Expecting nearly doubling Dario's pro forma revenues in
2023
Acquisition is immediately accretive to revenue and gross
margins and expected to accelerate path to profitability
Concurrent with the acquisition Dario prices $22.4 million equity financing
Company to host conference call today at 8:30am ET. Dial-in and replay information
below
NEW
YORK, Feb. 21, 2024 /PRNewswire/
-- DarioHealth Corp. (Nasdaq: DRIO) ("Dario" or the "Company")
announced today that it has acquired Twill, Inc. ("Twill"), a
leader in digital-led care. The combination enables Dario to create
one of the most comprehensive digital offerings in the market for
chronic conditions, spanning a wide spectrum of health and
well-being needs from emotional health to the costliest chronic
conditions. The transaction creates immediate scale, with three of
the top eight national health plans, multiple Fortune 100 employers
and several major pharmaceutical companies as customers.
The acquisition of Twill is expected to nearly double pro forma
2023 revenue, and gross margins are expected to reach approximately
80-85% by 2025. The acquisition is expected to accelerate market
penetration and drive greater sales opportunities as a direct
result of the breadth of combined solutions, with an opportunity to
increase revenue per customer through cross-selling into both
companies' existing customer bases, which has almost no overlap.
Dario expects to be able to realize cost synergies immediately, and
expects to reach nearly 30% in annualized cost synergies within two
years following the close of the transaction. The combination of
revenue scale, expected improved gross margins, and significant
cost synergies are expected to accelerate the path to profitability
within the second-year post acquisition.
"The Twill acquisition is an incredible opportunity to bring
together our complementary solutions and create an unrivaled
platform for the next generation of consumer-centric digital
health. The addition of Twill instantly boosts revenue and margins,
leveraging a robust SaaS-like model to fuel expected rapid growth
and accelerating profitability. We are confident in our ability to
integrate Twill and its employees and operations, as we have a
track record of integrating previously acquired businesses," said
Erez Raphael, CEO of Dario.
"It's rare to find not just alignment, but shared passion
igniting a collaboration. That's exactly what we've discovered in
Twill. Their dedication to consumer empowerment through technology
mirrors our own, making this union not just a strategic move, but a
powerful convergence of values and goals. This unwavering belief
resonated with both companies' shareholders, leading to
shareholders from both companies participating in the financing.
It's an injection of not just capital, but confidence in the future
we're building together. With this strengthened foundation, we're
poised to aggressively pursue our growth plan, fueled by a shared
vision and the passion of investors and executives alike,"
concluded Erez Raphael. Twill's
deep consumer experience began with Happify Health, one of the
original digital mental health solutions sold directly to consumers
for more than ten years. During that time, Twill helped more than 4
million users improve their emotional health before expanding to
deliver broader capabilities for commercial customers which today
include some of the most marquee fortune 100 employers and top
payors in the country. The launch of the Twill Care digital
community further bolstered the company's strength in engagement by
offering an innovative approach to engaging members wherever they
are in their care journey. Leveraging Twill's innovation in
well-being and navigation enhances Dario's end-to-end member
journey for optimization across solutions.
The combined solution will be unique in its ability to enroll
and engage members across their care journeys, enabling Dario to
deliver outcomes across broad populations. Improved navigation
capabilities will help connect members with the right solutions at
the right time and expand potential for additional solution
integrations.
"The market is demanding more conditions from less vendors to
reduce point solution fatigue and the high cost of managing
multiple vendors. The combination of our solutions provides the
single solution the market wants and expands Dario's artificial
intelligence and solution navigation capabilities, including
immediate enhancements to Dario's current GLP-1 solution," said
Rick Anderson, President of
Dario. "It's not just a goal, it's a pathway," said
Tomer Ben-Kiki, Twill's Co-Founder
and CEO. "This shared vision fuels our powerful union,
transforming data into a vibrant tapestry of individual health
stories. Imagine three million threads of the combined company's
data, interwoven with rich insights and diverse perspectives,
brought to life by our AI expertise. This tapestry
reveals unprecedented depth, predicting needs and optimizing
treatment for every person. The spark was undeniable from the start
- Dario's warmth and collaborative spirit resonated with our own.
Together, we're beyond excited to create something truly
groundbreaking." Tomer Ben-Kiki,
will join Dario's leadership team as Chief Operating Officer and
Twill co-founder Ofer Leidner, will
join as an advisor to the commercial team to support company
growth.
The expected doubling of pro forma revenues in 2023 is based on
extrapolated, pro forma revenues through the nine months ended
September 30, 2023, of $30.5 million, comprised of $16.7 million in Dario revenues and $13.8 million in Twill revenues.
Financial Terms
Under the terms of the Twill acquisition, Dario paid
$10 million of cash and agreed to
issue approximately 10 million shares of common stock in the form
of pre-funded warrants for the benefit of Twill's debt holders and
equity holders the warrants will vest in four equal amounts at 270
days, 360 days, 540 days and 720 days, post deal closing.
Private Placement
Concurrent with the acquisition, Dario priced a $22.4 million private placement of convertible
preferred stock, priced at the market under Nasdaq rules, with
participation from investors from both companies. Pursuant to the
terms of private placement, Dario agreed to issue shares of newly
designated convertible preferred stock (the "Preferred Stock").
Each share of Preferred Stock will be sold at $1,000 per
share, with conversion prices of $2.02 and $2.14,
raising gross proceeds of $22.4 million. The Preferred Stock
provides for holders of Preferred Stock, upon conversion, to
receive a 7.5% dividend payable in common stock each quarter for
the first four quarters, followed by a 15% stock dividend in the
fifth quarter, for an aggregate stock dividend of up to 45%. Each
share of Preferred Stock shall automatically convert into shares of
the Company's common stock at the applicable Conversion Price upon
the 15-month anniversary of the final closing of the offering.
Dario intends to use the net proceeds from the offering for general
corporate purposes.
Inducement Grants
The Company announced the issuance of inducement grants of stock
options to purchase up to 2,963,459 shares of the Company's common
stock to employees of Twill as an inducement to their becoming
employees of the Company, in accordance with Nasdaq Listing Rule
5635(c)(4). The options have an exercise price of $2.55, which is equal to Dario's stock price of
common stock on February 15, 2024,
and will vest in eight quarterly instalments over two years
following closing of the Twill acquisition.
As part of these inducement grants, the Company agreed to issue
options to purchase up to 1,017,947 shares of the Company's common
stock to Tomer Ben-Kiki, in
connection with Mr. Ben-Kiki's appointment as Chief Operating
Officer of the Company. Options to purchase up to 717,947 shares of
the Company's common stock are subject to time vesting and 300,000
vest subject to performance. These options were granted as an
inducement material to Mr. Ben-Kiki becoming an employee of the
Company, in accordance with Nasdaq Listing Rule 5635(c)(4).
The options have an exercise price per share equal to
$2.55, which was the closing price of
the Company's common stock on the Nasdaq Stock Market on
February 15, 2024. The time-based
options vest as follows: options to purchase up to 291,742 shares
of common stock shall vest immediately and the remaining 426,205
shares will vest over two years in eight equal quarterly amounts,
subject to Mr. Ben-Kiki's continued employment by the Company on
the applicable vesting date. The performance-based option to
purchase up to 300,000 shares of common stock vest immediately upon
achieving certain milestones relating to the achievement of
revenues (on a U.S. generally accepted accounting principles basis)
relating to Twill products for the year ending December 31, 2024, the achievement of certain
operating expense targets for the years ending December 31, 2024 and December 31, 2025, the ability to generate
software value from funds invested and meet product roadmap and the
retention of key employees post transaction, subject in each case
to Mr. Ben-Kiki's continued employment by the Company on the
applicable vesting date.
Dario will also issue up to an equivalent of 1,766,508 shares,
733,562 in the form of restricted stock units and 1,032,946 in the
form of warrants, each of which shall be subject to the approval of
Dario's stockholder, issuable to Twill's board members other
employees and consultants of Twill. Warrants to purchase 315,000
shares of common stock are performance based and will vest upon
achieving certain milestones relating to the achievement of
revenues (on a U.S. generally accepted accounting principles basis)
relating to Twill products for the year ending December 31, 2024, the achievement of new signed
contracts during 2024 that will contribute additional revenue
targets in the fourth quarter of the year ending December 31, 2024 subject to providing continued
services to the Company.
Advisors
Stifel acted as financial advisor to Dario on the acquisition,
and Sullivan & Worcester LLP acted as legal counsel to Dario in
connection with the acquisition and the financing. TD Cowen acted
as financial advisor, and Lowenstein Sandler LLP acted as legal
counsel, to Twill in connection with the transaction.
The securities described herein have not been registered under
the Securities Act of 1933, as amended, and may not be sold in
the United States absent
registration or an applicable exemption from the registration
requirements.
This press release shall not constitute an offer to sell or the
solicitation of an offer to buy, nor shall there be any sale of
these securities in any state or other jurisdiction in which such
an offer, solicitation, or sale would be unlawful prior to
registration or qualification under the securities laws of any such
state or other jurisdiction.
Conference Call and Replay Information
Please use the link below to register for the call today,
February 21, 2024 at 8:30am ET.
A replay of the call will also be available via the same
link.
https://lifescievents.com/event/dariohealth/
About Dario Health
DarioHealth Corp. (Nasdaq: DRIO) is
a leading digital health company revolutionizing how people with
chronic conditions manage their health through a user-centric,
multi-chronic condition digital therapeutics platform. Dario's
platform and suite of solutions deliver personalized and dynamic
interventions driven by data analytics and one-on-one coaching for
diabetes, hypertension, weight management, musculoskeletal pain and
behavioral health.
Dario's user-centric platform offers people continuous and
customized care for their health, disrupting the traditional
episodic approach to healthcare. This approach empowers people to
holistically adapt their lifestyles for sustainable behavior
change, driving exceptional user satisfaction, retention and
results and making the right thing to do the easy thing to do.
Dario provides its highly user-rated solutions globally to
health plans and other payers, self-insured employers, providers of
care and consumers. To learn more about Dario and its digital
health solutions, or for more information, visit
http://dariohealth.com.
About Twill
Twill is creating patient-led and
technology enabled experiences to deliver care in the modern
healthcare era. Twill is developing and marketing a uniquely
connected patient workflows designed to simplify care delivery. For
those who need self-guided care Twill offers a digital solution
optimized for mental health and resiliency with tailored and
culturally adapted tracks and activities.
To learn more about Twill and its digital health solutions, or
for more information, visit https://www.twill.health
Cautionary Note Regarding Forward-Looking Statements
This news release and the statements of representatives and
partners of DarioHealth Corp. related thereto contain or may
contain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Statements that
are not statements of historical fact may be deemed to be
forward-looking statements. For example, the Company is using
forward-looking statements in this press release when it discusses
its expected cash balance after the closing of the financing
transaction, the expected benefits and advancement relating to the
acquisition of Twill, the expected pro forma unaudited revenues and
gross margins for 2023 and that gross margins are expected to
approach approximately 80-85% by 2025, that the combined company
expects to be able to realize nearly 30% of cost synergies within
two years following the close of the transaction, that the
combination of revenue scale, expected improved gross margins, and
significant cost synergies are expected to accelerate the path to
profitability within the second-year post acquisition, that the
acquisition is expected to accelerate market penetration through
driving more sales opportunities as a direct result of the breadth
of combined solutions, with an immediate opportunity to increase
revenue per customer through cross-selling into both companies'
existing customer base, which has almost no overlap, the benefits
to be realized as a result of the acquisition and the expected use
of proceeds from the private placement. Without limiting the
generality of the foregoing, words such as "plan," "project,"
"potential," "seek," "may," "will," "expect," "believe,"
"anticipate," "intend," "could," "estimate" or "continue" are
intended to identify forward-looking statements. Readers are
cautioned that certain important factors may affect the Company's
actual results and could cause such results to differ materially
from any forward-looking statements that may be made in this news
release. Factors that may affect the Company's results include, but
are not limited to, regulatory approvals, product demand, market
acceptance, impact of competitive products and prices, product
development, commercialization or technological difficulties, the
success or failure of negotiations and trade, legal, social and
economic risks, and the risks associated with the adequacy of
existing cash resources. Additional factors that could cause or
contribute to differences between the Company's actual results and
forward-looking statements include, but are not limited to, those
risks discussed in the Company's filings with the U.S. Securities
and Exchange Commission. Readers are cautioned that actual results
(including, without limitation, the timing for and results of the
Company's commercial and regulatory plans for Dario™ as described
herein) may differ significantly from those set forth in the
forward-looking statements. The Company undertakes no obligation to
publicly update any forward-looking statements, whether as a result
of new information, future events or otherwise, except as required
by applicable law.
Contact Information
DarioHealth Corporate
Contact
Mary Mooney
VP Marketing
+1-312-593-4280
DarioHealth Investor Relations Contact
Kat
Parrella
Investor Relations Manager
+315-378-6922
Media Contact
Scott
Stachowiak
Scott.Stachowiak@russopartnersllc.com
+1-646-942-5630
Logo -
https://mma.prnewswire.com/media/1920436/DarioHealth_Logo.jpg
View original
content:https://www.prnewswire.com/news-releases/dario-acquires-twill-creating-one-of-the-most-comprehensive-digital-health-platform-across-the-most-prevalent-chronic-conditions-302067252.html
SOURCE DarioHealth Corp.