LabStyle Innovations Reports 2015 Results

- FDA clearance announced on December 22nd

- 61% increase in sequential quarterly shipments

- Q4 2015 net loss and operating loss narrowed by 9% and 27%, respectively, compared to Q3 2015

- 694% increase in annual shipments

- 2015 net loss narrowed by 45% compared to 2014

- Rapid market penetration and favorable user experience

Feb 09, 2016, 08:00 ET from LabStyle Innovations Corp.

CAESAREA, Israel, Feb. 9, 2016 /PRNewswire/ -- LabStyle Innovations Corp. (OTCQB: DRIO), developer of the Dario™ Diabetes Management Solution, reported financial and operational results for the year ended December 31, 2015 and provided an outlook for the coming quarters.

"We are very pleased to report continuing growth in revenues and product shipments, as well as a significant reduction in net and EBITDA loss. We believe Dario's user centric approach results in an exceedingly high level of satisfaction among users, which translates into enhanced financial results for LabStyle," stated Erez Raphael, LabStyle's Chief Executive Officer.

"The positive user feedback and corresponding market penetration in countries such as Australia is encouraging as we look forward to launching the Dario in the United States at the end of February 2016, where our lean, digital, direct-to-consumer approach will be a crucial asset. Digital health technology is transforming the multi-billion dollar medical device industry into a user driven market. We have encouraged and enabled patients to be more empowered in managing their own health by using our digital health solutions. We've found they are extremely satisfied with LabStyle's user-friendly, patient-centric tools that improve healthcare economics while providing caregivers and physicians with superior information," Mr. Raphael concluded. 

Q4 and Year-End 2015 Highlights:

  • Sequential quarterly shipments to distribution partners and customers of products and software services increased 61% from $292,000 in Q3 to $470,000 in Q4.
  • Net loss attributable to holders of common stock and operating loss in Q4 2015 narrowed by 9% and 27%, respectively, compared to Q3 2015.
  • Net loss attributable to holders of common stock narrowed by 55% and non-GAAP adjusted EBITDA narrowed by 35% in 2015 as compared to 2014.
  • Annual shipments to distribution partners and customers of products and software services increased 694% from $145,000 in 2014 to $1,152,000 in 2015.
  • LabStyle Innovations received U.S. FDA Marketing Clearance for the Dario Blood Glucose Monitoring System.
  • In preparation for the U.S. launch, LabStyle opened its North American headquarters in Burlington, Massachusetts, located near Boston in the 'high tech corridor' along Route 128 and Interstate 95. The office is headed by Todd Durniak, LabStyle's Executive Vice President and General Manager for North America.
  • LabStyle has been featured in multiple U.S.-based media channels including MedBuzz, Med Device Online, Gizmaz and others.
  • New data and user case studies have been presented at numerous scientific, technology, and industry conferences.
  • IP position was strengthened with the U.S. PTO issuing LabStyle a patent expanding its IP to address management of chronic diseases beyond diabetes through smart phones.
  • LabStyle signed a new distribution agreement with one of India's leading pharmaceutical and medical device networks, Centaur Pharmaceuticals Pvt. Ltd.

Near-term outlook:

  • LabStyle is planning to launch the Dario in the U.S., the largest addressable market in the world, by the end of February 2016.
  • Market launches are planned for additional territories in APAC and EMEA later in 2016.
  • Continuing to secure regulatory approval and reimbursements in additional markets.

Summary of Financial Results

LabStyle's billings for 2015 amounted to approximately $1,152,000, a 694% increase compared to approximately $145,000 in 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 Israel's leading healthcare HMO, Maccabi Healthcare. Sequential quarterly shipments to distribution partners and customers of products and software services increased 61% from $292,000 in the third quarter of 2015 to $470,000 in the fourth quarter of 2015.

LabStyle's revenues for 2015 amounted to approximately $823,000 compared to approximately $51,000 in 2014. Fourth quarter revenues for 2015 amounted to approximately $308,000 compared to approximately $273,000 in the third quarter of 2015.

Deferred revenues amounted to approximately $31,000 at December 31, 2015, compared to approximately $24,000 at December 31, 2014.

GAAP net loss attributable to holders of common stock, as detailed in the table below decreased by approximately $8,759,000, or 55%, to approximately $7,296,000 in 2015, compared to approximately $16,055,000 GAAP net loss attributable to holders of common stock in 2014. GAAP net loss attributable to holders of common stock for the fourth quarter of 2015 was $1,672,000, narrowing by 9% quarter-over-quarter as compared to $1,829,000 in the third quarter of 2015.

Non-GAAP adjusted EBITDA for 2015, as detailed in the table below, decreased by approximately $2,988,000, or 35%, to approximately $5,640,000 for 2015, compared to approximately $8,628,000 Non-GAAP adjusted EBIDTA in 2014.

As of December 31, 2015 cash and cash equivalents amounted to approximately $2,671,000.

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:

 




Year ended December 31,




2015


2014







Net loss as reported



$     (7,296)


$    (16,055)

Adjustments:






Depreciation



335


549

Impairment of production line



-


489

Revaluation of warrants



(571)


(2,194)

Other finance expense



15


3,713

Deemed dividend related to May 2015 exchange agreement



154


-

Deemed dividend related to February 2014 exchange agreement



-


279

Deemed dividend related to Series A Preferred Stock



-


2,899

Stock-based compensation and Common Stock



1,723


1,692







Non-GAAP adjusted EBITDA



$     (5,640)


$      (8,628)







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



34,159,595


8,678,953







Non-GAAP adjusted EBITDA per share



$       (0.16)


$       (0.99)

 

About LabStyle Innovations

LabStyle Innovations Corp. (OTCQB: DRIO) creates innovative mobile and digital tools that empower and engage users to lead healthier lives. LabStyle's "Real data. Real time. Real improvements." approach and strategy is positioning the company as a major player in the mHealth industry; an industry currently worth $10B and expected to reach $31B by 2020. LabStyle's flagship product, The Dario™ Smart Diabetes Management Solution, is a platform for diabetes management that combines an all-in-one blood glucose meter, native smart phone app (iOS & Android), website portal and a wide variety of treatment tools to support more proactive and better informed decisions by users living with diabetes, their doctors and healthcare systems.

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 how  Dario's user centric approach results in an exceedingly high level of satisfaction among users, which translates into enhanced financial results, or when it discusses launching the Dario in the United States, or when it discusses its 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














December 31,





2015


2014








ASSETS














CURRENT ASSETS:







Cash and cash equivalents




$          2,671


$          1,453

Short-term bank deposits




80


83

Inventories




601


234

Other accounts receivable and prepaid expenses




935


286








Total current assets




4,287


2,056








LEASE DEPOSITS




41


47








PROPERTY AND EQUIPMENT, NET




749


978








Total assets




$          5,077


$         3,081

 


CONSOLIDATED BALANCE SHEETS



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












December 31,





2015


2014

LIABILITIES AND STOCKHOLDERS' DEFICIENCY







CURRENT LIABILITIES:







Trade payables




$          978


$          708

Deferred revenues




31


24

Other accounts payable and accrued expenses




681


884

Total current liabilities




1,690


1,616








LIABILITY RELATED TO WARRANTS




2,610


4,003








COMMITMENTS AND CONTINGENT LIABILITIES







CONVERTIBLE PREFERRED SHARES:







Series A Preferred Stock of $0.0001 par value -
Authorized: 60,000 shares at December 31, 2015 and
2014; Issued and Outstanding: 35,600 and 41,652 shares
at December 31, 2015 and 2014, respectively; Aggregate
liquidation preference of $3,560 and $4,165 at December
31, 2015 and 2014, respectively




 

 

2,357


 

 

2,757








STOCKHOLDERS' DEFICIT







Common Stock of $0.0001 par value -
Authorized: 160,000,000 and 80,000,000 shares at December
31, 2015 and 2014, respectively; Issued and Outstanding:
52,407,057 and 16,233,430 shares at December 31, 2015
and 2014, respectively 




5


2








Preferred Stock of $0.0001 par value -
Authorized: 4,940,000 shares at December 31, 2015 and
2014; Issued and Outstanding: None at December 31,
2015 and 2014




-


-








Additional paid-in capital




41,769


30,761








Accumulated deficit




(43,354)


(36,058)








Total stockholders' deficiency




(1,580)


(5,295)








Total liabilities and stockholders' deficiency




$          5,077


$          3,081

 


CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS


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









Year ended December 31




2015


2014













Revenues



$               823


$            51

Cost of revenues and ramp up of manufacturing



1,678


2,274

Impairment of production line



-


2,712







Gross loss



855


2,712







Operating expenses:






Research and development



$            2,565


$         3,943

Sales, marketing and pre-production costs



1,330


1,063

General and administrative



2,948


3,640







Total operating expenses



6,843


8,646







Operating loss



7,698


11,358







Financial expenses (income), net:






Revaluation of warrants



(571)


(2,194)

Other financial expense, net



15


3,713







Total financial expenses (income), net



(556)


1,519







Net loss



$           7,142


$       12,877







Deemed dividend related to May 2015 exchange agreement



$              154


$             -

Deemed dividend related to February 2014 exchange agreement



$                   -


$           279

Deemed dividend related to Series A Preferred Stock



$                   -


$        2,899

Net loss attributable to holders of Common Stock



$           7,296


$      16,055







Net loss per share












Basic and diluted loss per share



$            (0.21)


$        (1.85)

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



34,159,595


8,678,953







 

CONSOLIDATED STATEMENTS OF CASH FLOWS



U.S. dollars in thousands








Year ended December 31,



2015


2014

Cash flows from operating activities:





Net loss


$      (7,142)


$        (12,877)

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





Stock-based compensation and Common Stock to service providers


1,723


1,692

Issuance cost related to warrants to investors and service provider


-


533

Depreciation


335


549

Write-off of a production line


-


489

Increase in deferred revenues


7


24

Decrease (increase) in other accounts receivable and prepaid expenses


(649)


158

Increase in inventories


(366)


(234)

Increase (decrease) in trade payables


292


(186)

Decrease in other accounts payable and accrued expenses


102


341

Incremental value to February 2014 Investors that resulted from Exchange Agreement


-


3,124

Change in the fair value of warrants to purchase shares of Common Stock


(571)


(2,194)

Loss from disposal of fixed assets


(8)


-



(6,277)


(8,581)

Net cash used in operating activities










Cash flows from investing activities:





Investment in short-term bank deposits


(282)


(91)

Proceeds of maturities of short-term bank deposit


285


231

Investment in lease deposit, net


(6)


(6)

Purchase of property and equipment


(110)


(563)


Net cash used in investing activities


(113)


(429)


Cash flows from financing activities
:






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


7,075


3,754

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


-


4,096

Proceeds from exercise of options and warrants


533


350






Net cash provided by financing activities


7,608


8,200






Increase (decrease) in cash and cash equivalents


1,218


(810)

Cash and cash equivalents at the beginning of year


1,453


2,263






Cash and cash equivalents at the end of year


$            2,671


$                    1,453






Non-cash investing and financing activities:





Purchase of property and equipment


$                 27


$                       308

Classification of liability related to warrants as a result of September 2014 round
Replacement Agreement


$               822


$                            -

Conversion of liability related to warrants to Common Stock as a result of 2011-2012
Private Placement round warrants conversion


$                    -


$                           9

     Conversion of Series A Preferred Stock to Common Stock


$               400


$                         46

Payment for executives and directors under Salary Program


$               304


$                            -

 

Contact:

Brenda Zeitlin
LabStyle Innovations Corp.
1 800 896 9062
Brenda@mydario.com

SOURCE LabStyle Innovations Corp.