Digital health company DarioHealth has received a Buy rating and a $3 price target from Litchfield Hills Research, representing a potential 350% increase from its current trading price. The analyst's optimism centers on the company's strategic pivot from a direct-to-consumer model to a business-to-business-to-consumer approach since 2020, which has enabled expansion to health plans and employers. This transformation is reflected in the company's B2B2C recurring revenue, which grew 398% year-over-year in the fourth quarter of 2024.
A key strength is DarioHealth's comprehensive chronic care platform, addressing five major conditions: diabetes, hypertension, weight management, musculoskeletal pain, and behavioral health. The recent Twill acquisition has fortified this multi-condition strategy, distinguishing the company in the digital health market. The $3 price target is based on a future earnings model with a 9% discount rate, anticipating GAAP breakeven in the second half of 2026, with projected revenues of $66.1 million and non-GAAP operating income of $17.4 million. The company expects gross margins exceeding 80% in its core B2B2C business.
An emerging opportunity is the GLP-1 weight management market, projected to reach $100 billion by 2030. Preliminary research shows members using GLP-1 experienced significant reductions in blood glucose levels, sustained throughout the year. Strategic partnerships, such as the collaboration with Rula Health, provide access to over 15,000 behavioral health providers nationwide. The company is also leveraging artificial intelligence to optimize operations, projecting a 20% reduction in expenses between the fourth quarters of 2024 and 2025.
The recent $25.6 million private placement has strengthened DarioHealth's financial position, supporting its strategic plan. Its client roster includes major employers like Amazon, Microsoft, and Google, along with top insurers and pharmaceutical companies. Financial projections indicate continued growth, with revenues expected to reach $35.9 million in 2025 and $66.1 million in 2026. The company aims for operational cash flow breakeven by late 2025 and full profitability in the second half of 2026.
