"We're just waiting for the Logo…that's when the transformation happens."
The analyst on the phone confused me for a second…
"Logo?" I asked.
"You know, a big-name company that adopts their tech…a logo."
That was a couple of months ago. The company in question was DarioHealth Corp. (DRIO:NASDAQ), a $133 million digital therapeutics company. Up to that point, Dario had an impressive user base of 60,000 individuals that signed up for its smart app on Google and Apple.
What it lacked was a "Logo." For the company to really turn the corner on growth, some big companies needed to adopt its technology. It needed access to a large pool of customers. That's what a Logo would do for them.
It seems like an easy sell. Dario makes a blood glucose monitoring system that works with any smartphone. The app collects the data and helps users manage their blood glucose. It's like Fitbit for diabetics…and its users love it. It has a 4.6-star rating on Google Play Store.
The goal of Dario's app is to improve health. Its initial focus is on diabetics and pre-diabetics, helping them reduce their A1c blood glucose measures. A1c is the "gold standard" measure of blood sugar control. Uncontrolled A1c has a huge impact on healthcare cost.
Reducing A1c demonstrably decreases healthcare costs. A 2018 paper published in Applied Health Economics and Health Policyexamined data from 3,197 patients over five years. Patients that decreased A1c over that period cut healthcare costs by 24% in the first year and 17% the second year. That reflects a two-year savings of more than $3,000 per patient.
The conclusion of that paper was that reducing A1c over a short timeframe may lead to substantial reduction in healthcare costs. They concluded that health plans and other payers should pursue that outcome.
Dario's users are so happy that the company had a massive buy-in when it began to study the effectiveness of its methodology. From 2017 to 2019, over 20,000 users participated in eight scientific studies presented at three leading diabetes conferences. That's enormous trust from its clients.
And the results of the studies demonstrate just why Dario's clients are happy. On average, users reduced blood glucose (A1c) by 1.4% after one year. That's a huge improvement.
To put that in perspective, comparable studies on oral antidiabetic prescription drugs only reduced A1c by 0.5% to 1.25%. However, these drugs can cost up to $720 per month. In contrast, Dario's app costs around $25 per month.
Dario's success represents a gross savings estimate of about $2,380 per person per year in healthcare costs.
That's why its recent announcement of its selection as an employee health benefit by a self-insured, Fortune 500 subsidiary is a big deal. It marks the first move for Dario into this market. Access to large lists of companies should dramatically increase Dario's subscriber base. And while it isn't a Logo yet, that's the logical next step.
If you are interested in the massive growth of digital therapeutics companies, look at DarioHealth (Nasdaq: DRIO). It's a company on the move.
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.[NLINSERT]
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