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)
April
24, 2008
DIGIRAD
CORPORATION
(Exact
name of registrant as specified in its charter)
|
Delaware
|
000-50789
|
33-0145723
|
||
|
(State
or other jurisdiction of incorporation)
|
(Commission
File Number)
|
(IRS
Employer
Identification
No.)
|
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
Written communications
pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule
14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant
to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant
to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item
2.02. Results of Operations and Financial Condition
On
April
24, 2008, Digirad Corporation issued a press release announcing financial
results for the quarter ended March 31, 2008. 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.
|
Exhibit
No.
|
|
Description
|
|
99.1
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Press
Release dated April 24, 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: April
24,
2008
Digirad
Corporation Reports Financial Results for First-Quarter 2008
POWAY,
Calif.— April 24, 2008—Digirad Corporation (Nasdaq: DRAD), a
leading
provider of medical diagnostic imaging systems and services to physicians’
offices, hospitals and imaging centers, today reported financial results for
first quarter ended March 31, 2008.
Consolidated
revenues were higher, compared to the same time period in 2007, due to an
increase in mobile imaging services revenues within Digirad Imaging Solutions.
The Company’s product division experienced a downturn in large part due to the
difficult market conditions during the quarter. Operating expenses were
relatively unchanged from the year ago period, but the effects of weaker margins
and lower product sales contributed to the loss in the quarter.
Chief
Executive Mark Casner commented: “We are clearly disappointed with the
performance of our product division during first quarter, but we remain
cautiously optimistic that these results reflect more of an acute phase than
a
systemic problem. And while it can be difficult to predict future results,
early
indications show that bookings and shipments have picked up during the first
few
weeks of April.
“In
late
third-quarter 2007, we launched labor-retention initiatives to reduce turnover
in the DIS division,” Casner continued. “I am pleased to report that these
initiatives have produced some positive results, but they have also contributed
to the squeeze on margins this quarter. As a result, we are evaluating these
initiatives and will likely refine them this quarter to address this
issue.”
Growth
of
DIS services revenues in first quarter, compared to first-quarter 2007, was
the
result of incremental revenue from ultrasound imaging that in second-quarter
2007 Digirad added to its line of mobile imaging services. According to Casner,
ultrasound business is progressing well according to plan.
DIS
now
accounts for more than 75 percent of total revenues, and the Company's centers
of influence are beginning to produce higher bookings and revenue each quarter.
Also during the quarter, Digirad added Johns Hopkins Medical Center, one
of the
nation's premiere academic medical centers, to its centers of influence.
The
Company began this program less than a year ago, now has working relationships
with six centers of influence, and expects to sign at least four additional
centers by the end of 2008.
Casner
added: “The results of our centers of influence strategy are encouraging, but we
feel it is too early to offer a definitive outlook. However, as this expansion
continues to gain traction, we’ll be able to better understand and predict not
only the revenue implications but also the timing of those revenue
flows.”
First-Quarter
2008 Financial Summary:
| · |
Consolidated
revenues were $18.3 million, compared to $17.5 million in first-quarter
2007.
|
| · |
Digirad
Imaging Solutions (DIS) revenue rose 13.6 percent to $13.9 million
from
$12.2 million in first-quarter 2007, due primarily to the introduction
of
ultrasound imaging services.
|
| · |
Product-related
revenue was $4.4 million, compared to $5.3 million in first-quarter
2007,
due to fewer camera sales resulting from healthcare imaging reimbursement
pressures and the slowing economy.
|
|
·
|
Gross
profit declined to $4.4 million from $5.4 million in first-quarter
2007,
due primarily to lower camera sales, and higher labor and other servicing
costs related to DIS.
|
MORE-MORE-MORE
Digirad
Corporation Reports Financial Results for First-Quarter 2008
Page
2-2-2
|
·
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Total
operating expenses rose to $6.1 million from $5.9 million in first-quarter
2007 due to higher amortization costs from the acquisition of Ultrascan
in
the second-quarter 2007.
|
|
·
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Net
loss for the quarter was $1.4 million, or $(0.07) per share, compared
to
net profit of $74,000, or $0.00 per share, in first-quarter 2007.
|
The
Company’s plan to stabilize growth of services revenues and reduce the effects
of the economy and other market pressures includes not only continuing to drive
the centers of influence strategy to augment direct sales and marketing to
physicians but also a broader range of imaging services and, therefore, revenue
sources. During first quarter Digirad began a pilot program to evaluate a new
diagnostic ultrasound procedure to complement its current imaging services.
Physicians
enrolled with DIS who are participating in the pilot program are finding that
additional vascular imaging can enhance patient care. All primary-care
physicians using DIS ultrasound services may soon be able to offer this new
service to their patients.
Casner
stated: “We will continue to pilot this program during the next few quarters
and, if indications remain positive, anticipate rolling out this new service
to
the larger number of our DIS physicians who lease our ultrasound imaging
services. Due to the way the new procedure easily fits into our current process,
we would also be able to leverage our existing ultrasound
infrastructure.”
Other
First-Quarter 2008 Updates:
|
·
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DIS
fleet upgrades: seven multi-head Cardius XPO cameras were added
to
Digirad’s mobile imaging services fleet during the quarter; 82 percent
of
DIS’ mobile fleet, or 68 systems, have been upgraded. The upgrades of
the
entire fleet are expected to be completed during second-quarter
2008.
|
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·
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Asset
utilization was 64 percent of 143 systems (nuclear and ultrasound),
compared to 58 percent of 82 systems (all nuclear) for first-quarter
2007.
|
|
·
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Cash
and equivalents and securities available for sale on March 31,
2008,
totaled $26.4 million, compared to $31.7 million on December 31,
2007.
|
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·
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Cash
usage during the quarter included $2.6 million for operations and
$2.6
million for capital expenditures to expand the Company’s mobile imaging
services business.
|
|
·
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Receivables
on March 31, 2008, were $9.8 million, compared to $8.5 million
on December
31, 2007.
|
|
·
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Inventories
on March 31, 2008, were $5.8 million compared to $5.5 million on
December
31, 2007.
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Management
Updates Guidance for Full-Year 2008
Considering
current economic pressures, the early-growth phase of the Company’s centers of
influence, and continued volatility with its business, management anticipates
consolidated revenues in a range of $75 million to $81 million, consisting
of
DIS revenue of $56 million to $60 million and product-related revenue of $19
million to $21 million. Management expects a consolidated net loss in a range
of
$2.0 million to $4.5 million, including estimated stock-based compensation
expense of $1 million.
Conference
Call Information
A
conference call is scheduled for 11:00 a.m. EDT today to discuss the results
and
management’s outlook. A simultaneous web cast 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
Digirad
Corporation provides diagnostic nuclear and ultrasound imaging systems and
services to physicians’ offices, hospitals and other medical services providers
for cardiac, vascular, and
MORE-MORE-MORE
Digirad
Corporation Reports Financial Results for First-Quarter 2008
Page
3-3-3
general
imaging applications. Digirad’s Cardius XPO line of nuclear imaging cameras use
patented solid-state technology and unique multi (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 equipment exceeds 500 systems; in
addition, a mobile fleet of more than 143 nuclear and ultrasound imaging systems
is being used in 22 states and the District of Columbia, 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.
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 revenues, gross margins, operating
expenses, performance and cost 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 First-Quarter 2008
Page
4-4-4
Digirad
Corporation
Condensed
Consolidated Statements of Operations
(In
thousands, except per share amounts)
(Unaudited)
|
Three
Months Ended
March
31,
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|||||||
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2008
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2007
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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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13,854
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$
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12,197
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|||
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Product
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4,417
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5,341
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|||||
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Total
revenues
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18,271
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17,538
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|||||
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Cost
of revenues:
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|||||||
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DIS
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10,912
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8,938
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|||||
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Product
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2,946
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3,158
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|||||
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Total
cost or revenues
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13,858
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12,096
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|||||
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Gross
profit
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4,413
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5,442
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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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644
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782
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|||||
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Sales
and marketing
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2,119
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2,098
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|||||
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General
and administrative
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3,159
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2,972
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|||||
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Amortization
of intangible assets
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190
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6
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|||||
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Total
operating expenses
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6,112
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5,858
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|||||
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Loss
from operations
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(1,699
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)
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(416
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)
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|||
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Interest
income, net
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306
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464
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|||||
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Other
income (expense)
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(2
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)
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26
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||||
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Net
income (loss)
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$
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(1,395
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)
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$
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74
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||
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Net
income (loss) per share:
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|||||||
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Basic
and diluted
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$
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(0.07
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)
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$
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0.00
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||
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Weighted
average shares outstanding:
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|||||||
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Basic
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18,931
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18,815
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|||||
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Diluted
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18,931
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19,200
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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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17
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$
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25
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|||
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Cost
of Product revenue
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11
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26
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|||||
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Research
and development
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13
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23
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|||||
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Sales
and marketing
|
24
|
50
|
|||||
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General
and administrative
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115
|
150
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|||||
MORE-MORE-MORE
Digirad
Corporation Reports Financial Results for First-Quarter 2008
Page
5-5-5
Digirad Corporation
Condensed Consolidated Balance Sheets(1)
(in thousands)
|
March
31,
|
|
December
31,
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|||||
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2008
|
2007
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||||||
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(unaudited)
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|||||||
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Assets
|
|||||||
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Cash and cash equivalents
|
$
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15,568
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$
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14,922
|
|||
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Securities available-for-sale
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8,304
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16,740
|
|||||
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Accounts receivable, net
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9,772
|
8,536
|
|||||
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Inventories, net
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5,804
|
5,455
|
|||||
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Other current assets
|
2,133
|
1,786
|
|||||
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Total current assets
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41,581
|
47,439
|
|||||
|
Property and equipment, net
|
17,494
|
16,235
|
|||||
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Intangible
assets, net
|
2,441
|
2,631
|
|||||
|
Goodwill
|
2,650
|
2,650
|
|||||
|
Securities
available-for-sale
|
2,500
|
--
|
|||||
|
Restricted cash
|
60
|
60
|
|||||
|
Total assets
|
$
|
66,726
|
$
|
69,015
|
|||
|
Liabilities and stockholders' equity
|
|||||||
|
Accounts payable
|
$
|
2,648
|
$
|
2,650
|
|||
|
Accrued compensation
|
2,843
|
3,547
|
|||||
|
Accrued warranty
|
785
|
930
|
|||||
|
Other accrued liabilities
|
3,036
|
3,285
|
|||||
|
Deferred revenue
|
2,922
|
2,909
|
|||||
|
Current portion of long-term debt
|
142
|
213
|
|||||
|
Total current liabilities
|
12,376
|
13,534
|
|||||
|
Long-term debt, net of current portion
|
75
|
--
|
|||||
|
Deferred rent
|
211
|
234
|
|||||
|
Total stockholders' equity
|
54,064
|
55,247
|
|||||
|
Total liabilities and stockholders' equity
|
$
|
66,726
|
$
|
69,015
|
|||
(1) The
condensed consolidated balance
sheet as of December 31, 2007, has been
derived from the audited financial statements as of that date.
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