue to at a rate per annum equal to the lesser of (i) three percent (3%) over the Contract Rate (as defined in the Callodine Credit Agreement), or (ii) the maximum rate of interest permitted to be charged by applicable laws or regulations, until paid. …”see in full comparison
“On November 5, 2025, we entered into an amendment (the “Callodine Credit Agreement Amendment”) to its existing Callodine Loan Facility, with the Callodine Lenders. …”see in full comparison
see in full comparisonWe have incurred net losses since its inception.As of December 31,2024,2025, wehadhas incurred recurring losses and negative cash flows from operations since inception and has an accumulated deficit of$390,343$452,078 as of December 31,2024.2025. For the year ended December 31,2024,2025, weusedincurred approximately$38,562$25,941 of negative cash flows in operations. Management believes we have sufficient funds to support its operation for at least a period of twelve months from the date of the issuance of these consolidated financial statements. Our current operating budget includes various assumptions concerning the level and timing of cashinreceiptsoperations.and cash outlays for operating expenses and capital expenditures. We expect to incur future net losses andourits transition to profitability is dependent upon, among other things, the successfuldevelopment andcommercialization of our products and the achievement of a level of revenues adequate to support the cost structure. Until we achieve profitability orgenerategenerates positive cash flows,weit will continue to be dependent on raising additionalfunds.funds to fund its operations. We intend to fund our future operations including meeting its covenants related to loan facility, through cash on hand, additional private and/or public offerings of debt or equitysecuritiessecurities, cost-saving plan intended to reduce operating expenses and extend its cash runway, or a combination of the foregoing. There are no assurances, however, that we will be able to obtain an adequate level of financial resources that are required for the long-term development and commercialization ofourits product offerings.
“In September 2025, the FASB issued Accounting Standards Update 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software (“ASU 2025-06”). ASU 2025-06 provides targeted improvements to the accounting for internal-use software costs by replacing the existing project-stage model with a principles-based approach to determine when capitalization of costs should begin. …”see in full comparison
“Impairment of production lines. We are required to review our production lines for impairment in accordance with ASC 360, “Property, Plant and Equipment,” whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. …”see in full comparison
“At the core of our mission and vision is engagement. We believe that most existing digital health solutions in the market fail to deliver improved health outcomes because users are not engaged due to a lack relevance, personalization, consumerization, and longitudinal data and information. We, and our acquired companies, first commercialized our digital behavioral health products in the D2C marketplace, and we continue to use the D2C marketplace as a sandbox and laboratory to innovation. …”see in full comparison
Full comparison: every changed paragraph (87)
We are a vertically integrated health intelligence platform with a mission to power the behavior changes that drive better health. Unlike software-only digital health platforms, Dario owns the complete chain of value in chronic care management - connected FDA-cleared hardware devices that generate continuous physiological data, AI built on that proprietary data, and a behavior change and coaching layer validated through over 100 peer-reviewed clinical studies. We are committed to transforming healthcare by delivering a comprehensive and highly engaging whole-person health platform, which enables us to create a future where healthy change is effortless and accessible to all.
At the core of our mission and vision is engagement. We believe that most existing digital health solutions in the market fail to deliver improved health outcomes because users are not engaged due to a lack relevance, personalization, consumerization, and longitudinal data and information. We, and our acquired companies, first commercialized our digital behavioral health products in the D2C marketplace, and we continue to use the D2C marketplace as a sandbox and laboratory to innovation. These consumers pay for these digital health products out of their own pockets and are therefore the most value driven among all healthcare consumers. These consumers demanded that we deliver highly engaging user experiences that deliver strong clinical health outcomes for which consumers will pay. The bottom line is that if users are not engaged in digital solutions over a long period of time, they cannot change their behavior and they cannot get healthier – we first deliver engagement followed by sustained behavior change that then leads to measurable health outcomes and improvement. We believe that our D2C marketplace roots and continued focus delivers better user experiences, longer sustained engagement, stronger clinical outcomes, at the most affordable prices, that then delivers the highest ROI in the industry.
We are a leading global DTx company revolutionizing the way people manage their health across the chronic condition spectrum to live a better and healthier life. Our mission is to transform how affected individuals manage their health and chronic conditions by empowering our customers to easily manage their conditions and take steps to improve their overall health. Most chronic conditions are driven by personal behaviors and the actions that are or are not taken. We believe that changing these behaviors can dramatically improve our customers’ overall health and substantially reduce unnecessary health spending. However, behavioral change and habit formation are difficult, especially in managing chronic disease and related conditions. Our digital therapeutics endeavor to produce lasting behavior changes in our customers by applying a novel combination of AI-driven dynamic personalization and behavioral science at scale. This allows us to engage and support our customers, and offer them a complete virtual care solution, ideally resulting in improved health outcomes and reduced total cost of care.
Our principal operating subsidiary, LabStyle Innovation Ltd., is an Israeli company (“LabStyle”) with its headquarters in Caesarea, Israel. We were formed on August 11, 2011, as a Delaware corporation with the name LabStyle Innovations Corp. On July 28, 2016, we changed our name to DarioHealth Corp. We began our sales in the direct-to-consumer space, solving first for what we deemed the most difficult problems: how to engage users and support behavior change to improve clinical outcomes in diabetes. Our most developed AI tools leverage the direct-to-consumer experience from over 150,000 members to drive superior engagement and outcomes. In early 2020, we broadened our solutions to include other medical conditions in addition to diabetes, and to serve business customers who seek to improve the health of their stakeholders. We also subsequently acquired Upright, PsyInnovations, Physimax Technology, and most recently Twill, to further our platform. Presently, we have deployed solutions for diabetes, hypertension, pre-diabetes, MSK and behavioral health, which conditions will also be powered by our AI-driven behavior change platform. We are currently delivering our solutions to providers, employers, health plans and pharmaceutical companies. We continue to achieve key benchmarks as we rapidly scale our B2B2C model, including more than 100 total signed contracts as of today. We believe we have a unique and defensible position in the market thanks to our unique solution origin in consumer markets.
We, along with TWILLTwill Merger Sub, Inc. (“Merger Sub”), Twill and Bilal Khan, solely in his capacity as the representatives of Twill’s stockholders and other equity holders, entered into an Agreement and Plan of Merger (the “Merger Agreement”), dated February 15, 2024 (the “Closing Date”). Pursuant to the provisions of the Merger Agreement, on the Closing Date, (i) Merger Sub was merged with and into Twill (the “Merger”), the separate corporate existence of Merger Sub ceased and Twill continued as the surviving company and a wholly owned subsidiary of the Company, (ii) we paid to Twill’s debt holders and equity holders aggregate consideration (“Merger Consideration”) of (A) $10.0 million in cash, (B) pre-funded warrants (the “Pre-Funded Warrants”) to purchase up to 10,000,400500,020 shares (the “Warrant Shares”) of our common stock issuable to a trust (the “Trust”) formed for the benefit of certain equity and debt holders of Twill, issuable in 4 equal tranches, (C) stock options to purchase up to 2,963,459148,173 shares of common stock issued to employees of Twill as an inducement to their employment with us, issued outside of our equity compensation plans, pursuant to Nasdaq Rule 5635(c)(4), with an exercise price of $2.55$51.00 per share, and (D) a combination of warrants and restricted stock units (“RSUs”) to acquire up to 1,766,50888,326 shares of common stock issued to certain outgoing board members, consultants and outgoing officers of Twill (all of such RSUs and warrants being subject to the approval of the Company’s stockholders, pursuant to Nasdaq Rule 5635), and (iii) the parties to the Merger Agreement consummated the transactions contemplated thereby. The Merger Agreement contains various customary representations, warranties and covenants. As a result of the Merger, Twill will operate as our wholly owned subsidiary.
The Pre-Funded Warrants arewere subject to a non-waivable 19.99% ownership blocker and the issuance of any shares of common stock underlying such warrants that are in excess of such amount shall be subject to the approval of our stockholders. In addition, the Company, the Trust and WhiteHawk Capital Partner LP (the “Beneficiary”), have executed a Lock Up/Leak Out Agreement (the “Leak Out Agreement”), pursuant to which until such time as the Trust receives $10,600,000 in aggregate net proceeds (the “Leak Out Period”), (i) the Trust shall only be allowed to sell such Warrant Shares at a rate of up to 10% of the average daily trading volume of the common stock in a manner which will not negatively affect the share price, (ii) all such sales shall be conducted pursuant to Rule 144 and (iii) that the Beneficiary shall not cause the Trust to engage in any short selling of such Warrant Shares during the Leak-Out Period. TheOn CompanyJanuary has29, agreed2026, we held our Annual Meeting of Stockholders pursuant to seekwhich stockholderour approvalstockholders withinvoted 135to days followingapprove the closingissuance of theshares Mergerof tocommon permitstock theissuable fullupon exercise of the Pre-Funded WarrantsWarrants, (theamong “Warrantother Vote”).agenda Initems. addition,As weof enteredFebruary into11, voting2026 agreements with certain existing stockholders to vote in favorall of the WarrantPre-Funded Vote.Warrants We have agreedrelated to callMerger awere stockholder meeting each fiscal quarter thereafterissued to the extent the Warrant Vote is not approved by the Company’s stockholders.trustee.
Pursuant to the terms of the Merger Agreement, we also agreed to appoint a new member to our board of directors, nominated by Twill equity holders and subject to such nominee being acceptable to us, within 90 days following the closing of the Merger. Such appointment right shall continue until the earlier of 540 days following the closing of the Merger, or the date which the Trust exercises its third tranche of Pre-Funded Warrants. As of December 31, 2025, the Trust had exercised its third tranche of Pre-Funded Warrants, and accordingly, the related board appointment right has terminated and is no longer in effect.
In addition, we executed certain consulting agreements (the “"Consulting Agreements”") with Ofer Leidner and Bilal Khan, each former officers of Twill. Pursuant to the terms of the Consulting Agreements, we agreed to retain the services of Messrs. Leidner and Khan for a period of at least 14 months and 6 months respectively, in exchange for monthly consulting fees of $35,416 and $35,417, respectively. As of December 31, 2025, both Consulting Agreements have been concluded. In addition, the Companywe agreed to issue to Mr. Leidner warrants to purchase up to 1,032,94651,648 shares of common stock, of which 717,94635,898 are subject to time vesting and 315,00015,750 are subject to certain performance-based metrics,metrics. andAs of December 31, 2025, all 35,898 time-vesting warrants have vested. The 15,750 performance-based warrants expired upon conclusion of the Consulting Agreement. We also agreed to issue to Mr. Khan 350,00017,500 fully vested RSUs whichIn shalladdition, bein vestAugust 2024 we agreed to issue to Mr. Leidner warrants to purchase up to 25,000 warrants subject to stockholdertime approval.vesting, 15,625 vested upon conclusion of the consulting services and 9,375 remain unvested. We also agreed to issue to Mr. Leidner performance-based warrants to purchase up to 40,000. The performance-based warrants expired upon conclusion of the Consulting Agreement.
Readers are cautioned that, according to our management’s estimates, based on our budget and the initial launch of our commercial sales, we believe that we will have sufficient resources to continue our activity through 2025 without raising additional capital. This includes an amount of anticipated inflows from sales of Dario through direct sales in the United States and through distribution partners. If we are unable to scale up our commercial launch of Dario or meet our commercial sales targets (or if we are unable to ramp up revenues), and if we are unable to obtain additional capital resources in the near term, we may be unable to continue activities, absent material alterations in our business plans, and our business might fail.
Our consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Our fiscal year ends on December 31.
While all the accounting policies impact the consolidated financial statements, certain policies may be viewed to be critical. Our management believes that the accounting policies which involve more significant judgments and estimates used in the preparation of our consolidated financial statements,statements include revenue recognition, inventories, liability related to certain warrants, and accounting for production lines and its related useful life and impairment.
RevenueWe isrecognize recognized under the five-step methodologyrevenue in accordance with Accounting Standards Codification (“ASC”) 606, “Revenue from contracts with customers,”when (“ASCor 606”as), whichit requiressatisfies usperformance obligations by transferring promised hardware or services to its customers in an amount that reflects the consideration we expect to receive. We apply the following five steps: (1) identify the contract with thea customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations identified,in the contract, and (5) recognize revenue when (or as) eacha performance obligation is satisfied.
If the contract contains a single performance obligation, the entire transaction price is allocated to the single performance obligation. For contracts that contain multiple performance obligations, we allocate the transaction price to each performance obligation based on the relative standalone selling price (“SSP”) for each performance obligation. We use judgment in determining the SSP for its performance obligations. To determine SSP, we maximize the use of observable standalone sales and observable data, where available. In instances where performance obligations do not have observable standalone sales, we may use alternative methods to estimate the standalone selling price, such as cost plus margin approach.
Our payment terms are generally 45 days or less. In instances where the timing of revenue recognition differs from the timing of invoicing, we determine our contracts generally do not include a significant financing component since our selling prices are not subject to billing terms nor is our purpose to receive financing from our customers or to provide customers with financing. In addition, we elected to apply the practical expedient not to adjust the promised amount of consideration for the effects of a significant financing component if the Company expects, at the inception of a contract, that the period between when we will transfer a promised good or service to a customer and when the customer will pay for that good or service will be one year or less. Revenue is recognized net of any taxes collected from customers which are subsequently remitted to governmental entities. We elected to account for shipping and handling activities as fulfillment activities. Shipping and handling activities are classified as part of cost of revenues.
We consider customer and distributersdistributor purchase orders to be the contracts with a customer.customers. For each contract, wethe considerCompany considers the promise to transfer tangible productshardware and/or services, each of which are distinct, toand beaccounted thefor identifiedas separate performance obligations. In determining the transaction price,price we evaluate whether the price is subject to rebates and adjustments to determine the net consideration to which we expect to receive. As our standard payment terms are less than one year, the contracts have no significant financing component. We allocate the transaction price to each distinct performance obligation based on their relative standalone selling price. Revenue from tangible productshardware is recognized when control of the producthardware is transferred to the customer (i.e., when our performance obligation is satisfied), which typically occurs at shipment. The revenues from fixed-price servicesservice arrangements are recognized ratablyover overtime based on the contractpattern periodof andtransfer of services to the costs associated with these contracts are recognized as incurred.customer.
We provide a mobile and web-based digital therapeutics health management programs to employers and health plans for their employees or covered individualsindividuals. includingSuch programs include live clinical coaching, content, automated journeys, hardware, and life-stylelifestyle coaching, currently supporting diabetes, prediabetes and obesity, hypertension, behavioral health (BH) and musculoskeletal health (MSK).MSK. At contract inception, we assess the type of services being provided and assessassesses the performance obligations in the contract. RevenueThese issolutions recognizedintegrate eitheraccess onto our web-based platform, and clinical and data services to provide an overall health management solution. The promises to transfer these goods and services are not separately identifiable and are considered a persingle engagedcontinuous memberservice per month (PEMPM) or a per employee per month (PEPM) basis. Our contracts consistcomprised of a fixedseries priceof distinct services recognized over time that isare based onsubstantially the monthlysame numberand have the same pattern of memberstransfer (i.e., distinct days of service). Revenues related to the Twill platform are recognized over time, since the customer simultaneously receives and clinicalconsumes the benefits provided by our performance. Revenues related to health management programs consumedand byto eachthe member.Twill Theplatform priceare isrecognized determinedusing duringa contracttime-elapsed negotiationsmeasure withof customers.progress, since those services have a consistent continuous pattern of transfer to the customer.
To the extent the transaction price includes variable consideration, revenue is recognized using the variable consideration allocation exception, or, if the allocation exception is not met, the Company recognizes revenue ratably based on estimates of the variable consideration to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. When the variable consideration allocation exception is met, we recognize revenue each month using either on a PEMPM or a PEPM basis.
We generally recognize revenues for professional services using an input method, based on labor hours consumed, which the Company believes best depicts the transfer of the services to the customer.
Certain of our contracts include client performance guarantees and a portion of the fees in those contracts are subject to performance-based metrics such as clinical outcomes or minimum member utilization rate.rates. WeThe includeCompany includes in the transaction price some or all of an amount of variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur when the uncertainty associated with the variable consideration is subsequently resolved. RefundRefunds to a customer that resultsresult from performance levels that were not met by the end of the measurement period are adjusted to the transaction price,price and therefore estimated at the outset of the arrangement.
We follow the guidance provided in ASC 606 for determining whether it is a principal (i.e., report revenues on a gross basis) or an agent (i.e., report revenues on a net basis) in arrangements with customers that involve another party that contributes to providing specified services to a customer, based on whether we control the specified good or service.
Production Lines
Capitalization of Costs. We capitalize direct incremental costs of third-party manufacturers related to the equipment in our production lines. We cease construction cost capitalization relating to our production lines once they are ready for its intended use and held available for occupancy. All renovations and betterments that extend the economic useful lives of assets and/or improve the performance of the production lines are capitalized.
Useful Lives of Assets. We are required to make subjective assessments as to the useful lives of our production lines for purposes of determining the amount of depreciation to record on an annual basis with respect to our construction of the production lines. These assessments have a direct impact on our net income (loss). Production lines are usually depreciated on a straight-line basis over a period of up to seven years, except any renovations and betterments which are depreciated over the remaining life of the production lines.
Impairment of production lines. We are required to review our production lines for impairment in accordance with ASC 360, “Property, Plant and Equipment,” whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted cash flows expected to be generated by the assets. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets.
Revenues for the year ended December 31, 2024,2025, amounted to $27,040$22,359 compared to $20,352$27,040 during the year ended December 31, 2023.2024. The increasedecrease in revenues for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024, resulted from an increase in our revenuesprimarily from oura commercialnon-renewal channel.of Theone revenuescustomer alsoacquired includethrough the consolidation of Twill’s revenues, as a result of its acquisition during the first quarter of 2024. The pro forma revenues for the year ended December 31, 2024, if the closing of the acquisition of Twill would have taken place on the first day of the year would have amounted to $29,003.acquisition.
Cost of revenues for the years ended December 31, 2025 and 2024 was $9,694 and $13,773, respectively. The decrease was primarily driven by lower amortization of technology, hardware and consumables, reduced payroll-related expenses allocated to cost of revenues, and lower hosting and server expenses.
During the years ended December 31, 2024 and 2023, we recorded costs related to revenues in the amount of $13,773 and $14,368, respectively. The decrease in cost of revenues was mainly due to a reduction in payroll related expenses included in the cost of revenues and stock-based compensation during the period, partially offset by an increase in amortization of technology related to the acquisition of Twill, and hosting costs.
Gross profit for the year ended December 31, 2024,2025, amounted to $13,267$12,665 (49.1%56.6% of revenues) compared to $5,984$13,267 (29.4%49.1% of revenues) for the year ended December 31, 2023 .2024. The increase in gross profit as a percentage of revenue for the year ended December 31, 2024,2025, compared to the year ended December 31, 2023,2024, resulted mainly from thelower increase in the revenues from the commercial channel, mainly related to the acquisitionamortization of Twill.technology, hardware and consumables and reduced hosting costs. Gross profit for the year ended December 31, 2024,2025, excluding amortization of acquired technology, depreciation and stock-based compensation was $18,366$14,404 (67.9%64.4% of revenues) compared to $10,801$18,366 (53.1%67.9% of revenues) during the year ended December 31, 2023.2024.
Our research and development expenses increaseddecreased by $3,931$10,388 to $13,791 for the year ended December 31, 2025, compared to $24,179 for the year ended December 31, 2024,2024. comparedThe todecrease $20,248in forresearch theand yeardevelopment ended December 31, 2023. This increaseexpenses was mainly due to efficiency and post-merger integration activities resulting in a resultdecrease of higherin payroll related expenses, software licenses and an increase in subcontractorsubcontractors and consulting expenses due to the consolidation of Twill during the year ended December 31, 2024, partially offset byand stock-based compensation and bonus payments.expenses. Our research and development expenses, excluding stock-based compensation and depreciation, for the year ended December 31, 2024,2025, were $20,645$12,033 compared to $16,367$20,645 for the year ended December 31, 2023,2024, ana increasedecrease of $4,278.$8,612. This increasedecrease was mainly adue resultto of higher payroll related expenses, software licenses,efficiency and anpost-merger increaseintegration activities resulting in subcontractora decrease in payroll, and subcontractors and consulting expenses due to the consolidation of Twill.expenses.
Research and development expenses consist mainly of employees’ salaries and related overhead costs involved in research and development activities, expenses related to: (i) our solutions including our Dario Smart Diabetes ManagementManagement, Solution, Dario Move solutionMSK and our digital behavioral health solution,solutions, (ii) labor, stock-based compensation contractors and engineering expenses, (iii) depreciation and maintenance fees related to equipment and software tools used in research and development, (iv) clinical trials performed in the United States to satisfy the FDA approval requirementsdevelopment and (viv) facilities expenses associated with and allocated to research and development activities.
Our sales and marketing expenses increaseddecreased by $2,565$6,012 to $20,338 for the year ended December 31, 2025, compared to $26,350 for the year ended December 31, 2024, compared to $23,785 for the year ended December 31, 2023.2024. This increasedecrease was mainly a result of higherlower payroll related expenses, amortizationlower ofstock-based customercompensation relationship,expenses, softwarepartially licensesoffset andby an increase in subcontractorsubcontractors and consulting expenses due to the consolidation of Twill, partially offset by a decrease in bonus payments and stock-baseddigital compensationmarketing expenses during the year ended December 31, 2024.expenses. Our sales and marketing expenses, excluding stock-based compensation, depreciation and amortization, for the year ended December 31, 2024,2025, were $20,277$16,851 compared to $17,146$20,277 for the year ended December 31, 2023,2024, ana increasedecrease of $3,131.$3,426. This increasedecrease was mainly due to a reduction in payroll expenses resulting from post-merger integration activities and a reduction in headcount. partially offset by an increase in payroll expenses, subcontractorsubcontractors and consulting servicesexpenses and softwaredigital licensesmarketing resulting from the consolidation of Twill during the year ended December 31, 2024.expenses.
Sales and marketing expenses consist mainly of employees’ salaries and related overhead costs, stock-based compensation, depreciation of customer relationship intangible asset, online marketing campaigns of our service offering, trade show expenses and marketing consultants, marketing expensesconsultants and subcontractors.
Our general and administrative expenses increaseddecreased by $2,342$5,291 to $15,191 for the year ended December 31, 2025, compared to $20,482 for the year ended December 31, 2024, compared to $18,140 for the year ended December 31, 2023.2024. The increasedecrease was mainly due to higherlower payrollstock-based relatedcompensation expensesexpenses, lower accounting and legal fees and reduced acquisition costs that were related to the consolidationacquisition of Twill duringon theFebruary year15, ended December 31, 2024, partially offset by a decrease in stock-based compensation.2024. Our general and administrative expenses, excluding stock-based compensation, share-based payments, acquisition costs and depreciation, for the year ended December 31, 2024,2025, were $11,236$9,667 compared to $8,663$11,236 for the year ended December 31, 2023,2024, ana increasedecrease of $2,573.$1,569, This increaseand was mainly due to higherlower payroll related expensesaccounting and acquisitionlegal costsfees, relatedreduced tosubcontractor theand consolidationconsulting of Twill.expenses.
Our general and administrative expenses consist mainly of employees’ salaries and related overhead costs, stock-based compensation, directors’insurance fees,costs, legal and accounting fees, patentacquisition registration,related costs, expenses related to investor relations, as well as our office rent and related expenses.relations.
Our finance expenses, net, were $4,954 for the year ended December 31, 2025, compared to $13,145 of finance income, net, for the year ended December 31, 2024, a change of $18,100. The change from finance income to finance expenses was primarily due to the decrease in income from revaluation of the pre-funded warrants (income of $1,580 in 2025 compared to income of $16,435 in 2024) issued in the first quarter of 2024, which are subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of comprehensive loss.
Our finance income, net, increased by $16,319 to $13,145 for the year ended December 31, 2024, compared to $3,174 financing expenses for the year ended December 31, 2023. The increase in the finance income, net for the year ended December 31, 2024, compared to the year ended December 31, 2023, was due to income from revaluation of the pre-funded warrants issued as part of the consideration for the acquisition of Twill, as these warrants are classified as a liability under U.S. GAAP.
Financial expenses, netnet, primarily consist of credit facility interest expense, interest income from cash balances, revaluation of warrants and pre-funded warrants, revaluation of short-terma investments,long-term loan, bank charges, lease liability and foreign currency translation differences.
Income tax expense was $105 for the year ended December 31, 2025, compared to income from tax wasof $1,852 for the year ended December 31, 2024, representing an increase of $1,916 as compared to $64 of income tax expenses for the year ended December 31, 2023.2024. The increase in our income from taxchange was primarily due to a changereduction in the valuation allowance for deferred tax liability that resulted from the acquisition of Twill.Twill in 2024.
Net loss for the year ended December 31, 20242025 was $42,747.$41,714. Net loss for the year ended December 31, 2023,2024, was $59,427.$42,747. The decrease from 20232024 was mainly due to the increasedecrease in our financialoperating income.expenses.
The factors described above resulted in net loss attributable to common stockholders of $61,735 and $40,982 for the year ended December 31, 2025 and 2024, respectively.
As of December 31, 2024,2025, we, WayForward and Twill had a U.S. federal net operating loss carryforward of approximately $192,404,$47,055, $5,803, and $156,686 of which $27,270$7,120, $371 and $18,832 respectively, were generated from tax years 2011-2017 and can be carried forward and offset against taxable income,income whichand that expires during the years 2031 to 2037.
To supplement our consolidated financial statements presented in accordance with U.S. GAAP within this Annual Report on Form 10-K, management provides certain non-GAAP financial measures (“NGFM”) of the Company’sour financial results, including such amounts captioned: “net loss before interest, taxes, depreciation, and amortization” or “EBITDA,” and “Non-GAAP Adjusted Loss,” as presented herein below. Importantly, we note the NGFM measures captioned “EBITDA” and “Non-GAAP Adjusted Loss” are not recognized terms under U.S. GAAP, and as such, they are not a substitute for, considered superior to, considered separately from, nor as an alternative to, U.S. GAAP and /or the most directly comparable U.S. GAAP financial measures.
We believe the NGFM provide useful information by isolating certain expenses, gains, and losses, which are not necessarily indicative of our operating financial results and business outlook. In this regard, the presentation of the NGFM herein below, is to help the reader of our consolidated financial statements to understand the effects of the non-cash impact on our (U.S. GAAP) audited statement of operations ofsuch as the revaluation of the warrants and the expense related to stock-based compensation, each as discussed herein above.
We have incurred net losses since its inception. As of December 31, 2024,2025, we hadhas incurred recurring losses and negative cash flows from operations since inception and has an accumulated deficit of $390,343$452,078 as of December 31, 2024.2025. For the year ended December 31, 2024,2025, we usedincurred approximately $38,562$25,941 of negative cash flows in operations. Management believes we have sufficient funds to support its operation for at least a period of twelve months from the date of the issuance of these consolidated financial statements. Our current operating budget includes various assumptions concerning the level and timing of cash inreceipts operations.and cash outlays for operating expenses and capital expenditures. We expect to incur future net losses and ourits transition to profitability is dependent upon, among other things, the successful development and commercialization of our products and the achievement of a level of revenues adequate to support the cost structure. Until we achieve profitability or generategenerates positive cash flows, weit will continue to be dependent on raising additional funds.funds to fund its operations. We intend to fund our future operations including meeting its covenants related to loan facility, through cash on hand, additional private and/or public offerings of debt or equity securitiessecurities, cost-saving plan intended to reduce operating expenses and extend its cash runway, or a combination of the foregoing. There are no assurances, however, that we will be able to obtain an adequate level of financial resources that are required for the long-term development and commercialization of ourits product offerings.
As of December 31, 2024,2025, we had approximately $27,764$26,017 in cash and cash equivalents and short-term bank deposits compared to $36,797$28,461 at December 31, 2023.2024.
On January 26, 2021, we entered into securities purchase agreements with institutional accredited investors relating to an offering with respect to the sale of an aggregate of 3,278,688 shares of the Company’s common stock at a purchase price of $21.35 per share, for aggregate gross proceeds of $70,000. The closing of the offering was consummated on February 1, 2021. The purchase price per share represents the “Minimum Price” of the Company’s Common Stock pursuant to Nasdaq Rule 5635(d) as of the date of execution of each respective securities purchase agreement. We and the investors participating in the offering also executed a registration rights agreement pursuant to which we agreed to file a registration statement covering the resale of the shares within sixty (60) days following the final closing of the offering.
On October 22, 2021, we entered into a Sales Agreement (“Sales Agreement”) with Cowen and Company, LLC (“Cowen”), pursuant to which we may issue and sell shares of our common stock having an aggregate offering price of up to $50,000 from time to time through Cowen. Upon entering into the Sales Agreement, we filed a new shelf registration statement on Form S-3, which was declared effective by the SEC on November 12, 2021. During the year ended December 31, 2023, we sold 408,043 shares of our common stock under the Sales Agreement for aggregate net proceeds of approximately $1,614, The Sales Agreement has since expired.
On February 28, 2022, we entered into securities purchase agreements with institutional accredited investors relating to a registered direct offering with respect to the sale of an aggregate of 4,674,454 shares of our common stock and pre-funded warrants to purchase an aggregate of 667,559 shares of our common stock, at a purchase price of $7.49 per share. The aggregate gross proceeds were approximately $40,000.
On June 9, 2022, we entered into a Credit Agreement (the “OrbiMed Credit Agreement”), with OrbiMed Royalty and Credit Opportunities III, LP (“Orbimed”), as the lender for a five-year senior secured credit facility in an aggregate principal amount of up to $50 million (the “Loan Facility”),million, of which $25 million was made available on the closing date and up to $25 million was to be made available on or prior to June 30, 2023, subject to certain revenue requirements.
On May 1, 2023, we entered into a Loan and Security Agreement, and Supplement thereto (the “LSA”), with our subsidiary, PsyInnovations, collectively as the borrowers (the “Borrowers”) and Avenue Venture Opportunities Fund II, L.P. and Avenue Venture Opportunities Fund, L.P., collectively as the lenders (the “Avenue Lenders”). The LSA provides for a four-year secured credit facility in an aggregate principal amount of up to $40,000 (the “Avenue Loan Facility”), of which $30,000 was made available on the closing date (the “Initial Tranche”) and up to $10,000 (the “Discretionary Tranche”) may be made available on the later of July 1, 2023, or the date the LenderAvenue approvesLenders approve the issuance of the Discretionary Tranche. On May 1, 2023, the Borrowers closed on the Initial Tranche, less certain fees and expenses payable to or on behalf of the Avenue Lenders. As a result of the execution of the LSA and the funding of the Initial Tranche, we satisfied our prior OrbiMed Credit Agreement we previously executed with OrbiMed, on June 9, 2022, and terminated the OrbiMed Credit Agreement with Orbimed.
All obligations under the LSA are guaranteed by our wholly owned subsidiary, Labstyle. All obligations under the LSA, and the guarantees of those obligations, are secured by substantially all of our, PsyInnovations’ and the guarantor's assets. Subject to certain milestones set forth in the LSA, the Borrowers shall make monthly payments to the Avenue Lenders of the interest at the then effective rate. If the Borrowers fail to meet the milestones set forth in the LSA, the Borrowers shall make monthly principal installments in advance in an amount sufficient to fully amortize the Loan. The Borrowers shall repay amounts outstanding under the Avenue Loan Facility in full immediately upon an acceleration as a result of an event of default as set forth in the LSA.
During the term of the Avenue Loan Facility, interest payable in cash by the Borrowers shall accrue on any outstanding balance due under the Avenue Loan Facility at a rate per annum equal to the higher of (x) the sum of four one-half percent (4.50%) plus the prime rate as published in the Wall Street Journal and (y) twelve and one-half percent (12.50%). During an event of default, any outstanding amount under the Avenue Loan Facility will bear interest at a rate of 5.00% in excess of the otherwise applicable rate of interest. The Borrowers will pay certain fees with respect to the Avenue Loan Facility, including an upfront commitment fee, an administration fee and a prepayment premium, as well as certain other fees and expenses of the Avenue Lenders.
On February 15, 2024, we entered into the First Amendment to Loan and Security Agreement and Supplement (the “Avenue Amendment”) with the Avenue Lenders. Pursuant to the Avenue Amendment, the parties agreed to include the Merger Sub and Twill as parties to our existing loanAvenue facilityLoan Facility with the Avenue Lenders. In addition, the Avenue Amendment provides (i) that we will seek stockholder approval to reprice the warrants issued to the lenders on May 1, 2023 to permit an amendment to the exercise price of such warrants to the “minimum price” as defined by Nasdaq rules as of the closing of the Twill Agreement and (ii) permit the Avenue Lenders, subject to Nasdaq rules, to convert up to two million of the principal amount of its loan to us at a conversion price of $4.001$80.02 per share.
On December 16, 2024, we entered into the Third Amendment to Loan and Security Agreement and Supplement (the “Third Avenue Amendment”) with Avenue Lenders. Pursuant to the Third Avenue Amendment, the parties agreed to (i) amend the potential interest only period under the loanAvenue facilityLoan Facility such that the existing interest only period ending on April 30, 2024 was extended by a period of six months provided that we net certain proceeds from an equity financing on or before March 31, 2025 in the aggregate; (ii) an additional sixth month interest only extension period was added, which is conditioned on our achieving a multi-million dollar net revenue milestone, with cash burn not to exceed a certain multi-million dollar level, for the trailing six month period ending September 30, 2025; (iii) the interest only period may not exceed a total of 36 months from the closing of the loan as of May 1, 2023; and (iv) the maturity date of the loan will be extended from May 1, 2027 to November 1, 2027, provided that we meet the foregoing amended milestones.
In addition, the Third Avenue Amendment provides (i) that we will seek stockholder approval to reprice the warrants issued to the Avenue Lenders on May 1, 2023 to permit an amendment to the exercise price of such warrants to the “minimum price” as defined by Nasdaq rules as of the closing of the Avenue Amendment (or $0.7208$14.416 per share) and (ii) permit the Avenue Lenders, subject to Nasdaq rules, to convert up to two million of the principal amount of its loan to us at a conversion price of $0.8650$17.30 per share. AsOn April 28, 2025, we held a special meeting of Decemberstockholders 31,in 2024, we have not yet obtained stockholder approval forwhich the warrantstockholders repricing.approved the following: (i) reduce the exercise price of certain warrants to purchase 29,246 shares of Common Stock issued to Avenue Venture Opportunities Fund II, L.P. and Avenue Venture Opportunities Fund, L.P. (collectively “Avenue”) to $14.42 per share, and (ii) to permit the conversion of up to two million dollars of the principal amount of the loan issued by Avenue to us at a conversion price of $17.30 per share.
In consideration for the Third Avenue Amendment, we agreed to pay a certain amendment fee at closing, and the exit payment due under the loan was increased by a certain amount, in addition to accrued interest and then outstanding principal. On April 30, 2025, the Avenue Loan Facility pursuant to the LSA was repaid in full.
On May 1, 2023, we entered into securities purchase agreements (each, a “Series B Purchase Agreement”) with accredited investors relating to an offering and the sale of an aggregate of 6,200 shares of newly designated Series B Preferred Stock (the “Series B Preferred Stock”), an aggregate of 7,946 shares of Series B-1 Preferred Stock (the “Series B-1 Preferred Stock”), and an aggregate of 150 shares of Series B-2 Preferred Stock (the “Series B-2 Preferred Stock”) at a purchase price of $1,000 for each share of preferred stock. Certain of our executive officers and directors purchased shares of Series B-2 Preferred Stock in the Offering. On May 5, 2023, we entered into purchase agreements (the “Series B-3 Purchase Agreement” and together with the Series B Purchase Agreement, the “Purchase Agreement”) with accredited investors, relating to the Offering, to an offering and the sale of an aggregate of 1,106 shares of newly designated Series B-3 Preferred Stock (the “Series B-3 Preferred Stock”), at a purchase price of $1,000 for each share of preferred stock. As a result of the sale of the preferred stock, the aggregate gross proceeds to us from the Offering are approximately $15.4 million. The closing of the Series B Preferred Stock, Series B-1 Preferred Stock and Series B-2 Preferred Stock occurred on May 4, 2023, and the closing of the Series B-3 Preferred Stock occurred on May 9, 2023.
On February 15, 2024, we entered into securities purchase agreements (each, a “Series C Purchase Agreement”) with accredited investors relating to an offering (the “Series C Offering”) and the sale of an aggregate of (i) 17,307 shares of newly designated Series C Preferred Stock (the “Series C Preferred Stock”), and (ii) 4,000 shares of Series C-1 Preferred Stock (the “Series C-1 Preferred Stock”), at a purchase price of $1,000 for each share of preferred stock. In addition, on February 16, 2024, we entered into Series C Purchase Agreements with accredited investors relating to the Series C Offering and the sale of an aggregate of 1,115 shares of Series C-2 Preferred Stock (the “Series C-2 Preferred Stock” and together with the Series C Preferred Stock and the Series C-1 Preferred Stock, the “Series C Preferred Stock”), at a purchase price of $1,000 for each share of preferred stock. AsWe a result of the sale of the preferred stock, thereceived aggregate gross proceeds toof usapproximately $22,422 from the Seriesoffering Cof Offeringpreferred were approximately $22,422.stock. The closing of the Series C Preferred Stock, Series C-1 Preferred Stock and Series C-2 Preferred Stock occurred on February 21, 2024.
On December 16, 2024, we entered into securities purchase agreements with accredited investors relating to an offering and the sale of an aggregate of (i) 7,055 shares of newly designated Series D Preferred Stock, and (ii) 11,750 shares of Series D-1 Preferred Stock, at a purchase price of $1,000 for each share of preferred stock. AsWe a result of the sale of the preferred stock, thereceived aggregate gross proceeds toof usapproximately $18,805 from the offering wereof approximatelypreferred $18,805.stock. The closing of the offering occurred on December 18, 2024.
On December 16, 2024, we and certain purchasers that were holders of our Series B and C Preferred Stock executed lock up agreements (the “Lock Up Agreement”), pursuant to which we agreed to issue, subject to stockholder approval, up to forty percent (40%) of the shares of common stock issuable upon conversion of the preferred stock held by such purchaser, including dividend shares of common stock due upon conversion of these shares into shares of common stock , over the course of twelve (12) months (the “Additional Shares”). Each holder shall be entitled to receive 10% of the Additional Shares for each three (3) month period each holder agrees not to transfer or otherwise sell (subject to certain limitations) the shares of common stock issuable upon conversion of the Series B Preferred Stock and Series C Preferred Stock and the dividend shares of common stock due upon conversion. Between May 23, 2025 and May 28, 2025, the Company and holders that previously entered into Lock-Up Agreements, entered into an Amended and Restated Lock-Up Agreement (the “A&R Lock-Up Agreement”) pursuant to which the holders agreed to extend the restrictive period previously provided in the Lock-Up Agreements until February 21, 2026 (the “Lock Up Period”) for the right to receive an additional 10% of the common stock underlying the Series B Preferred Stock and the Series C Preferred Stock held by the holders. On October 20, 2025, we and holders that previously entered into the Lock-Up Agreement and the A&R Lock-Up Agreement entered into a Second Amended and Restated Lock-Up Agreement (the “Second A&R Lock-Up Agreement”) pursuant to which the Lock-Up Period shall automatically terminate, and all share consideration shall be accelerated and immediately be issued by us in full (to the extent not already issued) upon (A) any merger or consolidation of our with or into another individual, entity, corporation, partnership, association, limited liability company, limited liability partnership, joint-stock company, trust or unincorporated organization, (B) any sale of all or substantially all of our assets in one transaction or a series of related transactions, or (C) any reclassification of the Common Stock or any compulsory share exchange pursuant to which the common stock is effectively converted into or exchanged for other securities, cash or property.
What changed in the latest 10-Q
Risk Factors
In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2025, which could materially affect our business, financial condition, or future results.
There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.
Removed heading “We believe our current cash on hand will not be sufficient to fund our projected operating requirements for a period of one year from the issuance of these interim financial statements. This raises substantial doubt about our ability to continue as a going concern.”
Largest changes
“We believe our current cash on hand will not be sufficient to fund our projected operating requirements for a period of one year from the issuance of these interim financial statements. This raises substantial doubt about our ability to continue as a going concern.”see in full comparison
“We believe that our current cash on hand will not be sufficient to fund our projected operating requirements for a period of one year from the issuance of our interim financial statements. This raises substantial doubt about our ability to continue as a going concern and could materially limit our ability to raise additional funds through the issuance of equity or debt securities or otherwise. If we cannot continue as a going concern, our investors may lose their entire investment in our securities. …”see in full comparison
Full comparison: every changed paragraph (3)
There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025, except as noted below.2025.
We believe our current cash on hand will not be sufficient to fund our projected operating requirements for a period of one year from the issuance of these interim financial statements. This raises substantial doubt about our ability to continue as a going concern.
We believe that our current cash on hand will not be sufficient to fund our projected operating requirements for a period of one year from the issuance of our interim financial statements. This raises substantial doubt about our ability to continue as a going concern and could materially limit our ability to raise additional funds through the issuance of equity or debt securities or otherwise. If we cannot continue as a going concern, our investors may lose their entire investment in our securities. Until we can generate significant revenues, we expect to satisfy our future cash needs through equity or debt financing. We cannot be certain that additional funding will be available to us on acceptable terms, if at all. If funds are not available, we may be required to delay, reduce the scope of, or eliminate product development plans commercialization, sales and marketing, or other strategic initiatives.
Management's Discussion & Analysis (MD&A)
New heading “Recent Commercial Developments”
New heading “Recent Events and Trends Regarding Tariffs and International Trade”
Largest changes
“On August 15, 2025, the Company did not meet one of the financial covenants under the Credit Agreement. Upon an Event of Default (as defined in the Credit Agreement) under the Credit Agreement, interest shall accrue to at a rate per annum equal to the lesser of (i) three percent (3%) over the Contract Rate (as defined in the Credit Agreement), or (ii) the maximum rate of interest permitted to be charged by applicable laws or regulations, until paid. The Company notified Callodine of its intention to utilize an Equity Cure (as defined in the Credit Agreement) to address the event of default. …”see in full comparison
“Recent Events and Trends Regarding Tariffs and International Trade”see in full comparison
Cost of revenues consists mainly of the cost of hardware and consumables production, shipping and handling costs, employees' salaries and related overhead costs,see in full comparisonstock-based compensation, depreciation of production lines and related cost of equipment used in production,amortization of technologies, hosting costs,shippinginventory write-downs andhandlingtariffcosts,refundsandrecognizedinventoryunderwrite-downs.the IEEPA.
“Based on the Company's updated cash flow projections as of the date of these financial statements, and the conditions noted above, we believe that our current cash on hand will not be sufficient to fund our projected operating requirements for a period of one year from the issuance of these financial statements. These conditions raise substantial doubt about our ability to continue as a going concern.”see in full comparison
“Global trade policy continues to evolve and the ultimate impact of recent developments with respect to U.S. tariffs is unclear. On February 20, 2026, the U.S. Supreme Court issued a ruling striking down certain tariffs previously imposed under the IEEPA. On March 4, 2026, the Court of International Trade ordered U.S. Customs and Border Protection ("CBP") to begin the refund process for all importers who were subject to the IEEPA duties. In April 2026, the CBP opened a portal for the refund process to begin for certain importers. …”see in full comparison
“The ultimate availability, timing, and amount of any remaining refunds of such tariffs remain uncertain and are subject to further legal, regulatory, and administrative developments. Following the Supreme Court's decision, the U.S. presidential administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs. …”see in full comparison
Full comparison: every changed paragraph (42)
We are a vertically integrated health intelligence platform with a mission to power the behavior changes that drive better health. Unlike software-only digital health platforms, Dario owns the complete chain of value in chronic care management - connected FDA-clearedUnited States Food and Drug Administration (“FDA”)-cleared hardware devices that generate continuous physiological data, AI built on that proprietary data, and a behavior change and coaching layer validated through over 100 peer-reviewed clinical studies. We are committed to transforming healthcare by delivering a comprehensive and highly engaging whole-person health platform, which enables us to create a future where healthy change is effortless and accessible to all.
In total, we had 165 customers in 2026.
Recent Commercial Developments
During and subsequent to the quarter ended June 30, 2026, we continued to expand our commercial footprint through new customer awards, expanded relationships with existing customers and continued enhancements to its AI-powered chronic condition management platform. As of June 30, 2026 we had 181 customers.
Among other developments, we announced that a Fortune 50 employer selected us to provide our integrated cardiometabolic care platform to more than 100,000 eligible employees, with commercial launch expected in the second half of 2026. We also announced an expansion of its relationship with a top-five U.S. health insurer to include hypertension care, as well as the launch of an integrated GLP-1 program through licensed healthcare providers, further broadening its cardiometabolic care offerings. In addition, we announced broader deployment of DarioIQ™, its AI-powered engagement platform, across enterprise customers.
Recent Events and Trends Regarding Tariffs and International Trade
Global trade policy continues to evolve and the ultimate impact of recent developments with respect to U.S. tariffs is unclear. On February 20, 2026, the U.S. Supreme Court issued a ruling striking down certain tariffs previously imposed under the IEEPA. On March 4, 2026, the Court of International Trade ordered U.S. Customs and Border Protection ("CBP") to begin the refund process for all importers who were subject to the IEEPA duties. In April 2026, the CBP opened a portal for the refund process to begin for certain importers. Based on these court rulings affirming the Company's legal right to recover IEEPA tariffs, the Company determined that it is entitled to a tariff refund of approximately $536, which was recorded in receivables, net on the condensed consolidated balance sheet. For the six months ended June 30, 2026, the Company recorded a $369 benefit for these tariffs in cost of revenues on the condensed consolidated statements of operations and comprehensive loss, $265 of which related to prior fiscal year costs and $104 related to current-period costs. The remaining $167 of the approximately $536 tariff refund reduced the carrying value of inventory on the condensed consolidated balance sheet as of June 30, 2026. As of the date of this filing, the Company had received approximately $23 of such refunds, with the remaining amount expected to be received in batches through the U.S. Customs and Border Protection refund process.
The ultimate availability, timing, and amount of any remaining refunds of such tariffs remain uncertain and are subject to further legal, regulatory, and administrative developments. Following the Supreme Court's decision, the U.S. presidential administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs. There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on the Company's business. The Company continues to monitor and evaluate these developments and assess their potential impact on its business, financial condition, and results of operations.
Comparison of the Threethree Monthsand Endedsix Marchmonths 31,ended June 30, 2026 and MarchJune 31,30, 2025 (dollar amounts in thousands)
Revenues for the three and six months ended MarchJune 31,30, 2026 amounted to $5,584,$5,177 and $10,760, respectively, compared to revenues of $6,752$5,369 and $12,121, respectively, during the three and six months ended MarchJune 31,30, 2025, representing a decrease of 17.3%.3.6% and 11.2%, respectively. The decrease in revenues wasfor the three and six months ended June 30, 2026, compared to the three and six months ended June 30, 2025, resulted primarily from a decrease in our revenues from the pharma channel, which was attributable to a non-recurring revenue from a pharmaceutical partner recognized in the prior-year period. These declines wereperiod, partially offset by growth in revenues from our channel partners and an increase in our direct-to-consumer sales.
During the three and six months ended MarchJune 31,30, 2026, we recorded costs related to revenues in the amount of $2,384,$1,985 and $4,366, respectively, compared to $2,870costs related to revenues of $2,405 and $5,275, respectively, during the three and six months ended MarchJune 31,30, 2025, representing a decrease of 16.9%.17.5% and 17.2%, respectively. The decrease in cost of revenues in the three and six months ended June 30, 2026, compared to the three and six months ended June 30, 2025, was primarilymainly drivena byresult lowerof a decrease in amortization of technology and lower hosting and server expenses, which were partially offset by higher hardware and consumables expenses recorded in the cost of revenues.revenues and as a result of an IEEPA tariff refund, $369 which was recorded in the six and three month ended June 30, 2026.
Cost of revenues consists mainly of the cost of hardware and consumables production, shipping and handling costs, employees' salaries and related overhead costs, stock-based compensation, depreciation of production lines and related cost of equipment used in production, amortization of technologies, hosting costs, shippinginventory write-downs and handlingtariff costs,refunds andrecognized inventoryunder write-downs.the IEEPA.
Gross profit for the three and six months ended MarchJune 31,30, 20262026, amounted to $3,200$3,192 (57.3%61.7% of revenues) and $6,394 (59.4% of revenues), respectively, compared to $3,882$2,964 (57.5%55.2% of revenues) and $6,846 (56.5% of revenues), respectively, during the three and six months ended MarchJune 31,30, 2025. The decreaseincrease in gross profit as a percentage of revenuerevenues for the three and six months ended MarchJune 31,30, 2026, compared to the three and six months ended MarchJune 31,30, 2025, resulted mainly from thea decreaselower inamortization revenueof technology, lower hosting server expenses and higherthe hardwareIEEPA andtariff consumables expensesrefund, which were partially offset by lowerhigher amortization of technologyhardware and lower hosting and serverconsumables expenses. Gross profit for the three and six months ended MarchJune 31,30, 2026, excluding amortization of acquired technology, stock-based compensation and depreciation, was $3,385$3,374 (60.6%65.2% of revenues) comparedand to $4,782$6,761 (70.8%62.8% of revenues), respectively, compared to $3,417 (63.6% of revenues) and $8,199 (67.6% of revenues), respectively, during the three and six months ended MarchJune 31,30, 2025.
Our research and development expenses decreased by $1,723,$1,621, or 41.9%,43.6%, to $2,385$2,100 for the three months ended MarchJune 31,30, 2026, compared to $4,108$3,721 for the three months ended MarchJune 31,30, 2025, and decreased by $3,344, or 42.7%, to $4,485 for the six months ended June 30, 2026, compared to $7,829 for the six months ended June 30, 2025. The decrease in research and development expenses was mainly due to efficiencies andresulting from post-merger integration activities, and the utilization of AI, resulting in a decrease in headcount and payroll expenses, subcontractors and consulting and stock-based compensation expensesexpenses, partially offset by the impact of foreign currency fluctuations resulting from the strengthening of the New Israeli Shekel (“"NIS”") against the U.S. dollar, as certain of our expenses are denominated in NIS. Our research and development expenses, excluding stock-based compensation and depreciation, for the three and six months ended MarchJune 31,30, 20262026, were $2,261$2,210 and $4,471, respectively, compared to $3,542$3,246 and $6,788, respectively, for the three and six months ended MarchJune 31,30, 2025.2025, a decrease of $1,036 and $2,317, respectively. The decrease in research and development expenses was mainly due to efficiencies and post-merger integration activities, resulting in a decrease in payroll and subcontractors and consulting expenses.
Research and development expenses consist mainly of employees' salaries and related overhead costs involved in research and development activities, expenses related to (i) our solutions (ii) labor, stock-based compensation, contractors and engineering expenses, (iii) depreciation and maintenance fees related to equipment and software tools used in research and development, and (iv) facilities expenses associated with and allocated to research and development activities.
Our sales and marketing expenses decreased by $975,$260, or 16.6%,5%, to $4,898$4,971 for the three months ended MarchJune 31,30, 2026, compared to $5,873$5,231 for the three months ended MarchJune 31,30, 2025, and decreased by $1,234, or 11.1%, to $9,870 for the six months ended June 30, 2026, compared to $11,104 for the six months ended June 30, 2025. The decrease was mainly a result of lower payrollpayroll-related expenses,expenses and lower stock-based compensation,compensation partiallyexpenses, offset by an increase in digital marketing expenses.expense. Our sales and marketing expenses, excluding stock-based compensation, depreciation and amortization, for the three and six months ended MarchJune 31,30, 20262026, were $4,466$4,364 and $8,831, respectively, compared to $4,747$4,341 and $9,088, respectively, for the three and six months ended MarchJune 31,30, 2025, aan increase of $23 and decrease of $281.$257, respectively. The decrease for the six months in sales and marketing expenses was mainly due to lower payroll-related expenses resulting from post-merger integration activities and a reduction in headcount.
Sales and marketing expenses consist mainly of employees' salaries and related overhead costs, stock-based compensation, depreciation of customer relationship intangible asset, digital marketing campaigns, tradesoftware showtools expenses,used in sales and marketing and marketing consultants and subcontractors.
Our general and administrative expenses decreased by $84,$612, or 2.5%,19.1%, to $3,226$2,600 for the three months ended MarchJune 31,30, 2026, compared to $3,310$3,212 for the three months ended MarchJune 31,30, 2025, and decreased by $696, or 10.7%, to $5,826 for the six months ended June 30, 2026, compared to $6,522 for the six months ended June 30, 2025. The decrease in each of the three and six months ended June 30, 2026 was mainly due to lower expensesstock-based relatescompensation toexpenses, corporatelower activitiespublic suchcompany asrelated investorexpenses, relations,lower legal and insurance expenses, and lower accounting and legal fees which werefees, partially offset by an increase in stock-based compensation expenses and the impact of foreign currency fluctuations resulting from the strengthening of the (“NIS”) against the U.S. dollar, as certain of our expenses are denominated in NIS. Our general and administrative expenses, excluding stock-based compensation, share-based paymentsdepreciation and depreciation,acquisition-related costs, for the three and six months ended MarchJune 31,30, 20262026, were $2,002$2,132 and $4,134, respectively, compared to $2,304$2,193 and $4,497, respectively, for the three and six months ended MarchJune 31,30, 2025, a decrease of $302.$61 and $363, respectively. The decrease in general and administrative expenses was mainly due to lower subcontractors and consulting expenses and lower legal and accounting fees.
Our general and administrative expenses consist mainly of employees' salaries and related overhead costs, stock-based compensation, insurance costs, legal and accounting fees, acquisition-related costs, and expenses related to investor relations.
Our financial expensesexpenses, (income), netnet, for the three months ended MarchJune 31,30, 20262026, were $883,$1,117, representing a decrease of $2,673, compared to $(204)financial expenses, net, of $3,790 for the three months ended MarchJune 31,30, 2025. Our financial expenses, net, for the six months ended June 30, 2026, were $2,002, representing a decrease of $1,584, compared to financial income, net, of $3,586 for the six months ended June 30, 2025. The decrease in our financial expenses (income), net, was mainly due to financial income resulting from the revaluationre-evaluation of pre-fundedloan warrantsand associated costs in the firstsecond quarter of 2025 which were fully exercised in February 2026.2025.
Financial income,expenses (income), net primarily consists mainly of credit facility interest expense, interest income from cashbank balances,deposits, revaluation of warrants and pre-funded warrants, bank charges, lease liabilitywarrants and foreign currency translation differences.
Income tax
Income tax expenses were $57$328 and $384, respectively for the three and six months ended MarchJune 31,30, 2026, representing an increase in tax expenses of $328 and $362, respectively as compared to $22income tax expenses of $0 and $22, respectively for the three and six months ended MarchJune 31,30, 2025. Income tax expenses for the three and six months ended MarchJune 31,30, 2026 were primarily comprised of salesa tax andprovision statefrom tax.previous years related to our subsidiary Dario Services Pvt. Ltd.
Net loss decreased by $5,066, or 39%, to $7,924 for the three months ended June 30, 2026, compared to a net loss of $12,990 for the three months ended June 30, 2025, and decreased by $6,044, or 27.2%, to $16,173 for the six months ended June 30, 2026, compared to a net loss of $22,217 for the six months ended June 30, 2025. The decrease in net loss for the three and six months ended June 30, 2026, compared to the three and six months ended June 30, 2025, was mainly due to an increase in our gross profit - including the benefit of an IEEPA tariff refund recorded in cost of revenues, a portion of which related to prior fiscal year costs - and a decrease in our operating expenses, driven by lower research and development, sales and marketing, and general and administrative expenses, and financial expenses partially offset by an increase in our income tax expense.
Net loss decreased by $978, or 10.6%, to $8,249 for the three months ended March 31, 2026, compared to a net loss of $9,227 for the three months ended March 31, 2025. The decrease in net loss was mainly due to decrease in operating expenses.
The factors described above resulted in net loss attributable to common stockholders for the three and six months ended MarchJune 31,30, 20262026, ofamounted $8,249,to $7,924 and $16,173, compared to net loss attributable to common stockholders of $14,066$18,562 and $32,628 for the three and six months ended MarchJune 31,30, 2025.
As of MarchJune 31,30, 2026, we had approximately $14,977$6,634 in cash and cash equivalents and $5,035$7,327 in short term deposits compared to $21,803 and $4,214 on December 31, 2025.
We have experienced cumulative losses of $460,327$468,251 since inception (August 11, 2011) through MarchJune 31,30, 2026, and have stockholders' equity of $62,380$55,088 as of MarchJune 31,30, 2026. In addition, we have not completed our efforts to establish a stable recurring source of revenuesrevenue sufficient to cover our operating costs and expect to continue to generate losses for the foreseeable future.
Since inception, we have financed our operations primarily through private placements and public offerings of our Common Stock and warrants to purchase shares of our Common Stock, receiving aggregate net proceeds totaling $307,133$307,237 through MarchJune 31,30, 2026, and a credit facility, net in thean aggregate net amount of $25,795 asthrough ofJune March 31,30, 2026.
On April 30, 2025, we entered into a Credit Agreement (the “Credit Agreement”), by and among us as borrower, the financial institutions party thereto from time to time as lenders, and Callodine Commercial Finance, LLC (in its capacity as agent for all lenders, “Agent”, and collectively with other lenders, “Lenders” and each a “Lender”). Under the terms of the Credit Agreement, each Lender agreed to make a multi-draw term loan to us of up to $50,000 (each a “Term Loan”) in which we borrowed $32,500 at the time of closing on April 30, 2025 (the “Callodine Loan Facility”). The Callodine Loan Facility has a five-year term maturing in April 2030, with principal repayments not due until May 2028. The outstanding principal balance bears interest at SOFR plus 7.75%. In addition, subject to the discretion of the Agent and the Lenders, we may at our option draw an aggregate of up to an additional $17,500$17,500. Of the aggregate loan amount, $2,500 of such additional Term Loan is subject to the achievement of certain conditions.revenue and gross margin thresholds, subject to the discretion of the Agent and the Lenders and $15,000 of such additional Term Loan is subject to the discretion of the Agent and the Lenders. As of MarchJune 31,30, 2026, the outstanding balance under the Callodine Loan Facility was $30,931.$31,064.
On August 15, 2025, the Company did not meet one of the financial covenants under the Credit Agreement. Upon an Event of Default (as defined in the Credit Agreement) under the Credit Agreement, interest shall accrue to at a rate per annum equal to the lesser of (i) three percent (3%) over the Contract Rate (as defined in the Credit Agreement), or (ii) the maximum rate of interest permitted to be charged by applicable laws or regulations, until paid. The Company notified Callodine of its intention to utilize an Equity Cure (as defined in the Credit Agreement) to address the event of default. Callodine waived the event of default, subject to the successful implementation of an Equity Cure no later than October 3, 2025.
In connection therewith, the Company repriced the Warrant to purchase up to 105,707 shares of Common Stock issued to the lenders on April 30, 2025, at an exercise price of $16.56 per share, to permit an amendment to the exercise price of such Warrants to $15.35. In addition, conversion right of the lender in the amount of $2,500 was amended to a conversion price of $15.35 per share.
On March 30, 2026, we entered into the Sales Agreement with A.G.P./Alliance Global Partners, pursuant to which we may offer and sell, from time to time, up to an aggregate of $20.0 million$20,000 of shares of our common stock under the At-The-Market Sales Agreement (the “ATM Program.Program”). Sales of shares under the Sales Agreement, if any, may be made by any method permitted by law that is deemed to be an “at the market offering” under Rule 415(a)(4) under the Securities Act, or in negotiated transactions or as principal pursuant to a separate terms agreement. We have no obligation to sell any shares under the ATM Program and may suspend offers thereunder or terminate the Sales Agreement at any time, subject to its terms.
As of March 31, 2026, no shares had been sold under the ATM Program. Subsequent to March 31, 2026 and throughThrough the date of this Quarterly Report on Form 10-Q, we sold an aggregate of 7,25214,191 shares under the ATM Program for gross proceeds of approximately $54$104 and nethad proceeds$154 in related expenses, out of approximatelywhich $53,$104 afterwere deductingrecognized commissionsin the statement of changes in stockholders' equity and offering$50 expenses.as deferred asset.
On July 22, 2026, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with institutional investors, pursuant to which we agreed to issue and sell to the investors in a registered direct offering priced at-the-market under Nasdaq rules (the “Offering”) an aggregate of 2,437,060 shares (the “Shares”) of our Common Stock, and pre-funded warrants to purchase an aggregate of 1,017,499 shares of Common Stock. Each Share was sold at an offering price of $6.80 per share, and each pre-funded warrant was sold at an offering price of $6.7999, for aggregate gross proceeds of approximately $23,500 and $22,800 net of Offering expenses. In addition, Dennis Matheis, a member of our Board of Directors, entered into a Purchase Agreement to purchase 14,430 shares of Common Stock at a purchase price of $6.93 per share. The Offering closed on July 23, 2026.
Management believes that the proceeds from the Purchase Agreement, combined with our cash on hand and short-term bank deposits are sufficient to meet our obligations as they come due for at least a period of twelve months from the date of the issuance of these unaudited condensed consolidated financial statements. There are no assurancesassurances, however, that we will be able to obtain an adequate level of financial resources that are required for the long-term development and commercialization of our product offerings.
As such, we have a significant present need for capital. If we are unable to scale up our commercial launch of our products or meet our commercial sales targets (or if we are unable to generate any revenue at all), and if we are unable to obtain additional capital resources in the near term, we may be unable to continue activities absent material alterations in our business plans and our business might fail.
Based on the Company's updated cash flow projections as of the date of these financial statements, and the conditions noted above, we believe that our current cash on hand will not be sufficient to fund our projected operating requirements for a period of one year from the issuance of these financial statements. These conditions raise substantial doubt about our ability to continue as a going concern.
The following table sets forth selected cash flow information for the periodsSix indicatedmonths ended:
Net cash used in operating activities was $6,025$12,108 for the threesix months ended MarchJune 31,30, 2026, a decrease of 9.7%4.7% compared to $6,673$12,704 used in operations for threesix months ended MarchJune 31,30, 2025. Cash used in operations decreased mainly due to the decrease in our operating expenses.
Net cash used in investing activities was $826$3,113 for the threesix months ended MarchJune 31,30, 2026, compared to $31$75 net cash used in investing activities during the same period in 2025. The increase is due to investments in short term bank deposit, compared to the same period in 2025.
ThereNet werecash noprovided by financing activities duringwas $0 for the threesix months ended MarchJune 31,30, 2026, primarily consisting of proceeds from the ATM Program, which were fully offset by issuance costs related to those offerings, compared to $6,815$6,939 net cash derived from financing activities during the same period in 2025. The 2025 amount was mainly attributable to proceeds from the issuance of shares of preferred stock.
DRIO insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 1 Form 4 filing (1 insider, 1 trade date, 14,430 shares, about $100.0K) and open-market sales in 0 filings. Net open-market shares: 14,430 (purchases minus sales); net value about $100.0K.Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-24 | Palumbo John R |
Grant/award | 62,000 | — | — |
| 2026-09-24 | Stern Adam K |
Grant/award | 28,000 | — | — |
| 2026-09-24 | Mcgrath Dennis M |
Grant/award | 61,000 | — | — |
| 2026-09-24 | Shaked Yoav |
Grant/award | 54,000 | — | — |
| 2026-09-24 | Franco-Yehuda Chen |
Grant/award | 95,000 | — | — |
| 2026-09-24 | Matheis Dennis |
Grant/award | 44,000 | — | — |
| 2026-09-24 | Karah Hila |
Grant/award | 28,000 | — | — |
| 2026-09-24 | Raphael Erez |
Grant/award | 297,000 | — | — |
| 2026-07-23 | Matheis Dennis |
Open-market purchase | 14,430 | $6.93 | $100.0K |
| 2025-09-18 | Stern Adam K |
Conversion | 8,435 | $16.60 | $140.0K |
| 2025-09-18 | Stern Adam K |
Conversion | 11,760 | $40.40 | $475.1K |
| 2024-08-12 | Shaked Yoav |
Conversion | 772 | $19.10 | $14.7K |
| 2024-08-12 | Raphael Erez |
Conversion | 579 | $19.10 | $11.1K |
| 2024-08-12 | Matheis Dennis |
Conversion | 965 | $19.10 | $18.4K |
Well-known investors holding DRIO (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 24,289 | $160.3K | 0.0% | Added 19% |