DRIO

DarioHealth Corp.

NASDAQ · HEALTH CARE · SURGICAL & MEDICAL INSTRUMENTS & APPARATUS

3.68

−0.40 −9.80%

USD · close Oct 21

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MKT CAP $36.1MP/E 0.6DIV YIELD —FCF YIELD -70.66%REV TTM —NET INCOME −$35.7MNET DEBT $33M52W 3.68 – 16.19SEC XBRL · TTM TO Invalid Date

How DRIO rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

29%

of sentences unchanged

Added

223

new sentences

Dropped

303

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Length

−2,929

words, now 14,875

New in FY2025

Risks Related to Our Financial Position and Capital Requirements Given our limited revenue and lack of positive cash flow, we will need to raise additional capital, which may be unavailable to us or, even if consummated, may cause dilution or place significant restrictions on our ability to operate.
According to our management’s estimates, based on our current cash on hand and further based on our budget and the assumption related to our commercial sales, we believe that we will have sufficient resources to continue our activities for at least a period of twelve months from the date of the issuance of this 10K.
Moreover, the regulatory compliance that comes with being a publicly registered company incurs significant costs.
Debt financing obtained by us involves agreements that include liens on our assets, covenants limiting or restricting our ability to take specific actions, such as incurring additional debt.
This increases our expenses and requires that our assets be provided as security for such debt.
Debt financing must be repaid regardless of our operating results.
We currently have a credit facility in place, of which $32.5 million was made available in April 2025.
If such financing is not available on satisfactory terms, or is not available at all, we may be required to delay, scale back or eliminate the development of business opportunities and our operations and our financial condition may be materially adversely affected.
As of December 31, 2025, we have drawn down $32.5 million of the credit facility.
If we raise additional funds through collaborations and licensing arrangements, we may be required to relinquish some rights to our technologies or products, or to grant licenses on terms that are not favorable to us.
We have financed our operations primarily through private placements, public offerings of common stock and certain credit facilities, and have incurred losses in each year since inception including net losses of $41,714,000 and $42,747,000 in 2025 and 2024, respectively.
Our accumulated deficit as of December 31, 2025 was approximately $452,078,000.
Our ability to achieve profitability depends on, among other things, our ability to grow our contracted member base, expand utilization among existing customers, retain and renew contracts, manage operating expenses.
There can be no assurance that we will achieve or sustain profitability.
Our indebtedness under the Callodine loan facility subjects us to financial covenants and other restrictions that could adversely affect our liquidity, operational flexibility and financial condition.
In April 2025, we entered into a credit facility with Callodine Commercial Finance, LLC (“Callodine”) providing for borrowings of up to $50.0 million, of which $32.5 million was funded at closing.
In November 2025, we entered into an amendment to the facility that, among other things, reset certain financial covenants, waived financial covenant testing for the second and third quarters of 2025, modified liquidity requirements to include a $10.0 million minimum consolidated unencumbered liquid assets covenant, imposed enhanced reporting obligations under certain liquidity thresholds, increased the exit fee and clarified that a portion of the remaining availability under the facility is uncommitted and subject to the lenders’ discretion.
Our ability to access the remaining availability under the facility is subject to the achievement of specified revenue thresholds and other conditions.
The credit agreement contains financial and operational covenants and other restrictions that may limit our ability to incur additional indebtedness, grant liens, make investments, or engage in certain strategic transactions.
If we fail to comply with the covenants or other requirements under the loan facility, or if our operating performance does not meet required thresholds, the lenders could declare an event of default and accelerate repayment of outstanding amounts, which could materially adversely affect our liquidity and financial condition.
There can be no assurance that we would be able to obtain additional waivers, amendments or refinancing on acceptable terms, or at all.
In addition, the facility includes warrant coverage and a conversion feature that may result in dilution to our stockholders.
Our ability to service our indebtedness and comply with the terms of the credit agreement depends on our future operating performance and our ability to generate sufficient cash flow, which are subject to economic, competitive, regulatory and other factors beyond our control.
Risks Related to Our Business There is no assurance that our digital health engagement platform will succeed or achieve broad adoption by healthcare providers, employers, health plans or other enterprise customers.
Our product offering consists of our digital health engagement platform, which is designed to provide digital health solutions across cardiometabolic and behavioral health conditions, through which we digitally engage users, assist them in monitoring chronic conditions and provide coaching, support, digital communications, connected devices, data analytics and alerts.
We primarily generate revenue under a Business-to-Business-to-Consumer (“B2B2C”) model by contracting with employers, health plans and other enterprise customers, who in turn make our solutions available to their eligible members.
While we have entered into agreements with employers and health plans in the United States, enterprise adoption of digital health solutions is subject to lengthy sales cycles, budget constraints, procurement processes, clinical validation requirements and competitive evaluations.
In addition, even where contracts are executed, revenue realization depends on member eligibility, enrollment rates, engagement levels, utilization and contract renewals, all of which are outside our direct control.
Accordingly, the success of our platform depends on our ability to attract new enterprise customers, retain and expand existing customer relationships, demonstrate clinical and economic value, and achieve sufficient enrollment and sustained utilization by members.
We cannot assure that prospective customers will adopt our platform, that existing customers will renew or expand their contracts, or that eligible members will enroll in or continue to use our solutions at anticipated levels.
If adoption, enrollment, engagement or renewal rates are lower than expected, or if customers reduce the scope of their agreements, our revenue growth may be adversely affected, and our business, financial condition and operating results could be materially and adversely impacted.
We are often faced with lengthy customer evaluation and approval processes associated with the adoption of our digital health engagement platform.
Consequently, we incur substantial expenses and devote significant management effort and expense to developing customer adoption of our platform which may not result in revenue generation.
We do not own or operate manufacturing facilities for commercial production of our products, and we lack the resources and the capability to manufacture our products on a commercial scale.
Therefore, we rely on a limited number of suppliers who manufacture and assemble certain components of our products.
Our reliance on these third-party suppliers also subjects us to other risks that could harm our business, including: ● we are not a major customer of many of our suppliers, and these suppliers may therefore give other customers’ needs higher priority than ours; ● third parties may threaten or enforce their intellectual property rights against our suppliers, which may cause disruptions or delays in shipment, or may force our suppliers to cease conducting business with us; ● we may not be able to obtain an adequate supply in a timely manner or on commercially reasonable terms; ● our suppliers, may make errors in manufacturing that could negatively affect the efficacy or safety of our products or cause delays in shipment; ● we may have difficulty locating and qualifying alternative suppliers; ● switching components or suppliers may require product redesign and possibly submission to FDA, European Economic Area Notified Bodies, or other foreign regulatory bodies, which could significantly impede or delay our commercial activities; ● one or more of our sole- or single-source suppliers may be unwilling or unable to supply components of our products; ● other customers may use fair or unfair negotiation tactics and/or pressures to impede our use of the supplier; ● the occurrence of a fire, natural disaster or other catastrophe impacting one or more of our suppliers may affect their ability to deliver products to us in a timely manner; and ● our suppliers may encounter financial or other business hardships unrelated to our demand, which could inhibit their ability to fulfill our orders and meet our requirements.
In several of our principal target markets, we utilize online and digital marketing in order to create awareness of Dario and our products.
Our management believes that using online advertisement through affiliate networks and a variety of other pay-for-performance methods is superior for marketing and generating sales of our products rather than utilizing traditional, expensive retail channels.
Because we use non-traditional retail sales tools and rely on healthcare providers to educate our customers about our products, we cannot predict the level of success, if any, that we may achieve by marketing our products via the Internet.
Our Dario applications, which are a key to our business model, are currently available on the Apple App Store and the Google Play Store.

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Gone since FY2024

Risks Related to Our Financial Position and Capital Requirements We were formed in August 2011 and are thus subject to the risks associated with new businesses.
We were formed in August 2011 as a new business and, commencing from 2015, we entered the commercialization stage of our technology.
As such, this limited operating history may not be adequate to enable you to fully assess our ability to develop commercialize and achieve market acceptance of the Dario digital platform.
We commenced a commercial launch of the free Dario Smart Diabetes Management application in the United Kingdom in late 2013 and commenced an initial soft launch of the full Dario Smart Diabetes Management Solution (including the app and the Dario Blood Glucose Monitoring System) in selected jurisdictions in March 2014 with the goal of collecting customer feedback to refine our longer-term roll-out strategy and continued to scale up launch during 2014 in the United Kingdom, the Netherlands and New Zealand, in 2015 in Australia, Israel and Canada and in 2016 in the United States.
These efforts have not generated sufficient revenues, and we will need to generate additional revenues over the next years.
Therefore, we are, and expect for the foreseeable future to be, subject to all the risks and uncertainties, inherent in a new business and the development and sale of new medical devices and related software applications.
As a result, we may be unable to fully develop, obtain regulatory approval for, commercialize, manufacture, market, sell and derive material revenues in the timeframes we project, if at all, and our inability to do so would materially and adversely impact our viability as a company.
In addition, we still must establish many functions necessary to operate a business, including finalizing our managerial and administrative structure, continuing product and technology development, assessing and commencing our marketing activities, implementing financial systems and controls and personnel recruitment.
Accordingly, you should consider our prospects in light of the costs, uncertainties, delays and difficulties frequently encountered by companies in their initial revenue generating stages, particularly those in the medical device and mobile health fields.
In particular, potential investors should consider that there is a significant risk that we will not be able to: ● implement or execute our current business plan, or that our business plan is sound; ● maintain our management team and the Company’s board of directors (the “Board of Directors”); ● raise sufficient funds in the capital markets or otherwise to effectuate our business plan; ● determine that our technologies that we have developed are commercially viable; and/or ● attract, enter into or maintain contracts with, and retain customers.
In the event that we do not successfully address these risks, our business, prospects, financial condition, and results of operations could be materially and adversely affected.
Given our limited revenue and lack of positive cash flow, we will need to raise additional capital, which may be unavailable to us or, even if consummated, may cause dilution or place significant restrictions on our ability to operate.
According to our management’s estimates, based on our current cash on hand and further based on our budget and the assumption that initial commercial sales will commence during our anticipated timeframes, we believe that we will have sufficient resources to continue our activities through 202 5 .
Moreover, the regulatory compliance arising out of being a publicly registered company has dramatically increased our costs.
We currently have a credit facility in place with Avenue Venture Opportunities Fund L.P. and Avenue Venture Opportunities Fund II, L.P. , of which $30 million was made available in May 2023.
If such financing is not available on satisfactory terms, or is not available at all, we may be required to delay, scale back or eliminate the development of business opportunities and our operations and financial condition may be materially adversely affected.
As of December 31, 2024, we have drawn down $30 million of the credit facility.
Debt financing, if obtained, may involve agreements that include liens on our assets, covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, could increase our expenses and require that our assets be provided as a security for such debt.
Debt financing would also be required to be repaid regardless of our operating results.
If we raise additional funds through collaborations and licensing arrangements, we may be required to relinquish some rights to our technologies or candidate products, or to grant licenses on terms that are not favorable to us.
We have financed our operations primarily through private placements, public offerings of common stock and certain credit facilities, and have incurred losses in each year since inception including net losses of $42,747,000 and $59,427,000 in 2024 and 2023, respectively.
Our accumulated deficit at December 31, 2024 was approximately $390,343,000.
Our ability to generate revenue and achieve profitability depends upon our ability, alone or with others, to commercialize our digital health engagement platform.
We may be subject to claims for rescission or damages in connection with certain sales of shares of our securities.
In March 2016, the Securities and Exchange Commission declared effective a registration statement that we filed to cover 66,667 shares 76,667 warrants to purchase common stock, 76,667 shares of common stock underlying such warrants, and underwriters’ warrants to purchase up to 7,172 shares of common stock.
Sales of approximately 2,778 shares of common stock, approximately 12,778 shares of common stock underlying warrants and approximately 1,278 shares of common stock underlying underwriters’ warrants may not have been made in accordance with Section 5 of the Securities Act of 1933, as amended.
Accordingly, the purchasers of those securities may have rescission rights or be entitled to damages.
The amount of such liability, if any, is uncertain.
In the event that we are required to make payments to investors as a result of these unregistered sales of securities, our liquidity could be negatively impacted.
Our revenues are concentrated with a major customer, and our revenues may decrease significantly if we were to lose our major customer.
Due to our limited operating history, we have a limited customer base and have depended on a major customer for a significant portion of our revenue.
As of December 31, 2024, our major customer accounted for 41.6% of our accounts receivable balance.
If the customer were to terminate the agreement, or if we fail to adequately perform under the agreement, and if we are unable to diversify our customer base, our revenue could decline, and our results of operations could be adversely affected.
Risks Related to Our Business There is no assurance that our digital health engagement platform will succeed or be adopted by healthcare providers.
Our product offering consists of our digital health engagement platform, where we digitally engage with Dario users, assist them in monitoring their chronic illnesses and provide them with coaching, support, digital communications, and real-time alerts, trends and pattern analysis.
We expect that our digital health engagement platform may be leveraged by our potential partners, such as clinics, health care service providers, employers, and payers for scalable monitoring of people with diabetes in a cost-effective manner, which we expect will open for us additional revenue streams.
While we have begun to execute agreements with employers and health plans in the United States, we have not yet seen wide adoption of our platform.
Therefore, the success of our digital health engagement platform will depend entirely on our potential partners’ adoption of the platform and we cannot assure you that our potential partners will do so, or, if adopted, that they will continue to use the platform continually and for an extended period of time.
If we cannot encourage potential partners to utilize our digital health engagement platform we may not succeed in marketing the product to our potential partners, the failure of which may materially and adversely affect our business and operating results.
The success of our Dario product will depend on the acceptance of Dario in the healthcare market.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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