LabStyle Innovations Announces 2015 Second Quarter Result

August 13, 2015 6:04 pm
  • 161% jump in sequential quarterly revenues
  • 77% increase in shipments to distributors and customers over Q1 2015
  • Dario launches in Canada with reimbursement from majority health plans
  • S. General Manager appointed in anticipation of FDA clearance in the coming months

CAESAREA, Israel, Aug 13, 2015 /PRNewswire/ — LabStyle Innovations Corp. (OTCQB: DRIO), developer of the Dario™ Diabetes Management Solution, today reported financial and operational results for the three-month period ended June 30, 2015, provided an update on recent corporate achievements, and an outlook on upcoming milestones.

“The Dario has met with very positive acceptance from users and healthcare communities in the national markets in which it has been launched, affirming our belief that the Dario will become the leading smart glucose meter and diabetes management solution. The global $12 billion glucose monitoring market is ripe for an innovative solution like the Dario which leverages mobile technologies and provides a real time, cloud-based solution that has proven itself as highly engaging for patients,” stated Erez Raphael, LabStyle’s Chairman and Chief Executive Officer.

“The strong growth in our sequential quarter-over-quarter financial results, we believe, is an indicator of future trending as we anticipate rolling out in multiple markets each quarter.”

“We look forward to achieving major milestones in the second half of 2015. As we enter new markets, we are proud to have the opportunity to help make life easier for the millions of people living with diabetes,” Raphael concluded.

LabStyle Chief Financial Officer Zvi Ben-David commented, “Driven by growing revenues and continued increases in operational efficiencies, we reduced both GAAP net loss and non-GAAP adjusted EBITDA by 34% and 51% respectively, in the second quarter of the current year, as compared to the second quarter of 2014. As we gain regulatory approvals in more countries and build market traction for the Dario, we are committed to cost-containment and building economies of scale with a goal towards positive cash flow.”

Q2 2015 Highlights:

  • Shipments to distribution partners and customers of products and software services increased 77% from $141,000 in Q1 2015 to $250,000 in Q2 2015
  • Sequential quarterly revenues grew 161% from $67,000 in Q1 2015 to $175,000 in Q2 2015
  • Net loss narrowed by 34% and non-GAAP adjusted EBITDA narrowed by 51% in Q2 2015 as compared to Q2 2014
  • Dario Diabetes Management Solution launched in Canada, selling through pharmacies and online, with reimbursement through a majority of medical plans
  • In preparation for the Dario’s anticipated clearance for marketing by the FDA in the coming months, Mr. Todd Durniak was appointed as Senior Vice President and General Manager in the U.S.
  • LabStyle opened its first ecommerce store for the Dario Smart meter and Dario accessories; the eShop currently serves the Israeli market
  • In partnership with Israel’s leading HMO, Maccabi Healthcare, LabStyle launched the comprehensive Dario Diabetes Management Solution as part of Maccabi’s advanced Telecare unit; this serves as a model for future HMO agreements through which LabStyle leverages the Dario’s mobile health technology to improve patient outcomes and healthcare economics, while also generating subscription revenues from digital platform and software subscription
  • LabStyle presented a Late Breaking Poster at the American Diabetes Association’s 75th Anniversary Scientific Session titled, “Performance of Dario Blood Glucose Monitoring System Evaluated in a Clinical Study in Compliance with the New ISO 15197:2013 Standard,” showing the Dario Diabetes Management Solution delivered excellent clinical performance and very positive user experience

Upcoming Milestones:

  • Continuing revenue growth momentum from Dario product and software sales to current and new customers
  • S. market launch expected in the coming months following anticipated FDA clearance for the Dario; U.S. is largest addressable market in the world
  • Market launches expected in additional strategic territories
  • Pursuing regulatory approval and reimbursement in additional markets
  • Signing additional strategic deals with healthcare providers and HMOs to monetize cloud-based data services

Summary of Financial Results

LabStyle’s billings for the second quarter of 2015 amounted to approximately $250,000 compared to approximately $141,000 in the first quarter of 2015 and approximately $63,000 in the second quarter of 2014. This includes product shipments to distributors and direct customers, as well as services provided with respect to LabStyle’s patient management software platform launch as part of the partnership with Maccabi Healthcare.

LabStyle’s revenues for the second quarter of 2015 amounted to approximately $175,000 compared to approximately $67,000 in the previous quarter and none in the second quarter of 2014.

Deferred revenues for the second quarter of 2015 amounted to approximately $78,000 compared to approximately $56,000 in the first quarter of 2015 and $24,000 in the fourth quarter of 2014.

GAAP net loss, as detailed in the table below decreased by approximately $1,096,000 or 34% to approximately $2,158,000 for the second quarter of 2015, compared to approximately $3,254,000 GAAP net loss in the second quarter of 2014.

Non-GAAP adjusted EBITDA for the three months ended on June 30, 2015, as detailed in the table below, decreased by approximately $1,412,000 or 51% to approximately $1,341,000 for the second quarter of 2015, compared to approximately $2,753,000 Non-GAAP adjusted EBIDTA in the second quarter of 2014.

As of June 30, 2015 cash and cash equivalents amounted to approximately $981,000. Subsequent to June 30, 2015 the Company raised approximately $1,371,000, net of issuance costs, through a sale of 5,143,863 shares of the Company’s Common Stock and 5,143,870 warrants to purchase 5,143,870 shares of the Company’s Common Stock.

Note on Non-GAAP Measures

Readers should note that LabStyle has, in certain disclosures above and in the schedule below, supplemented its GAAP net loss with a Non-GAAP measure of adjusted EBITDA.  Management believes that this Non-GAAP financial measure provides useful supplemental information to management and investors regarding LabStyle’s performance, facilitates a more meaningful comparison of results for current period with previous operating results, and assists management in analyzing future trends, making strategic and business decisions and establishing internal budgets and forecasts. A reconciliation of Non-GAAP adjusted EBIDTA to GAAP net loss, the most directly comparable GAAP measure is provided in the schedule below.

There are limitations in using this Non-GAAP financial measure because it is not prepared in accordance with GAAP and may be different from Non-GAAP financial measures used by other companies. This Non-GAAP financial measure should not be considered in isolation or as a substitute for GAAP financial measures. Investors and potential investors should consider Non-GAAP financial measures only in conjunction with the Company’s consolidated financial statements prepared in accordance with GAAP and the reconciliations of the Non-GAAP financial measure provided in the schedule below:

   

Unaudited

(US Dollars in thousands, except stock and stock data)
  Three months ended June 30,    Six months ended June 30,
2015   2014   2015   2014
 
Net loss as reported $        (2,158) $        (3,254) $      (3,796) $      (6,238)
Adjustments:
Depreciation 85 160 163 358
Revaluation of warrants 526 (396) 376 (538)
Other finance expense (income) (34) 47 (23) 505
Deemed dividend related to warrants exchange agreement 154 154
 
EBITDA $        (1,427) $        (3,443) $      (3,126) $      (5,913)
Stock-based compensation 86 690 212 1,199
 
Non-GAAP adjusted EBITDA $        (1,341) $        (2,753) $      (2,914) $      (4,714)
Weighted average number of common stock used in computing basic and diluted net loss per share   30,243,041   22,985,523 25,845,711 22,152,675
 Non-GAAP adjusted EBITDA per share $        (0.04) $        (0.12) $       (0.11) $       (0.21)

About LabStyle Innovations

LabStyle Innovations Corp. (OTCQB:DRIO) develops and commercializes patent-pending technology providing consumers with laboratory-testing capabilities using smart mobile devices. LabStyle’s flagship product is the Dario personalized smart meter.  Dario received CE mark certification in September 2013 and began a world rollout in select countries in December 2013.  LabStyle filed a Premarket Notification Application, also known as a 510(k), with the US Food and Drug Administration (FDA) for the Dario™ smart meter (Dario Blood Glucose Monitoring System) in December 2013. LabStyle is pursuing patent applications in multiple areas covering the specific processes related to blood glucose level measurement as well as more general methods of rapid tests of body fluids using mobile devices and cloud-based services. For more information: www.mydario.com and http://mydario.investorroom.com.

Cautionary Note Regarding Forward-Looking Statements

This news release and the statements of representatives and partners of LabStyle Innovations Corp. (the “Company”) related thereto contains 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. 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. For example, we are using forward-looking statements in this press release when we discuss the potential for Dario to become the leading smart glucose meter and diabetes management solution, achievement of upcoming milestones, the entry into new markets, future trends in our results and revenues and in the field of diabetes management and anticipated FDA clearance. 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.

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands

 

 

        June 30,   December 31,
        2015   2014
        Unaudited    
             
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $             981   $            1,453
Short-term bank deposits 92 83
Trade receivables 3
Inventories 207 234
Other accounts receivable and prepaid expenses 328 286
Total current assets 1,611 2,056
LEASE DEPOSIT 40 47
PROPERTY AND EQUIPMENT, NET 854 978
Total assets  $           2,505  $                    3,081

 

CONSOLIDATED BALANCE SHEETS

U.S. dollars in thousands (except stock and stock data)

June 30, 2015   December 31, 2014
Unaudited    
LIABILITIES AND STOCKHOLDERS’ DEFICIENCY
CURRENT LIABILITIES:
Trade payables $               856 $                           708
Deferred revenues 78 24
Other accounts payable and accrued expenses 612 884
Total current liabilities 1,546 1,616
LIABILITY RELATED TO WARRANTS 4,379 4,003
COMMITMENTS AND CONTINGENT LIABILITIES
CONVERTIBLE PREFERRED SHARES:
Series A Preferred Stock of $0.0001 par value -Authorized: 60,000 shares at June 30, 2015 (unaudited) and December 31, 2014; Issued and Outstanding: 35,600 and 41,652 shares at June 30, 2015 (unaudited) and December 31, 2014, respectively; Aggregate liquidation preference of $3,560 and $4,165 at June 30, 2015 (unaudited) and December 31, 2014, respectively 2,357 2,757
STOCKHOLDERS’ DEFICIENCY
Common Stock of $0.0001 par value -Authorized: 160,000,000 and 80,000,000 shares at June 30, 2015 (unaudited) and December 31, 2014, respectively; Issued and Outstanding: 31,476,212 and 16,233,430 shares at June 30, 2015 (unaudited) and December 31, 2014, respectively 3 2
Preferred Stock of $0.0001 par value -Authorized: 4,940,000 shares at June 30, 2015 (unaudited) and December 31, 2014; Issued and Outstanding: None at June 30, 2015 (unaudited) and December 31, 2014
Additional paid-in capital 34,074 30,761
Accumulated deficit (39,854) (36,058)
Total stockholders’ deficiency (5,777) (5,295)
Total liabilities and stockholders’ deficiency  $                 2,505 $            3,081

 

 

 

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

U.S. dollars in thousands (except stock and stock data)

 

Three months ended June 30   Six months ended June 30
2015   2014   2015   2014
Unaudited Unaudited
Revenues $            175 $                     –  $                242 $                    –
Cost of revenues and ramp up of manufacturing costs                 410 605 707                 1,026
Gross loss                 235                 605 465 1,026
Operating expenses:
Research and development $              441 $           1,333  $           1,324 $           2,440
Sales, marketing and pre-production costs 262 373 514 659
General and administrative 574 1,292 986 2,146
Total operating expenses 1,277 2,998 2,824 5,245
Operating loss 1,512 3,603 3,289 6,271
Financial expenses (income), net:
Revaluation of warrants 526 (396) 376 (538)
Other financial expense (income) (34) 47 (23) 505
Total financial expenses (income), net 492 (349) 353 (33)
Net loss  $           2,004 $            3,254 $           3,642  $          6,238
 
Deemed dividend related to warrants exchange agreement  $             154                   – $              154
Net loss attributable to holders of Common Stock  $           2,158 $            3,254 $           3,796  $          6,238
Net loss per share
Basic loss per share  $          (0.07) $           (0.14) $          (0.15)  $          (0.28)
Weighted average number of common stock used in computing basic net loss per share 30,243,041 22,985,523 25,845,711 22,152,675
Diluted loss per share $          (0.07) $           (0.15)  $          (0.15) $          (0.29)
Weighted average number of common stock used in computing diluted net loss per share 30,243,041         23,202,077 25,845,711      22,260,952

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands

Six months ended June 30,
2015   2014
Unaudited
     
Cash flows from operating activities:      
Net loss   $       (3,642)   $       (6,238)
Adjustments required to reconcile net loss to net cash used in operating activities:
Stock-based compensation and restricted shares 242 1,199
Issuance cost related to warrants to investors and service provider 489
Depreciation 163 358
Decrease in trade receivables (3)
Decrease (increase) in other accounts receivable and prepaid expenses (41) 120
Decrease (increase) in inventories 27 (22)
Increase in trade payables 163 39
Increase in deferred revenues 54
Increase (decrease) in other accounts payable and accrued expenses (163) 175
Increase (decrease) in fair value of warrants 376 (538)
Capital loss from disposal of fixed assets (8)
Net cash used in operating activities (2,832) (4,418)
Cash flows from investing activities:        
Proceeds of maturities of short-term bank deposit 158
Investment in short-term bank deposits (10) (130)
Investment in lease deposits 7 (8)
Purchase of property and equipment (46) (150)
Net cash used in investing activities (49) (130)
Cash flows from financing activities:        
Proceeds from issuance of Common Stock and warrants, net of issuance cost 1,956 3,754
Proceeds from conversion of warrants, net of issuance cost 453
Proceeds from exercise of options and warrants into Common Stock *) – 350
Net cash provided by financing activities 2,409 4,104
Decrease in cash and cash equivalents (472) (444)
Cash and cash equivalents at the beginning of the period 1,453 2,263
Cash and cash equivalents at the end of the period $          981 $          1,819
Non-cash investing and financing and activities:
Purchase of property and equipment  $             24  $                56
Conversion of Series A Preferred Stock into Common Stock  $           401  $                  9
Conversion of accrued expenses into Common Stock in April 2015  $           110  $                 –

*) Represents an amount lower than $1.

Investor Relations and Press:

Brenda Zeitlin

LabStyle Innovations

1800 896 9062

brenda@mydario.com