Digital Therapeutics Leader DarioHealth Makes a Critical Acquisition

February 19, 2021

Source: Matt Badiali for Streetwise Reports   02/17/2021

Independent financial analyst Matt Badiali discusses DarioHealth’s latest acquisition and what it means for the company’s growth.

On January 27, DarioHealth Corp. (DRIO:NASDAQ) bought Upright Technologies. Upright is a leader in musculoskeletal (MSK) treatment using a similar digital platform to DarioHealth’s. This is a “force multiplier” for DarioHealth because it broadens the treatment options for the company’s popular app.

Upright Technologies’ system complements DarioHealth’s platform. Upright won the 2016 Convergence MEDy award for excellence in medical entrepreneurship and Best Medical App 2016 at MEDICA. The platform reduced back pain over a period of 18 months. It has the largest patient-reported outcome in the musculoskeletal space, with over 57,000 participants.


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Upright’s platform offers a data driven solution to back pain. It has sensors that collect data, biofeedback, and coaching. And the two companies share a user-centric philosophy. They both aim for real, positive outcomes on chronic conditions.

DarioHealth’s platform assists users in managing pre-diabetes, diabetes, obesity and hypertension. It captures, monitors and communicates personalized health data and metrics, like a smartwatch. The company’s team uses that data to supply high-quality, personalized coaching to help users succeed.

And once the two platforms integrate, it will significantly increase the company’s revenue.

That’s because DarioHealth’s platform focuses on diabetes and requires buy-in by participants. When a company signs up with DarioHealth, roughly 1 in 10 employees will be a potential customer for its diabetes and hypertension system. However, 4 in 10 employees will be interested in the MSK. The result of the acquisition is that DarioHealth’s platform will now be able to serve a much larger customer base.

DarioHealth might be the best new digital therapeutics companies in the sector. CEO Erez Raphael continues to stand by his philosophy and grow the company in a smart, deliberate manner.

Livongo’s acquisition by Teledoc for $18.5 billion left a vacuum at the top of the sector. DarioHealth is clearly one of the favorites to fill that void. The market took notice. As you can see in the chart below, DarioHealth’s shares are up more than 200% in a year.

DRIO chart

But with just a $394 million market cap, the company still offers a huge value opportunity for new investors. Livongo’s takeover set a new standard for companies like DarioHealth. And DarioHealth’s cross-functional system combines life sciences, behavioral science and technology to create a unique and successful new tool for health.

The one promise from management that we haven’t seen is a true nameplate payer. Once we see the company land a large insurance company, the stock should rip higher.

Good Investing,

–Matt Badiali

Reach Matt Badiali at www.mattbadiali.net.

Matt Badiali is a geologist and independent financial analyst. He spent fifteen years researching and writing about great investments inside the natural resources sectors. He can be reached at www.mattbadiali.net.

 

Streetwise Reports Disclosure:
1) Matt Badiali: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: DarioHealth. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: I am a consultant to DarioHealth. I determined which companies would be included in this article based on my research and understanding of the sector.
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