• Year over year revenue growth of 13% for both periods
• Adjusted net income improved by more than $1.0 million and $2.7 million, respectively
• Announces financial guidance for 2014
• Announces a regular quarterly cash dividend of $0.05 cents per share

SUWANEE, Ga., Aug. 1, 2014 (GLOBE NEWSWIRE) -- Digirad Corporation (Nasdaq:DRAD) today reported its financial results for the second quarter and first six months ended June 30, 2014.

Total revenues for the 2014 second quarter were $14.6 million, an increase of 13 percent compared to the prior year's second quarter revenue of $12.9 million. GAAP net income, which included $0.1 million of restructuring costs associated with its previously announced lease termination, was $0.8 million, or $0.04 per diluted share, compared to a GAAP net loss of $0.6 million, or $0.03 loss per diluted share in the prior year quarter.

Total revenues for the first six months of 2014 were up 13 percent year over year to $27.6 million. Net income for the first six months of 2014 was $0.7 million, or $0.04 per diluted share. Total revenues in the first six months of 2013 were $24.4 million with a net loss of $3.0 million, or a loss of $0.16 per diluted share.

Digirad President and CEO Matt Molchan said, "We have had an outstanding year so far in 2014. Our revenues once again increased this quarter, and also for the first six months, on a year over year basis, showing that our new strategic direction is definitely gaining hold. Excluding the impact of our recent Telerhythmics acquisition, revenues in our Diagnostic Services business increased 6 percent during the second quarter, showing we are growing both organically as well as from our acquisitions. Our Diagnostic Imaging business revenue was down slightly for the quarter, as we can be affected by timing and volume of cameras sold in each quarterly period, but overall, we had a great quarter and six months and we continue to be on track to grow our Diagnostic Services business."

"I am also very pleased to announce that the integration of our recent Telerhythmics acquisition is going well and as planned. We are working hard and fast to get the business fully integrated within all our sales programs and operations, as well as the back office activities. This process will take some time as we previously announced, but once complete, we believe Telerhythmics will be poised for outstanding growth."

The Company's cash, cash equivalents and available-for-sale securities balance at June 30, 2014 was $21.4 million, an increase from the March 31, 2014 balance of $19.4 million. This increase reflects cash flow generation of the business and positive working capital changes totaling $2.9 million, partially offset by payment of cash dividends of $0.9 million.

Excluding the $0.1 million restructuring charge for the lease termination and $0.1 million of acquired intangible amortization, adjusted net income for the second quarter of 2014 was $1.1 million, or $0.06 adjusted net income per diluted share. Excluding the $0.6 million of restructuring charges and $0.1 million of acquired intangible amortization recorded in the 2013 second quarter, the adjusted results were essentially break even.

Adjusted EBITDA for the second quarter of 2014 was $1.5 million, compared to adjusted EBITDA of $0.6 million for the same period of the prior year. The current restructuring charges are related to the previously announced lease termination in Poway, CA, a move that the Company believes will save between $400,000 and $500,000 annually once the transition is complete. A reconciliation of adjusted net income and adjusted EBITDA to net income is provided later in this release.

The Company also announced a cash dividend of $0.05 cents per share that will be paid on August 25, 2014, to shareholders of record on August 12, 2014.

2014 Six-Month Financial Highlights

Net income in the first six months of 2014 improved year over year from the loss in the first six months of 2013 by more than $3.7 million, or $0.20 per diluted share.

Adjusted net income for the first six months of 2014 was $1.4 million, or an adjusted $0.08 per diluted share, which was a year-over-year improvement of more than $2.7 million, or an adjusted $0.15 per diluted share.

Adjusted EBITDA for the first six months of this year was $2.3 million compared to an adjusted EBITDA loss of $0.2 million in the first six months of 2013.

2014 Financial Guidance

For fiscal year 2014, the Company expects to generate revenues between $53.5 million and $55.0 million; non-GAAP adjusted diluted earnings per share between $0.13 and $0.15; and non-GAAP adjusted EBITDA between $4.5 million and $5.0 million. In fiscal year 2013, the Company generated $49.4 million of revenue, non-GAAP adjusted diluted earnings per share of $0.03 and non-GAAP adjusted EBITDA of $2.6 million.

The Company's non-GAAP financial measure adjusted diluted earnings per share excludes restructuring charges and acquired intangible asset amortization. Adjusted EBITDA further excludes stock-based compensation expense.

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 877-407-9039 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 income (loss)", "adjusted net income (loss) per diluted share" and "adjusted EBITDA". The most directly comparable measure for these non-GAAP financial measures are operating expenses, net income (loss) and diluted net income (loss) per share. The Company has included below unaudited adjusted financial information, which present the Company's results of operations after excluding restructuring charges, purchase intangible asset amortization, and gain on the sale of assets and license agreement, and in the measure of adjusted EBITDA, interest, taxes, depreciation, amortization and stock-based compensation.

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, 2014.

About Digirad Corporation

Digirad delivers convenient, effective, and efficient diagnostic solutions on an as needed, when needed, and where needed basis. Digirad is one of the largest national providers of in-office nuclear cardiology and ultrasound imaging services, and also provides cardiac event monitoring services. These services are provided to physician practices, hospitals and imaging centers through its Diagnostic Services business. Digirad also sells medical diagnostic imaging systems, including solid-state gamma cameras, for nuclear cardiology and general nuclear medicine applications, as well as provides service on the products sold through its Diagnostic Imaging business. 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. Some of these forward-looking statements can be identified by the use of forward-looking words such as "believes," "expects," "may," "will," "should," "seek," "approximately," "intends," "plans," "estimates," or "anticipates," or the negative of those words or other comparable terminology, or in specific statements such as the Company's ability to deliver value to customers, the 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. These risks are 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)

CONTACT: Jeffry Keyes

         Chief Financial Officer

         858-726-1600

         ir@digirad.com

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