UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
DC 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of
The
Securities Exchange Act of 1934
Date
of
Report (Date of earliest event reported)
February
7, 2008
DIGIRAD
CORPORATION
(Exact
name of registrant as specified in its charter)
|
Delaware
|
000-50789
|
33-0145723
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||
|
(State
or other jurisdiction of incorporation)
|
(Commission
File Number)
|
(IRS
Employer
Identification
No.)
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13950
Stowe Drive
Poway,
California 92064
(Address
of principal executive offices, including zip code)
(858)
726-1600
(Registrant’s
telephone number, including area code)
N/A
(Former
name or former address, if changed since last report)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
|
o
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Written
communications pursuant to Rule 425 under the Securities Act (17
CFR
230.425)
|
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
|
|
o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17
CFR
240.14d-2(b))
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|
o
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Pre-commencement
communications pursuant to Rule 13e-4(c) under the Exchange Act (17
CFR
240.13e-4(c))
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Item 2.02. Results of Operations and Financial Condition
On
February 7, 2008, Digirad Corporation issued a press release announcing
financial results for the quarter and year ended December 31, 2007. A copy
of
this press release is attached hereto as Exhibit 99.1.
This
information and the exhibits hereto are being furnished and shall not be deemed
to be "filed" for purposes of Section 18 of the Securities Exchange Act of
1934,
as amended (the "Exchange Act"), or otherwise subject to the liability of that
section, nor shall they be deemed incorporated by reference in any filing under
the Securities Act of 1933, as amended, or the Exchange Act, except as expressly
set forth by specific reference in such a filing.
Item
9.01. Financial Statements and Exhibits
(c)
Exhibits.
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Exhibit
No.
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|
Description
|
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99.1
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Press
Release dated February 7, 2008.
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SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
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DIGIRAD
CORPORATION
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|||
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By:
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/s/
Todd Clyde
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||
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Todd
Clyde
Chief
Financial Officer
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|||
Date: February
7, 2008
Exhibit
99.1
Digirad
Corporation Reports Financial Results for 2007 Fourth Quarter and Twelve
Months
Net
Results Improve for Year on Higher Services Revenues, Lower Expenses
POWAY,
Calif.—February 7, 2008—Digirad Corporation (Nasdaq: DRAD), a
leading
provider of medical diagnostic imaging systems and services to physicians’
offices, hospitals and imaging centers, today reported narrower losses for
the
twelve months ended December 31, 2007, on higher annual revenues and lower
operating expenses for the year.
Consolidated
revenues for the quarter were $18.8 million, up nine percent from $17.2 million
in fourth-quarter 2006. Revenue from its mobile imaging services division
or DIS
rose 16 percent to $13.4 million from $11.6 million in fourth-quarter 2006.
Product-related revenue was $5.4 million, and included sales of 18 cameras,
compared to $5.6 million in fourth-quarter 2006, including sales of 17 cameras.
Consolidated
revenues for full-year 2007 were $73.9 million, compared to $71.9 million
in
2006. DIS revenue was $52.4 million, compared to $49.6 million for 2006.
Product-related revenue was $21.5 million, including sales of 73 cameras,
compared to $22.3 million in 2006, which included sales of 71
cameras.
Chief
Executive Officer Mark Casner commented: “We are pleased with our achievements
in 2007: our acquisition of Ultrascan, the launch of our Centers of Influence
strategy, the improvement in our product margins, and the reduction of our
operating loss by $5.4 million compared to 2006.”
Consolidated
gross profit decreased by nine percent to $4.5 million for the quarter,
principally due to decreased DIS profitability attributable to greater than
normal seasonality and the disruption in radioisotope supplies announced
previously. Gross margin was 24 percent of revenues in the fourth quarter
of
2007, compared to 28 percent of revenues in 2006.
Consolidated
gross profit for full-year 2007 increased by eight percent to $20.5 million,
or
28 percent of revenues, compared to $19.1 million, or 26 percent of revenues
in
2006.
Net
loss
for the quarter was $1.1 million, or $(0.06) per share, compared to a
fourth-quarter 2006 net loss of $149,000, or $(0.01) per share. The $1.0
million
increase in net loss for fourth-quarter 2007 was due in part to a decline
in DIS
gross profit, increased amortization costs associated with the intangible
assets
arising from the Ultrascan acquisition of $185,000, and a fourth-quarter
charge
of $300,000 primarily from impairment of certain long-term assets.
Despite
higher net losses for the fourth quarter, net loss for the year declined
more
than 75 percent to $1.4 million, or $(0.07) per share, compared to a net
loss of
$6.3 million, or $(0.34) per share, incurred in 2006. Total operating expenses
for full-year 2007 declined to $23.4 million, or 32 percent of revenues,
from
$27.3 million, or 38 percent of revenues, in 2006.
For
the
quarter, DIS operated 136 units, both nuclear and ultrasound, with an overall
asset utilization rate of 60 percent,
compared
to 83 units (all nuclear) and an asset utilization rate of 56 percent for
fourth-quarter 2006. During the quarter the Company continued to upgrade
its
mobile imaging services’ nuclear camera fleet by replacing six single-head
cameras with its multi-headed Cardius XPO configuration. The Company’s fleet of
mobile cameras now includes 61 multi-headed cameras. The ongoing upgrades
are
expected
to increase reliability and patient throughput and thereby lead to higher
utilization and lower labor costs in subsequent periods.
MORE-MORE-MORE
Digirad
Corporation Reports Financial Results for 2007 Fourth Quarter and Twelve
Months
Page
2-2-2
Cash
and
equivalents and securities available for sale on December 31, 2007, totaled
$31.7 million, compared to $44.3 million on December 31, 2006. Cash usage
for
2007 included $8.8 million in payments toward the acquisition of Ultrascan
net
assets and $8.6 million for capital expenditures primarily associated with
the
fleet upgrade of the Company’s mobile imaging services operations. Cash usage
was offset in part by positive cash flows from operations of $4.7 million
during
the year. Net receivables were $8.5 million, compared to $7.5 million on
December 31, 2006. Net inventories were $5.5 million, compared to $5.9 million
on December 31, 2006.
Focus
for 2008
Casner
further commented: “Looking forward, our key focus for 2008 will be driving DIS
revenue growth through our Centers of Influence strategy, increasing our
mobile
imaging fleet utilization which should translate into a profitable 2008 for
our
DIS business, and reaching profitability for the first time in the history
of
our product business, as we intend to increase product-related revenue, reduce
costs and improve reliability in this business segment.”
Management
Reaffirms Guidance for 2008
For
full-year 2008, the Company anticipates consolidated revenues in a range
of $80
million to $84 million, consisting of DIS imaging services revenue of $59
million to $61 million and product-related revenue of $21 million to $23
million; and consolidated net results for 2008 to range from net income of
$500,000 to a net loss of $1 million, including estimated stock-based
compensation expense of $1 million.
Conference
Call Information
Digirad
has scheduled a conference call at 11:00 a.m. EDT today. 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. A telephone replay of the call will be available at
(800)
406-7325 or (303) 590-3030, conference ID #3838461, from approximately 2
p.m.
EST. The telephone replay will be available until 11:59 pm EST on February
9.
About
Digirad
Digirad
Corporation provides diagnostic nuclear and ultrasound imaging systems and
services to physicians’ offices, hospitals and other medical services providers
for cardiac, vascular, and general imaging applications. Digirad’s Cardius XPO
line of nuclear imaging cameras use patented solid-state technology and unique
multi (single, dual, triple) head design for superior performance and advanced
features for sharper digital images, faster processing, compact size, lighter
weight for portability, ability to handle patients up to 500 pounds, and
improved patient comfort compared to standard nuclear cameras. Digirad’s 2020tc
general-purpose nuclear imager has a small footprint and may also be configured
for fixed or mobile use to supplement primary imaging. Digirad’s installed base
of nuclear equipment exceeds 500 systems; in addition, a mobile fleet of
more
than 136 nuclear and ultrasound imaging systems is being used in 23 states,
primarily in the eastern, midwestern and southwestern United States. For
more
information, please visit www.digirad.com. Digirad®, Digirad Imaging Solutions®,
and Cardius® are registered trademarks of Digirad Corporation.
MORE-MORE-MORE
Digirad
Corporation Reports Financial Results for 2007 Fourth Quarter and Twelve
Months
Page
3-3-3
Forward-Looking
Statements
Statements
in this press release that are not a description of historical facts are
forward
looking statements. You can identify these statements by the fact that they
do
not relate strictly to historical or current facts and use words such as
"anticipate," "estimate," "expect," "project," "intend," "plan," "believe"
and
other words and terms of similar meaning. Examples of such forward looking
statements include statements regarding revenue growth, gross margin
improvements, declining operating expenses, performance and costs benefits
from
the ongoing upgrade of the mobile imaging fleet, anticipated revenue in 2008
from the Company’s centers of influence strategy, potential acquisitions, and,
in general, anticipated financial results for 2008. Actual performance and
benefits results may differ materially from those set forth in this press
release due to risks and uncertainties inherent in Digirad's business including,
without limitation, changes in business conditions, technology, customers’
business conditions, work force, suppliers, business prospects, 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, 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.
|
Investor
Contact:
Dan
Matsui
Allen
& Caron
949-474-4300
|
Company
Contact:
Todd
Clyde, CFO
858-726-1600
ir@digirad.com
|
|
[Financial
tables follow]
Digirad
Corporation Reports Financial Results for 2007 Fourth Quarter and Twelve
Months
Page
4-4-4
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Digirad Corporation
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||||||||||||||||
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Condensed Consolidated Statements of Operations
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||||||||||||||||
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(In thousands, except per share amounts)
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||||||||||||||||
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Three Months Ended
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Twelve
Months Ended
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||||||||||||||
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December
31,
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December 31,
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||||||||||||||
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2007
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2006
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2007
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2006
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||||||||||
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(unaudited)
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(unaudited)
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|||||||||||||
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Revenues:
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||||||||||||||||
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DIS
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$
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13,420
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$
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11,606
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$
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52,440
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$
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49,614
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||||||||
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Product
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5,403
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5,641
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21,507
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22,312
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||||||||||||
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Total revenues
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18,823
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17,247
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73,947
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71,926
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||||||||||||
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Cost of revenues:
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||||||||||||||||
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DIS
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10,749
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8,595
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39,520
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37,675
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||||||||||||
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Product
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3,582
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3,742
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13,909
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15,192
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||||||||||||
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Total cost of revenues
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14,331
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12,337
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53,429
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52,867
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||||||||||||
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Gross profit
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4,492
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4,910
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20,518
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19,059
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||||||||||||
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Operating expenses:
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||||||||||||||||
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Research and development
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631
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645
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3,072
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3,894
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||||||||||||
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Sales and marketing
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2,009
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2,030
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7,670
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8,827
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||||||||||||
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General and administrative
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2,794
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2,846
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11,920
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14,535
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||||||||||||
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Amortization
and impairment of intangible assets
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371
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(8
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)
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697
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27
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|||||||||||
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Total operating expenses
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5,805
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5,513
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23,359
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27,283
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||||||||||||
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Loss from operations
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(1,313
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)
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(603
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)
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(2,841
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)
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(8,224
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)
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||||||||
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Interest income, net
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343
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454
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1,566
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1,988
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||||||||||||
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Other
expense
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(130
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)
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--
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(101
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)
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(54
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)
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|||||||||
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Net loss
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$
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(1,100
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)
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$
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(149
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)
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$
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(1,376
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)
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$
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(6,290
|
)
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||||
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Net loss per share - basic and diluted
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$
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(0.06
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)
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$
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(0.01
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)
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$
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(0.07
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)
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$
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(0.34
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)
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||||
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Weighted average shares outstanding:
|
||||||||||||||||
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Basic and diluted
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18,916
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18,791
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18,845
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18,761
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||||||||||||
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Stock-based compensation expense
is included in the above as follows:
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||||||||||||||||
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Cost of DIS revenue
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$
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10
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$
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17
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$
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71
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$
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141
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||||||||
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Cost of Product revenue
|
(11
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)
|
9
|
49
|
74
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|||||||||||
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Research and development
|
15
|
--
|
77
|
130
|
||||||||||||
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Sales and marketing
|
35
|
41
|
102
|
279
|
||||||||||||
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General and administrative
|
32
|
110
|
606
|
942
|
||||||||||||
MORE-MORE-MORE
Digirad
Corporation Reports Financial Results for 2007 Fourth Quarter and Twelve
Months
Page
5-5-5
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Digirad Corporation
|
|||||||
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Condensed Consolidated Balance Sheets(1)
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|||||||
|
(in thousands)
|
|||||||
|
December 31,
|
|||||||
|
2007
|
|
2006
|
|||||
|
(unaudited)
|
|||||||
|
Assets
|
|||||||
|
Cash and cash equivalents
|
$
|
14,922
|
$
|
10,070
|
|||
|
Securities available-for-sale
|
16,740
|
34,256
|
|||||
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Accounts receivable, net
|
8,536
|
7,534
|
|||||
|
Inventories, net
|
5,455
|
5,860
|
|||||
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Other current assets
|
1,786
|
1,499
|
|||||
|
Total current assets
|
47,439
|
59,219
|
|||||
|
Property and equipment, net
|
16,235
|
9,570
|
|||||
|
Other
intangible assets, net
|
2,631
|
428
|
|||||
|
Goodwill
|
2,650
|
--
|
|||||
|
Restricted cash
|
60
|
60
|
|||||
|
Total assets
|
$
|
69,015
|
$
|
69,277
|
|||
|
Liabilities and stockholders' equity
|
|||||||
|
Accounts payable
|
$
|
2,650
|
$
|
2,643
|
|||
|
Accrued compensation
|
3,547
|
3,650
|
|||||
|
Accrued warranty
|
930
|
788
|
|||||
|
Other accrued liabilities
|
3,285
|
3,306
|
|||||
|
Deferred revenue
|
2,909
|
2,775
|
|||||
|
Current portion of long-term debt
|
213
|
269
|
|||||
|
Total current liabilities
|
13,534
|
13,431
|
|||||
|
Long-term debt, net of current portion
|
--
|
99
|
|||||
|
Deferred rent
|
234
|
302
|
|||||
|
Total stockholders' equity
|
55,247
|
55,445
|
|||||
|
Total liabilities and stockholders' equity
|
$
|
69,015
|
$
|
69,277
|
|||
(1) The condensed consolidated balance sheet as of December 31, 2006,
was derived from the
audited financial statements as of that date.
####