10-Q: DarioHealth Reports Q1 2026 Results, Revenue Declines

DarioHealth Corp. reported a 17.3% decrease in revenue for the first quarter of 2026 compared to the prior year, primarily due to a non-recurring pharmaceutical partner revenue in the previous period.

Summary

• DarioHealth Corp. reported total revenues of $5.584 million for the three months ended March 31, 2026, a decrease of 17.3% from $6.752 million in the same period of 2025.
• The decrease in revenue was mainly attributed to the absence of a non-recurring revenue from a pharmaceutical partner recognized in the prior year, partially offset by growth in channel partner revenues and an increase in direct-to-consumer sales.
• Cost of revenues decreased by 16.9% to $2.384 million, leading to a gross profit of $3.200 million (57.3% of revenues) for Q1 2026, compared to $3.882 million (57.5% of revenues) in Q1 2025.
• Operating expenses saw a significant reduction, with R&D expenses down 41.9% to $2.385 million, Sales and Marketing down 16.6% to $4.898 million, and General and Administrative down 2.5% to $3.226 million.
• Net loss for the quarter was $8.249 million, an improvement from $9.227 million in the prior year's quarter, primarily due to the reduction in operating expenses.
• The company had $14.977 million in cash and cash equivalents as of March 31, 2026, down from $21.803 million at the end of 2025.
• DarioHealth continues to face substantial doubt about its ability to continue as a going concern, with current cash on hand not expected to be sufficient for the next twelve months.
• The company has an At-The-Market (ATM) Sales Agreement allowing for up to $20 million in stock sales, of which $54,000 had been raised by May 13, 2026.

Sentiment

Score: 3

Explanation: StockSavvy.ai views this as a negative sentiment due to the revenue decline, ongoing going concern issues, and substantial accumulated deficit, despite some operational cost efficiencies.

Positives

• Net loss decreased by 10.6% to $8.249 million for the three months ended March 31, 2026, compared to $9.227 million in the same period of 2025, driven by reduced operating expenses.
• Operating expenses were significantly reduced across all major categories: R&D (-41.9%), Sales and Marketing (-16.6%), and General and Administrative (-2.5%).
• Gross profit margin remained relatively stable at 57.3% in Q1 2026, compared to 57.5% in Q1 2025, indicating efficient cost management on goods and services sold.
• The company has an active ATM program allowing for potential capital raises up to $20 million, with $53,000 raised post-quarter end.
• Sublease agreement in Israel expected to generate approximately $21 per month for 28 months.
• New lease agreement in India for 176 work units with a commitment term of 42 months.

Negatives

• Total revenues decreased by 17.3% to $5.584 million in Q1 2026 compared to $6.752 million in Q1 2025, primarily due to the absence of a one-time revenue from a pharmaceutical partner.
• The company has substantial doubt about its ability to continue as a going concern, with current cash insufficient for the next twelve months.
• Cash and cash equivalents decreased from $21.803 million at the end of 2025 to $14.977 million at the end of Q1 2026.
• The company has an accumulated deficit of $460.327 million as of March 31, 2026.
• The Callodine Loan Facility has covenants that could restrict the company's ability to take certain actions, and a default occurred in August 2025, though waived with an equity cure.

Risks

• Substantial doubt exists regarding the company's ability to continue as a going concern due to insufficient cash to fund projected operating requirements for the next year.
• The company's ability to raise additional capital on acceptable terms is uncertain, which could lead to delays or elimination of product development, commercialization, sales, and marketing initiatives.
• The company is subject to risks related to general market, political, and economic conditions, including unrest and conflict in the Middle East.
• Changes or developments in U.S. laws or policies, including trade policies and tariffs, could impact the business.
• The company relies on intellectual property and must maintain or protect the validity of its patents and other intellectual property.
• The company's financial position raises substantial doubt about its ability to continue as a going concern.
• The company's ability to meet the requirements of its existing debt facility is a concern.
• The company's ability to consummate a potential sale, merger, or strategic business combination is a forward-looking statement with inherent uncertainties.

Future Outlook

The company expects to continue incurring future net losses and its transition to profitability is dependent on successful development and commercialization of its products and achieving adequate revenues. Until profitability is achieved, it will rely on raising additional funds through debt or equity offerings. There is substantial doubt about the company's ability to continue as a going concern.

Management Comments

• "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 of relevance, personalization, consumerization, and longitudinal data and information."
• "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."
• "As a digital health consolidation leader, we have acquired companies that have spent over a decade and nearly $525 million, in combination with our own investment, to develop and deliver the most engaging whole-person health platform in the market."
• "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 interim financial statements. This raises substantial doubt about our ability to continue as a going concern."

Industry Context

StockSavvy.ai notes that DarioHealth's Q1 2026 results reflect ongoing challenges in the digital therapeutics sector, particularly concerning revenue generation and achieving profitability. The company's strategy of consolidating digital health companies and focusing on user engagement and whole-person health is a recognized trend, but execution and market adoption remain critical.

Comparison to Industry Standards

• The reported net loss of $8.249 million for Q1 2026, while an improvement from the prior year, is substantial for a company with revenues of $5.584 million, indicating a high burn rate relative to current revenue.
• The decrease in revenue by 17.3% is a concern, especially when compared to some competitors in the digital health space that are reporting growth, albeit often with significant R&D and marketing investments.
• The company's gross profit margin of 57.3% is within a reasonable range for software and service-based businesses, but the overall operating loss highlights the high cost of sales, marketing, and R&D.
• The 'going concern' warning is a significant red flag, indicating a higher risk profile compared to more established and financially stable companies in the digital health industry like Teladoc Health or Amwell, which, despite their own challenges, generally have stronger liquidity positions.

Related Party Transactions

• In February 2025, the Company appointed a new non-executive director who is a member of a consulting firm that has provided investment and business consulting services since 2021. The company agreed to pay a monthly cash retainer and issue restricted shares and warrants to the firm. For the three months ended March 31, 2026 and March 31, 2025, share-based compensation expenses related to this service provider were $65 for each period.

Stakeholder Impact

• Shareholders: Potential dilution from ATM program sales, ongoing concern about the company's ability to continue as a going concern, and the risk of losing their entire investment.
• Creditors: The company's going concern status and reliance on future financing could impact its ability to service debt obligations.
• Employees: Continued operational funding and the company's long-term viability are critical for job security.
• Suppliers: The company's financial health and ability to secure future funding are important for continued business relationships.

Next Steps

• Continue to fund operations through cash on hand, additional private and/or public offerings of debt or equity securities, or a combination thereof.
• Utilize proceeds from the ATM Program for commercial, sales and marketing activities, research and development, potential mergers and acquisitions, repayment of outstanding indebtedness, and general corporate and working capital purposes.
• Continue to develop and commercialize the company's products.
• Focus on achieving a level of revenues adequate to support the cost structure and transition to profitability.
• Sublease a portion of its leased office premises in Caesarea, Israel.
• Utilize a new lease agreement for office space in Gurugram, Haryana, India.

Key Dates

Recommendation

While the company has improved its net loss through cost-cutting, the significant revenue decline, ongoing going concern issues, and substantial accumulated deficit present considerable risks. The ATM program offers a potential lifeline, but the path to profitability remains uncertain. A 'hold' recommendation is appropriate, awaiting clearer signs of revenue stabilization and a more robust liquidity position before considering a more positive or negative stance.

Keywords

DarioHealth Corp., Form 10-Q, Quarterly Report, Digital Therapeutics, Healthcare Technology, Financial Results, Revenue, Net Loss, Going Concern, ATM Program, Callodine Loan Facility