Dario Health, which has developed a system for supporting chronic patients, announced today (Tuesday) that it has signed a strategic agreement with Sanofi. Under the agreement, Sanofi will promote Dario’s products and connect them to its products, and will pay Dario $ 30 million over a number of years.
The announcement was made before the start of the Nasdaq trade. Prior to the publication of the announcement, it was traded Dario Heath At a value of $ 121 million, up 9.5% in pre-trade. The stock is now rising above 3% in trading.
Dario began her career in diabetes and today she caters to several types of chronic patients: diabetes, hypertension, orthopedics, including through the Israeli company Afriat, which acquired in early 2021 for $ 31 million, of which only 1.5 million in cash, and mental health, among The rest thanks to the acquisition of Wayforward, in May 2021, for $ 30 million, of which $ 6 million in cash. The company’s patients usually receive some device including consumables used by them for routine care, support through a digital app and support through a human trainer.
The acquisitions made by the company along with growth in its original operations, led to a significant increase in its revenues, which stood for several years at several million dollars a year. In the third quarter of 2021 alone, the company recorded $ 5.6 million, an increase of 176% over the same quarter in 2020.
“Information is the heart of the matter”
Erez Rafael, the company’s CEO, explains that in recent years the company has shifted its operations so that instead of selling its products and services to end consumers, it sells them to insurance companies in the US and employers who insure their employees directly.
“When I joined the company its focus was on measuring sugar over the phone. For me I always knew it would be a software company. So yes, we still sell diabetics like all other patients what they need to manage the disease, but information is the heart of the matter,” says Raphael . The information allows the physician, coach, and digital system to offer the patient customized suggestions.
“Selling to insurance companies requires a long period of time. One and a half to two years. Therefore activity we started in 2020, has now matured and our clients include over 50 different insurance plans. Our clients are the ones who want the complete solution, i.e. surround the chronic patient and give him support from all. “The directions, and also to treat him with a basket of problems. The same patient can have a problem of diabetes, blood pressure, obesity, an orthopedic problem and mental needs.” One can guess that the company’s appetite for purchases has not diminished, and it will try to surround its patients from other directions, depending on customer demand.
How are you actually different from companies like Livongo, a diabetes management company that was sold for $ 18 billion in shares to the telemedicine company Taladok?
“There are dozens to hundreds of companies in support of chronic patients. Most of them do not reach more than a few million dollars of revenue. We are already recording a revenue rate of about $ 20-30 million a year. Livongo, with revenues of about $ 300 million a year, is competing Our direct in diabetes and blood pressure. There are things where we are better and things where Livongo is better. Our user interface is better. Our clinical products are better, and we have a mental and orthopedic practice, which they do not have. We do not intend to solve the story of the doctor’s visit, but what happens between doctor’s visits. “
Increase in gross profit
Raphael notes that the company’s gross profitability has risen to 45%, and he estimates that it will continue to rise as the company places more emphasis on the software component in its products. “We strive for a gross margin of 70%.”
What exactly will the agreement with Sanofi include?
“They want our information and they want to be a player in digital healthcare, to give their customers a more customized drug use experience. In the first stage they will help us sell the product. In the next stage we will connect their technology (eg sugar monitoring devices and insulin pumps) and “Our agreement does not require them to invest in us, but they have such a plan.”
Meanwhile, Dario is raising about $ 40 million, at a price of $ 7.49, a premium of 2.6% on the market price at the close of trading yesterday before the announcement. Dario said it would use the proceeds of the offering to accelerate the commercialization of its products in the US.
The company was accompanied in the transactions of attorneys Oded Har Even and Ron Ben Best, of Sullivan & Worcester.