Israel’s Dario Health, which is traded on Wall Street, and develops a monitoring application for the treatment of diabetes and blood pressure patients, published financial reports for the fourth quarter and for the entire year 2022, from which it appears that the company recorded an increase in revenues and gross profit, reduced operating expenses as well as the loss. The company’s CEO, Erez Raphael, attributes the results to the improvement recorded with the transition to a business model of the B2B sector, and directs investors to reduce the loss in the fourth quarter of this year.
Revenues increased by 13% in the fourth quarter to approximately $6.8 million, compared to approximately $6 million in the same period last year and an increase of 3.1% from $6.6 million in the third quarter of 2022. The increase in revenues is due to an increase in revenues from the B2B channel.
The gross profit in the fourth quarter amounted to approximately $2.7 million, an increase of approximately $2.2 million compared to a gross profit of approximately $0.5 million in the corresponding period last year and a 52% increase from $1.8 million in the third quarter of 2022. The gross profit rate increased to approximately 40.1% in the fourth quarter of 2022 from 9.1% in the same period last year and from 27.3% in the third quarter of 2022.
The pro forma gross profit excluding approximately $1.2 million for depreciation and other expenses related to the purchase of technology, amounted to approximately $4.0 million, or 58.1% of the revenues in the three months ended December 31, 2022, compared to a pro forma gross profit of approximately $1.3 million, or 22% of revenues for the three months ending December 31, 2021.
Operating expenses in the fourth quarter of 2022 amounted to approximately $11.7 million, compared to approximately $22.2 million in the fourth quarter of 2021 and to $16.4 million in the third quarter of 2022. A decrease of approximately $10.5 million, or 47% compared to the fourth quarter of 2021, and a decrease of about 4.6 million dollars, or 28.3% compared to the third quarter of 2022. The decrease compared to the third quarter of 2022, was due to a decrease in digital marketing expenses.
The total operating expenses, minus stock-based compensation, purchase expenses and depreciation in the fourth quarter of 2022 were approximately $10 million, compared to approximately $16.4 million in the fourth quarter of 2021, and approximately $11.4 million in the third quarter of 2022.
The operating loss in the fourth quarter of 2022 amounted to approximately $9.0 million, a decrease of approximately $12.7 million or 58.4%, compared to $21.7 million in the fourth quarter of 2021, and a decrease of $5.6 million or 38.2% compared to $14.6 million in the quarter the third of 2022. The decrease compared to the fourth quarter of 2021 and the third quarter of 2022 was mainly due to a decrease in operating expenses.
The net loss in the fourth quarter of 2022 amounted to approximately $12.6 million, a decrease of approximately $9.0 million, or 41.5%, compared to a net loss of approximately $21.6 million in the fourth quarter of 2021, and a decrease of $3.0 million or 19.3% compared to the quarter The third of 2022. The net loss excluding stock-based compensation, acquisition expenses and depreciation in the fourth quarter of 2022 amounted to $9.6 million, compared to approximately $14.9 million in the fourth quarter of 2021 and approximately $9.5 million in the third quarter of 2022.
Trace increase in income
For the entire year 2022, revenues increased by 34% to approximately $27.7 million, compared to $20.5 million in 2021.
Gross profit for the twelve months ended December 31, 2022, amounted to approximately $9.7 million, an increase of 144%, or approximately $5.7 million compared to gross profit of approximately $4.0 million for the twelve months ended December 31, 2021. Gross profit as a percentage of revenue increased to 34.9% in the twelve months ended December 31, 2022, from 19.3% in the twelve months ended December 31, 2021.
The pro forma gross profit excluding a total of approximately $4.36 million for depreciation and expenses related to acquisitions, amounted to approximately $14.0 million, or 50.7% of the revenues in the twelve months ending December 31, 2022, compared to a pro forma gross profit of approximately $8.1 million, or 39.3% of revenues in the twelve months ending December 31, 2021.
Operating expenses in 2022 amounted to approximately $66.5 million, a decrease of approximately $14 million or 17.4% compared to approximately $80.5 million in the twelve months ended December 31, 2021. The decrease was due to a decrease in marketing and administrative and general expenses. Total operating expenses, excluding stock-based compensation, acquisition-related expenses and depreciation in 2022 were approximately $49.7 million, compared to approximately $55 million in 2021.
The operating loss in 2022 decreased by approximately $19.7 million to approximately $56.8 million, compared to an operating loss of approximately $76.5 million in 2021. This decrease was mainly due to an increase in gross profit and a decrease in operating expenses.
In the bottom line, the net loss amounted to approximately $62.2 million, compared to a net loss of approximately $76.8 million in 2021. The decrease was due to higher gross margin and lower operating expenses.
“During the fourth quarter, we continued to see a substantial improvement in our financial results which resulted from the transition to a business model of the B2B sector, including significant growth in revenues, an increase in gross profit, a decrease in operating expenses and net loss, and a reduction in the use of cash,” noted Erez Raphael, CEO Dario. “It is worth noting that the operating loss in the fourth quarter decreased by 58% to $9 million compared to $21.7 million in the fourth quarter of 2021 and the non-GAAP operating loss in the fourth quarter decreased by 60% to $6 million compared to $15 million in the fourth quarter of 2021.
“These indicators demonstrate the significant growth in revenues and efficiency in operating expenses that resulted from the strategic transition to an integrated platform of several chronic conditions in the B2B sector, which continues to gain momentum in the market. The B2B sector will represent approximately 59% of our total revenues in 2022, an increase from 4 % in 2021. As our transition to an integrated platform for managing a variety of diseases continues to gain momentum in the market, we anticipate that the company’s financial profile will continue to improve due to a lower customer acquisition cost, yielding gross profitability of approximately 70%.”
“During the fourth quarter, we achieved a major milestone when we reached the goal of 100 B2B contracts, which we believe reflect the market’s desire for an integrated digital therapeutic platform to manage a variety of diseases,” Raphael added. “It should be noted that 52% of the contracts signed in the second half of 2022 are for multiple chronic conditions, which can generate 4 to 8 times more revenue per client in a contract to manage multiple chronic conditions, compared to a contract to manage a single chronic condition. Contracts to manage a variety of chronic conditions also represent more than -50% of our current contract pipeline. The results together with our contract pipeline provide us with confidence as to what we can achieve in 2023 and in the future.”