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LabStyle Innovations Reports Third Quarter 2015 Results
[November 13, 2015]

LabStyle Innovations Reports Third Quarter 2015 Results


CAESAREA, Israel, Nov. 13, 2015 /PRNewswire/ -- LabStyle Innovations Corp. (OTCQB: DRIO), developer of the Dario™ Diabetes Management Solution, today reported financial and operational results for the three months ended September 30, 2015 and provided an outlook for the coming quarters.

"We are very pleased to report strong growth in revenues, product shipments, and software services, as well as a significant reduction in net and EBITDA loss. Users in markets including Australia and Canada have reported an exceedingly high level of satisfaction with the Dario when monitoring their daily glucose levels. This customer satisfaction rate corresponds with the Dario's rapid market penetration, strong consumer demand, and accelerating revenue growth in Australia where the Dario launched in March. The Canadian market, where we launched in June, is showing a similar pattern," stated Erez Raphael, LabStyle's President and Chief Executive Officer.

"Results in Australia and Canada are particularly encouraging because these markets are very similar in profile to the U.S. and may be predictive of the potential demand for the Dario in the world's largest market for glucose monitors.  Early success in Australia and Canada is proof that our lean, digital, direct-to-consumer approach will be a crucial asset for the U.S. launch of the Dario."

"Technology, and particularly mobile technology, is transforming the multi-billion dollar medical device industry into one that is end-user driven. We have witnessed patients evaluating the benefits of mobile health solutions and they are willing to replace traditional meters with pure native mobile solutions. We believe our strategy of delivering user-friendly, patient-centric apps that also improve healthcare economics while providing caregivers and physicians with superior information, is a driver of our current and future success in this market. The Dario is our first product and we see clear opportunities to launch similar mobile healthcare apps for other indications," Mr. Raphael concluded. 

Q3 2015 Highlights:

  • Sequential quarterly revenues grew 56% from $175,000 in Q2 2015 to $273,000 in Q3 2015.
  • Shipments to distribution partners and customers of products and software services increased 17% from $250,000 in Q2 2015 to $292,000 in Q3 2015.
  • Net loss narrowed by 41% and non-GAAP adjusted EBITDA narrowed by 39% in Q3 2015 as compared to Q3 2014.
  • LabStyle was granted a patent in the U.S. that expands its intellectual property rights to include the management of all chronic diseases using smart phones.
  • LabStyle signed new distribution agreements with market leaders, all of whom have followed the Dario digital marketing strategy and have opened e-commerce websites to promote on-line sales of the Dario Management Solution.
  • LabStyle received reimbursement status for the Dario Smart Meter and test strips in Canada through the majority of medical plans.
  • LabStyle presented clinical results at leading scientific conferences on diabetes and mHealth. Data show the Dario Diabetes Management solution not only meets new International Standards Organization (ISO) 2013 performance requirements for accuracy with 99% precision, it is also user friendly for patients, caregivers and physicians.
  • The advanced telecare unit of Maccabi Healthcare, Israel's leading HMO, has published positive patient performance results after one month of participation in the telemedicine partner program with the Dario™ Diabetes Management Solution.
  • LabStyle was featured in numerous U.S.-based media outlets including eHealth Radio, Mass Device, Personal Tech MD, and Boston Magazine.

Near-term outlook:

  • U.S. market launch expected in the next few months following anticipated FDA clearance for the Dario; the U.S. is the 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 third quarter of 2015 amounted to approximately $292,000 compared to approximately $250,000 in the second quarter of 2015 and approximately $141,000 in the first quarter of 2015. 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 Israel's leading healthcare HMO, Maccabi Healthcare.

LabStyle's revenues for the third quarter of 2015 amounted to approximately $273,000 compared to approximately $175,000 in the second quarter of 2015 and $67,000 in the first quarter of 2015.

Deferred revenues for the third quarter of 2015 amounted to approximately $54,000 compared to approximately $78,000 in the second quarter of 2015 and $56,000 in the first quarter of 2015.

GAAP net loss, as detailed in the table below decreased by approximately $4,504,000 or 71% to approximately $1,829,000 for the third quarter of 2015, compared to approximately $6,333,000 GAAP net loss in the third quarter of 2014.

Non-GAAP adjusted EBITDA for the three months ended on September 30, 2015, as detailed in the table below, decreased by approximately $816,000 or 39% to approximately $1,265,000 for the third quarter of 2015, compared to approximately $2,081,000 Non-GAAP adjusted EBIDTA in the third quarter of 2014.

As of September 30, 2015 cash and cash equivalents amounted to approximately $1,908,000.

Subsequent to September 30, 2015 LabStyle entered into a warrant replacement agreement with certain holders of warrants, which are accounted for as a liability in LabStyle's financial statements, pursuant to which 4,257,067 outstanding warrants were replaced by warrants to acquire an aggregate of 4,682,772 shares of Common Stock. The warrants replacement agreement allows  LabStyle to remove the liability of the warrants being replaced from its balance sheet as a result of the replacement of warrants that contain a net settlement cash feature and liquidated damages penalties.

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 the 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
September 30,


Nine months ended
September 30,



2015


2014


2015


2014










Net loss as reported


$        (1,829)


$        (6,333)


$      (5,624)


$      (12,571)

Adjustments:









Depreciation


85


103


248


461

Revaluation of warrants


(753)


(2,606)


(377)


(3,144)

Other finance expense (income)


35


3,176


11


3,681

Deemed dividend related to warrants exchange agreement


-


-


154


-

Deemed dividend related to exchange agreement


-


279


-


279

Deemed dividend related to Series A Preferred Stock


 

-


 

2,977


 

-


 

2,977










EBITDA


$        (2,462)


$        (2,404)


$      (5,588)


$      (8,317)










Stock-based compensation and Common Stock


1,197


323


1,439


1,522










Non-GAAP adjusted EBITDA


$        (1,265)


$        (2,081)


$      (4,149)


$      (6,795)

Weighted average number of
Common Stock used in computing
basic net loss per share


37,433,188


9,610,160


29,835,891


6,179,981

Non-GAAP adjusted EBITDA per share


$          (0.03)


$         (0.22)


$        (0.14)


$       (1.10)


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 contain 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, the Company is using forward-looking statements in this press release when the Company discusses the potential demand for the Dario in the U.S. market, its anticipated U.S. launch of the Dario, its current and future success in this market, its anticipated FDA clearance, opportunities to launch similar mobile healthcare apps and the Company's near term outlook.  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







September 30,



December 31,





2015


2014





Unaudited










ASSETS














CURRENT ASSETS:







Cash and cash equivalents




$           1,908


$            1,453

Restricted cash




10


-

Short-term bank deposits




69


83

Inventories




315


234

Other accounts receivable and prepaid expenses




419


286








Total current assets




2,721


2,056








LEASE DEPOSITS




33


47








PROPERTY AND EQUIPMENT, NET




796


978








Total assets




$            3,550


$            3,081









 


CONSOLIDATED BALANCE SHEETS

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







September 30,
2015


December 31,
2014





Unaudited



LIABILITIES AND STOCKHOLDERS' DEFICIENCY







CURRENT LIABILITIES:







Trade payables




$               879


$                           708

Deferred revenues




54


24

Other accounts payable and accrued expenses




594


884

Total current liabilities




1,527


1,616

LIABILITY RELATED TO WARRANTS




3,626


4,003

COMMITMENTS AND CONTINGENT LIABILITIES







CONVERTIBLE PREFERRED SHARES:







Series A Preferred Stock of $0.0001 par value -

Authorized: 60,000 shares at September 30, 2015
(unaudited) and December 31, 2014; Issued and
Outstanding: 35,600 and 41,652 shares at September 30,
2015 (unaudited) and December 31, 2014, respectively;
Aggregate liquidation preference of $3,560 and $4,165 at
September 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 September 30, 2015 (unaudited) and December 31, 2014, respectively; Issued and Outstanding: 42,768,309 and 16,233,430 shares at September 30, 2015 (unaudited) and December 31, 2014, respectively




4


2

Preferred Stock of $0.0001 par value -

Authorized: 4,940,000 shares at September 30, 2015 (unaudited) and December 31, 2014; Issued and Outstanding: None at September 30, 2015 (unaudited) and December 31, 2014




-


-

Additional paid-in capital




37,718


30,761

Accumulated deficit




(41,682)


(36,058)

Total stockholders' deficiency




(3,960)


(5,295)

Total liabilities and stockholders' deficiency




$              3,550


$            3,081

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

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





Three months ended
September 30


Nine months ended
September 30




2015


2014


2015


2014




Unaudited


Unaudited












Revenues


$             273


$                     -


$                 515


$                   -


Cost of revenues and ramp up of
manufacturing


404


585


1,111


1,611












Gross loss


131


585


596


1,611












Operating expenses:










Research and development


$              667


$               769


$            1,991


$           3,209


Sales, marketing and pre-production costs


417


252


931


911


General and administrative


1,332


901


2,318


3,047












Total operating expenses


2,416


1,922


5,240


7,167












Operating loss


2,547


2,507


5,836


8,778












Financial expenses (income), net:










Revaluation of warrants


(753)


(2,606)


(377)


(3,144)


Other financial expense (income), net


35


3,176


11


3,681












Total financial expenses (income), net


(718)


(570)


(366)


537












Net loss


$           1,829


$            3,077


$           5,470


$           9,315












Deemed dividend related to warrants exchange agreement


$                  -


$                   -


$              154


$                  -


Deemed dividend related to exchange agreement


$                 -


$               279


$                  -


$              279


Deemed dividend related to Series A Preferred Stock


$                  -


$            2,977


$                  -


$           2,977


Net loss attributable to holders of Common Stock


$           1,829


$            6,333


$           5,624


$         12,571












Net loss per share




















Basic loss per share


$          (0.05)


$           (0.66)


$          (0.19)


$           (2.03)


Weighted average number of Common Stock used in computing basic net loss per share


37,433,188


9,610,160


29,835,891


6,179,981












Diluted loss per share


$          (0.05)


$           (0.66)


$          (0.19)


$           (2.23)


Weighted average number of Common Stock used in computing diluted net loss per share


37,433,188


9,610,160


29,835,891


6,194,418


 

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

U.S. dollars in thousands





Nine months ended September 30,



2015


2014



Unaudited

Cash flows from operating activities:





Net loss


$       (5,470)


$        (9,315)

Adjustments required to reconcile net loss to net cash used in operating activities:





Stock-based compensation and Common Stock


1,439


1,522

Issuance cost related to warrants to investors and service provider


-


533

Depreciation


248


461

Decrease (increase) in other accounts receivable and prepaid expenses


(120)


117

Increase in inventories


(81)


(109)

Increase in trade payables


183


367

Increase in deferred revenues


30


-

Increase (decrease) in other accounts payable and accrued expenses


(58)


276

Increase (decrease) in fair value of warrants


(377)


(3,144)

Consideration granted to the February 2014 investors from exchange agreement


-


3,124

Capital loss from disposal of fixed assets


(8)


-



(4,214)


(6,168)

Net cash used in operating activities










Cash flows from investing activities:





Proceeds of maturities of short-term bank deposit


333


230

Investment in short-term bank deposits


(330)


(130)

Investment in restricted cash


(10)


-

Maturity of (investment in) lease deposits


12


(6)

Purchase of property and equipment


(70)


(219)






Net cash used in investing activities







(65)


(125)

Cash flows from financing activities:





Proceeds from issuance of Common Stock and warrants, net of issuance cost


1,956


3,754

Proceeds from issuance of Common Stock and warrants, net of issuance cost


2,325


-

Proceeds from issuance of Series A Preferred Stock and warrants, net of issuance cost


-


4,096

Proceeds from exercise of warrants into Common Stock, net of issuance cost


453


-

Proceeds from exercise of options and warrants into Common Stock


(*) -


350






Net cash provided by financing activities


4,734


8,200






Increase in cash and cash equivalents


455


1,907

Cash and cash equivalents at the beginning of the period


1,453


2,263






Cash and cash equivalents at the end of the period


$              1,908


$              4,170






Non-cash investing and financing activities:





Purchase of property and equipment


$                   26


$                 323

Conversion of Series A Preferred Stock into Common Stock


$                 400


$                     -

Conversion of liability related to warrants to Common Stock


$                     -


$                    9

    Payment for executives and directors under Salary Program


$                232


$                     -

(*) Represents an amount lower than $1.

Press
Brenda Zeitlin
LabStyle Innovations Corp.
1 800 896 9062   
[email protected]

 




 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/labstyle-innovations-reports-third-quarter-2015-results-300178386.html

SOURCE LabStyle Innovations Corp.


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