The $213 billion musculoskeletal market’s challenges have caught the attention of DarioHealth, which is expanding its multi-conditional platform to create one of the most comprehensive digital health platforms on the market.
DarioHealth Corp, a publicly traded company (Nasdaq: DRIO), announced the signing of a definitive agreement to acquire Upright Technologies Ltd, which specialises in digital solutions for Musculoskeletal Disorders (MSK), in a stock exchange transaction. The objective is to add Upright’s innovative MSK technology solutions to its broad therapeutic platform which represents the entry point for bringing together complementary businesses with industry-leading consumer engagement and clinical outcomes, through a platform that combines advanced sensors, AI-led dynamic behaviour change, member journeys and coaching.
At the same time, perfectly aligned with its expansion plans in the healthtech sector, Dario announced that it has agreed with leading investors in the healthcare field to raise $70 million through a private placement of its common shares listed on the market in accordance with Nasdaq rules. Dario signed securities purchase agreements for the sale of a total of 3,278,688 common shares at a purchase price of $21.35 per share. Dario intends to use the net proceeds of the offering for general corporate purposes in connection with its expansion.
Backed by Nantahala Capital Management, LLC, Perceptive Advisors, Driehaus Capital Management, Farallon Capital Management, Pura Vida Investments and other leading healthcare investors, it has reached more than 150,000 members while generating combined pro forma 2020 revenues of more than $20 million for the entire year. Cowen is acting as Dario’s financial and capital markets advisor for the acquisition transaction and the private placement, while Cowen, Stifel and SternAegis Ventures acted as placement agents for the financing. On closing of the private placement, Dario’s cash balance is expected to exceed $90 million. The private placement transaction is subject to standard closing conditions and is expected to be completed on or about February 1, 2021.
Who is Upright?
The digital MSK health company focuses on preventing and treating the most common MSK conditions through behavioural science, biofeedback, coaching, and wearable tech. Upright has over 90,000 active users with his solution being clinically validated and being recommended by more than 500 clinics worldwide.
The acquisition of Upright should complement and further advance Dario’s strategy in the following ways:
- It will expand Dario’s solution into MSK, a market that costs payers and employers $213 billion a year.
- It will add to its digital therapy platform a clinically proven and highly attractive solution for chronic diseases that has a strong co-morbidity with Dario’s current medical portfolio.
- It will bring significant revenue and organisational benefits by exploiting Dario’s existing business-to-business (B2B) sales organisation.
- The combination of two DTx leaders with background in the direct-to-consumer (D2C) market, where user interfaces have been developed and refined, resulting in high user engagement and sustainable behavioural change, will further set Dario apart from its direct competitors by providing an even more comprehensive solution that addresses a wider range of chronic diseases.
MSK currently has a heavy financial impact on Dario’s customers, while at the same time being responsible for a high percentage of employee absenteeism and loss of productivity. It constitutes a top priority for clinical improvement and cost reduction for self-insured employers and health plans. According to Rick Anderson, Dario’s President and General Manager for North America, the addition of Uprights’ digital solutions to its comprehensive platform will provide an opportunity for the healthcare technology leader to address an even more diverse range of consumer needs. Widely involved in driving sustainable behavioural change, the strategic acquisition of Dario is justified by Upright’s approach and commitment to the same cause, making it the ideal solution to take the healtech’s giant integrated solutions to the next level in terms of engagement volume.
“We are committed to delivering the industry’s most comprehensive, clinically proven solution for the management of chronic conditions, and the addition of Upright, which is an expansion of our core competency, represents a significant step toward that goal. With similar approaches to building highly engaging and clinically effective products and similar cultures, I anticipate a rapid and seamless integration,” said Erez Raphael, Managing Director of Dario.
CEO and co-founder of Upright, Oded Cohen, underlined the success that such a merger is about to bring by stating “Similar to Dario, we have had great success building our product with roots in the D2C market and have begun to make inroads into the B2B space. We believe there are significant synergies that can be derived from being part of a broader digital health platform.”
By joining forces, the two healthtech solutions innovators aim to provide “an integrated, scalable, virtual platform to reduce employer, payor, and provider healthcare costs and offer lasting and impactful health outcomes for end-users.” A vision that fits perfectly with Dario’s user-centric culture and Upright’s solution-oriented technologies.
Regarding the terms of the acquisition agreement, Upright’s CEO and co-founder, Oded Cohen, will become Managing Director of Dario’s MSK product and will join Dario’s Board of Directors.
In addition, Dario has undertaken to acquire Upright for $31 million, of which $29.5 million will be paid in shares and $1.5 million in cash. After deducting outstanding debt and working capital adjustments, the number of purchase shares issued was determined based on the closing price of Dario’s shares on the day prior to the signing of the term sheet, conditional to a share price collar that is effective based on recent market activity post-signature. Dario will issue approximately 1.7 million ordinary shares to Upright shareholders at closing, which will be subject to customary closing conditions and is expected to take place on or about 7 February 2021.
DarioHealth’s unaudited revenues for 2020 are estimated to be approximately $7.6 million, including estimated revenues of $2.12 million in the fourth quarter of 2020, and Upright’s unaudited revenues for 2020 are estimated to be approximately $12.8 million. Dario’s cash balance at December 31, 2020 was $28.6 million.