Q2 2024 Financial Results: Quarterhill, DarioHealth, and Eli Lilly Report Mixed Outcomes

Quarterhill Announces Q2 2024 Financial Results - Quarterhill (OTC:QTRHF)

Mr. Vineet Khosla, AI and Machine Learning Pioneer, joins the Board of Directors TORONTO, Aug. 9, 2024 /PRNewswire/ - Quarterhill Inc. ("Quarterhill" or the "Company") QTRH QTRHF, a leading provider of tolling and enforcement solutions in the Intelligent Transportation System ("ITS") industry, announces its financial results for the three and six months ended June 30, 2024. All financial information in this press release is reported in United States ("US") dollars, unless otherwise indicated. Quarterhill has changed the presentation currency of its financial statements to US dollars, its functional currency. A significant proportion of the Company's sales, expenses, assets, and liabilities are denominated in US dollars. This change in presentation currency aims to enhance external stakeholders' ability to assess Quarterhill's financial performance and to reduce the impact of foreign exchange volatility. Q2 2024 Highlights Revenue was $41.5 million, up 7.5% compared to $38.6 million in Q2 2023.Adjusted EBITDA1 was $1.7 million compared to $2.9 million in Q2 2023.Cash from operations was $0.8 million compared to cash used in operations of ($10.3) million in Q2 2023.Revenue backlog3 was $500 million at June 30, 2024.Completed acquisition of Red Fox I.D. Limited ("Red Fox"), expanding the Company's software offerings.Red Fox won two prestigious King's Awards: one for innovation and one for excellence in international trade. "Q2 saw continued execution on our goals to drive top-line growth, expand Adjusted EBITDA margin and improve cash flow," said Chuck Myers, CEO at Quarterhill. "Adjusted EBITDA margin grew sequentially from Q1, and we anticipate continued progress in growing our margin throughout the year. Additionally, we generated positive cash flow from operations for the first time in two years and expect our cash balance to grow through the end of the year." "Our two business units - tolling and enforcement - made progress in Q2 on their ongoing projects as well as closing new business, resulting in a contracted revenue backlog of $500 million at quarter end. We remain focused on leveraging the improvements we've made in the past year to our project management and contract bidding processes to grow these leading businesses. At the same time, we continue to work to increase our market reach through operational integration, exploring new opportunities in Europe, penetrating the logistics sector and building-out our suite of software solutions, in particular with artificial intelligence (AI) applications." Board of Directors Update Quarterhill announces that Vineet Khosla, Chief Technology Officer at the Washington Post, has joined the Board of Directors, effective immediately. Mr. Khosla has an extensive track record as an innovator and executive at some of the world's largest technology companies. A pioneering researcher and leading voice in AI, machine learning, and cloud computing, he has driven significant advancements in these fields. Since joining the Washington Post in 2023, Mr. Khosla has led the engineering team, executing the next phase of the company's innovation strategy. Prior to the Post, Vineet served as Senior Engineering Manager at Uber, where he was responsible for the development of their map routing engine, which optimizes routes and timing. Before his tenure at Uber, he was the first engineering hire for Siri's natural language engine at Apple, where he spent over eight years in senior engineering roles, developing and managing Siri's AI engine. Mr. Khosla holds a Master's in AI from the University of Georgia, earned in 2005. "We are very pleased to welcome Vineet to the Board," said Rusty Lewis, Chair of the Board at Quarterhill. "His deep expertise in AI and machine learning, combined with his experience at the intersection of transportation and technology, will play a key role in the development of our product roadmap and our push to expand the software side of our business." Q2 2024 Financial Review Quarterhill's Management's Discussion and Analysis and financial statements for the three and six months ended June 30, 2024 are available at the Company's website and at its profile at SEDAR+. Financial statements for the three and six months ended June 30, 2023, have been prepared to reflect continuing operations, and therefore, exclude results during that period from Wi-LAN Inc. ("WiLAN"), which was sold by Quarterhill on June 15, 2023. Revenues for the three and six months ended June 30, 2024, were $41.5 million and $76.4 million, up 7.5% and 14%, respectively, compared to $38.6 million and $67.0 million in the three and six months ended June 30, 2023. The increase in revenues was due to increased activity and improved performance with North American project revenue. Gross profit2 as a value and as a percentage of revenues may be subject to significant variance in each reporting period due to the nature and type of contract and service work performed. Gross profit for the three and six months ended June 30, 2024, was $8.5 million and $14.9 million, or 21% and 19%, as compared to $10.0 million and $13.8 million, or 26% and 21%, in the three and six months ended June 30, 2023. While gross profit margin percentage has increased on a sequential quarterly basis, the year-over-year decreases compared to the prior year periods were primarily due to one tolling project that is in the maintenance phase but experiencing a transitory period of lower-than-expected margin. The year-over-year decreases in gross profit margin were partially offset by continued strong performance in the Company's enforcement operations. Total operating expenses are comprised of selling, general and administrative costs ("SG&A"), research and development ("R&D") costs, depreciation, amortization of intangible assets and other charges. Total operating expenses for the three and six months ended June 30, 2024, were $10.8 million and $21.2 million compared to $10.6 million and $22.2 million in the three and six months ended June 30, 2023. The year-over-year changes were primarily due to lower R&D expenses and other charges offset by higher SG&A. Adjusted EBITDA1 for the three and six months ended June 30, 2024, was $1.7 million and $1.8 million compared to $2.9 million and ($0.9) million for the three and six months ended June 30, 2023. The decrease in Adjusted EBITDA for the three months ended June 30, 2024, compared to the prior year period, was due to lower gross profit as previously explained, and offset, in part, by increased revenue and lower operating expenses. This increase in Adjusted EBITDA for the six months ended June 30, 2024, compared to the prior year period, was due to higher revenue and lower operating expenses. Net loss from continuing operations for the three and six months ended June 30, 2024, was ($3.0) million and ($7.2) million, or ($0.03) and ($0.06) per diluted share, compared to a net loss from continuing operations of ($10.2) million and ($19.3) million, or ($0.09) and ($0.17) per diluted share, for the three and six months ended June 30, 2023. Cash generated (used) in continuing operations for the three and six months ended June 30, 2024, was $0.8 million and ($9.3) million compared to cash used in continuing operations of ($6.9) million and ($13.5) million for the three and six months ended June 30, 2023. Cash and cash equivalents were $24.0 million at June 30, 2024, compared to $42.7 million at December 31, 2023. The uses of cash in the three months ended June 30, 2024, included a net amount of $4.9 million spent on the acquisition of Red Fox. Adjusted Working Capital4 was $68.4 million at June 30, 2024, compared to $78.9 million at December 31, 2023. Due to the nature of the Company's business activities, operating cash flows may vary significantly between periods due to changes and timing in working capital balances. 1. Please refer to the Adjusted EBITDA Non-IFRS Financial Measures section for further information. 2. Please refer to Gross Margin % in the Supplementary Financial Measures section for further information. 3. Please refer to the Backlog - Non-IFRS Financial Measures section for further information. 4. Please refer to the Adjusted Working Capital - Non-IFRS Financial Measures section for further information. Conference Call and Webcast Quarterhill will host a conference call to discuss its financial results on Friday, August 9, 2024, at 10:00 AM Eastern Time. Webcast Information Live audio webcast will be available at: https://app.webinar.net/E0GnDAr2wRQWebcast replay will be available at: https://app.webinar.net/E0GnDAr2wRQ Traditional Dial-in Information To access the call from the U.S. and Canada, dial 1.800.836.8184 (Toll Free)To access the call from other locations, dial 1.289.819.1350 (International) Rapidconnect To instantly join the conference call by phone, please use the following URL to easily register and be connected into the conference call automatically: https://emportal.ink/4cZxWpC Telephone Replay Telephone replay will be available from August 9, 2024, until August 16, 2024, at: 1.888.660.6345 (Toll Free North America) or 1.289.819.1450. Conference ID: 52352 and Replay Passcode: 52352# Non-IFRS Financial Measures and Non-IFRS Ratios Quarterhill uses both IFRS and certain non-IFRS financial measures to assess performance. Non-IFRS financial measures are financial measures disclosed by a company that (a) depict historical or expected future financial performance, financial position or cash flow of a company, (b) with respect to their composition, exclude amounts that are included in, or include amounts that are excluded from the composition of the most directly comparable financial measure disclosed in the primary financial statements of the company, (c) are not disclosed in the financial statements of the company and (d) are not a ratio, fraction, percentage or similar representation. Non-IFRS ratios are financial measures disclosed by a company that are in the form of a ratio, fraction, percentage or similar representation that has a non-IFRS financial measure as one or more of its components, and that are not disclosed in the financial statements of the company. These non-IFRS financial measures and non-IFRS ratios are not standardized financial measures under IFRS, and, therefore, are unlikely to be comparable to similar financial measures presented by other companies. Management believes these non-IFRS financial measures and non-IFRS ratios provide transparent and useful supplemental information to help investors evaluate our financial performance, financial condition, and liquidity using the same measures as management. These non-IFRS financial measures and non-IFRS ratios should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS. Adjusted EBITDA - Non-IFRS Financial Measures We use the non-IFRS financial measure "Adjusted EBITDA" to mean net (loss) income adjusted for (i) income taxes, (ii) finance expense or income; (iii) amortization and impairment of intangibles; (iv) other charges and other one-time items; (v) depreciation of right-of-use assets and property, plant and equipment; (vi) stock- based compensation; (vii) foreign exchange (gain) loss; and (viii) other income which includes equity in earnings from joint ventures; (ix) dividends received from joint ventures; and * changes in fair value of derivative liability. Adjusted EBITDA is used by our management to assess our normalized cash generated on a consolidated basis. Adjusted EBITDA is also a performance measure that may be used by investors to analyze the cash generated by Quarterhill. Adjusted EBITDA should not be interpreted as an alternative to net (loss) income and cash flows from operations as determined in accordance with IFRS or as measure of liquidity. The most directly comparable IFRS financial measure is Net (loss) income. Adjusted EBITDA per share - Non-IFRS ratio Adjusted EBITDA per share is calculated as Adjusted EBITDA divided by the basic weighted average of common shares. Adjusted EBITDA per share is used by our management and investors to analyze cash generated by Quarterhill on a per share basis. The most comparable IFRS measure is earnings per share. Adjusted Working Capital Adjusted Working Capital is calculated as current assets minus current liabilities, adjusted for convertible debentures and derivative liability. Adjusted Working Capital reflects our net working capital expected to be settled in cash within twelve months. Backlog - Non-IFRS Financial Measures We use the non-IFRS measure "backlog" to mean the total value of work that has not yet been completed but that in management's experience of similar situations has: (a) a high certainty of being performed pursuant to existing contracts or work orders specifying job scope, value and timing; (b) an expectation of expansion of existing contracts due to expected extensions; and/or (c) been awarded to one or more of our ITS operating subsidiaries as evidenced by a binding contract or where the finalization of a binding contract is reasonably assured. Activities under such contracts may cover a period of up to 15 years. We do not include in "backlog", the value of any expected but unsigned change orders that management considers may apply to such contracts. Supplementary Financial Measures Supplementary financial measures are financial measures disclosed by a company that (a) are, or are intended to be, disclosed on a periodic basis to depict the historical or expected future financial performance, financial position or cash flow of a company (b) are not disclosed in the financial statement of the company, (c) are not non-IFRS financial measures, and (d) are not non-IFRS ratios. Key supplementary measures disclosed are as follows: Gross margin % Calculated as gross profit as a percentage of revenue. About Quarterhill Quarterhill is a leading provider of tolling and enforcement solutions in the Intelligent Transportation System (ITS) industry. Our goal is technology-driven global leadership in ITS, via organic growth of our tolling and enforcement businesses, and by continuing an acquisition-oriented investment strategy that capitalizes on attractive growth opportunities within ITS and its adjacent markets. Quarterhill is listed on the TSX under the symbol QTRH and on the OTCQX Best Market under the symbol QTRHF. For more information: www.quarterhill.com. Forward-looking Information This news release contains forward-looking information and forward-looking statements within the meaning of applicable Canadian securities laws (collectively, "forward-looking statements") regarding Quarterhill, its operating subsidiaries and their respective businesses. Such forward-looking statements relate to future events, conditions or future financial performance of ‎Quarterhill based on future economic conditions and courses of action. All statements other ‎than statements of historical fact may be forward-looking statements. Such forward-looking statements ‎are often, but not always, identified by the use of any words such as "seek", "anticipate", "budget", ‎‎"plan", "goal", and similar expressions. These statements involve known and unknown risks, assumptions, ‎uncertainties and other factors that may cause actual results or events to differ materially from those ‎anticipated in such forward-looking statements. The Company believes the expectations reflected in ‎those forward-looking statements are reasonable, but no assurance can be given that these expectations ‎will prove to be correct and such forward-looking statements included in this news release should not be ‎unduly relied upon.‎ In particular, this news release contains forward-looking statements pertaining to, but not limited to, the ‎following: operational and financial expectations for the 2024 financial year, including revenue, gross margin and Adjusted EBITDA expectations; and the Company's business plan. ‎Although the forward-looking statements contained in this news release are based upon assumptions ‎which management of the Company believes to be reasonable, the Company cannot assure investors ‎that actual results will be consistent with these forward-looking statements. With respect to forward-‎looking statements contained in this news release, the Company has made assumptions regarding, but ‎not limited to: the Company's ability to execute on its business plan; successful integration of Red Fox; general economic and industry trends; operating assumptions relating to the ‎Company's operations; demand for the Company's products and services; cost estimates for fixed price contracts; and the other assumptions set forth in the ‎Company's most recent annual information form available under the Company's profile on SEDAR+ ‎at www.sedarplus.ca.‎ The Company's actual results could differ materially from those anticipated in the forward-looking ‎statements, as a result of numerous known and unknown risks and uncertainties and other factors ‎including, but not limited to: changes in demand for the Company's products and services; general economic, ‎political, market and business conditions, including fluctuations in interest rates, foreign exchange rates, ‎stock market volatility; reliance on key management personnel; risks related to competition within the Company's industry and relating to technological advances; litigation risks; cyber-security risks; fixed price contracts may result in unexpected costs to the Company; risks of health epidemics, pandemics and similar ‎outbreaks; and the other risks set forth in the Company's most recent annual information form ‎and management's discussion and analysis for the three and twelve months ended December 31, 2023 available under the Company's profile on SEDAR+ at www.sedarplus.ca.‎ The Company's actual results, performance or achievement could differ materially from those ‎expressed in, or implied by, these forward-looking statements and, accordingly, no assurance can be ‎given that any of the events anticipated by the forward-looking statements will transpire or occur, or if ‎any of them do so, what benefits the Company will derive therefrom. Readers are therefore cautioned ‎that the foregoing lists of important factors are not exhaustive, and they should not unduly rely on the ‎forward-looking statements included in this news release. All forward-looking statements contained in this news release are expressly ‎qualified by this cautionary statement. Quarterhill has no intention, and undertakes no obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law. This news release contains "future-oriented financial information" and "financial outlooks" within the meaning of applicable Canadian securities laws (collectively, "FOFI"), including about the financial results, revenue, gross margin and Adjusted EBITDA of Quarterhill for the year ended December 31, 2024. FOFI, as with forward-looking ‎statements ‎generally, are, without limitation, based on the assumptions and qualifications, and are subject to the risks, set out ‎above in respect of forward-looking statements. Quarterhill's actual financial position and results of operations may differ materially from ‎management's ‎current expectations and, as a result, the Company's financial results may differ ‎materially from ‎the FOFI provided in this news release. The Company and its management believe that the FOFI has been prepared on a reasonable basis, reflecting management's best estimates and judgments and the FOFI contained in this news release was approved by management as of the date hereof, for purposes of providing further information about the Company's future business operations and results. However, because this information is subjective and subject to numerous risks and assumptions, it should not be relied on as necessarily indicative of future results. Except as required by applicable securities laws, the Company undertakes no obligation to update such FOFI. Readers are cautioned that the FOFI contained in this news release should not be used for purposes other than for which it is disclosed herein, and such information is ‎presented for ‎illustrative purposes only and may not be an indication of the Company's actual ‎financial position or ‎results of operations.‎ Interim Condensed Consolidated Statements of Loss and Comprehensive Loss (in thousands and in United States dollars, except share and per share amounts) Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 (restated) (restated) Revenues $41,513 $38,623 $76,410 $66,969 Direct cost of revenues 32,997 28,616 61,537 53,205 Gross profit 8,516 10,007 14,873 13,764 Operating expenses Selling, general and administrative expenses 7,073 6,132 13,448 13,090 Research and development expenses 479 1,008 796 1,877 Depreciation of right-of-use assets 364 384 708 721 Depreciation of property, plant and equipment 383 407 760 818 Amortization of intangible assets 2,140 2,088 4,377 4,175 Other charges 321 555 1,155 1,519 10,760 10,574 21,244 22,200 Results from operations (2,244) (567) (6,371) (8,436) Finance income (97) (27) (365) (60) Finance expense 1,651 1,731 3,356 3,368 Foreign exchange (gain) loss (387) 769 (1,497) 1,104 Other income (267) (227) (134) (458) Change in fair value of derivative liability (432) (11) (927) (215) Loss before taxes (2,712) (2,802) (6,804) (12,175) Current income tax expense (recovery) 272 (2,688) 345 (2,570) Deferred income tax (recovery) expense (17) 10,073 36 9,665 Income tax expense 255 7,385 381 7,095 Net loss from continuing operations (2,967) (10,187) (7,185) (19,270) Net loss from discontinued operations - (11,594) - (14,061) Net loss (2,967) (21,781) (7,185) (33,331) Other comprehensive loss that may be reclassified subsequently to net loss: Foreign currency translation adjustment (247) (2,905) (932) (2,590) Comprehensive loss ($3,214) ($24,686) ($8,117) ($35,921) Loss per share - Basic From continuing operations ($0.03) ($0.09) ($0.06) ($0.17) From discontinued operations - (0.10) - (0.12) Loss per share - Basic ($0.03) ($0.19) ($0.06) ($0.29) Loss per share - Diluted From continuing operations ($0.03) ($0.09) ($0.06) ($0.17) From discontinued operations - (0.10) - (0.12) Loss per share - Diluted ($0.03) ($0.19) ($0.06) ($0.29) Interim Condensed Consolidated Statements of Financial Position (in thousands and in United States dollars) As at June 30, 2024 December 31, 2023 January 1, 2023 (restated) (restated) Current assets Cash and cash equivalents $24,041 $42,733 $48,905 Short-term investments - - 1,142 Restricted short-term investments - - 4,812 Accounts receivable, net 29,396 27,291 17,155 Unbilled revenue 39,465 34,247 30,529 Income taxes receivable 130 - 251 Inventories (net of obsolescence) 11,453 10,760 10,076 Prepaid expenses and deposits 4,067 4,795 5,050 108,552 119,826 117,920 Non-current assets Accounts and other long-term receivables 4,516 4,364 397 Long-term prepaid expenses and deposits - - 1,257 Right-of-use assets, net 5,452 5,288 7,600 Property, plant and equipment, net 3,786 4,136 5,104 Intangible assets, net 79,799 79,092 104,164 Investment in joint venture 4,782 5,054 5,712 Investment in other entity 2,898 2,898 - Deferred compensation asset 1,048 952 991 Deferred income tax assets - - 18,903 Goodwill 31,046 29,019 41,556 133,327 130,803 185,684 TOTAL ASSETS $241,879 $250,629 $303,604 Liabilities Current liabilities Accounts payable and accrued liabilities $28,350 $30,330 $34,685 Income taxes payable 734 662 724 Current portion of lease liabilities 2,056 1,954 1,924 Current portion of deferred revenue 6,869 5,806 6,295 Current portion of long-term debt 2,125 2,125 21,588 Convertible debentures 37,840 38,196 35,655 Derivative liability 1,296 2,290 1,316 79,270 81,363 102,187 Non-current liabilities Deferred revenue 1,252 621 2,022 Long-term lease liabilities 5,529 5,727 7,116 Long-term debt 16,293 17,312 - Deferred compensation liabilities 1,065 945 862 Deferred income tax liabilities 2,032 1,221 1,519 26,171 25,826 11,519 TOTAL LIABILITIES 105,441 107,189 113,706 Shareholders' equity Capital stock 314,119 313,738 401,248 Contributed surplus 126,863 126,129 37,545 Accumulated other comprehensive income 14,720 15,652 15,928 Deficit (319,264) (312,079) (264,823) 136,438 143,440 189,898 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $241,879 $250,629 $303,604 Interim Condensed Consolidated Statements of Cash Flows (in thousands and in United States dollars) Three months ended June 30, Six months ended June 30, 2024 2023 2024 2023 (restated) Operating activities: Net loss from continuing operations ($2,967) ($10,187) ($7,185) ($19,270) Add (deduct) non-cash items: Stock-based compensation expense 708 39 1,212 270 Depreciation and amortization 2,887 2,879 5,845 5,714 Foreign exchange (gain) loss (387) 769 (1,497) 1,104 Other income (315) (227) (134) (458) Deferred and non-cash income tax (recovery) expense (17) 10,073 36 9,665 Embedded derivatives (33) - 6 93 Change in fair value of derivative liability (432) (11) (927) (215) Non-cash interest expense 552 873 1,092 1,351 Net change in non-cash working capital balances 806 (11,083) (7,760) (11,704) Cash generated from (used in) continuing operations 802 (6,875) (9,312) (13,450) Net operating cash flows attributable to discontinued operations - (3,378) - (4,685) Net cash generated from (used in) operating activities 802 (10,253) (9,312) (18,135) Financing activities: Dividends paid - (1,067) - (2,127) Payment of lease liabilities (561) (436) (1,138) (828) Repayment of long-term debt (531) (625) (1,062) (1,250) Cash used in financing activities (1,092) (2,128) (2,200) (4,205) Net financing cash flows attributable to discontinued operations - (51) - (100) Net cash used in financing activities (1,092) (2,179) (2,200) (4,305) Investing activities: Net proceeds from disposition of a subsidiary - 32,021 - 32,021 Cash sold on disposition of a subsidiary - (8,000) - (8,000) Acquisition of business, Red Fox (7,181) - (7,181) - Cash acquired on acquisition of business, Red Fox 2,296 - 2,296 - Proceeds from sale of property, plant and equipment 10 - 10 - Purchase of property, plant and equipment (344) (305) (545) (638) Capitalized software costs (650) (932) (1,373) (2,316) Cash (used in) generated from investing activities (5,869) 22,784 (6,793) 21,067 Net investing cash flows attributable to discontinued operations - 1,194 - 1,194 Net cash used in investing activities (5,869) 23,978 (6,793) 22,261 Foreign exchange on cash held in foreign currencies (223) (2,514) (386) (2,692) Net (decrease) increase in cash and cash equivalents (6,382) 9,032 (18,692) (2,871) Cash and cash equivalents, beginning of period 30,423 37,002 42,733 48,905 Cash and cash equivalents, end of period $24,041 $46,034 $24,041 $46,034 Interim Condensed Consolidated Statements of Shareholders' Equity (in thousands and in United States dollars) Capital Stock Contributed Surplus Accumulated Other Comprehensive Income Deficit Total Shareholders' Equity Balance, January 1, 2023 (restated) $401,248 $37,545 $15,928 ($264,823) $189,898 Net loss - - - (33,331) (33,331) Other comprehensive loss - - (2,590) - (2,590) Stock-based compensation expense - 288 - - 288 Common shares issued from restricted stock units 60 (63) - - (3) Reduction of stated capital (87,948) 87,948 - - - Dividends declared - - - (1,060) (1,060) Balance, June 30, 2023 $313,360 $125,718 $13,338 ($299,214) $153,202 Balance, January 1, 2024 $313,738 $126,129 $15,652 ($312,079) $143,440 Net loss - - - (7,185) (7,185) Other comprehensive loss - - (932) - (932) Stock-based compensation expense - 1,212 - - 1,212 Common shares issued from restricted stock units 326 (423) - - (97) Common shares issued from deferred stock units 55 (55) - - - Balance, June 30, 2024 $314,119 $126,863 $14,720 ($319,264) $136,438 Reconciliation of Net Loss to Adjusted EBITDA (in thousands and in United States dollars, except share and per share amounts) Three months ended June 30, 2024 2023 $ Per Share [2] $ Per Share (restated) Net loss from continuing operations ($2,967) ($0.03) ($10,187) ($0.09) Adjusted for: Income tax expense 255 0.00 7,385 0.06 Foreign exchange (gain) loss (387) (0.00) 769 0.01 Finance expense, net 1,554 0.01 1,704 0.02 Other charges 321 0.00 555 0.01 Depreciation and amortization 2,887 0.03 2,879 0.03 Stock based compensation expense 708 0.01 39 0.00 Change in fair value of derivative liability (432) (0.00) (11) (0.00) Other income (267) (0.00) (227) (0.00) Adjusted EBITDA [1] $1,672 $0.01 $2,906 $0.03 ________________ ________________ ________________ ________________ Weighted average number of Common Shares Basic 115,274,980 114,649,772 Six months ended June 30, 2024 2023 $ Per Share [2] $ Per Share (restated) Net loss from continuing operations ($7,185) ($0.06) ($19,270) ($0.17) Adjusted for: Income tax expense 381 - 7,095 0.06 Foreign exchange gain (1,497) (0.01) 1,104 0.01 Finance expense, net 2,991 0.03 3,308 0.03 Other charges 1,155 0.01 1,519 0.01 Depreciation and amortization 5,845 0.05 5,714 0.05 Stock based compensation expense 1,212 0.01 270 0.00 Change in fair value of derivative liability (927) (0.01) (215) (0.00) Other income (134) - (458) (0.00) Adjusted EBITDA [1] $1,841 $0.02 ($933) ($0.01) ________________ ________________ ________________ ________________ Weighted average number of Common Shares Basic 115,186,092 114,644,764 1. Please refer to the Adjusted EBITDA Non- IFRS Financial Measures section for further information. 2. Please refer to the Supplementary Financial Measures for further information. View original content:https://www.prnewswire.com/news-releases/quarterhill-announces-q2-2024-financial-results-302218638.html SOURCE Quarterhill Inc. Market News and Data brought to you by Benzinga APIs

DarioHealth Reports Second Quarter 2024 Financial and Operating Results - DarioHealth (NASDAQ:DRIO)

Q2 revenue of $6.26 million reflects an increase of 8.6% over Q1 2024, and an increase of 1.7% over Q2 of 2023, driven primarily by increased B2B2C revenues Q2 commercial and consumer revenues totaled $7.34 million before a non-recurring price concession in collaboration with a pharma partner, compared to $3.57 million for Q2 of 2023, representing a 105% increaseCore B2B2C revenue channel, recurring revenues from employers and health plans in the second quarter totaled $5.5 million, an increase of 315% year over year and 60% sequentially from the first quarter of 2024Made progress on collaboration with existing and potential pharma clients to accelerate a transformation to a new, recurring, and more stable revenue-based business model in our pharma channel, which is currently milestone based.Strong business momentum on cross selling of Twill offering to Dario clients with at least 10 initial clientsExecuted on Dario-Twill synergies that expect to reduce operating expenses by approximately 40% by Q1 2025 compared to Q1 2024, aiding in an expected reduction in operating losses of at least 70% by Q1 2025Saw increased GLP-1 product adoption across new and existing clients seeking our metabolic solutions, with 9 clients implementing already and several more expected in 2024.Company expects to reach cashflow breakeven by the end of 2025Ended Q2 2024 with cash equivalents of $22.9 millionCompany to host investor conference call and webcast at 8:30 a.m. ET today Q2 2024 and Recent Highlights NEW YORK, Aug. 8, 2024 /PRNewswire/ -- DarioHealth Corp. DRIO ("Dario" or the "Company"), a leader in the global digital health market, today reported financial results for the second quarter 2024. In the second quarter, we drove significant growth in our core business-to-business-to-consumer (B2B2C) channel. Our B2B2C channel grew 60% sequentially over the first quarter of 2024, and 315% over the second quarter of 2023, primarily due to Aetna customer sign on, expansions of existing customer contracts, new customer launches, and the addition of Twill, Inc. ("Twill") revenues following our acquisition of Twill in the first quarter of 2024. The organic sequential growth of this channel is 28%. Our legacy direct to consumer (B2C) business remains at its consistent run rate at $7.6 million. We are continuing the momentum of scaling of our business and realizing the benefits of the strategic decisions we have made over the past few quarters. Our growing confidence in our ability to meet our target of cash flow breakeven by the end of 2025 is supported by recent progress in our core high margin B2B2C channel that reached $21.6 million in annual recurring revenues (ARR). We signed multiple contracts in 2024 so far, saw more employers sign on to the Aetna platform, and many of Dario's clients have agreed to adopt the Twill platform, providing validation that our cross-selling efforts will help further us towards reaching cash flow breakeven. "Looking ahead, we anticipate a significant reduction in operating losses over the next three quarters driven by continued revenue growth and aggressive cost-cutting measures implemented post-Twill merger. These cost reduction initiatives, which commenced in early May 2024 and were completed in early August 2024, are expected to yield a 24% decrease in GAAP operating expenses, and a 40% decrease in non-GAAP operating expenses from the first quarter of 2024 to the first quarter of 2025. Additionally, we expect gross margins to climb to 80% by the first quarter of 2025, as our core B2B2C revenues have already reached 82% gross margins in the second quarter. These combined efforts are anticipated to result in a 58% reduction in GAAP operating loss and 75% reduction in non-GAAP operating losses between the first quarter of 2024 and the first quarter of 2025, providing a clear path to cash flow breakeven by the end of 2025," stated Erez Raphael, Chief Executive Officer of Dario. "Our core B2B2C revenue saw an increase in the second quarter as we saw the significant impact of new customer launches, customer expansions, and the transformative impact of the Twill acquisition," stated Steven Nelson, Dario's Chief Commercial Officer. "We continue to see meaningful traction with our GLP-1 product among new and existing contracts, with 9 clients already implementing the product and several others in the pipeline. We see an increasing opportunity for revenue growth with the GLP-1 product as more and more clients have expressed interest in this product each quarter. Aetna continues to add customers to its existing Mind Companion platform, a trend we expect to continue. We've signed agreements to expand with a health plan customer and other off-cycle employers, which are anticipated to launch this year. Our commercial pharma channel, traditionally reliant on milestone-based revenue, presents a significant growth opportunity. The industry's shift towards direct-to-consumer models aligns perfectly with our expanded capabilities following the acquisition of Twill. We are confident that our Dario-Twill consumer hub platform, coupled with our enhanced offerings, positions us as a premier partner for pharma companies seeking to engage patients effectively. We are actively collaborating with existing and potential pharma clients to accelerate this transformation and maximize the value of our new, recurring, and more stable revenue-based business model. To facilitate this strategic transition, we have granted a one-time price concession of $1.1 million to a strategic partner. This decision reflects our commitment to balancing short-term adjustments with long-term growth prospects. While we anticipate a potential near-term reduction in channel revenues as we focus on securing long-term, sustainable growth, we are actively collaborating with existing and potential clients to accelerate this transformation and maximize the value of our new business model. We see a growing opportunity to expand on our foundational artificial intelligence (AI) capabilities given the data and tools that have had for years and are now of growing importance to our business model. We believe that the integration of generative AI and microservices is set to revolutionize drug discovery, consumer engagement, and personalization, with proprietary data sets poised for internal and external monetization, and we have a market leading capability to capitalize on this movement. With our strong cash position, we believe that we are well-equipped to execute our strategy and solidify Dario's leadership in the digital health space," concluded Mr. Nelson. Additional Q2 2024 and Recent Highlights Signed multiple new customer contracts and obtained commitments from some Dario clients to adopt the Twill platform beginning in January 2025, because of cross selling efforts.Announced a strategic management restructuring with the appointment of Steven Nelson as Dario's inaugural Chief Commercial Officer.Announced two new studies presented at the 84th Annual American Diabetes Association (ADA) Scientific Sessions in Orlando, demonstrating 12 months of sustained healthy behavior change for Dario members taking a GLP-1.Announced new research published in the leading peer-reviewed journal for digital health and medicine, Journal of Internet Medicine (JMIR) demonstrating a clinically significant reduction in blood glucose levels for members using Dario to manage weight alongside diabetes.Announced two new studies published in the leading peer-reviewed journal for digital health and medicine, Journal of Internet Medicine (JMIR), including a Randomized Controlled Trial (RCT) demonstrating the impact of a digital stress reduction program for teens. Second Quarter 2024 Results Summary Revenues for the second quarter ended June 30, 2024, were $6.26 million, a 1.7% increase from $6.15 million for the second quarter ended June 30, 2023, and an increase of 8.6% from $5.76 million for the first quarter of 2024. The increase compared to the quarter ended June 30, 2023, resulted from an increase in revenues from the B2B2C channel and the consolidation of Twill revenues. B2B2C, employers and health plans recurring revenues for the second quarter ended June 30, 2024, were $5.5 million compared to $1.34 million in the quarter ended June 30, 2023, representing an increase of 315%, and compared to $3.5 million in the first quarter of 2024, representing an increase of 59.7% sequentially. Gross profit for the second quarter ended June 30, 2024, was $2.76 million, an increase of $682,000 or 32.9%, compared to gross profit of $2.07 million for the second quarter of 2023, and an increase of 13.3% from $2.43 for the first quarter of 2024. The reason for this increase is the increase in our B2B2C revenues. Gross profit as a percentage of revenues increased to 44.1% in the second quarter of 2024, from 33.7% in the second quarter of 2023, and 42.2% in the first quarter of 2024. Pro-forma gross profit, excluding $1.23 million of amortization expenses related to the acquisition of technology, was $4.0 million, or 63.8% of revenues, for the three months ended June 30, 2024, compared to pro-forma gross profit of $3.17 million, or 51.5% of revenues, for the three months ended June 30, 2023, and a pro-forma gross profit of $3.6 million, or 62.4% of revenues, for the three months ended March 31, 2024. A reconciliation of GAAP to non-GAAP measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures." Total operating expenses for the second quarter ended June 30, 2024, were $18.9 million compared with $16.1 million for the second quarter ended June 30, 2023, and $20.3 million for the first quarter of 2024, an increase of $2.8 million, or 17.7%, compared to the second quarter of 2023, and a decrease of $1.4 million, or 6.6%, compared to the first quarter of 2024. The increase compared to the second quarter ended June 30, 2023, resulted mainly from the acquisition of Twill. The decrease compared to the first quarter of 2024 resulted mainly from a decrease in stock-based compensation expenses. Total operating expenses excluding stock-based compensation, acquisition related expenses and depreciation for the second quarter of 2024 were $14.7 million compared to $10.7 million for the second quarter of 2023, and $12.7 million for the first quarter of 2024. Operating loss for the second quarter of 2024 was $16.2 million, an increase of $2.2 million, or 15.5%, compared to $14 million for the second quarter of 2023, and a decrease of $1.7 million, or 9.3%, compared to $17.9 million for the first quarter of 2024. The increase compared to the second quarter of 2023 was due to the increase in operating expenses. The decrease compared to the first quarter of 2024 was due to the decrease in operating expenses. Financing income was $2.6 million for the second quarter of 2024, compared to financing expense of $2.6 million for the second quarter of 2023. The reason for this increase was the revaluation of the pre-funded warrants issued as part of the consideration for the acquisition of Twill, due to its classification as a liability according to GAAP rules. Net loss was $13.6 million in the second quarter of 2024, a decrease of $3.0 million, or 17.9%, compared to a net loss of $16.6 million in the second quarter of 2023, and an increase of $6.4 million, or 89.7%, compared to $7.2 million in the first quarter of 2024. Net loss excluding stock-based compensation, acquisition related expenses and depreciation for the second quarter of 2024 was $8.1 million compared to a loss of $10 million for the second quarter of 2023, and a profit of $1.6 million in the first quarter of 2024. A reconciliation of GAAP to non-GAAP measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures." Financial Results for the Six Months Ended June 30, 2024: Revenues for the six months ended June 30, 2024, were $12 million, a 9.1% decrease from $13.2 million for the six months ended June 30, 2023. Gross profit for the six months ended June 30, 2024, was $5.19 million, a decrease of 1%, or $54,000, compared to gross profit of $5.24 million for the six months ended June 30, 2023. Pro-forma gross profit, excluding $2.4 million of amortization of expenses related to acquisitions, was $7.6 million for the six months ended June 30, 2024, compared to a pro-forma gross profit of $7.4 million for the six months ended June 30, 2023. Pro-forma gross profit margin, excluding amortization of acquisition related expenses, was 63.1% for the six months ended June 30, 2024, compared to 56.1% for the six months ended June 30, 2023. A reconciliation of GAAP to non-GAAP measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures." Total operating expenses for the six months ended June 30, 2024, were $39.2 million, an increase of $7.5 million, or 23.9%, compared with $31.7 million for the six months ended June 30, 2023. The increase resulted from the acquisition of Twill. Total operating expenses excluding stock-based compensation, amortization of acquisition related expenses and depreciation for the six months ended June 30, 2024, were $27.4 million compared to $21.4 million for the six months ended June 30, 2023. Operating loss for the six months ended June 30, 2024, increased by $7.6 million to $34.0 million, compared to a $26.4 million operating loss for the six months ended June 30, 2023. This increase is mainly due to the increase in operating expenses. Financing income was $11.3 million for the six months ended June 30 2024, compared to financing expense of $3.0 million for the six months ended June 30, 2023. The reason for this increase was the revaluation of the pre-funded warrants issued as part of the consideration for the acquisition of Twill, due to its classification as a liability according to GAAP rules. Net loss was $20.8 million for the six months ended June 30, 2024, compared to a net loss of $29.4 million for the six months ended June 30, 2023. The decrease was driven by the increase in financing income. A reconciliation of GAAP to non-GAAP measures has been provided in the financial statement tables included in this press release. An explanation of these measures is also included below under the heading "Non-GAAP Financial Measures." Conference Call Details: Thursday, August 8, 8:30am ET Dial-in Number: 1-800-717-1738 (domestic) or 1-646-307-1865 (international) Call me™: https://emportal.ink/3V5ogDP Participants can use the dial-in numbers above and be answered by an operator OR click the Call me™ link for instant telephone access to the event. This link will be made active 15 minutes prior to scheduled start time. Webcast link: https://viavid.webcasts.com/starthere.jsp?ei=1672806&tp_key=f245af335e Participants are asked to dial in approximately 10 minutes prior to the start of the event. A replay of the call will be available approximately two hours after completion through Sunday, September 8th, 2024. To listen to the replay, dial 1-844-512-2921 (domestic) or 1-412-317-6671 (international) and use replay passcode 1163410. About DarioHealth Corp. DarioHealth Corp. DRIO is a leading digital health company revolutionizing how people with chronic conditions manage their health through a user-centric, multi-chronic condition digital therapeutics platform. Our platform and suite of solutions deliver personalized and dynamic interventions driven by data analytics and one-on-one coaching for diabetes, hypertension, weight management, musculoskeletal pain and behavioral health. Our user-centric platform offers people continuous and customized care for their health, disrupting the traditional episodic approach to healthcare. This approach empowers people to holistically adapt their lifestyles for sustainable behavior change, driving exceptional user satisfaction, retention and results and making the right thing to do the easy thing to do. Dario provides its highly user-rated solutions globally to health plans and other payers, self-insured employers, providers of care and consumers. To learn more about Dario 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 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, when the Company discusses its expected reduced operating expenses expected by Q1 2025 and the resulting operating losses by such time period, that it expects to reach breakeven by the end of 2025, its expected breakeven timeline is supported by its progress in its high margin B2B2C channel, its expected ARR in its B2B2C channel, that client adoption of the Twill platform will help it towards it cross-selling efforts, that it anticipates a significant reduction in operating losses over the next three quarters driven by robust revenue growth and aggressive cost-cutting measures, that its cost cutting measures are expected to yield a 41% decrease in operating expenses from the first quarter of 2024 to the first quarter of 2025, that it projects gross margin to climb to 80% by the first quarter of next year, that it believes it has a clear and direct path to reaching profitability in the second half of 2025, the expected timing of its client launch, that it sees an increasing opportunity for revenue growth with the GLP-1 product as more and more clients express interest in this product each quarter, that Aetna continues to add customers to the existing Mind Companion platform, a trend it expects to continue, that its commercial pharma channel, traditionally reliant on milestone-based revenue, presents a significant growth opportunity, thar while it anticipates a potential near-term reduction in channel revenues as it focuses on securing long-term, sustainable growth, it is actively collaborating with existing and potential clients to accelerate this transformation and maximize the value of its new business model, and that with its strong cash position, it believes that it is well-equipped to execute its strategy and solidify Dario's leadership in the digital health space. 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. Non-GAAP Financial Measures We have provided in this release financial information that has not been prepared in accordance with Generally Accepted Accounting Principles (GAAP). These non-GAAP financial measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies. We use these non-GAAP financial measures internally in analyzing our financial results and believe they are useful to investors, as a supplement to GAAP measures, in evaluating our ongoing operational performance. We believe that the use of these non-GAAP financial measures provides an additional tool for investors to use in evaluating ongoing operating results and trends and in comparing our financial results with peer companies, many of which present similar non-GAAP financial measures to investors. Non-GAAP financial measures should not be considered in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measures provided in the financial statement tables below. Operating expenses (non-GAAP). Our presentation of non-GAAP operating expenses excludes stock-based compensation expenses, amortization of acquisition related expenses and depreciation of fixed assets. Due to varying available valuation methodologies, subjective assumptions, and the variety of equity instruments that can impact a company's non-cash operating expenses, we believe that providing non-GAAP financial measures that exclude non-cash expenses provides us with an important tool for financial and operational decision making and for evaluating our own core business operating results over different periods of time. Net loss (non-GAAP). Our presentation of adjusted net loss excludes the effect of certain items that are non-GAAP financial measures. Adjusted net loss represents net loss determined under GAAP without regard to stock-based compensation expenses, deferred inventory, depreciation of fixed assets, earn-out remeasurement and acquisition related expenses and amortization. We believe these measures provide useful information to management and investors for analysis of our operating results. DARIOHEALTH CORP. AND ITS SUBSIDIARIES INTERIM CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands June 30, December 31, 2024 2023 Unaudited ASSETS CURRENT ASSETS: Cash and cash equivalents $ 22,938 $ 36,797 Short-term restricted bank deposits 859 292 Trade receivables, net 6,731 3,155 Inventories 5,133 5,062 Other accounts receivable and prepaid expenses 3,679 2,024 Total current assets 39,340 47,330 NON-CURRENT ASSETS: Deposits 6 6 Operating lease right of use assets 1,547 967 Long-term assets 134 143 Property and equipment, net 1,334 899 Intangible assets, net 22,346 5,404 Goodwill 57,427 41,640 Total non-current assets 82,794 49,059 Total assets $ 122,134 $ 96,389 DARIOHEALTH CORP. AND ITS SUBSIDIARIES INTERIM CONSOLIDATED BALANCE SHEETS U.S. dollars in thousands (except stock and stock data) June 30, December 31, 2024 2023 Unaudited LIABILITIES AND STOCKHOLDERS' EQUITY CURRENT LIABILITIES: Trade payables $ 3,351 $ 1,131 Deferred revenues 1,515 997 Operating lease liabilities 884 111 Other accounts payable and accrued expenses 6,475 6,300 Current maturity of long-term loan 5,191 3,954 Total current liabilities 17,416 12,493 NON-CURRENT LIABILITIES Operating lease liabilities 1,118 885 Long-term loan 23,440 24,591 Warrant liability 12,054 240 Other long-term liabilities 51 36 Total non-current liabilities 36,663 25,752 STOCKHOLDERS' EQUITY Common stock of $0.0001 par value - authorized: 160,000,000 shares; issued and outstanding: 30,024,275 and 27,191,849 shares on June 30, 2024 and December 31, 2023, respectively 3 3 Preferred stock of $0.0001 par value - authorized: 5,000,000 shares; issued and outstanding: 40,331 and 18,959 shares on June 30, 2024 and December 31, 2023, respectively *) - *) - Additional paid-in capital 431,526 407,502 Accumulated deficit (363,474) (349,361) Total stockholders' equity 68,055 58,144 Total liabilities and stockholders' equity $ 122,134 $ 96,389 DARIOHEALTH CORP. AND ITS SUBSIDIARIES INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS U.S. dollars in thousands (except stock and stock data) Three months ended Six months ended June 30, June 30, 2024 2023 2024 2023 Unaudited Unaudited Revenues: Services $ 4,660 $ 4,149 $ 8,820 $ 9,406 Consumer hardware 1,595 2,003 3,193 3,812 Total revenues 6,255 6,152 12,013 13,218 Cost of revenues: Services 960 1,625 1,925 3,102 Consumer hardware 1,306 1,359 2,504 2,699 Amortization of acquired intangible assets 1,233 1,094 2,396 2,175 Total cost of revenues 3,499 4,078 6,825 7,976 Gross profit 2,756 2,074 5,188 5,242 Operating expenses: Research and development $ 6,810 $ 5,222 $ 13,452 $ 10,387 Sales and marketing 7,132 6,460 14,042 12,800 General and administrative 5,005 4,412 11,740 8,483 Total operating expenses 18,947 16,094 39,234 31,670 Operating loss 16,191 14,020 34,046 26,428 Total financial expenses (income), net (2,581) 2,565 (11,267) 2,982 Loss before taxes 13,610 16,585 22,779 29,410 Income Tax -- -- 1,994 -- Net loss $ 13,610 $ 16,585 $ 20,785 $ 29,410 Other comprehensive loss: Deemed dividend (contribution) $ (8,706) $ 1,691 $ (6,672) $ 1,691 Net loss attributable to common shareholders $ 4,904 $ 18,276 $ 14,113 $ 31,101 Net loss per share: Basic and diluted loss per share of common stock $ 0.08 $ 0.58 $ 0.27 $ 1.03 Weighted average number of common stock used in computing basic and diluted net loss per share 39,830,793 28,186,345 37,778,087 27,879,881 DARIOHEALTH CORP. AND ITS SUBSIDIARIES INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS U.S. dollars in thousands Six months ended June 30, 2024 2023 Unaudited Cash flows from operating activities: Net loss $ (20,785) $ (29,410) Adjustments required to reconcile net loss to net cash used in operating activities: Stock-based compensation 10,420 10,148 Depreciation and impairment 648 191 Change in operating lease right of use assets 425 135 Amortization of acquired intangible assets 2,516 2,238 Decrease (increase) in trade receivables, net (247) 1,595 Increase in other accounts receivable, prepaid expense and long-term assets (1,171) (476) Decrease (increase) in inventories (71) 2,042 Decrease in trade payables (190) (871) Decrease in other accounts payable and accrued expenses (3,034) (865) Decrease in deferred revenues (224) (531) Change in operating lease liabilities (417) (90) Change in fair value of warrant liability (12,643) -- Non-Cash financial expenses 204 1,501 Other 96 -- Net cash used in operating activities (24,473) (14,393) Cash flows from investing activities: Purchase of property and equipment (85) (220) Purchase of short-term investments -- (4,996) Proceeds from redemption of short-term investments -- 5,033 Payments for business acquisitions, net of cash acquired (8,796) -- Net cash used in investing activities (8,881) (183) Cash flows from financing activities: Proceeds from issuance of common stock, net of issuance costs - 1,410 Proceeds from issuance of preferred stock, net of issuance costs 20,206 14,868 Proceeds from borrowings on credit agreement -- 29,604 Repayment of long-term loan -- (27,833) Net cash provided by financing activities 20,206 18,049 Increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents (13,148) 3,473 Effect of exchange rate differences on cash, cash equivalents and restricted cash and cash equivalents (48) -- Cash, cash equivalents and restricted cash and cash equivalents at beginning of period 36,797 49,470 Cash, cash equivalents and restricted cash and cash equivalents at end of period $ 23,601 $ 52,943 Supplemental disclosure of cash flow information: Cash paid during the period for interest on long-term loan $ 1,972 $ 2,044 Non-cash activities: Right-of-use assets obtained in exchange for lease liabilities $ 428 $ 14 Reconciliation of Operating Loss, Net Loss and Operating Expenses to Adjusted Operating Loss, Net Loss and Operating Expenses (Non-GAAP) U.S. dollars in thousands Three months ended June 30, 2024 GAAP Stock-Based Compensation Expenses Amortization of acquisition related expenses and depreciation of fixed assets Non-GAAP Cost of Revenues $ 3,499 (5) (1,248) 2,246 Gross Profit 2,756 5 1,248 4,009 Research and development 6,810 (448) (63) 6,299 Sales and Marketing 7,132 (1,650) (94) 5,388 General and Administrative 5,005 (1,459) (553) 2,993 Total Operating Expenses 18,947 (3,557) (710) 14,680 Operating Loss $ (16,191) 3,562 1,958 (10,671) Financing expenses (2,581) - - (2,581) Income Tax - - Net Loss $ (13,610) 3,562 1,958 (8,090) Reconciliation of Operating Loss, Net Loss and Operating Expenses to Adjusted Operating Loss, Net Loss and Operating Expenses (Non-GAAP) U.S. dollars in thousands Three months ended June 30, 2023 GAAP Stock-Based Compensation Expenses Amortization of acquisition related expenses and depreciation of fixed assets Non-GAAP Cost of Revenues $ 4,078 (17) (1,124) 2,937 Gross Profit 2,074 17 1,124 3,215 Research and development 5,222 (1,302) (16) 3,904 Sales and Marketing 6,460 (1,824) (45) 4,591 General and Administrative 4,412 (2,149) (34) 2,229 Total Operating Expenses 16,094 (5,275) (95) 10,724 Operating Loss $ (14,020) 5,292 1,219 (7,509) Financing expenses 2,565 - - 2,565 Income Tax - - Net Loss $ (16,585) 5,292 1,219 (10,074) Reconciliation of Operating Loss, Net Loss and Operating Expenses to Adjusted Operating Loss, Net Loss and Operating Expenses (Non-GAAP) U.S. dollars in thousands Six months ended June 30, 2024 GAAP Stock-Based Compensation Expenses Amortization of acquisition related expenses and depreciation of fixed assets Non-GAAP Cost of Revenues $ 6,825 (12) (2,425) 4,388 Gross Profit 5,188 12 2,425 7,625 Research and development 13,452 (1,563) (124) 11,765 Sales and Marketing 14,042 (3,406) (170) 10,466 General and Administrative 11,740 (5,439) (1,158) 5,143 Total Operating Expenses 39,234 (10,408) (1,452) 27,374 Operating Loss $ (34,046) 10,420 3,877 (19,749) Financing expenses (11,267) - - (11,267) Income Tax (1,994) (1,994) Net Loss $ (20,785) 10,420 3,877 (6,488) Reconciliation of Operating Loss, Net Loss and Operating Expenses to Adjusted Operating Loss, Net Loss and Operating Expenses (Non-GAAP) U.S. dollars in thousands Six months ended June 30, 2023 GAAP Stock-Based Compensation Expenses Amortization of acquisition related expenses and depreciation of fixed assets Non-GAAP Cost of Revenues $ 7,976 (44) (2,236) 5,696 Gross Profit 5,242 44 2,236 7,522 Research and development 10,387 (2,487) (35) 7,865 Sales and Marketing 12,800 (3,671) (89) 9,040 General and Administrative 8,483 (3,946) (69) 4,468 Total Operating Expenses 31,670 (10,104) (193) 21,373 Operating Loss $ (26,428) 10,148 2,429 (13,851) Financing expenses 2,982 - - 2,982 Income Tax - - Net Loss $ (29,410) 10,148 2,429 (16,833) DarioHealth Corporate Contact Mary Mooney VP Marketing [email protected] +1-312-593-4280 DarioHealth Investor Relations Contact Kat Parrella Investor Relations Manager [email protected] +315-378-6922 Media Contact: Scott Stachowiak [email protected] +1-646-942-5630 Logo - 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Lilly Reports Q2 2024 Financial Results, Raises Full-Year Revenue Guidance by $3 Billion - Eli Lilly (NYSE:LLY)

Revenue in Q2 2024 increased 36%, driven by Mounjaro, Zepbound and Verzenio. When excluding $579.0 million of revenue from the sale of rights for Baqsimi in Q2 2023, revenue in Q2 2024 increased 46%. Excluding the sale of rights for Baqsimi, non-incretin revenue increased 17% worldwide and 25% in the U.S.Q2 2024 EPS increased 68% to $3.28 on a reported basis and increased 86% to $3.92 on a non-GAAP basis, both inclusive of $0.14 of acquired IPR&D charges.2024 full-year revenue guidance raised by $3 billion; reported EPS guidance raised $2.05 to the range of $15.10 to $15.60, and non-GAAP EPS guidance raised $2.60 to the range of $16.10 to $16.60. Pipeline progress included approval of Kisunla in the U.S. for Alzheimer's disease and Jaypirca in Japan for relapsed or refractory mantle cell lymphoma. Additional progress included submission of tirzepatide in the U.S. and EU for obstructive sleep apnea and obesity, and positive topline results from the Phase 3 trial evaluating tirzepatide for heart failure with preserved ejection fraction and obesity. INDIANAPOLIS, Aug. 8, 2024 /PRNewswire/ -- Eli Lilly and Company LLY today announced its financial results for the second quarter of 2024. "Mounjaro, Zepbound and Verzenio led our strong financial performance in the second quarter as we advanced our manufacturing expansion agenda, and it is equally exciting to see the growth around the world of our medicines for cancer, neurological disorders and autoimmune diseases," said David A. Ricks, Lilly's chair and CEO. "We also recently received approval of Kisunla to help people with Alzheimer's disease, a moment that was decades in the making. Lilly's performance and progress in Alzheimer's, metabolic disorders and many other serious diseases highlight the tenacity, focus and capability of our scientists, clinicians, engineers, customer teams and collaborators." Lilly shared numerous updates recently on key regulatory, clinical, business development and other events, including: U.S. Food and Drug Administration (FDA) approval of Kisunla™ (donanemab-azbt) for the treatment of Alzheimer's disease;Approval of Jaypirca® in Japan for people with relapsed or refractory mantle cell lymphoma who are resistant or intolerant to other Bruton tyrosine kinase inhibitors;Submission of tirzepatide in the U.S. and EU for the treatment of moderate-to-severe obstructive sleep apnea in adults with obesity;Submission of mirikizumab in Japan for the treatment of moderately to severely active Crohn's disease;Positive topline results from the SUMMIT Phase 3 clinical trial evaluating tirzepatide in adults with heart failure with preserved ejection fraction and obesity;Positive topline results from the QWINT-2 and QWINT-4 Phase 3 clinical trials that showed once-a-week dosing of insulin efsitora alfa in adults with type 2 diabetes delivers A1C reduction and safety profile consistent with daily insulin;The announcement of an agreement for Lilly to acquire Morphic Holding, Inc. to expand Lilly's immunology pipeline with oral integrin therapies for treatment of serious chronic diseases;The commitment of an additional $5.3 billion manufacturing investment in the company's newest Indiana site to boost API production for tirzepatide and pipeline medicines;The issuance of an open letter informing the public about potentially serious risks posed by the proliferation of counterfeit, fake, compounded, and other unsafe or untested versions of the company's FDA-approved tirzepatide medications and about the appropriate use of the company's authentic medicines; andAnnouncements regarding changes to the company's executive leadership team. For information on important public announcements, visit the news section of Lilly's website. Financial Results $ in millions, except per share data Second Quarter 2024 2023 % Change Revenue $ 11,302.8 $ 8,312.1 36 % Net income - Reported 2,967.0 1,763.2 68 % Earnings per share - Reported 3.28 1.95 68 % Net income - Non-GAAP 3,541.2 1,904.4 86 % Earnings per share - Non-GAAP 3.92 2.11 86 % A discussion of the non-GAAP financial measures is included below under "Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information (Unaudited)." Second-Quarter Reported Results In Q2 2024, worldwide revenue was $11.30 billion, an increase of 36% compared with Q2 2023, driven by a 27% increase in volume and a 10% increase due to higher realized prices, partially offset by a 1% decrease from the unfavorable impact of foreign exchange rates. The volume increase was primarily driven by growth from Mounjaro®, Zepbound®, Verzenio®, Taltz® and Jardiance®, partially offset by the sale of rights for Baqsimi® in Q2 2023 and declines in Trulicity®. Excluding $579.0 million of revenue from the sale of rights for Baqsimi in Q2 2023, revenue in Q2 2024 increased by 46%, and worldwide volume increased by 37%. Excluding the sale of rights for Baqsimi, non-incretin revenue increased 17% worldwide and 25% in the U.S. Strong performance by the company's incretin medicines continued, as production increases resulted in improved channel dynamics and stocking levels in the U.S., contributing to sales growth during the quarter. While supply and demand have come into better balance, expected increases in demand may result in periodic supply tightness for certain presentations and dose levels. In the U.S., the company plans to launch Zepbound 2.5 mg and 5 mg single-dose vials in the coming weeks. Higher realized prices were primarily driven by Mounjaro in the U.S., which saw net price positively impacted by access and savings card dynamics compared with Q2 2023. In the second half of 2024, these savings card dynamics should have a minimal impact on realized price comparisons to base periods, as the $25 non-covered benefit expired on June 30, 2023. New Products(i) revenue grew by $3.46 billion to $4.46 billion in Q2 2024, led by Mounjaro and Zepbound. Growth Products(ii) revenue increased 3% to $5.05 billion in Q2 2024 as growth led by Verzenio, Taltz, and Jardiance was largely offset by lower Trulicity sales. (i) Lilly defines New Products as select products launched since 2022, which currently consist of Ebglyss, Jaypirca, Mounjaro, Omvoh and Zepbound. (ii) Lilly defines Growth Products as select products launched prior to 2022, which currently consist of Cyramza, Emgality, Jardiance, Olumiant, Retevmo, Taltz, Trulicity, Tyvyt and Verzenio Revenue in the U.S. increased 42% to $7.84 billion, driven by a 27% increase in volume and a 15% increase in realized prices. The increase in U.S. volume was driven by Zepbound, Mounjaro and Verzenio, partially offset by the sale of rights for Baqsimi in Q2 2023 and declines in Trulicity. The higher realized prices in the U.S. were primarily driven by Mounjaro. The company fulfilled the majority of prior incretin wholesaler backorders during Q2 2024, improving both wholesaler stocking levels and overall product availability for patients in the U.S. Q2 2024 Mounjaro and Zepbound sales in the U.S. were positively impacted by channel stocking that the company estimates totaled high teens to mid-20s as a percent of U.S. sales. Revenue outside the U.S. increased 25% to $3.47 billion, driven by a 27% increase in volume, partially offset by a 3% decrease due to the unfavorable impact of foreign exchange rates. The increase in volume outside the U.S. was primarily driven by the launch of Mounjaro KwikPen® in various markets. Gross margin increased 40% to $9.13 billion in Q2 2024. Gross margin as a percent of revenue was 80.8%, an increase of 2.5 percentage points. The increase in gross margin percent was primarily driven by favorable product mix and higher realized prices, partially offset by higher production costs. In Q2 2024, research and development expenses increased 15% to $2.71 billion, or 24% of revenue, driven by continued investments in the company's portfolio and its people. Marketing, selling and administrative expenses increased 10% to $2.12 billion in Q2 2024, primarily driven by investments in the company's launches and its people. In Q2 2024, the company recognized acquired in-process research and development (IPR&D) charges of $154.3 million compared with $97.1 million in Q2 2023. Asset impairment, restructuring and other special charges were $435.0 million in Q2 2024, which was related to anticipated litigation payments. There were no asset impairment, restructuring and other special charges in Q2 2023. Other income (expense) was expense of $197.6 million in Q2 2024, compared to expense of $36.8 million in Q2 2023. The increase in expense was primarily driven by larger net losses on investments in equity securities in Q2 2024 and higher net interest expenses. The effective tax rate was 15.6% in both Q2 2024 and Q2 2023. The Q2 2024 tax rate reflects a mix of earnings in higher tax jurisdictions, while the Q2 2023 rate reflects the impact of earnings from the sale of rights for Baqsimi. In Q2 2024, net income and earnings per share (EPS) were $2.97 billion and $3.28, respectively, compared with net income of $1.76 billion and EPS of $1.95 in Q2 2023. EPS in Q2 2024 included $0.14 of acquired IPR&D charges compared with $0.09 in Q2 2023. Second-Quarter Non-GAAP Measures On a non-GAAP basis, Q2 2024 gross margin increased 40% to $9.27 billion. Gross margin as a percent of revenue was 82.0%, an increase of 2.2 percentage points. The increase in gross margin percent was primarily driven by favorable product mix and higher realized prices, partially offset by higher production costs. The effective tax rate on a non-GAAP basis was 16.5% in Q2 2024 compared with 16.1% in Q2 2023. The Q2 2024 tax rate reflects a mix of earnings in higher tax jurisdictions, while the Q2 2023 rate reflects the impact of earnings from the sale of rights for Baqsimi. On a non-GAAP basis, Q2 2024 net income and EPS were $3.54 billion and $3.92, respectively, compared with net income of $1.90 billion and EPS of $2.11 in Q2 2023. EPS in Q2 2024 included $0.14 of acquired IPR&D charges compared with $0.09 in Q2 2023. For further detail on non-GAAP measures, see the reconciliation below as well as the "Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information (Unaudited)" table later in this press release. Second Quarter 2024 2023 % Change Earnings per share (reported) $ 3.28 $ 1.95 68 % Asset impairment, restructuring and other special charges .38 -- Net losses on investments in equity securities .14 .05 Amortization of intangible assets .12 .11 Earnings per share (non-GAAP) $ 3.92 $ 2.11 86 % Numbers may not add due to rounding. Acquired IPR&D .14 .09 56 % Selected Revenue Highlights (Dollars in millions) Second Quarter Year-to-Date Selected Products 2024 2023 % Change 2024 2023 % Change Mounjaro $ 3,090.8 $ 979.7 NM $ 4,897.4 $ 1,548.2 NM Trulicity 1,245.6 1,812.5 (31) % 2,701.9 3,789.6 (29) % Verzenio 1,331.9 926.8 44 % 2,382.2 1,677.7 42 % Zepbound 1,243.2 -- NM 1,760.6 -- NM Jardiance(a) 769.6 668.3 15 % 1,456.1 1,245.8 17 % Taltz 824.7 703.9 17 % 1,428.8 1,230.8 16 % Humalog(b) 631.6 440.4 43 % 1,170.3 901.4 30 % Total Revenue 11,302.8 8,312.1 36 % 20,070.8 15,272.1 31 % (a) Jardiance includes Glyxambi®, Synjardy® and Trijardy® XR (b) Humalog includes Insulin Lispro NM - not meaningful Mounjaro For Q2 2024, worldwide Mounjaro revenue was $3.09 billion compared with $979.7 million in Q2 2023. U.S. revenue was $2.41 billion compared with $915.7 million in Q2 2023, reflecting continued strong demand, improved channel dynamics, and higher realized prices due to savings card dynamics. In the second half of 2024, these savings card dynamics should have a minimal impact on realized price comparisons to base periods, as the $25 non-covered benefit expired on June 30, 2023. Revenue outside the U.S. increased to $677.2 million compared with $64.0 million in Q2 2023, primarily driven by volume associated with the launch of Mounjaro KwikPen in various markets. Trulicity For Q2 2024, worldwide Trulicity revenue decreased 31% compared with Q2 2023 to $1.25 billion. U.S. revenue decreased 36% to $876.7 million, driven by decreased sales volume primarily due to competitive dynamics and supply constraints, partially offset by improved wholesaler stocking levels on certain doses. Revenue outside the U.S. decreased 16% to $368.9 million, primarily driven by decreased volume. In addition to the factors affecting U.S. volume, international markets continue to be impacted by actions Lilly has taken to manage demand amid tight supply, including measures to minimize the impact on existing patients by communicating with healthcare practitioners to not start new patients on Trulicity. Verzenio For Q2 2024, worldwide Verzenio revenue increased 44% compared with Q2 2023 to $1.33 billion. U.S. revenue was $861.4 million, an increase of 46%, primarily driven by increased demand. Revenue outside the U.S. was $470.5 million, an increase of 39%, driven by increased demand, partially offset by the unfavorable impact of foreign exchange rates. Zepbound For Q2 2024, U.S. Zepbound revenue was $1.24 billion. Zepbound launched in the U.S. for the treatment of adult patients with obesity or overweight with weight-related comorbidities in November 2023. Jardiance For Q2 2024, the company's worldwide Jardiance revenue increased 15% compared with Q2 2023 to $769.6 million. U.S. revenue was $428.9 million, an increase of 11%, driven by increased demand. Revenue outside the U.S. was $340.7 million, an increase of 21%, driven by increased volume. Jardiance is part of the company's alliance with Boehringer Ingelheim. Lilly reports as revenue royalties received on net sales of Jardiance. Taltz For Q2 2024, worldwide Taltz revenue increased 17% compared with Q2 2023 to $824.7 million. U.S. revenue increased 14% to $539.4 million, driven by increased demand and, to a lesser extent, channel dynamics. Revenue outside the U.S. increased 23% to $285.3 million, driven by increased demand. Humalog For Q2 2024, worldwide Humalog revenue increased 43% compared with Q2 2023 to $631.6 million. U.S. revenue was $434.7 million, an increase of 89%, driven by higher realized prices primarily due to changes to estimates for rebates and discounts, segment mix and increased demand. Revenue outside the U.S. was $196.9 million, a decrease of 7%, driven by decreased volume, partially offset by higher realized prices. 2024 Financial Guidance 2024 full-year revenue guidance increased by $3.0 billion to the range of $45.4 billion to $46.6 billion, primarily driven by the strong performance of Mounjaro and Zepbound, as well as the company's non-incretin medicines. Additionally, the company has improved clarity into the timing and pace of the company's production expansions and planned Mounjaro launches outside the U.S. In Q2 2024, the company achieved a number of supply-related milestones and has increased confidence regarding production expectations for the rest of the year. The ratio of (Gross Margin - OPEX) / Revenue, where OPEX is defined as the sum of research and development expenses and marketing, selling and administrative expenses, is now expected to be in the range of 36% to 38% on a reported basis and 37% to 39% on a non-GAAP basis. Both ratios reflect the $3.0 billion increase in revenue guidance. Guidance on a reported basis now includes asset impairment, restructuring and other special charges of $435 million to reflect the Q2 2024 charge, which was associated with anticipated litigation payments. Other income (expense) guidance is now expected to be a range of ($525) to ($425) million of expense on a reported basis and ($400) to ($300) million of expense on a non-GAAP basis, both reflecting lower expected net interest expense. The reported guidance also reflects net losses on investments in equity securities through Q2 2024. Tax rate guidance is now expected to be approximately 15% on both a reported and non-GAAP basis, driven by changes in the company's forecasted mix of earnings in higher tax jurisdictions. Based on these changes, EPS guidance increased to the ranges of $15.10 to $15.60 on a reported basis and $16.10 to $16.60 on a non-GAAP basis. The company's 2024 financial guidance reflects adjustments shown in the reconciliation table below. 2024 Guidance(1) Earnings per share (reported) $15.10 to $15.60 Amortization of intangible assets .49 Asset impairment, restructuring, and other special charges .38 Net losses on investments in equity securities .12 Earnings per share (non-GAAP) $16.10 to $16.60 Numbers may not add due to rounding (1) Reported and Non-GAAP EPS guidance both include $0.24 of Acquired IPR&D charges incurred through Q2 2024. The following table summarizes the company's 2024 financial guidance: 2024 Guidance(1) Prior Updated(3) Revenue $42.4 to $43.6 billion $45.4 to $46.6 billion (Gross Margin - OPEX(2)) / Revenue: (reported) 32% to 34% 36% to 38% (non-GAAP) 33% to 35% 37% to 39% Other Income/(Expense) (reported) ($500) to ($400) million ($525) to ($425) million Other Income/(Expense) (non-GAAP) ($500) to ($400) million ($400) to ($300) million Tax Rate Approx. 14% Approx. 15% Earnings per Share (reported) $13.05 to $13.55 $15.10 to $15.60 Earnings per Share (non-GAAP) $13.50 to $14.00 $16.10 to $16.60 (1) Non-GAAP guidance reflects adjustments presented in the earnings per share reconciliation table above. (2) OPEX is defined as the sum of research and development expenses and marketing, selling and administrative expenses. (3) Guidance includes Acquired IPR&D charges through Q2 2024 of $264.8 million or $0.24 on a per share basis. Guidance does not include Acquired IPR&D either incurred, or expected to be incurred, after Q2 2024. Webcast of Conference Call As previously announced, investors and the general public can access a live webcast of the Q2 2024 financial results conference call through a link on Lilly's website at investor.lilly.com/webcasts-and-presentations. The conference call will begin at 10 a.m. Eastern time today and will be available for replay via the website. Non-GAAP Financial Measures Certain financial information is presented on both a reported and a non-GAAP basis. Some numbers in this press release may not add due to rounding. Reported results were prepared in accordance with U.S. generally accepted accounting principles (GAAP) and include all revenue and expenses recognized during the periods. Non-GAAP measures reflect adjustments for the items described in the reconciliation tables later in the release. Related materials provide certain GAAP and non-GAAP figures excluding the impact of foreign exchange rates. Lilly recalculates current period figures on a constant currency basis by keeping constant the exchange rates from the base period. The company's 2024 financial guidance is provided on both a reported and a non-GAAP basis. The non-GAAP measures are presented to provide additional insights into the underlying trends in the company's business. About Lilly Lilly is a medicine company turning science into healing to make life better for people around the world. We've been pioneering life-changing discoveries for nearly 150 years, and today our medicines help more than 51 million people across the globe. Harnessing the power of biotechnology, chemistry and genetic medicine, our scientists are urgently advancing new discoveries to solve some of the world's most significant health challenges: redefining diabetes care; treating obesity and curtailing its most devastating long-term effects; advancing the fight against Alzheimer's disease; providing solutions to some of the most debilitating immune system disorders; and transforming the most difficult-to-treat cancers into manageable diseases. With each step toward a healthier world, we're motivated by one thing: making life better for millions more people. That includes delivering innovative clinical trials that reflect the diversity of our world and working to ensure our medicines are accessible and affordable. To learn more, visit Lilly.com and Lilly.com/news. F-LLY Cautionary Statement Regarding Forward-Looking Statements This press release contains management's current intentions and expectations for the future, all of which are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. The words "estimate", "project", "intend", "expect", "believe", "target", "anticipate", "may", "could", "aim", "seek", "will", "continue", and similar expressions are intended to identify forward-looking statements. Actual results may differ materially due to various factors. The following include some but not all of the factors that could cause actual results or events to differ from those anticipated, including the significant costs and uncertainties in the pharmaceutical research and development process, including with respect to the timing and process of obtaining regulatory approvals; the impact and uncertain outcome of acquisitions and business development transactions and related costs; intense competition affecting the company's products, pipeline, or industry; market uptake of launched products and indications; continued pricing pressures and the impact of actions of governmental and private payers affecting pricing of, reimbursement for, and patient access to pharmaceuticals, or reporting obligations related thereto; safety or efficacy concerns associated with the company's products; dependence on relatively few products or product classes for a significant percentage of the company's total revenue and an increasingly consolidated supply chain; the expiration of intellectual property protection for certain of the company's products and competition from generic and biosimilar products, and risks from the proliferation of counterfeit or illegally compounded products; the company's ability to protect and enforce patents and other intellectual property or changes in patent law or regulations related to data package exclusivity; information technology system inadequacies, inadequate controls or procedures, security breaches, or operating failures; unauthorized access, disclosure, misappropriation, or compromise of confidential information or other data stored in the company's information technology systems, networks, and facilities, or those of third parties with whom the company shares its data and violations of data protection laws or regulations; issues with product supply and regulatory approvals stemming from manufacturing difficulties, disruptions, or shortages, including as a result of unpredictability and variability in demand, labor shortages, third-party performance, quality, cyber-attacks, or regulatory actions related to the company's and third-party facilities; reliance on third-party relationships and outsourcing arrangements; the use of artificial intelligence or other emerging technologies in various facets of the company's operations which may exacerbate competitive, regulatory, litigation, cybersecurity, and other risks; the impact of global macroeconomic conditions, including uneven economic growth or downturns or uncertainty, trade disruptions, international tension, conflicts, regional dependencies, or other costs, uncertainties, and risks related to engaging in business globally; fluctuations in foreign currency exchange rates or changes in interest rates and inflation; litigation, investigations, or other similar proceedings involving past, current, or future products or activities; changes in tax law and regulations, tax rates, or events that differ from our assumptions related to tax positions; regulatory changes and developments; regulatory actions regarding the company's operations and products; regulatory compliance problems or government investigations; actual or perceived deviation from environmental-, social-, or governance-related requirements or expectations; asset impairments and restructuring charges; and changes in accounting and reporting standards. For additional information about the factors that could cause actual results or events to differ materially from forward-looking statements, please see the company's latest Form 10-K and subsequent Forms 8-K and 10-Q filed with the Securities and Exchange Commission. You should not place undue reliance on forward-looking statements, which speak only as of the date of this release. Except as is required by law, the company expressly disclaims any obligation to publicly release any revisions to forward-looking statements to reflect events after the date of this release. Baqsimi® (glucagon, Amphastar Pharmaceuticals) Cyramza® (ramucirumab, Lilly) Ebglyss® (lebrikizumab, Lilly) Emgality® (galcanezumab-gnlm, Lilly) Glyxambi® (empagliflozin/linagliptin, Boehringer Ingelheim) Humalog® (insulin lispro injection of recombinant DNA origin, Lilly) Jardiance® (empagliflozin, Boehringer Ingelheim) Jaypirca® (pirtobrutinib, Lilly) Kisunla™ (donanemab-azbt injection, Lilly) Mounjaro® (tirzepatide injection, Lilly) Olumiant® (baricitinib, Lilly) Omvoh® (mirikizumab, Lilly) Retevmo® (selpercatinib, Lilly) Synjardy® (empagliflozin/metformin, Boehringer Ingelheim) Taltz® (ixekizumab, Lilly) Trijardy® XR (empagliflozin/linagliptin/metformin hydrochloride extended release tablets, Boehringer Ingelheim) Trulicity® (dulaglutide, Lilly) Tyvyt® (sintilimab injection, Innovent) Verzenio® (abemaciclib, Lilly) Zepbound® (tirzepatide injection, Lilly) Third-party trademarks used herein are trademarks of their respective owners. Eli Lilly and Company Operating Results (Unaudited) - REPORTED (Dollars in millions, except per share data) Three Months Ended Six Months Ended June 30, June 30, 2024 2023 % Chg. 2024 2023 % Chg. Revenue $ 11,302.8 $ 8,312.1 36 % $ 20,070.8 $ 15,272.1 31 % Cost of sales 2,170.2 1,807.4 20 % 3,843.7 3,434.1 12 % Research and development 2,711.2 2,356.5 15 % 5,234.0 4,341.6 21 % Marketing, selling and administrative 2,117.3 1,925.4 10 % 4,069.5 3,674.6 11 % Acquired IPR&D 154.3 97.1 59 % 264.8 202.1 31 % Asset impairment, restructuring and other special charges 435.0 -- NM 435.0 -- NM Operating income 3,714.8 2,125.7 75 % 6,223.8 3,619.7 72 % Net interest income (expense) (146.3) (74.3) (280.1) (142.9) Net other income (expense) (51.3) 37.5 109.6 141.8 Other income (expense) (197.6) (36.8) NM (170.5) (1.1) NM Income before income taxes 3,517.2 2,088.9 68 % 6,053.3 3,618.6 67 % Income tax expense 550.2 325.7 69 % 843.4 510.5 65 % Net income $ 2,967.0 $ 1,763.2 68 % $ 5,209.9 $ 3,108.1 68 % Earnings per share - diluted $ 3.28 $ 1.95 68 % $ 5.76 $ 3.44 67 % Dividends paid per share $ 1.30 $ 1.13 15 % $ 2.60 $ 2.26 15 % Weighted-average shares outstanding (thousands) - diluted 904,248 902,699 904,025 902,991 Eli Lilly and Company Reconciliation of GAAP Reported to Selected Non-GAAP Adjusted Information (Unaudited) (Dollars in millions, except per share data) Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Gross Margin - As Reported $ 9,132.6 $ 6,504.7 $ 16,227.1 $ 11,838.0 Increase for excluded items: Amortization of intangible assets (Cost of sales)(i) 139.1 126.4 278.2 252.2 Gross Margin - Non-GAAP $ 9,271.7 $ 6,631.1 $ 16,505.3 $ 12,090.2 Gross Margin as a percent of revenue - As Reported 80.8 % 78.3 % 80.8 % 77.5 % Gross Margin as a percent of revenue - Non-GAAP(ii) 82.0 % 79.8 % 82.2 % 79.2 % Numbers may not add due to rounding. i. Exclude amortization of intangibles primarily associated with costs of marketed products acquired or licensed from third parties. ii. Non-GAAP gross margin as a percent of revenue reflects the gross margin effects of the adjustments presented above. Three Months Ended June 30, Six Months Ended June 30, 2024 2023 2024 2023 Net Income - As Reported $ 2,967.0 $ 1,763.2 $ 5,209.9 $ 3,108.1 Increase (decrease) for excluded items: Amortization of intangible assets (Cost of sales)(i) 139.1 126.4 278.2 252.2 Asset impairment, restructuring and other special charges(ii) 435.0 -- 435.0 -- Net (gains) losses on investments in equity securities (Other income/expense) 147.7 53.9 124.3 76.5 Corresponding tax effects (Income taxes) (147.6) (39.1) (170.9) (68.5) Net Income - Non-GAAP $ 3,541.2 $ 1,904.4 $ 5,876.5 $ 3,368.3 Effective tax rate - As Reported 15.6 % 15.6 % 13.9 % 14.1 % Effective tax rate - Non-GAAP(iii) 16.5 % 16.1 % 14.7 % 14.7 % Earnings per share (diluted) - As Reported $ 3.28 $ 1.95 $ 5.76 $ 3.44 Earnings per share (diluted) - Non- GAAP $ 3.92 $ 2.11 $ 6.50 $ 3.73 Numbers may not add due to rounding. i. Exclude amortization of intangibles primarily associated with costs of marketed products acquired or licensed from third parties. ii. For the three and six months ended June 30, 2024, excluded charges related to anticipated litigation payments. iii. Non-GAAP tax rate reflects the tax effects of the adjustments presented above. Refer to: Jordan Bishop; [email protected]; (317) 374-1878 (Media) Joe Fletcher; [email protected]; (317) 296-2884 (Investors) View original content to download multimedia:https://www.prnewswire.com/news-releases/lilly-reports-q2-2024-financial-results-raises-full-year-revenue-guidance-by-3-billion-302217339.html SOURCE Eli Lilly and Company Market News and Data brought to you by Benzinga APIs