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Edited Transcript of DRIO earnings conference call or presentation 13-Aug-19 1:00pm GMT

Q2 2019 DarioHealth Corp Earnings Call

CAESAREA Aug 20, 2019 (Thomson StreetEvents) -- Edited Transcript of DarioHealth Corp earnings conference call or presentation Tuesday, August 13, 2019 at 1:00:00pm GMT

TEXT version of Transcript

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Corporate Participants

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* Erez Raphael

DarioHealth Corp. - CEO & Director

* Olivier R. Jarry

DarioHealth Corp. - President & Chief Commercial Officer

* Zvi Ben David

DarioHealth Corp. - CFO, Treasurer & Secretary

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Conference Call Participants

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* Alexander David Nowak

Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst

* Benjamin Charles Haynor

Alliance Global Partners, Research Division - Analyst

* Steven William Wardell

Chardan Capital Markets, LLC, Research Division - Senior Equity Research Analyst

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to DarioHealth Second Quarter 2019 Earnings Call.

Hosting the call today are Erez Raphael, Chief Executive Officer; Olivier Jarry, President and Chief Commercial Officer; and Zvi Ben-David, Chief Financial Officer.

Before I turn the call over to management, I'd like to remind everyone that during the course of this call, management will make express and imply forward-looking statements within the Private Securities Litigation Reform Act of 1995 and other U.S. federal securities laws. DarioHealth does not assume any obligation to update that information.

Actual events or results may differ materially from those projected as a result of changing market trends, reduced demand and the competitive nature of DarioHealth's industry. Such forward-looking statements and their implications involve known and unknown risks, uncertainties and other factors that may cause actual results or performance to differ materially from those projected. The forward-looking statements discussed on this call are subject to other risks and uncertainties, including those discussed in the Risk Factors section and elsewhere in the company's annual report on Form 10-K for the year-ended December 31, 2018, filed with the Securities and Exchange Commission.

In addition, certain non-GAAP financial measures will be discussed during this call. These non-GAAP measures are used by management to make strategic decisions, forecast future results and evaluate the company's current performance. Management believes the presentation of these non-GAAP financial measures to useful -- is useful to investor's understanding and assessment of the company's ongoing core operations and prospects for the future. A reconciliation of these non-GAAP measures to the most comparable GAAP measures is included in today's press release regarding our quarterly results.

And with that, I'd like to now introduce Erez Raphael, Chief Executive Officer of DarioHealth. Mr. Raphael, the floor is yours.

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Erez Raphael, DarioHealth Corp. - CEO & Director [2]

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Welcome, and thank you for joining our call today. I would like to thank our stakeholders, including vendors, strategic partners, shareholders and our Board of Directors for their contribution to the success in driving the business forward this quarter.

In addition, I would like to congratulate the DarioHealth team for their time, intelligence and passion as we worked hard together to continue to transform Dario into digital therapeutics company, well positioned for success in chronic disease management. This transformation including both our product offering and our changed strategy.

As mentioned in Q1 earning call, we began an evolution of the product offering from a medical device to a software-driven model. We believe the software solution with an open platform is superior to one of the required specific device as it allows patients to choose the device, the company to quickly deploy upgraded technology and create the opportunity for the company to have a higher effective margin profile over time. This product evolution also continues to show signs of progress in terms of adding a better solution for patients as evidenced by recent clinical data we highlight -- we'll highlight later in this presentation.

This evolution will continue in the second half of 2019 and beyond as we will always work of -- for improving our solution for patients who seek help from Dario to manage the chronic diseases. In addition, our company evolution includes how and to whom we sell our product as well. This evolution started from a model that focused solely on the direct-to-consumer channel to one that spends more of its resources, both human and financial capital, on the business-to-business channel. As previously stated, we believe the B2B channel will be the big part of Dario future, complementing on our best-in-class direct-to-consumer strategy and driving results going forward.

Dario initial strategy, focused on direct-to-consumer, allowed us to gain valuable insights while building an industry-leading platform, unique in its robustness, global scope and evidence of improved clinical outcomes.

We continue to see superior user engagement, which is essential to our strong clinical efficacy and likely period option for reimbursement. In addition, we continue to experience strong customer retention, indicating that patients like the platform and are committed to using it for health care management of their chronic condition. Finally, we positioned Dario membership for higher average revenue per user, ARPU, with the launch of the hypertension and the expansion into the B2B channel.

The interest of employers, payers and health care providers in our chronic illness management platform has been aided by the growing pool of data evidence demonstrating improvement in clinical outcomes from the behavioral modification that occurs using our Dario solution.

Dario published at the ADA of 2019 the results of a study of 38,838 active Dario Type 2 diabetes users over 2 years, 2017 and 2018. It shows a 19.3% reduction in the average ratio of hypoglycemic events and an increase of 11.3% in normal-range readings. The most significant shift in results, 14% decrease in higher readings occurred after only 1-month of usage, and this low level was maintained through the remainder of the user's own subscription period.

Most importantly, we published the study in 2019 that shows that a large number of Dario users with Type 2 diabetes can lower their average blood glucose to equivalent of prediabetes level, which is 140 milligrams per deciliter. 30% of Type 2 users using Dario without coaching published at ADA 2019, and 45% of Type 2 users were receiving additional support from Dario coach, ADA 2019. But why all of these clinical results reduced by Dario system so important for all upscale stakeholders, patients, provider and payers? HbA1c levels are marker for diagnosing and analyzing the treatment of Type 2 diabetes patients. It is well known that when patients are compliant with the physician instructions, i.e., a high engagement of managing the disease, they can meaningfully reduce HbA1c levels. It is well known that 1% or 1 point drop in Hemoglobin A1c, HbA1c, levels can decrease diabetes-related death by 21%, decrease microvascular complications by 37% and decrease neocortical infractions by 14%. Dario high-engagement digital therapeutics platform can help them achieve this low HbA1c levels and the associated health benefits.

Notably, Type 2 diabetes patients are asymptomatic and still symptomatic developed later in the disease progression when it becomes really expensive and difficult to meaningfully reverse the progression or simply manage the disease.

Unfortunately, given the asymptomatic nature of early Type 2 diabetes, patients often don't manage their disease well when only directed by the physician. They don't see a visible reason to skipping an insulin injection that would keep their blood sugar levels in the healthy range since they have no noticeable implications. And skipping 1 injection may reinforce the concept of noncompliance of insulin therapy is okay, resulting in a -- in the behavioral skipping insulin injection.

For example, imagine putting a Band-Aid on a wound that you can't see. Why would you do it or even consider it being necessary? However, by ignoring the disease or physician care instruction, Type 2 diabetes progresses with each needed missed insulin injections.

Ending this understandable, reasonable patient behavior is where Dario can be most useful. We believe this is where Dario is essential to patient's health. Dario helps patients recognize and quantify the disease and their management of it. It helps patients understand the implications of being noncompliant with the physician care instructions, and it helps complement physician's instructions in between patient appointments, which may be missed, rescheduled or scheduled too far apart, Dario reinforces overall patient care for Type 2 diabetes patients.

If Dario is able to stop the decline from prediabetes to asymptomatic diabetes or symptomatic diabetes or reverse the progression of disease altogether, not only would we provide the patient better health life, we would also reduce health care system cost. There could be a few diabetes-related events and related acute care provider visits. There could be a fewer diabetes culpabilities to manage and related physician appointments. There may be a few subscriptions, and we could help providers manage patients between in-person appointment. As a result, there will maybe few in-office appointments. All this will lead to a lower health care system cost, something very valuable for both private and public payers.

Our scalable digital therapy platform also enables us to move beyond diabetes management into additional chronic condition field. The first of this is our entry into the hypertension management field with the release of Dario blood pressure monitoring system. With 73% occurrence of hypertension among diabetes patient, this is a natural transition for Dario and is expected to further drive users' engagement and ARPU.

By synchronizing the Dario blood pressure monitoring system data with the Dario mobile app, users can track the blood pressure with variety of health markers together with the daily excess of stimuli the influence -- that influence them. Utilizing the Dario blood pressure monitoring system together with the Dario blood glucose monitoring system creates a harmonized digital therapeutic solution, enabling users to better monitor their health and making informed data-driven choices.

Together with Dario software and professional coaching, we expect that users with hypertension and diabetes will benefit from a clear, broad picture of their condition in a user-friendly format on their iPhone or Android mobile device.

A key competitive advantage of DarioHealth -- of Dario and value driver for platform is our global footprint we see in-market approval in Europe. Recently introduced USB-C connectivity ensures compatibility with our latest android devices, allowing reengagement with Dario users with new smartphones that were previously incompatible. An estimated 60 million in Europe suffers from diabetes and this is an important milestone and reinforms our leadership position in the region.

During quarter 2, the Dario platform was adopted by 3 major clinic systems and dozens of smaller clinics through our existing alliances and with our new ones under negotiation, we expect to gain access to a series of midsized sales and number of controllers in several hundred of clinics.

In addition, Dario is being evaluated by 4 life science companies looking for a digital therapeutics companion for their product. Going forward, we plan to leverage our market leadership and growing user's base to meet surging demands for digital therapeutics and value-based health care in reducing effects of chronic illness.

Now I would like to -- I would like Olivier to share more details and early progress from Dario's B2C and B2B channel strategy. Olivier?

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Olivier R. Jarry, DarioHealth Corp. - President & Chief Commercial Officer [3]

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Thank you, Erez. Indeed, in digital therapeutics, we show a growing interest from business-to-business clients because they want clinically proven results. There are many digital companies trying to sell some kind of digital health program, particularly to employers. Literally, none of them can demonstrate Dario's remarkable level of clinical outcomes in diabetes previously mentioned by Erez.

I would like to take the following moments to share more information about the different channels we will be setting Dario's offerings through. First, we continue to be excited about the large direct-to-consumer market opportunity. Patients are becoming more informed over time about their treatment options, taking control over the management of their illnesses. We benefit from this market's tailwind. And we will continue to refine our strategy with higher yield to our marketing dollars over time.

Regarding employers and payers, Dario can report positive traction with 2 major payers that are covering several dozen million lives and have approved Dario's DTx solution. Now that we are approved on their platforms, we are working with them to penetrate their patient populations.

We have also just signed a large employer, and we are finalizing agreements with a couple others. We anticipate a similar process here with platform approval followed by patient pool penetration. Employers and payers will remain a major focus in Q3 from signing agreements to building the user base.

Clinics in North America continue to show a very strong interest in a Dario such as at the 2019 conferences of the American Diabetes Association and the American Association of Diabetes Educators, AADE, where we received dozens of expressions of interest. As a reminder of the reason for this interest, Dario is the only digital therapeutics company that connects health care professionals to the entire lifestyle data of their patients via the Dario cloud in real-time and through a browser, the latter a major argument vis-a-vis the cybersecurity protocols. Of note, we are not competitors to clinics but rather complement our management of chronic disease in a favorable way that results in positive clinical outcomes. At retailers, we are converting our offering from the classical meters and strips to what we call membership in a box.

Users will be able to buy from their favorite retailer in-store or on the Internet, the same 3 months membership that they may buy today from Dario's Internet channels. Being able to see the actual product physically displayed and explained in pharmacies will be an important factor for users to make that choice along with the blood pressure meter connected to Dario.

New large retailers like the fresh approach from Dario and are evaluating it. Retailers also like that when visiting the store, patients in searching Dario will drive ancillary store purchases. On the strategic side, we are in advanced discussions with a half dozen pharmaceutical, nutrition and medical devices companies. They realize that their products will be much more successful if they are part of a digital therapeutics solution that will enhance awareness, education, engagement and loyalty from their users.

And importantly, Dario will provide intimate insights we identified about very large numbers of users. Such patient insights are quasi-inaccessible today for these life sciences companies.

I would like to turn the call back over to Erez to discuss Dario's quarterly financial performance.

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Erez Raphael, DarioHealth Corp. - CEO & Director [4]

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Thank you, Olivier. Before highlighting specific quarter 2 results, I would like to make some high-level comments on the performance -- on our performance and what you should expect of Dario in the future.

In general, new products being sold through direct-to-consumer channel need an investment to maintain the growth the revenues. Without investments this will fall. This is the reality of the direct-to-consumer channel. Dario experienced during the second quarter was consistent with that reality. We invested less in direct-to-consumer activities during this last quarter. As a result, anticipated lower direct-to-consumer sales level. However, we are willing to sacrifice these sales as we focused on our broader strategic operating plan.

As we strategically shifted focus by reallocating resources and investments to our more lucrative and less-expensive business-to-business channel, we saw expenses decline materially. While the timing and the size of B2B sales initially less predictable, the cost of pursuing sales in these categories is less expensive, since it's involving negotiation and education but not significant individual ad marketing spend.

Dario anticipates lower expenses this quarter, and benefited from that B2B reality. We envision that low-expenses structure will continue in the second half of this year and also in the future. While we did not yet achieve significant revenues related to a higher focus on the B2B channel in Q2 2019 to cover the shortfall in the B2C sales, we do anticipate our investment in the business-to-business channel producing revenue in the second half of this year. Over time, this strategy and these wins will produce attractive annuity-like cash flows streams from large patient pools managing their chronic diseases covered by employer or payers.

Now I would like to hand over the call to Zvi Ben-David for a few highlights on our second quarter of 2019. Zvi?

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Zvi Ben David, DarioHealth Corp. - CFO, Treasurer & Secretary [5]

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Thanks, Erez. Here are some highlights from the second quarter of 2019. Revenues for the second quarter ended June 30, '19, were $1.651 million, a 25% decrease from revenues of $2.242 million in the first quarter ended March 31, 2019.

In addition, in the second quarter, we recorded an increase of $102,000 in our deferred revenues. Deferred revenues were generated from sales of our membership offering to our customers in the United States and Australia. Gross profit in the second quarter of 2019 was $326,000 compared to a gross profit of $558,000 in the first quarter of 2019 and compared to a gross profit of $522,000 in the second quarter of 2019. The decrease in our gross profit in the second quarter was attributed to lower sales and onetime expense write-off of our old cartridge production load for $82,000.

Operating loss for the second quarter ended June 30, '19, decreased by $431,000 to $5.360 million compared to $5.8 million in the second quarter ended June 30, 2018. This decrease is mainly due to the decrease in our operating expenses. Net loss attributable to holders of common stock decreased also by $456,000 to $4.5 million in the second quarter of 2019 compared to $5.8 million in the second quarter of 2018. As of June 30, 2019, cash and cash equivalents totaled approximately $8 million.

I'll turn -- I'll now turn the call back to Erez for some concluding remarks.

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Erez Raphael, DarioHealth Corp. - CEO & Director [6]

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In conclusion, Dario has developed a software-driven digital therapeutics platform that engages patients to be more focused and systematic about managing their chronic disease. This treatment compliance helps patient achieve happier, healthier lives and with healthier lives, all health care stakeholders benefit from a lower cost.

In this quarter, Dario expanded and improved its digital therapeutics platform while pushing forward it's strategic operating plan to the next stage. We are proud of the progress we made. As we assess the global healthcare market and the Dario place in it, we are more confident that over that, we have built a platform technology which will deliver better care and lower cost for patients with chronic diseases. We are excited to share more developments from the B2B channels strategy over the remainder of the year, and we believe that this development will generate double-digit top line growth in a combination with much lower losses creating significant value for our shareholders.

To conclude our prepared remarks, I would let -- I will now open the call for questions. Operator?

Karen?

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Operator [7]

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Yes, would you like me to open up the floor for questions?

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Erez Raphael, DarioHealth Corp. - CEO & Director [8]

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Yes. Yes, please.

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Questions and Answers

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Operator [1]

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(Operator Instructions) And our first question comes from Alex Nowak from DarioHealth (sic) [Craig-Hallum Capital Group].

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Alexander David Nowak, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [2]

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I'm actually from Craig-Hallum Capital Group. Erez, can you provide a bit color on the revenue shortfall this quarter. You know, I understand shifting initiatives away from the DTC to the partnership model. But then did the DTC side of the business experience a higher churn than previously, in prior quarters? I understand you probably didn't sign up as many DTC customers this quarter, but shouldn't the existing DTC users stay on the platform and continue to generate consistent revenue going forward?

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Erez Raphael, DarioHealth Corp. - CEO & Director [3]

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Thanks. Alex, thank you for the question. This is important one. So looking on the revenue, there are 2 reasons why we see this shortfall. Number one is accounting reason. Not every user that we are signing up is a member we can recognize the revenue immediately. So this is something that provide part of the reason for the, I think in some ways, the optic issue. Second issue is that when we are having DTC users, we have 2 type of users. We have those that are members and members are still having a very high retention. And actually we are improving their retention. We are improving the ARPU of those that are members. And we have users that, what we are calling them, device users. They are getting on the platform. We are interesting them with the device and we are then converting them to be members.

The revenue of users that are coming as a new device holders and are not signing up yet on the membership, this is something that we -- was reduced as we will do less buying from the mid of this quarter when we started this transformation. So practically, we see a reduction in those that are onetimers, we don't see a reduction in the members. Actually, the members are still providing a high ARPU and we're improving this ARPU. And we think it will be improved over time. And because of the nature of the accounting, plus the fact that the members are still on the platform, we do think that moving forward into Q3 and Q4, we are going to see a recovery of the revenues back to higher numbers because of these 2 reasons. We just -- also another reminder, we started to sell yearly membership only in early Q3 last year. And we're going to see all these renewals getting back to the platform and renewed in Q3. So Q3 will change this optic reality to be more positive. And I think that when we're talking about the product, it's taken us, the average revenue per user plus the churn, I think that for members, it's improving. And just to remind you when we are selling B2B, we are selling many memberships, which means that if the product is keeping good as in improving, we're going to see much higher ARPU when we will start intensively selling on the B2B part. So what -- the onetimers that are buying devices, this is something that we're selling less, members is still sustainable, and actually, we haven't seen a decline in our number of members on the platform.

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Alexander David Nowak, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [4]

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Okay, got it. So understood the model's going through bit of a transition here. When should you complete the transition to B2B? Or maybe asked a better way is when will the DTC declines -- or excuse me, when will the B2B increases offset the DTC declines?

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Erez Raphael, DarioHealth Corp. - CEO & Director [5]

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Yes. So thanks for the question. So first of all, we're not going to shut off the DTC. We think that the strategy of the company staying on DTC keep selling -- and I mean the DTC is where you are confronting with your users and you need to make them happy. If they're not happy, they're not buying your device, your membership. And this is where I think this is what makes us very good organization that is improving the offering quarter-to-quarter. So this is something that will stay and will be sustained and grow, not in the same intensity that we had so far. With regards to the B2B, we believe that moving forward Q3 and Q4, we're going to see the beginning of the growth. And we think that the offset will be done in the next 2 quarters where we'll get back to some kind of a growth. And as I stated in my script, we think that we're going to see the double-digit growth this year. But in parallel, I think that we can be much more efficient in terms of our losses and I think we're going to improve in a very drastic way our bottom line in the next 2 quarters. So on one hand, we will get back to the trajectory of growing. And on the other hand, we'll do it in a much lower cost structure, which will reduce our losses. And we believe we'll get -- we'll provide value to our shareholders because we didn't feel very comfortable with the high burn rate that we had. And we had to do something that will change it. We don't see it yet in Q2 because the whole transformation was done now. But in Q3 and Q4, we're going to see it big time. And we think that a very positive change that we did. And it will provide the right value to shareholders.

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Alexander David Nowak, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [6]

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Okay. Got it. And what are the metrics we should use here to help benchmark or move into the B2B model? Can you say how many partners do you have in total with clinics or employers that you are involved with? Just any metrics to help us get comfortable over the coming quarters that Dario is exceeding in its pivot towards B2B?

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Erez Raphael, DarioHealth Corp. - CEO & Director [7]

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Yes, absolutely. We think that moving forward we will focus more on the number of clients. We can talk in terms of numbers of payers or employers we already have in the pipeline. We're going to see the first user getting on the platform practically as we speak. So this is something that we feel comfortable. We have a nice pipeline of clients that already signed with us. And we are in an implementation stage. We need to feel more comfortable and to see that it's getting into more sustainable and more robustness in terms of clients. And we think that within the next 2 quarters, we'll start to publish information on the number of clients and then we can start create metrics that related to clients and number of members, B2B and DTC. And it will be much easier to provide a sustainable metric. I think we will do it in the next 2 quarter, absolutely.

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Alexander David Nowak, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [8]

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Okay. That's helpful. And then Olivier, you mentioned you got approved with 2 payers, can you provide some more color on what that means? Are they actively paying for your solution to their members? And is this a pilot phase with the payers? Or is that a full program?

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Olivier R. Jarry, DarioHealth Corp. - President & Chief Commercial Officer [9]

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That's another good question. One of the payers is, what we would call a Tier 2, very significant, very innovative payer. They are actually now working on these top users that at some point should come to Dario. So we consider these very concrete and hopefully, we'll see the results in this Q3. If not delayed to the early Q4. But Q3 should be the time when these come to the platform. The other one, I mentioned is a large one. And their model is a bit different. So they are taking us into their own clients, employers. And we have to pitch to these employers in order to then get the employees in turn. So we have a number of these multilevel cases that take more time. But with the support of the organization we sign with, we get a lot of interest from the next levels. It's just a lot of work.

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Alexander David Nowak, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [10]

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Okay. Got it. And just last question from me, a little bit of a follow-up to, Erez, your previous comment there. But when should the existing cash last you through given the switch to B2B and the lower burn that you mentioned?

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Erez Raphael, DarioHealth Corp. - CEO & Director [11]

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Yes. According to the report that we published, we stated that April is when the cash will be sufficient for.

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Alexander David Nowak, Craig-Hallum Capital Group LLC, Research Division - Senior Research Analyst [12]

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Sorry, did you say through break even or through the end of 2020? I missed the…

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Erez Raphael, DarioHealth Corp. - CEO & Director [13]

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I said say until April next year.

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Operator [14]

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(Operator Instructions) And our next question comes from Steven Wardell.

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Steven William Wardell, Chardan Capital Markets, LLC, Research Division - Senior Equity Research Analyst [15]

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So I'd just like to know, can you go over with us, where do you see the growth coming from in the next 12 months? So what product or products, what region or regions? What sales channel or channels do you see the growth coming from?

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Erez Raphael, DarioHealth Corp. - CEO & Director [16]

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We see the growth -- thanks, Steve. We see the growth coming from -- in terms of regions, mainly from the United States and from the U.K. And in terms of the channels, the majority of the growth will come from the B2B accounts. And with regards to the offering, it's going to be a membership for Dario Digital Therapeutics, which is the -- what we are selling in our own direct to consumer, which is transforming into B2B as well with the higher pricing because we're selling a premium membership. And the membership includes application, unlimited strips, the coaching, and the digital intervention capabilities that we are providing through the app. This is something that we already see the first members getting on the platform as we speak. And we think that this is where we're going to get the majority of the revenue. And this is something that will be supported by the DTC that will also contribute some level of sustainability or growth -- store growth supporting the B2B. So it's mainly the B2B U.S., mainly from payers.

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Operator [17]

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And our next question comes from Ben Haynor.

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Benjamin Charles Haynor, Alliance Global Partners, Research Division - Analyst [18]

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First off for me is the membership in a box, that sounds like an intriguing offering. Just curious on what the reception has been with potential pharmacies, retailers, et cetera, in terms of being able to get shelf space and the receptiveness to it?

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Erez Raphael, DarioHealth Corp. - CEO & Director [19]

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Yes. Actually, this is -- yes, take this.

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Olivier R. Jarry, DarioHealth Corp. - President & Chief Commercial Officer [20]

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Yes, no, I will take this one. Actually interestingly, it's was one of a very large chains when we expose the way that we work and kind of offering we have also, DTC, that told us -- and it's a very large one. And they told us, guys, why should you continue selling meters and strips. This is way, way more interesting. And I want to see more, I want to see more graphs, I want to see how it looks on the shelf. And we started to work with them on this. And we were almost surprised by the quality of its reception, we made a number of presentation a few days ago to another chain that also received very, very positively. So one that we publicized a couple of months ago, we are converting them as well and they say, guys -- it's almost like why did you wait? This is really making a difference. And they say it as a kind of a renewal, rejuvenation of this diabetes space that is a little bit of sad section of the store today where you have all these big meters that all look the same. And they are cumbersome and bulky and you have to carry them around. And then you have this very attractive thing that catch your attention first and then you realize that it's not only a meter, it's really the entire benefits of the digital advice behind it in terms of nutrition, exercise and controlling your weight, your blood pressure, so it's much, much more than a meter. And it's a convenience of the membership. You don't even have to think about becoming short of strips, for example, for you blood glucose meters. So we -- I would say we're almost surprised how positive they were to convert to membership in a box.

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Benjamin Charles Haynor, Alliance Global Partners, Research Division - Analyst [21]

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That's great. Very helpful. And then lastly for me, kind of what's been the reception to adding the blood pressure monitor and hypertension management tool to the B2B customers thus far?

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Olivier R. Jarry, DarioHealth Corp. - President & Chief Commercial Officer [22]

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It's all the same.

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Benjamin Charles Haynor, Alliance Global Partners, Research Division - Analyst [23]

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For potential customers, I guess, as well?

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Olivier R. Jarry, DarioHealth Corp. - President & Chief Commercial Officer [24]

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Go ahead, Erez.

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Erez Raphael, DarioHealth Corp. - CEO & Director [25]

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No go ahead.

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Olivier R. Jarry, DarioHealth Corp. - President & Chief Commercial Officer [26]

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For them, it's going into a holistic way of managing the patient. And if you go today to a drug store you see this section, as I said, of our blood glucose meter. You walk a few steps, you can see another section of blood pressure meters, it's not much more fun and attractive. And it's disconnected. And what we now explain through our marketing materials is there is a high comorbidity of hypertension and high blood glucose and you should manage both. And you have these 2 devices that connect to Dario and then the app gives you all the means to manage both together. So for them, it's a continuity of a previous story. It's not a piece of device each year and where people don't really know what to do. It seeing that are input of data into an app that is really going to help them. So they see it as a -- almost like a needed addition because there are so many people with diabetes that also have hypertension, more than half, closer to 3/4.

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Operator [27]

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And there appear to be no further questions at this time.

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Erez Raphael, DarioHealth Corp. - CEO & Director [28]

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Thank you so much, and have a good day.

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Operator [29]

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Thank you. Ladies and gentlemen, this does conclude today's teleconference. We thank you for your participation. You may disconnect your lines at this time and have a great day.