Digirad Corporation Reports 2012 Second Quarter and Six-Month Financial Results

Positive Trends in Service Revenue and Margins Continue; Share Buyback Accelerates in Q2

Marketwired

POWAY, CA--(Marketwire -07/26/12)- Digirad Corporation (DRAD) today reported 2012 second quarter revenue of $12.7 million, 2012 six-month revenue of $25.7 million and an ending cash and available-for-sale securities balance of $28.5 million. The net use of cash in the second quarter included $0.5 million for the repurchase of Digirad common stock under the corporate share buyback program, at June 30, 2012.

Digirad CEO Todd Clyde commented, "Progress and growth in the services side of the business for Digirad Imaging Solutions (DIS) continued during the second quarter as that group generated positive cash flow and continued its sequential revenue growth. Demand for our cameras remained stable and the sales funnel continues to be active though sequential revenues in the Product side of the business were down. On the services side, new physician groups are signing up for DIS days as reimbursement has stabilized and the positive clinical and economic drivers continue to motivate existing and new customers to add days of service and to get better utilization of the days they have under contract."

Clyde continued, "Our commercial activities and R&D efforts continue as we explore new ways to drive growth in our Product business -- both in the clinic and hospital settings. In addition, our newly completed Board restructuring has the organization more focused on delivering value to shareholders. To reiterate our goals for 2012, we expect to generate positive cash flow from our DIS business and are focused on increasing sales of both our cardiac and ergo cameras. Management and the Board's newly formed Strategic Advisory Committee continue to explore various strategic options, including examining where our core solid state camera technologies can be applied with greater success in the marketplace."

Second Quarter 2012 Summary

  • Total revenue for the second quarter of 2012 was $12.7 million, compared to $14.2 million for the same period in the prior year and down from $13.0 million in the first quarter of 2012. DIS-only revenue for the second quarter of 2012 was $9.4 million, compared to $10.0 million for the same period of the prior year and $9.3 million in the prior sequential quarter. Product revenue for the second quarter of 2012 was $3.3 million, compared to $4.3 million for the same period of the prior year and $3.7 million in the prior quarter.

  • Gross profit for the second quarter of 2012 was $3.7 million, or 29.0 percent of revenue, compared to $4.0 million, or 28.0 percent of revenue, in the same period of the prior year and $3.7 million, or 28.3 percent of revenue in the prior quarter.

  • Net loss for the second quarter of 2012 was $0.9 million, or $0.05 loss per share, compared to a net loss of $0.2 million, or $0.01 loss per share, in the same period of the prior year and a net loss of $1.3 million, or $0.07 loss per share, in the prior quarter. During the quarter, the Company posted approximately $0.2 million in legal and administrative expenses associated with certain shareholder negotiations that are now complete.

  • Cash and cash equivalents and available-for-sale securities totaled $28.5 million, or $1.49 per share, as of June 30, 2012. Cash and cash equivalents and available-for-sale securities totaled $30.4 million, or $1.61 per share, as of December 31, 2011. Cash collections accelerated in the second quarter as anticipated. Those collections were offset by the use of $0.5 million of cash used to purchase 211,177 shares of Digirad Common Stock under the Company's stock repurchase program.

  • During the second quarter of 2012, DIS asset utilization was 55 percent on 128 systems (nuclear and ultrasound), compared to 58 percent on 133 systems (nuclear and ultrasound) in the prior year second quarter and 56 percent on 128 systems (nuclear and ultrasound) in the prior quarter.

Year-to-Date Financial Highlights:

  • Total revenue for the first six months of 2012 was $25.7 million, compared to $28.4 million for the prior year period. DIS revenue for the first six months of 2012 was $18.7 million, compared to $19.5 million for the prior year period, and Product revenue for the first six months of 2012 was $7.0 million compared to $8.9 million for the prior year period.

  • Gross profit for the first six months of 2012 was $7.4 million, or 28.6 percent of revenue, compared to $7.5 million, or 26.4 percent of revenue, for the prior year period.

  • Net loss for the first six months of 2012 was $2.2 million, or $0.11 loss per share, compared to net loss of $0.6 million, or $0.03 loss per share, for the prior year period.

  • During the first six months of 2012, DIS asset utilization was 55 percent on 128 systems (nuclear and ultrasound), compared to 58 percent on 132 systems (nuclear and ultrasound) in the prior year period.

  • In total, the Company has used $0.6 million to purchase Digirad Common Stock under the Company's stock repurchase program in the first six months of the year.

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 877-941-1427 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.

About Digirad Corporation
Digirad is a leading provider of diagnostic imaging products. Digirad also provides the ability for its physician customers to lease its qualified personnel, imaging systems and related items required to perform nuclear imaging in their own offices. For more information, please visit www.digirad.com. Digirad® and Cardius® are registered trademarks of Digirad Corporation.

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 our ability to deliver value to customers, our expanded product and service offerings, including, the addition of the first large-field-of-view, solid state portable camera to the hospital marketplace, and our ability to generate positive cash flow in 2012. 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, and other risks detailed in Digirad's filings with the U.S. Securities and Exchange Commission, including 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.

 


Digirad Corporation
Consolidated Statements of Comprehensive Loss
(Unaudited in thousands, except per share data)

Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2012 2011 2012 2011
-------- -------- -------- --------
Revenues:
DIS $ 9,377 $ 9,950 $ 18,666 $ 19,546
Product 3,333 4,299 7,014 8,878
-------- -------- -------- --------
Total revenues 12,710 14,249 25,680 28,424
Cost of revenues:
DIS 6,908 7,772 13,885 15,534
Product 2,121 2,483 4,442 5,376
-------- -------- -------- --------
Total cost of revenues 9,029 10,255 18,327 20,910
-------- -------- -------- --------

Gross profit 3,681 3,994 7,353 7,514
Operating expenses:
Research and development 1,047 714 1,943 1,422
Marketing and sales 1,671 1,617 3,387 3,041
General and administrative 1,811 1,866 4,075 3,970
Amortization of intangible assets 58 83 136 176
Restructuring gain -- -- -- (164)
-------- -------- -------- --------
Total operating expenses 4,587 4,280 9,541 8,445
-------- -------- -------- --------
Loss from operations (906) (286) (2,188) (931)
Other income (expense):
Interest income 28 72 54 280
Interest expense (1) (7) (1) (20)
Other (expense) income (12) (7) (24) 57
-------- -------- -------- --------
Total other income 15 58 29 317
-------- -------- -------- --------
Net loss $ (891) $ (228) $ (2,159) $ (614)
======== ======== ======== ========

Net loss per common share - basic
and diluted $ (0.05) $ (0.01) $ (0.11) $ (0.03)
======== ======== ======== ========
Weighted average shares outstanding
- basic and diluted 19,315 18,988 19,278 18,963
======== ======== ======== ========

Other comprehensive loss:
Unrealized loss on marketable
securities (42) (30) (39) (200)
-------- -------- -------- --------
Total other comprehensive loss (42) (30) (39) (200)
-------- -------- -------- --------
Comprehensive loss $ (933) $ (258) $ (2,198) $ (814)
======== ======== ======== ========

Stock-based compensation expense is
included in the above as follows:

Cost of DIS revenue $ 2 $ 4 $ 4 $ 8
Cost of Product revenue 20 24 42 53
Research and development 19 20 39 43
Marketing and sales 37 29 65 65
General and administrative 60 119 177 254
-------- -------- -------- --------
Total stock-based compensation
expense $ 138 $ 196 $ 327 $ 423
======== ======== ======== ========




Digirad Corporation
Consolidated Balance Sheets
(In thousands, except share amounts)

June 30, December 31,
2012 2011
------------ ------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 19,043 $ 24,039
Securities available-for-sale 9,490 6,413
Accounts receivable, net 6,883 6,320
Inventories, net 6,247 6,178
Other current assets 778 855
Restricted cash 194 194
------------ ------------

Total current assets 42,635 43,999
Property and equipment, net 5,031 5,367
Intangible assets, net 341 477
Goodwill 184 184
------------ ------------

Total assets $ 48,191 $ 50,027
============ ============

Liabilities and stockholders' equity
Accounts payable $ 1,927 $ 1,330
Accrued compensation 2,307 2,291
Accrued warranty 281 297
Deferred revenue 1,916 2,099
Other accrued liabilities 2,373 2,397
------------ ------------

Total current liabilities 8,804 8,414
Deferred rent 113 126
------------ ------------
Total liabilities 8,917 8,540
------------ ------------

Commitments and contingencies
Stockholders' equity:
Preferred stock, $0.0001 par value: 10,000,000
shares authorized; no shares issued or
outstanding -- --
Common stock, $0.0001 par value: 80,000,000
shares authorized; 19,159,003 and 18,901,160
shares issued and outstanding (net of treasury
shares) at June 30, 2012 and December 31, 2011,
respectively 2 2
Treasury stock, at cost; 854,882 shares and
582,825 shares at June 30, 2012 and December
31, 2011, respectively (1,655) (1,058)
Additional paid-in capital 156,286 155,704
Accumulated other comprehensive (loss) income (6) 33
Accumulated deficit (115,353) (113,194)
------------ ------------

Total stockholders' equity 39,274 41,487
------------ ------------

Total liabilities and stockholders' equity $ 48,191 $ 50,027
============ ============


Contact:
Investor
Matt Clawson
Allen & Caron
949-474-4300
Email Contact
Company
Todd Clyde
CEO
858-726-1600
Email Contact

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