UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934

 

Date of Report (Date of Earliest Event Reported): May 18, 2021 (May 15, 2021)

 

DARIOHEALTH CORP.

(Exact name of registrant as specified in its charter)

 

Delaware   001-37704   45-2973162
(State or other jurisdiction
of incorporation) 		  (Commission
File Number) 		  (IRS Employer
Identification No.)

 

142 W. 57th St., 8th Floor

New York, New York 10019

(Address of Principal Executive Offices)

 

(646) 665-4667

(Issuer’s telephone number)

 

(Former name or former address, if changed since last report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation to the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

Securities registered pursuant to Section 12(b) of the Act:

 

Title of each class   Trading Symbol(s)   Name of exchange on which 
registered
Common Stock, par value $0.0001 per share   DRIO   The Nasdaq Capital Market LLC

 

Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 

 

 

 

 

Item 1.01 Entry into a Material Definitive Agreement.

 

PsyInnovations Acquisition

 

DarioHealth Corp., (the “Company”), WF Merger Sub, Inc., a Delaware corporation and the Company’s wholly owned subsidiary (“Merger Sub”), PsyInnovations, Inc. (dba wayForward), a Delaware corporation (“PsyInnovations”), and Jonathan Whitcher and Brian Branson, solely in their capacity as the representatives of PsyInnovations’ stockholders and other equity holders (collectively, the “Holders”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) dated as of May 15, 2021, pursuant to which (i) PsyInnovations will merge with and into Merger Sub, with Merger Sub as the surviving company (the “Merger”), and (ii) the Company will pay aggregate consideration (“Merger Consideration”) of (A) $6.0 million in cash and (B) up to $24.0 million in shares of Company common stock, par value $0.0001 per share (the “Common Stock”), including up to $5.0 million structured as an earn-out (the “Earn-Out”) payable in shares of Common Stock if behavioral health revenues from the Company exceed a certain threshold in 2022, subject to customary working capital and other adjustments as of the closing of the Merger (the “Closing”). $3.0 million of the Merger Consideration, consisting of $2,750,000 in shares of Common Stock and $250,000 in cash, will be subject to a hold-back (“Hold-Back”) for a minimum of eighteen (18) months to secure the indemnification obligations of the Holders. The Company will issue up to an aggregate of approximately 1,138,000 shares Common Stock in the Merger, determined based on the 60-day volume weighted average share price (VWAP) of $21.09 per share of the Common Stock traded on The Nasdaq Stock Market LLC that ended on May 13, 2021. The shares of Common Stock to be issued to the Holders in the Merger will be issued in reliance upon exemptions from registration under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), and Rule 506 promulgated under Regulation D of the Securities Act. Through the Merger, PsyInnovations will become a wholly-owned subsidiary of the Company. The Merger is intended to qualify for federal income tax purposes as a “reorganization” within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended.

 

Upon the Closing, the Company, through the surviving company in the Merger, will employ PsyInnovations’ founders Mr. Ritvik Singh and Dr. Navya Singh, as General Manager, Head of Behavioral Health, and Chief Behavioral Science Officer, respectively. Mr. Singh’s offer letter provides for a grant, effective at the Closing, of a non-qualified stock option to purchase 75,000 shares of the Common Stock pursuant to Nasdaq Listing Rule 5635(c)(4), outside of the Company's existing 2020 Equity Incentive Plan. The option is intended to be granted as an inducement material to Mr. Singh becoming an employee of the Company or its subsidiary, in accordance with Nasdaq Listing Rule 5635(c)(4). The option will have an exercise price per share based on the closing price of the Common Stock on the Nasdaq Stock Market on the trading day prior to the Closing date. 60,000 of the option shares will vest over a three-year period beginning on the date Mr. Singh begins employment, subject to Mr. Singh's continued employment by the Company or its subsidiary on the applicable vesting date. The remaining 15,000 option shares will vest upon the Company or its subsidiary meeting specified revenue targets on a rollout of the wayForward platform, subject to Mr. Singh’s continued employment on the vesting date.

 

The Merger Agreement contains customary representations and warranties and covenants. The Closing of the Merger Agreement is subject to the satisfaction or waiver of various conditions set forth in the Merger Agreement, including, but not limited to (i) the accuracy of the representations and warranties of each party contained in the Merger Agreement (subject to certain materiality qualifications), (ii) each party’s compliance with or performance of the covenants and agreements in the Merger Agreement in all material respects, and (iii) approval of Holders receiving not less than 95% of the Merger Consideration and delivery by such Holders (the “Consenting Holders”) of lock-up, release and joinder agreements (the “Lock-up, Release and Joinder Agreements”).

 

Under the Lock-up, Release and Joinder Agreements, the Consenting Holders will, among other things, (i) (i) agree to certain lock-up restrictions with respect to the transfer of Common Stock received as consideration in the Merger, (ii) agree to the indemnification provisions in the Merger Agreement, (iii) make customary representations and warranties in connection with the acquisition of shares of Common Stock in the Merger, and (iv) release various parties, including PsyInnovations and the Company, from certain claims related to the Merger. The shares of Common Stock issuable to the Consenting Holders at the Closing will be subject to a lock-up that will lapse in five (5) substantially equal installments every three (3) months commencing on the date that is six (6) months after the date of the Closing and, to the extent any portion of the Earn-Out becomes payable, then the shares of Common Stock so issuable will be subject to a lock-up that will lapse in five (5) substantially equal installments every three (3) months commencing on the date that is six (6) months after the Earn-Out payment date.

 

 

 

Item 7.01 Regulation FD Disclosure.

 

Attached as Exhibit 99.1 to this Current Report on Form 8-K, and incorporated into this Item 7.01 by reference, is an investor presentation of DarioHealth Corp.

 

Item 8.01 Other Information.

 

On May 18, 2021, the Company issued a press release announcing the execution of the Merger Agreement. A copy of the press release is attached hereto as Exhibit 99.2 and is incorporated by reference herein.

 

Item 9.01 Financial Statements and Exhibits.

 

(d) Exhibits.

 

Exhibit Number   Description
99.1   Investor presentation (furnished herewith)
99.2   Press release, dated May 18, 2021

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Dated: May 18, 2021 DARIOHEALTH CORP.
   
   
  By:  /s/ Zvi Ben David
    Name: Zvi Ben David
Title:   Chief Financial Officer, Treasurer and Secretary

 

 

Exhibit 99.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exhibit 99.2 

 

DarioHealth Acquires Digital Behavioral Health Platform wayForward

 

Expands Digital Chronic Care Platform to One of the Most Complete in the Industry

 

Adds Approximately 20 Employers to the Dario Platform

 


NEW YORK, May 18, 2021 /PRNewswire/ -- DarioHealth Corp. (Nasdaq: DRIO), a pioneer in the global digital therapeutics market, today announced it has entered into an agreement to acquire PsyInnovations, Inc. (dba wayForward), a behavioral health digital platform that includes AI-enabled screening to triage and navigate members to specific interventions, digital Cognitive Behavioral Therapy (CBT), self-directed care, expert coaching and access to in-person and telehealth provider visits. The wayForward platform fills an all too common hole in existing behavioral health coverage for people who may not need or be able to access provider-based treatment. wayForward is currently providing its full suite of digital behavioral health services to approximately 20,000 members and 20 self-insured employers.

 

Unfortunately, the behavioral health care a person receives today is dictated more by the setting in which a person receives it than what the person would best respond to. The result is higher cost care, increased patient attrition and impaired outcomes. The wayForward platform is unique in the industry in that it focuses on AI-based screening, digital tools and coaching to match members to the optimal level of care, including those who may not require care by a licensed clinician psychologist or psychiatrist, while providing access to those providers through a customer’s existing network or partners’ networks. This results in improved engagement and clinical outcomes. Very few solutions in the market provide the clinical rigor of digital CBT and coaching as the first line of care. Rather than competing with existing in-person and telehealth-based solutions, wayForward integrates with them seamlessly. This creates a pathway to work collaboratively with other behavioral health solutions and provider networks rather than compete with them.

 

Recognized for its product capabilities, wayForward has won innovation challenges with Anthem and Blue Cross BlueShield of Illinois and has demonstrated strong member utilization and clinical outcomes, including a 48% reduction in anxiety and a 59% reduction in depression in third-party studies. The ability of the wayForward platform to integrate with third parties streamlines interoperability and is consistent with Dario’s philosophy of making behavior change easier. The wayForward team, including its two founders, Ritvik Singh, CEO of wayForward and Dr. Navya Singh, Chief Clinical Officer of wayForward, will join the Dario team. We believe that wayForward’s base of self-insured employer customers validates the commercial opportunity, and there will be immediate combined value in leveraging Dario’s sales and marketing organization and wayForward’s technology organization in India.

 

Under the terms of the merger agreement, Dario agreed to pay $30.0 million of consideration, with $25.0 million due at closing and a future contingent payment of up to $5.0 million if behavioral health revenues from the Company exceed a certain threshold in 2022. The upfront component of the purchase price will be paid by a combination of $6.0 million in cash and $19.0 million in shares of Dario common stock. Dario will issue approximately 891,182 shares of common stock at the closing, which is subject to customary closing conditions and hold-backs. If earned, the contingent payment will be paid in shares of Dario common stock. The number of shares issuable in the transaction was determined based on the 60-day volume weighted average share price (VWAP) of $21.09 that ended on May 14, 2021. These shares will be subject to a mandatory lock-up over a 6-18 month period. wayFoward is expected to be accretive to revenue in 2021 with substantially more contribution to revenue in 2022. With the majority of the merger consideration being in equity and minimal post-closing investment expected to be required to achieve operational objectives, Dario believes that it will maintain its healthy balance sheet after adding wayForward’s scale and capabilities to its platform.

 

 

 

 

Approximately 20% of the population has a behavioral health need each year, and approximately 29% of people with a chronic condition have a behavioral health issue. With the addition of wayForward’s solution, Dario’s platform is one of the most comprehensive multi-condition solutions in the industry covering diabetes, hypertension, pre-diabetes, musculoskeletal and behavioral health. Post-acquisition, Dario’s platform will cover 6 of the 7 top benefit areas employers seek to address, according to a survey by Mercer. We believe that this acquisition enhances the integrated care that Dario’s platform can provide and substantially increases the portion of customers’ population that may be eligible for Dario’s services.

 

“We are excited to join Dario. wayForward was started with the mission to bring precise, readily available and cost-effective behavioral healthcare to all those in need. We believe that combining our platform with Dario’s best in class solutions for chronic disease will allow us to provide an industry leading product with superior outcomes and member experience and continue on our mission; now with an expanded client base. The experience of their team and existing sales & marketing infrastructure will help accelerate sales, reduce customer acquisition cost and maximize the value of our platform,” stated Ritvik Singh, Chief Executive Officer and Co-Founder of wayForward. “More importantly, the integrated platform will benefit patients who now have the opportunity to utilize the effective combined Dario/wayForward solution for multiple chronic conditions in a convenient digital experience.”

 

“Dario is a strong, flexible AI-driven platform that allows for new offerings to be seamlessly added to our open architecture. Over the last year, we have consistently stated our desire to provide a suite of best-in-class solutions for multiple chronic conditions on one platform, including behavioral health as a top priority. We are excited to deliver on our stated goals. We believe the wayForward offering and management team will be great, synergistic additions to our technology foundation,” stated Erez Raphael, Dario CEO.

 

Rick Anderson, President & General Manager of North America, stated “Adding wayForward to our already robust platform allows us to provide a complete solution to our members and customers. Our current collaborations with wayForward on customer requests for proposal made it clear that they are a natural partner for us. It broadens the opportunities for both companies by expanding the customers we can pursue and the number of members in each customer that we can serve. We look forward to leveraging our commercial team to accelerate the adoption of wayForward’s solution on an integrated and stand-alone basis.”

 

More information, including an Dario Health Corp Deck, can be found in the Company’s Current Report on Form 8-K filed with the Securities and Exchange Commission on May 18, 2021.

 

Sullivan & Worcester LLP is acting as legal counsel to Dario in connection with the acquisition.

 

 

 

 

About DarioHealth Corp.

 

DarioHealth Corp. (Nasdaq: DRIO) is a leading global digital therapeutics company revolutionizing how people with chronic conditions manage their health. Dario's next-generation, AI-powered, digital therapeutic solutions support more than just an individual's disease. Dario provides adaptive, personalized experiences that drive behavior change through evidence-based interventions, intuitive, clinically proven digital tools, high-quality software, and coaching to help individuals improve health and sustain meaningful outcomes. Dario offers one of the highest-rated diabetes and hypertension solutions on the market. The company's cross-functional team operates at the intersection of life sciences, behavioral science, and software technology and is rapidly expanding into new chronic conditions and geographic markets, using a performance-based approach to improve its users' health. Dario makes the right thing to do the easy thing to do. To learn more about DarioHealth and its digital health solutions, or for more information, visit http://dariohealth.com.

 


Cautionary Note Regarding Forward-Looking Statements

 

This news release and the statements of representatives and partners of DarioHealth Corp. (the "Company") related thereto contain or may contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that are not statements of historical fact may be deemed to be forward-looking statements. Without limiting the generality of the foregoing, words such as "plan," "project," "potential," "seek," "may," "will," "expect," "believe," "anticipate," "intend," "could," "estimate" or "continue" are intended to identify forward-looking statements. For example, the Company is using forward-looking statements in this press release when it discusses the potential synergies as a result of the acquisition, its belief that wayForward’s base of self-insured employer customers validates the commercial opportunity, its belief that following the acquisition, Dario’s platform is one of the most comprehensive multi-condition solutions in the industry, that the acquisition enhances the integrated care that Dario’s platform can provide and substantially increases the portion of customers’ population that may be eligible for Dario’s services, that the acquisition is expected to be accretive to revenue in 2021 with substantially more contribution to revenue in 2022 and that it believes it will maintain its healthy balance sheet after adding wayForward’s scale and capabilities to its platform. Readers are cautioned that certain important factors may affect the Company's actual results and could cause such results to differ materially from any forward-looking statements that may be made in this news release. Factors that may affect the Company's results include, but are not limited to, regulatory approvals, product demand, market acceptance, impact of competitive products and prices, product development, commercialization or technological difficulties, the success or failure of negotiations and trade, legal, social and economic risks, and the risks associated with the adequacy of existing cash resources. Additional factors that could cause or contribute to differences between the Company's actual results and forward-looking statements include, but are not limited to, those risks discussed in the Company's filings with the U.S. Securities and Exchange Commission. Readers are cautioned that actual results (including, without limitation, the timing for and results of the Company's commercial and regulatory plans for Dario™ as described herein) may differ significantly from those set forth in the forward-looking statements. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

 

 

 

 

DarioHealth Corporate Contact:

 

Suzanne Bedell

 

VP Marketing

 

suzanne@dariohealth.com

 

+1-347-767-4220

 

 

Investor Relations Contact:

 

Chuck Padala

 

chuck@lifesciadvisors.com

 

+1-646-627-8390

 

 

Media Contact:

 

Josephine Galatioto

 

Josephine.galatioto@russopartnersllc.com

 

+1-212-845-4262