DarioHealth has bought fellow digital health specialist Twill for $10 million upfront, plus another 10 million in stock worth upwards of $20 million, in a move that combines the two companies’ platforms for chronic diseases and mental health.
The company said that the deal gives it one of the most comprehensive digital offerings for chronic conditions in the market and will almost double its anticipated pro forma earnings for 2023 and raise margins above 80% by 2025, with the chance to trim almost a third off its costs.
In the first nine months of last year, DarioHealth reported revenues of around $17 million, a drop from just under $21 million in the same period of 2022, and an operating loss of more than $41 million. In the same period, Twill recorded around $14 million in sales and DarioHealth says the combined company will reach profitability in its second year of operations.
By combining the business, DarioHealth hopes to achieve the scale needed to get its programmes onto national health plans, unlocking revenue growth that has proved difficult for companies in the digital health category. Both companies focus mainly on offering digital tools to company health and wellness plans, along with some direct-to-consumer (DTC) sales. According to the company, there is almost no overlap between the two companies’ customer bases.
DarioHealth has developed a range of tools for chronic diseases including cardiovascular and metabolic disorders, notably diabetes where it has developed a tool that can be used by patiuents taking fast-growing GLP-1 drugs like Novo Nordisk’s Ozempic (semaglutide) and Eli Lilly’s Mounjaro (tirzepatide). Meanwhile, Twill offers apps for depression, anxiety and patient support. Twill’s Happify Health app has been sold DTC for more than 10 years.
The move fulfils expectations of increased consolidation in the digital health category, where many companies have struggled to create sustainable businesses as a result of volatile revenue generation and access to investment capital has slumped.
Erez Raphael, CEO of DarioHealth, said: “It’s rare to find not just alignment, but shared passion igniting a collaboration. That’s exactly what we’ve discovered in Twill.”
He added: “Their dedication to consumer empowerment through technology mirrors our own, making this union not just a strategic move, but a powerful convergence of values and goals.”
Twill chief executive and co-founder Tomer Ben-Kiki is joining DarioHealth’s executive team as chief operating officer, while the company’s other co-founder, COO Ofer Leidner, is joining DarioHealth in an advisory capacity.
In tandem with the takeover, DarioHealth has also priced a $22.4 million placement to raise funds for the integration of Twill and other corporate purposes.
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