DarioHealth Corp.

Previous wording

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations** **(amounts in thousands except for share and share amounts)

Current wording

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations** **(amounts in thousands except for share and per share amounts)

Previous wording

We are a vertically integrated health intelligence platform with a mission to power the behavior changes that drive better health. Unlike software-only digital health platforms, Dario owns the complete chain of value in chronic care management - connected FDA-cleared hardware devices that generate continuous physiological data, AI built on that proprietary data, and a behavior change and coaching layer validated through over 100 peer-reviewed clinical studies. We are committed to transforming healthcare by delivering a comprehensive and highly engaging whole-person health platform, which enables us to create a future where healthy change is effortless and accessible to all.

Current wording

We are a vertically integrated health intelligence platform with a mission to power the behavior changes that drive better health. Unlike software-only digital health platforms, Dario owns the complete chain of value in chronic care management - connected United States Food and Drug Administration (“FDA”)-cleared hardware devices that generate continuous physiological data, AI built on that proprietary data, and a behavior change and coaching layer validated through over 100 peer-reviewed clinical studies. We are committed to transforming healthcare by delivering a comprehensive and highly engaging whole-person health platform, which enables us to create a future where healthy change is effortless and accessible to all.

Previous wording

Comparison of the Three Months Ended March 31, 2026 and March 31, 2025 (dollar amounts in thousands)

Current wording

Comparison of the three and six months ended June 30, 2026 and June 30, 2025 (dollar amounts in thousands)

Previous wording

Revenues for the three months ended March 31, 2026 amounted to $5,584, compared to revenues of $6,752 during the three months ended March 31, 2025, representing a decrease of 17.3%. The decrease in revenues was primarily attributable to a non-recurring revenue from a pharmaceutical partner recognized in the prior-year period. These declines were partially offset by growth in revenues from channel partners and an increase in direct-to-consumer sales.

Current wording

Revenues for the three and six months ended June 30, 2026 amounted to $5,177 and $10,760, respectively, compared to revenues of $5,369 and $12,121, respectively, during the three and six months ended June 30, 2025, representing a decrease of 3.6% and 11.2%, respectively. The decrease in revenues for the three and six months ended June 30, 2026, compared to the three and six months ended June 30, 2025, resulted primarily from a decrease in our revenues from the pharma channel, which was attributable to non-recurring revenue from a pharmaceutical partner recognized in the prior-year period, partially offset by growth in revenues from our channel partners and an increase in our direct-to-consumer sales.

Previous wording

Cost of revenues consists mainly of the cost of hardware and consumables production, employees' salaries and related overhead costs, stock-based compensation, depreciation of production lines and related cost of equipment used in production, amortization of technologies, hosting costs, shipping and handling costs, and inventory write-downs.

Current wording

Cost of revenues consists mainly of the cost of hardware and consumables production, shipping and handling costs, employees' salaries and related overhead costs, amortization of technologies, hosting costs, inventory write-downs and tariff refunds recognized under the IEEPA.

Previous wording

Gross profit for the three months ended March 31, 2026 amounted to $3,200 (57.3% of revenues), compared to $3,882 (57.5% of revenues) during the three months ended March 31, 2025. The decrease in gross profit as a percentage of revenue for the three months ended March 31, 2026, compared to the three months ended March 31, 2025, resulted mainly from the decrease in revenue and higher hardware and consumables expenses which were partially offset by lower amortization of technology and lower hosting and server expenses. Gross profit for the three months ended March 31, 2026, excluding amortization of acquired technology, stock-based compensation and depreciation, was $3,385 (60.6% of revenues) compared to $4,782 (70.8% of revenues) during the three months ended March 31, 2025.

Current wording

Gross profit for the three and six months ended June 30, 2026, amounted to $3,192 (61.7% of revenues) and $6,394 (59.4% of revenues), respectively, compared to $2,964 (55.2% of revenues) and $6,846 (56.5% of revenues), respectively, during the three and six months ended June 30, 2025. The increase in gross profit as a percentage of revenues for the three and six months ended June 30, 2026, compared to the three and six months ended June 30, 2025, resulted mainly from a lower amortization of technology, lower hosting server expenses and the IEEPA tariff refund, which were partially offset by higher hardware and consumables expenses. Gross profit for the three and six months ended June 30, 2026, excluding amortization of acquired technology, stock-based compensation and depreciation, was $3,374 (65.2% of revenues) and $6,761 (62.8% of revenues), respectively, compared to $3,417 (63.6% of revenues) and $8,199 (67.6% of revenues), respectively, during the three and six months ended June 30, 2025.

Previous wording

Our research and development expenses decreased by $1,723, or 41.9%, to $2,385 for the three months ended March 31, 2026, compared to $4,108 for the three months ended March 31, 2025. The decreasein research and development expenseswas mainly due toefficiencies and post-merger activities, resulting in a decrease inpayroll expenses, subcontractors and consulting and stock-based compensation expenses partially offset by the impact of foreign currency fluctuations resulting from the strengthening of the New Israeli Shekel (“NIS”) against the U.S. dollar, as certain expenses are denominated in NIS. Our research and development expenses, excluding stock-based compensation and depreciation, for the three months ended March 31, 2026 were $2,261 compared to $3,542 for the three months ended March 31, 2025.

Current wording

Our research and development expenses decreased by $1,621, or 43.6%, to $2,100 for the three months ended June 30, 2026, compared to $3,721 for the three months ended June 30, 2025, and decreased by $3,344, or 42.7%, to $4,485 for the six months ended June 30, 2026, compared to $7,829 for the six months ended June 30, 2025. The decrease in research and development expenses was mainly due to efficiencies resulting from post-merger integration activities, and the utilization of AI, resulting in a decrease in headcount and payroll expenses, subcontractors and consulting and stock-based compensation expenses, partially offset by the impact of foreign currency fluctuations resulting from the strengthening of the New Israeli Shekel ("NIS") against the U.S. dollar, as certain of our expenses are denominated in NIS. Our research and development expenses, excluding stock-based compensation and depreciation, for the three and six months ended June 30, 2026, were $2,210 and $4,471, respectively, compared to $3,246 and $6,788, respectively, for the three and six months ended June 30, 2025, a decrease of $1,036 and $2,317, respectively. The decrease in research and development expenses was mainly due to efficiencies and post-merger integration activities, resulting in a decrease in payroll and subcontractors and consulting expenses.

Previous wording

Research and development expenses consist mainly of employees' salaries and related overhead costs involved in research and development activities, expenses related to (i) our solutions (ii) labor, stock-based compensation, contractors and engineering expenses, (iii) depreciation and maintenance fees related to equipment and software tools used in research and development, and (iv) facilities expenses associated with and allocated to research and development activities.

Current wording

Research and development expenses consist mainly of employees' salaries and related overhead costs involved in research and development activities, stock-based compensation, contractors and engineering expenses, software tools used in research and development, and facilities expenses associated with and allocated to research and development activities.

Previous wording

Our sales and marketing expenses decreased by $975, or 16.6%, to $4,898 for the three months ended March 31, 2026, compared to $5,873 for the three months ended March 31, 2025. The decrease was mainly a result of lower payroll expenses, lower stock-based compensation, partially offset by an increase in digital marketing expenses. Our sales and marketing expenses, excluding stock-based compensation, depreciation and amortization, for the three months ended March 31, 2026 were $4,466 compared to $4,747 for the three months ended March 31, 2025, a decrease of $281.

Current wording

Our sales and marketing expenses decreased by $260, or 5%, to $4,971 for the three months ended June 30, 2026, compared to $5,231 for the three months ended June 30, 2025, and decreased by $1,234, or 11.1%, to $9,870 for the six months ended June 30, 2026, compared to $11,104 for the six months ended June 30, 2025. The decrease was mainly a result of lower payroll-related expenses and lower stock-based compensation expenses, offset by an increase in digital marketing expense. Our sales and marketing expenses, excluding stock-based compensation, depreciation and amortization, for the three and six months ended June 30, 2026, were $4,364 and $8,831, respectively, compared to $4,341 and $9,088, respectively, for the three and six months ended June 30, 2025, an increase of $23 and decrease of $257, respectively. The decrease for the six months in sales and marketing expenses was mainly due to lower payroll-related expenses resulting from post-merger integration activities and a reduction in headcount.

Previous wording

Sales and marketing expenses consist mainly of employees' salaries and related overhead costs, stock-based compensation, depreciation of customer relationship intangible asset, digital marketing campaigns, trade show expenses, and marketing consultants and subcontractors.

Current wording

Sales and marketing expenses consist mainly of employees' salaries and related overhead costs, stock-based compensation, depreciation of customer relationship intangible asset, digital marketing campaigns, software tools used in sales and marketing and marketing consultants and subcontractors.

Previous wording

relates to corporate activities such as investor relations, and insurance expenses, and lower accounting and legal fees which were partially offset by an increase in stock-based compensation expensesand the impact of foreign currency fluctuations resulting from the strengthening of the (“NIS”) against the U.S. dollar, as certain expenses are denominated in NIS. Our general and administrative expenses, excluding stock-based compensation, share-based payments and depreciation, for the three months ended March 31, 2026 were $2,002 compared to $2,304 for the three months ended March 31, 2025, a decrease of $302.

Current wording

the three and six months ended June 30, 2026 was mainly due to lower stock-based compensation expenses, lower public company related expenses, lower legal and accounting fees, partially offset by the impact of foreign currency fluctuations resulting from the strengthening of the NIS against the U.S. dollar, as certain of our expenses are denominated in NIS. Our general and administrative expenses, excluding stock-based compensation, depreciation and acquisition-related costs, for the three and six months ended June 30, 2026, were $2,132 and $4,134, respectively, compared to $2,193 and $4,497, respectively, for the three and six months ended June 30, 2025, a decrease of $61 and $363, respectively. The decrease in general and administrative expenses was mainly due to lower subcontractors and consulting expenses and lower legal and accounting fees.

Previous wording

Our general and administrative expenses consist mainly of employees' salaries and related overhead costs, stock-based compensation, insurance costs, legal and accounting fees, acquisition-related costs, and expenses related to investor relations.

Current wording

Our general and administrative expenses consist mainly of employees' salaries and related overhead costs, stock-based compensation, insurance costs, legal and accounting fees, and expenses related to investor relations.

Previous wording

Financial income, net primarily consists of credit facility interest expense, interest income from cash balances, revaluation of warrants and pre-funded warrants, bank charges, lease liability and foreign currency translation differences.

Current wording

Financial expenses (income), net primarily consists mainly of credit facility interest expense, interest income from bank deposits, revaluation of warrants and pre-funded warrants and foreign currency translation differences.

Previous wording

Income tax expenses were $57 for the three months ended March 31, 2026, compared to $22 for the three months ended March 31, 2025. Income tax expenses for the three months ended March 31, 2026 were primarily comprised of sales tax and state tax.

Current wording

Income tax expenses were $328 and $384, respectively for the three and six months ended June 30, 2026, representing an increase in tax expenses of $328 and $362, respectively as compared to income tax expenses of $0 and $22, respectively for the three and six months ended June 30, 2025. Income tax expenses for the three and six months ended June 30, 2026 were primarily comprised of a tax provision from previous years related to our subsidiary Dario Services Pvt. Ltd.

Previous wording

The factors described above resulted in net loss attributable to common stockholders for the three months ended March 31, 2026 of $8,249, compared to net loss attributable to common stockholders of $14,066 for the three months ended March 31, 2025.

Current wording

The factors described above resulted in net loss attributable to common stockholders for the three and six months ended June 30, 2026, amounted to $7,924 and $16,173, compared to net loss attributable to common stockholders of $18,562 and $32,628 for the three and six months ended June 30, 2025.

Previous wording

As of March 31, 2026, we had approximately $14,977 in cash and cash equivalents and $5,035 in short term deposits compared to $21,803 and $4,214 on December 31, 2025.

Current wording

As of June 30, 2026, we had approximately $6,634 in cash and cash equivalents and $7,327 in short term deposits compared to $21,803 and $4,214 on December 31, 2025.

Previous wording

We have experienced cumulative losses of $460,327 since inception (August 11, 2011) through March 31, 2026, and have stockholders' equity of $62,380 as of March 31, 2026. In addition, we have not completed our efforts to establish a stable recurring source of revenues sufficient to cover our operating costs and expect to continue to generate losses for the foreseeable future.

Current wording

We have experienced cumulative losses of $468,251 since inception (August 11, 2011) through June 30, 2026, and have stockholders' equity of $55,088 as of June 30, 2026. In addition, we have not completed our efforts to establish a stable recurring source of revenue sufficient to cover our operating costs and expect to continue to generate losses for the foreseeable future.

Previous wording

Since inception, we have financed our operations primarily through private placements and public offerings of our Common Stock and warrants to purchase shares of our Common Stock, receiving aggregate net proceeds totaling $307,133 through March 31, 2026, and a credit facility, net in the amount of $25,795 as of March 31, 2026.

Current wording

Since inception, we have financed our operations primarily through private placements and public offerings of our Common Stock and warrants to purchase shares of our Common Stock, receiving aggregate net proceeds totaling $307,237 through June 30, 2026, and a credit facility, in an aggregate net amount of $25,795 through June 30, 2026.

Previous wording

On April 30, 2025, we entered into a Credit Agreement (the “Credit Agreement”), by and among us as borrower, the financial institutions party thereto from time to time as lenders, and Callodine Commercial Finance, LLC(in its capacity as agent for all lenders, “Agent”, and collectively with other lenders, “Lenders” and each a “Lender”). Under the terms of the Credit Agreement, each Lender agreed to make a multi-draw term loan to us of up to $50,000 (each a “Term Loan”) in which we borrowed $32,500 at the time of closing on April 30, 2025 (the “Callodine Loan Facility”). The Callodine Loan Facility has a five-year term maturing in April 2030, with principal repayments not due until May 2028. The outstanding principal balance bears interest at SOFR plus 7.75%. In addition, we may draw up to an additional $17,500 subject to certain conditions. As of March 31, 2026, the outstanding balance under the Callodine Loan Facility was $30,931.

Current wording

On April 30, 2025, we entered into a Credit Agreement (the “Credit Agreement”), by and among us as borrower, the financial institutions party thereto from time to time as lenders, and Callodine Commercial Finance, LLC(in its capacity as agent for all lenders, “Agent”, and collectively with other lenders, “Lenders” and each a “Lender”). Under the terms of the Credit Agreement, each Lender agreed to make a multi-draw term loan to us of up to $50,000 (each a “Term Loan”) in which we borrowed $32,500 at the time of closing on April 30, 2025 (the “Callodine Loan Facility”). The Callodine Loan Facility has a five-year term maturing in April 2030, with principal repayments not due until May 2028. The outstanding principal balance bears interest at SOFR plus 7.75%. In addition, subject to the discretion of the Agent and the Lenders, we may at our option draw an aggregate of up to an additional $17,500. Of the aggregate loan amount, $2,500 of such additional Term Loan is subject to the achievement of certain revenue and gross margin thresholds, subject to the discretion of the Agent and the Lenders and $15,000 of such additional Term Loan is subject to the discretion of the Agent and the Lenders. As of June 30, 2026, the outstanding balance under the Callodine Loan Facility was $31,064.

Previous wording

In connection therewith, the Company repriced the Warrant to purchase up to 105,707 shares of Common Stock issued to the lenders on April 30, 2025, at an exercise price $16.56 per share, to permit an amendment to the exercise price of such Warrants to $15.35. In addition, conversion right of the lender in the amount of $2,500 was amended to a conversion price of $15.35 per share.

Current wording

In connection therewith, the Company repriced the Warrant to purchase up to 105,707 shares of Common Stock issued to the lenders on April 30, 2025, at an exercise price of $16.56 per share, to permit an amendment to the exercise

Previous wording

On December 16, 2024, we and certain purchasers that were holders of our Series B and C Preferred Stock executed lock up agreements (the “Lock Up Agreement”), pursuant to which we agreed to issue, subject to stockholder approval, up to forty percent (40%) of the shares of Common Stock conversion shares of the preferred stock held by such purchaser, including dividend shares of Common Stock due upon conversion of these shares into shares of Common Stock, over the course of twelve (12) months (the “Additional Shares”). Each holder shall be entitled to receive 10% of the Additional Shares for each three (3) month period each holder agrees not to transfer or otherwise sell (subject to certain limitations) the shares of Common Stock issuable upon conversion of the Series B Preferred Stock and Series C Preferred Stock and the dividend shares of Common Stock due upon conversion. Between May 23, 2025 and May 28, 2025, the Company and holders that previously entered into Lock-Up Agreements, entered into an Amended and Restated Lock-Up Agreement (the “A&R Lock-Up Agreement”) pursuant to which the holders agreed to extend the restrictive period previously provided in the Lock-Up Agreements until February 21, 2026 (the “Lock Up Period”) for the right to receive an additional 10% of the Common Stock underlying the Series B Preferred Stock and the Series C Preferred Stock held by the holders. On October 20, 2025, we and holders that previously entered into the Lock-Up Agreement and the A&R Lock-Up Agreement entered into a Second Amended and Restated Lock-Up Agreement (the “Second A&R Lock-Up Agreement”) pursuant to which the Lock-Up Period shall automatically terminate, and all share consideration shall be accelerated and immediately be issued by us in full (to the extent not already issued) upon (A) any merger or consolidation

Current wording

On December 16, 2024, we and certain purchasers that were holders of our Series B and C Preferred Stock executed lock up agreements (the “Lock Up Agreement”), pursuant to which we agreed to issue, subject to stockholder approval, up to forty percent (40%) of the shares of Common Stock conversion shares of the preferred stock held by such purchaser, including dividend shares of Common Stock due upon conversion of these shares into shares of Common Stock, over the course of twelve (12) months (the “Additional Shares”). Each holder shall be entitled to receive 10% of the Additional Shares for each three (3) month period each holder agrees not to transfer or otherwise sell (subject to certain limitations) the shares of Common Stock issuable upon conversion of the Series B Preferred Stock and Series C Preferred Stock and the dividend shares of Common Stock due upon conversion. Between May 23, 2025 and May 28, 2025, the Company and holders that previously entered into Lock-Up Agreements, entered into an Amended and Restated Lock-Up Agreement (the “A&R Lock-Up Agreement”) pursuant to which the holders agreed to extend the restrictive period previously provided in the Lock-Up Agreements until February 21, 2026 (the “Lock Up Period”) for the right to receive an additional 10% of the Common Stock underlying the Series B Preferred Stock and the Series C Preferred Stock held by the holders. On October 20, 2025, we and holders that previously entered into the Lock-Up Agreement and the A&R Lock-Up Agreement entered into a Second Amended and Restated Lock-Up Agreement (the “Second A&R Lock-Up Agreement”) pursuant to which the Lock-Up Period shall automatically terminate, and all share consideration shall be accelerated and immediately be issued by us in full (to the extent not already issued) upon (A) any merger or consolidation of our with or into another individual, entity, corporation, partnership, association, limited liability company, limited liability partnership, joint-stock company, trust or unincorporated organization, (B) any sale of all or substantially all of our assets in one transaction or a series of related transactions, or (C) any reclassification of the Common Stock or any compulsory share exchange pursuant to which the Common Stock is effectively converted into or exchanged for other securities, cash or property.

Previous wording

On March 30, 2026, we entered into the Sales Agreement with A.G.P./Alliance Global Partners, pursuant to which we may offer and sell, from time to time, up to an aggregate of $20.0 million of shares of our common stock under the ATM Program. Sales of shares under the Sales Agreement, if any, may be made by any method permitted by law that is deemed to be an “at the market offering” under Rule 415(a)(4) under the Securities Act, or in negotiated transactions or as principal pursuant to a separate terms agreement. We have no obligation to sell any shares under the ATM Program and may suspend offers thereunder or terminate the Sales Agreement at any time, subject to its terms.

Current wording

On March 30, 2026, we entered into the Sales Agreement with A.G.P./Alliance Global Partners, pursuant to which we may offer and sell, from time to time, up to an aggregate of $20,000 of shares of our common stock under the At-The-Market Sales Agreement (the “ATM Program”). Sales of shares under the Sales Agreement, if any, may be made by any method permitted by law that is deemed to be an “at the market offering” under Rule 415(a)(4) under the Securities Act, or in negotiated transactions or as principal pursuant to a separate terms agreement. We have no obligation to sell any shares under the ATM Program and may suspend offers thereunder or terminate the Sales Agreement at any time, subject to its terms.

Previous wording

As of March 31, 2026, no shares had been sold under the ATM Program. Subsequent to March 31, 2026 and through the date of this Quarterly Report on Form 10-Q, we sold an aggregate of 7,252 shares under the ATM Program for gross proceeds of approximately $54 and net proceeds of approximately $53, after deducting commissions and offering expenses.

Current wording

Through the date of this Quarterly Report on Form 10-Q, we sold an aggregate of 14,191 shares under the ATM Program for gross proceeds of approximately $104 and had $154 in related expenses, out of which $104 were recognized in the statement of changes in stockholders' equity and $50 as deferred asset.

Previous wording

There are no assurances that we will be able to obtain an adequate level of financial resources that are required for the long-term development and commercialization of our product offerings.

Current wording

Management believes that the proceeds from the Purchase Agreement, combined with our cash on hand and short-term bank deposits are sufficient to meet our obligations as they come due for at least a period of twelve months from the date of the issuance of these unaudited condensed consolidated financial statements. There are no assurances, however, that we will be able to obtain an adequate level of financial resources that are required for the long-term development and commercialization of our product offerings.

Previous wording

The following table sets forth selected cash flow information for the periods indicated:

Current wording

The following table sets forth selected cash flow information for the Six months ended:

Previous wording

Net cash used in operating activities was $6,025 for the three months ended March 31, 2026, a decrease of 9.7% compared to $6,673 used in operations for three months ended March 31, 2025. Cash used in operations decreased mainly due to the decrease in our operating expenses.

Current wording

Net cash used in operating activities was $12,108 for the six months ended June 30, 2026, a decrease of 4.7% compared to $12,704 used in operations for six months ended June 30, 2025. Cash used in operations decreased mainly due to the decrease in our operating expenses.

Previous wording

Net cash used in investing activities was $826 for the three months ended March 31, 2026, compared to $31 net cash used in investing activities during the same period in 2025. The increase is due to investments in short term bank deposit, compared to the same period in 2025.

Current wording

Net cash used in investing activities was $3,113 for the six months ended June 30, 2026, compared to $75 net cash used in investing activities during the same period in 2025. The increase is due to investments in short term bank deposit, compared to the same period in 2025.

Previous wording

There were no financing activities during the three months ended March 31, 2026, compared to $6,815 net cash derived from financing activities during the same period in 2025. The 2025 amount was mainly attributable to proceeds from the issuance of shares of preferred stock.

Current wording

Net cash provided by financing activities was $0 for the six months ended June 30, 2026, primarily consisting of proceeds from the ATM Program, which were fully offset by issuance costs related to those offerings, compared to $6,939 net cash derived from financing activities during the same period in 2025. The 2025 amount was mainly attributable to proceeds from the issuance of shares of preferred stock.