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Digirad Corporation (DRAD) Reports Second Quarter and Six-Month Financial Results


8/1/2013 8:24:56 AM

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SUWANEE, GA--(Marketwired - August 01, 2013) - Digirad Corporation (NASDAQ: DRAD) today reported revenue of $12.9 million for the second quarter, a narrowing loss and an ending cash, cash equivalents and available-for-sale securities balance of $22.2 million.

Digirad President and CEO Matt Molchan said, "Revenues in both DIS and Diagnostic Imaging businesses were up in the second quarter compared to the prior year. Camera sales, especially ergo™ and Cardius™ imaging technologies saw improvements in the period. Progress on the bottom line was also notable as the GAAP net loss was cut to $616,000 -- in a quarter that included more than $600,000 in non-recurring restructuring costs and more than $500,000 in costs associated with a proxy battle and related litigation. We were also able to aggressively return cash to our shareholders by using $3 million of cash to buy over 1.2 million of our own shares."

Second Quarter 2013 Summary

  • Total revenue for the second quarter of 2013 was $12.9 million, compared to $12.7 million for the same period in the prior year. DIS revenue for the second quarter of 2013 was $9.5 million, compared to $9.4 million for the same period of the prior year, and Diagnostic Imaging revenue for the second quarter of 2013 was $3.4 million, compared to $3.3 million for the same period of the prior year.

  • Gross profit for the second quarter of 2013 was $3.8 million, or 29.4 percent of revenue, compared to $3.7 million, or 29.0 percent of revenue in the prior year quarter.

  • Net loss for the second quarter of 2013 was $616,000, or $0.03 loss per share, compared to a net loss of $891,000, or $0.05 loss per share, in the same period of the prior year. Adjusted net loss for the 2013 second quarter, excluding the $610,000 in expenses incurred for nonrecurring items related to restructuring activities, was $6,000, or $0.00 loss per share on an adjusted basis.

  • Operating expenses for the second quarter of 2013 were $4.4 million, compared to $4.6 million in the same period in the prior year. Adjusted operating expenses for the second quarter of 2013 were $3.8 million, compared to the $4.6 million in the same period of the prior year. In addition to the restructuring costs, operating expenses for the 2013 second quarter included approximately $538,000 in costs related to a successful proxy contest and subsequent on-going litigation with a dissident shareholder group.

  • Cash, cash equivalents and available-for-sale securities totaled $22.2 million as of June 30, 2013, reflecting the use of $3.0 million in cash during the quarter ended June 30, 2013 for the Company's share repurchase program. Cash, cash equivalents and available-for-sale securities totaled $27.2 million as of December 31, 2012.

Six-Month 2013 Summary

  • Total revenue for the first six months of 2013 was $24.4 million, compared to $25.7 million for the same period in the prior year. DIS revenue for the first six months of 2013 was $18.4 million, compared to $18.7 million for the same period of the prior year. Diagnostic Imaging revenue for the first six months of 2013 was $6.0 million, compared to $7.0 million for the same period of the prior year.

  • Gross profit for the first six months of 2013 was $6.6 million, or 27.1 percent of revenue, compared to $7.4 million, or 28.6 percent of revenue in the same period of the prior year.

  • Net loss for the first six months of 2013 was $3.0 million, or $0.16 loss per share, compared to a net loss of $2.2 million, or $0.11 loss per share, in the same period of the prior year. Adjusted net loss for the first six months of 2013, excluding the $1.6 million in expenses incurred for nonrecurring items related to restructuring activities, was $1.4 million, or $0.07 loss per share on an adjusted basis.

  • Operating expenses for the first six months of 2013 were $9.7 million, including restructuring and proxy contest and litigation costs, compared to $9.5 million in the same period in the prior year. Adjusted operating expenses for the first six months of 2013 were $8.0 million, compared to the $9.5 million in the same period of the prior year, which reflects the restructuring expenses incurred since the February 28, 2013 restructuring announcement. In addition to the restructuring costs, operating expenses for the first six months of 2013 included approximately $671,000 in costs related to the proxy contest and subsequent on-going litigation with the dissident shareholder group.

Molchan continued, "Our progress internally and in the marketplace during the second quarter was solid. We continue to identify and pursue a growing number of potential 'tuck-in' acquisition targets in key DIS regions. The entire team is focused on right sizing the cost structure around our current revenue levels in order to reach profitability, and at the same time, executing both organic and acquisitive aspects of our new strategy. Remembering that we just announced our restructuring plan on February 28, I am very pleased with the progress so far. We are still deploying other components of our restructuring plan that will result in further savings, and anticipate that the vast majority of the restructuring will be complete by the end of the third quarter leading to improved net income and cash flow on a go forward basis."

Conference Call Information
A conference call is scheduled for 11:00 a.m. EDT today to discuss the results and management's outlook. The call may be accessed by dialing 877-941-8418 five minutes prior to the scheduled start time and referencing Digirad. A simultaneous webcast of the call may be accessed online from the Events & Presentations link on the Investor Relations page at www.digirad.com; an archived replay of the webcast will be available within 15 minutes of the end of the conference call.

Use of Non-GAAP Financial Measures by Digirad Corporation
This Digirad news release presents the non-GAAP financial measures "adjusted operating expenses," "adjusted net loss" and "adjusted net loss per share." The most directly comparable measure for these non-GAAP financial measures are operating expenses, net loss and net loss per share. The company has included below unaudited adjusted financial information for the quarter and six months ended June 30, 2013, which present the Company's results of operations after excluding restructuring charges.
A discussion of the reasons why management believes that the presentation of non-GAAP financial measures provides useful information to investors regarding Digirad's financial condition and results of operations is included as Exhibit 99.2 to Digirad's report on Form 8-K filed with the Securities and Exchange Commission on August 1, 2013.

Forward-Looking Statements
This press release contains statements that are forward-looking statements as defined within the Private Securities Litigation Reform Act of 1995. These include statements regarding the Company's ability to deliver value to customers, the Company's ability to grow and generate positive cash flow, the ability to execute on restructuring activities, and ability to successfully execute acquisitions. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made, including the risks associated with changes in business conditions, technology, customers' business conditions, reimbursement, radiopharmaceutical shortages, economic outlook, operational policy or structure, acceptance and use of Digirad's camera systems and services, reliability, recalls, analysis of potential impairment and restructuring charges, the conclusion of our audit and other risks detailed in Digirad's filings with the U.S. Securities and Exchange Commission, including the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other reports. Readers are cautioned to not place undue reliance on these forward-looking statements, which speak only as of the date hereof. All forward-looking statements are qualified in their entirety by this cautionary statement, and Digirad undertakes no obligation to revise or update the forward-looking statements contained herein.

(Financial tables follow)

                                                                            
                                                                            
                                                                            
                            Digirad Corporation                             
                  Condensed Consolidated Statements of Loss                 
                                 (Unaudited)                                
                                                                            
                            Three Months Ended         Six Months Ended     
                                 June 30,                  June 30,         
                         ------------------------  ------------------------ 
(in thousands, except                                                       
 per share amounts)          2013         2012         2013         2012    
                         -----------  -----------  -----------  ----------- 
                         (unaudited)  (unaudited)  (unaudited)  (unaudited) 
Revenues:                                                                   
  DIS                    $     9,475  $     9,377  $    18,414  $    18,666 
  Diagnostic Imaging           3,415        3,333        6,022        7,014 
                         -----------  -----------  -----------  ----------- 
    Total revenues            12,890       12,710       24,436       25,680 
Cost of revenues:                                                           
  DIS                          7,179        6,908       14,004       13,885 
  Diagnostic Imaging           1,918        2,121        3,822        4,442 
                         -----------  -----------  -----------  ----------- 
    Total cost of                                                           
     revenues                  9,097        9,029       17,826       18,327 
                                                                            
Gross profit                   3,793        3,681        6,610        7,353 
  Operating expenses:                                                       
  Research and                                                              
   development                   177        1,047          996        1,943 
  Marketing and sales          1,009        1,671        2,245        3,387 
  General and                                                               
   administrative              2,571        1,811        4,673        4,075 
  Amortization of                                                           
   intangible assets              58           58          123          136 
  Restructuring charges          610           --        1,614           -- 
                         -----------  -----------  -----------  ----------- 
Total operating expenses       4,425        4,587        9,651        9,541 
                         -----------  -----------  -----------  ----------- 
                                                                            
Loss from operations            (632)        (906)      (3,041)      (2,188)
Other income (expense):                                                     
  Interest income                 16           28           39           54 
  Interest expense                (4)          (1)          (5)          (1)
  Other expense                    4          (12)         (28)         (24)
                         -----------  -----------  -----------  ----------- 
Total other income                                                          
 (expense)                        16           15            6           29 
                         -----------  -----------  -----------  ----------- 
Net loss                 $      (616) $      (891) $    (3,035) $    (2,159)
                         ===========  ===========  ===========  =========== 
                                                                            
Net loss per common                                                         
 share - basic and                                                          
 diluted                 $     (0.03) $     (0.05) $     (0.16) $     (0.11)
                         ===========  ===========  ===========  =========== 
                                                                            
Weighted average shares                                                     
 outstanding - basic and                                                    
 diluted                      19,032       19,315       19,177       19,278 
                         ===========  ===========  ===========  =========== 
                                                                            
                                                                            
                                                                            
                            Digirad Corporation                             
                       Adjusted Financial Information                       
                                 (Unaudited)                                
                                                                            
Adjusted Financial Data:                                                    
                                  Three Months Ended     Six Months Ended   
                                       June 30,              June 30,       
                                 --------------------  -------------------- 
(in thousands, except per share                                             
 amounts)                           2013       2012       2013       2012   
-------------------------------- ---------  ---------  ---------  --------- 
                                                                            
Total operating expenses         $   4,425  $   4,587  $   9,651  $   9,541 
                                                                            
  Restructuring charges(1)             610          -      1,614          - 
                                 ---------  ---------  ---------  --------- 
                                                                            
Adjusted operating expenses(2)   $   3,815  $   4,587  $   8,037  $   9,541 
                                 =========  =========  =========  ========= 
                                                                            
Net loss                         $    (616) $    (891) $  (3,035) $  (2,159)
                                                                            
  Restructuring charges(1)             610          -      1,614          - 
                                 ---------  ---------  ---------  --------- 
                                                                            
Adjusted net loss(2)             $      (6) $    (891) $  (1,421) $  (2,159)
                                 =========  =========  =========  ========= 
                                                                            
Net loss per common share -                                                 
 basic and diluted               $   (0.03) $   (0.05) $   (0.16) $   (0.11)
                                 =========  =========  =========  ========= 
                                                                            
Adjusted net loss per common                                                
 share - basic and diluted(2)    $       -  $   (0.05) $   (0.07) $   (0.11)
                                 =========  =========  =========  ========= 
                                                                            
Weighted average shares                                                     
 outstanding - basic and diluted    19,032     19,315     19,177     19,278 
                                 =========  =========  =========  ========= 
                                                                            
                                                                            
                                  Three Months Ended                        
                                 --------------------                       
(in thousands, except per share   June 30,  March 31,                       
 amounts)                           2013       2013                         
                                 ---------  ---------                       
                                                                            
Total operating expenses         $   4,425  $   5,226                       
                                                                            
  Restructuring charges(1)             610      1,004                       
                                 ---------  ---------                       
                                                                            
Adjusted operating expenses(2)   $   3,815  $   4,222                       
                                 =========  =========                       
                                                                            
Net loss                         $    (616) $  (2,419)                      
                                                                            
  Restructuring charges(1)             610      1,004                       
                                 ---------  ---------                       
                                                                            
Adjusted net loss(2)             $      (6) $  (1,415)                      
                                 =========  =========                       
                                                                            
Net loss per common share -                                                 
 basic and diluted               $   (0.03) $   (0.13)                      
                                 =========  =========                       
                                                                            
Adjusted net loss per common                                                
 share - basic and diluted(2)    $       -  $   (0.07)                      
                                 =========  =========                       
                                                                            
Weighted average shares                                                     
 outstanding - basic and diluted    19,032     19,322                       
                                 =========  =========                       
                                                                            
(1) Reflects nonrecurring charges primarily related to restructuring of the 
    Diagnostic Imaging camera operating activities.                         
                                                                            
(2) Adjusted financial information reflects GAAP results adjusted on a non- 
    GAAP basis to exclude nonrecurring items noted.                         
                                                                            

Investor Contact:
Matt Clawson
Allen & Caron
949-474-4300
Email Contact

Company Contact:
Jeffry Keyes
CFO
858-726-1600
Email Contact



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