DarioHealth, a leader in chronic disease management, has acquired Twill, a provider of consumer-focused care delivery models for mental and physical health, to create a comprehensive digital health offering covering a wide range of health and wellbeing needs. 

Why it's notable:

• Dario’s platform and digital tools serve a range of conditions, including diabetes, hypertension, weight management, musculoskeletal pain and behavioral health. The acquisition of Twill, known for its longstanding experience in providing mental health solutions to consumers, enables Dario to broaden its mental health services, and create one of the most comprehensive digital health offerings on the market.

• Despite catering to similar markets, Dario and Twill’s customer bases did not intersect. Gaining access to Twill’s customers across national health plans, multiple Fortune 100 employers and several major pharmaceutical companies, provides Dario with increased market access, and facilitates ongoing innovation within their platform without the need for continuous investment.

• The acquisition is anticipated to nearly double the pro forma revenue for 2023, with gross margins expected to reach 80-85% by 2025 (SaaS like financial profile). This financial outlook is driven by projections of increased market penetration and greater cross-selling opportunities into these non-overlapping customer bases. 

Point of View: Amid a wave of M&A activity, consumer-centricity is driving the integration of digital health services

• DarioHealth's strategic acquisition aligns with the recent surge in M&A activity within the digital health industry. Amidst declining investments, larger players are looking to increase market share and expand their reach, while smaller players are vying for a space in an overcrowded market. Given the proliferation of mental health solutions in recent years, this sector is particularly ripe for consolidation. 

• As healthcare consumers become increasingly fatigued with point solutions, Dario and Twill are looking to meet demands for more comprehensive, integrated solutions. Adopting a platform-based approach to tackle a wide range of conditions supports a more consumer-centric approach, allowing them to meet patients at various stages of their health journey. The acquisition also underscores Dario's commitment to integrating mental health support alongside chronic condition management.

• The projected revenue serves as an indicator of the companies' confidence in their potential, and may act as a bold statement to their competitors in the space. We believe more such M&A activity is likely to happen resulting in a few formidable players.