DarioHealth’s Earnings Call: Optimism Amid Revenue Shift

DarioHealth ((DRIO)) has held its Q3 earnings call. Read on for the main highlights of the call.

DarioHealth’s recent earnings call painted a picture of optimism for the company’s future, despite a slight dip in revenue. The call highlighted significant client growth, cost reductions, and robust gross margins, all of which contribute to a positive outlook. The strategic shift towards recurring revenue and high client retention rates further underscore the company’s promising trajectory.

Multi-Condition Solution Success

DarioHealth’s multi-condition solution has gained substantial traction, with over 50% of new clients in 2025 opting for this comprehensive digital health platform. This trend underscores the growing demand for integrated health solutions that cater to multiple conditions, positioning DarioHealth as a leader in the digital health space.

Strong Client Expansion

The company has experienced remarkable client expansion, signing 45 new accounts year-to-date in 2025, surpassing their initial goal of 40. This achievement brings DarioHealth’s total client base to over 125, reflecting the company’s successful client acquisition strategies and market appeal.

High Gross Margins

DarioHealth reported impressive gross margins, achieving 60% GAAP and over 80% non-GAAP margins. These figures highlight the profitability of the company’s software-first model, which is a key driver of its financial success.

Significant Cost Reductions

The company has made substantial strides in reducing operating expenses, cutting costs by $17.2 million or 31% in the first nine months of 2025. This includes a 21% reduction in the third quarter compared to the previous year, showcasing DarioHealth’s commitment to operational efficiency.

UnitedHealthcare Partnership

DarioHealth’s partnership with UnitedHealthcare is set to significantly expand its reach. The launch on UnitedHealthcare’s digital marketplace, with a full national rollout anticipated in January 2026, is expected to enhance the company’s market presence and client base.

Strong Renewal and Retention Rates

The company boasts a 90% client renewal rate, demonstrating the value and satisfaction DarioHealth provides its clients. This high retention rate is a testament to the company’s effective service delivery and client relationship management.

Revenue Decline

Despite the positive developments, DarioHealth experienced a revenue decline in the third quarter of 2025, reporting $5 million, down from $5.4 million in 2025 and $7.4 million in 2024. This decrease is attributed to the nonrenewal of a large scope of work and the transition to a recurring revenue model.

Pharma Services Transition

DarioHealth is transitioning its pharma services from milestone-based projects to a recurring revenue model. While this shift results in smaller contributions compared to employer and health plan channels, it aligns with the company’s strategic focus on sustainable revenue streams.

Forward-Looking Guidance

Looking ahead, DarioHealth’s management provided an optimistic outlook for 2026, driven by anticipated revenue acceleration and operational efficiencies. The company targets $12.4 million in new business for 2026, supported by a robust $69 million pipeline. They aim to achieve cash flow breakeven by late 2026 to early 2027, with continued expansion into high-margin recurring revenue models. Additionally, DarioHealth plans to further reduce operating expenses by 10-15% over the next 12-15 months.

In summary, DarioHealth’s earnings call reflects a company on a positive trajectory, with strong client growth, impressive cost reductions, and a strategic shift towards recurring revenue models. Despite a temporary revenue decline, the company’s forward-looking guidance and strategic partnerships, such as with UnitedHealthcare, signal a promising future. Investors and stakeholders can remain optimistic about DarioHealth’s potential for sustained growth and profitability.