SOURCE: Digirad

Digirad

July 26, 2012 07:30 ET

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

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

POWAY, CA--(Marketwire - Jul 26, 2012) - Digirad Corporation (NASDAQ: 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  
                   
                   

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