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Digirad Corporation Reports Financial Results for the Second Quarter and Six Months ended June 30, 2015

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  • Announces year over year growth in revenue and adjusted EBITDA
  • Confirms financial guidance for 2015
  • Announces a regular quarterly cash dividend of $0.05 cents per share

SUWANEE, Ga., Aug. 07, 2015 (GLOBE NEWSWIRE) -- Digirad Corporation (Nasdaq: DRAD) today reported its financial results for the second quarter and six months ended June 30, 2015.

Total revenues for the 2015 second quarter were $15.5 million, an increase of 7 percent compared to the prior year's second quarter revenues of $14.6 million.

Adjusted net income for the 2015 second quarter was $1.1 million, or $0.06 per diluted share, which was unchanged from the same period in the prior year.  Adjusted EBITDA for the 2015 second quarter was $1.7 million, compared to $1.5 million in the prior year second quarter.

Total revenues for the six months ended June 30, 2015 were $29.4 million, an increase of 7 percent compared to the prior year's revenues for the first six months of $27.6 million.

Adjusted net income for the six months ended June 30, 2015 was $1.4 million, or $0.07 per diluted share, compared to adjusted net income of $1.4 million, or $0.08 per diluted share in same period in the prior year.  Adjusted EBITDA for the six months ended June 30, 2015 was $2.5 million, compared to $2.3 million in the same period in the prior year. A reconciliation of adjusted net income and adjusted EBITDA is provided later in this release.

Digirad President and CEO Matt Molchan said, "I am pleased to report that we achieved another solid quarter of performance in our second quarter of 2015. Our core businesses are performing well, and we are seeing more volume and revenue growth from our Telerhythmics business after the completion of our integration efforts last quarter, in particular in the month of June.  Though our year to date results were impacted by the severe weather in the first quarter, our expectation is that full year results will fall within our previously announced financial guidance range."

Molchan continued, "I am also pleased to announce that our integration efforts for MD Office Solutions are complete, and that business is a solid contributor to our results.  We continue to monitor for other potential acquisitions, and we believe there are more opportunities out there similar to MD Office Solutions.  Though timing is always hard to predict, we continue to expect to acquire some of these businesses over time."

For the first six months ended June 2015, the Company generated cash flow from operations of $2.2 million, compared to $1.2 million in the same period of the prior year. The Company's cash, cash equivalents and available-for-sale securities balance at June 30, 2015 was $21.7 million, a $0.3 million decrease from the December 31, 2014 balance of $22.0 million. Cash activity for the period included normal working capital changes along with payment of cash dividends.

As previously announced, the Company's 2015 financial guidance is to generate revenues between $61.0 million and $63.0 million; non-GAAP adjusted diluted earnings per share between $0.19 and $0.21; and non-GAAP adjusted EBITDA between $6.5 million and $6.9 million.  The Company's non-GAAP financial measure adjusted diluted earnings per share excludes restructuring charges, acquired intangible asset amortization, acquisition related income tax adjustments and acquisition related contingent consideration valuation adjustments. Adjusted EBITDA further excludes stock-based compensation expense.

The Company also announced a cash dividend of $0.05 cents per share that will be paid on August 31, 2015, to shareholders of record on August 21, 2015.

Conference Call Information

A conference call is scheduled for 11:00 a.m. EDT on August 7, 2015 to discuss the results and management's outlook. The call may be accessed by dialing 1-877-407-9039 (international callers: +1-201-689-8470) 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 http://drad.client.shareholder.com/events.cfm; 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 net income,"  "adjusted net income per diluted share," and "adjusted EBITDA." The most directly comparable measure for these non-GAAP financial measures are net income and diluted net income per share. The Company has included below unaudited adjusted financial information, which presents the Company's results of operations after excluding restructuring charges, acquired intangible asset amortization, acquisition related income tax items, acquisition related contingent consideration adjustments, 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 7, 2015.

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.

Digirad Corporation
Condensed Consolidated Statements of Income
(Unaudited)
 
 Three Months Ended Six Months Ended
 June 30, June 30,
(in thousands, except per share amounts)2015 2014 2015 2014
        
Revenues:       
Diagnostic Services$12,179  $11,340  $22,742  $20,895 
Diagnostic Imaging3,368  3,247  6,645  6,689 
Total revenues15,547  14,587  29,387  27,584 
Cost of revenues:       
Diagnostic Services9,213  8,204  17,719  15,738 
Diagnostic Imaging1,567  1,878  3,253  3,899 
Total cost of revenues10,780  10,082  20,972  19,637 
        
Gross profit4,767  4,505  8,415  7,947 
Total gross profit percentage30.7% 30.9% 28.6% 28.8%
Diagnostic Services gross profit percentage24.4% 27.7% 22.1% 24.7%
Diagnostic Imaging gross profit percentage53.5% 42.2% 51.0% 41.7%
        
Operating expenses:       
Marketing and sales1,268  1,245  2,478  2,340 
General and administrative2,203  2,193  4,371  4,188 
Amortization of intangible assets133  104  238  170 
Restructuring charges  138    579 
Total operating expenses3,604  3,680  7,087  7,277 
        
Income from operations1,163  825  1,328  670 
        
Other income (expense):       
Interest and other income, net11  15  22  32 
Interest expense(12) (9) (23) (17)
Total other income (expense)(1) 6  (1) 15 
        
Income before income taxes1,162  831  1,327  685 
Income tax benefit (expense)(65) (8) 515  (10)
Net income$1,097  $823  $1,842  $675 
        
Net income per share:       
Basic$0.06  $0.04  $0.10  $0.04 
Diluted$0.06  $0.04  $0.09  $0.04 
Dividends declared per common share$0.05  $0.05  $0.10  $0.10 
        
Weighted average shares outstanding – basic19,263  18,554  19,036  18,536 
Weighted average shares outstanding – diluted19,726  18,839  19,511  18,831 
        


Digirad Corporation
Condensed Consolidated Balance Sheets
(Unaudited)
 
(in thousands, except share data)June 30,
 2015
 December 31,
 2014
Assets   
Current assets:   
Cash and cash equivalents$14,886  $14,051 
Securities available-for-sale6,780  7,935 
Accounts receivable, net7,252  5,989 
Inventories, net4,016  3,644 
Other current assets668  856 
Restricted cash233  477 
Total current assets33,835  32,952 
    
Property and equipment, net6,034  4,766 
Intangible assets, net3,346  2,577 
Goodwill2,897  1,337 
Other assets312  269 
Total assets$46,424  $41,901 
    
Liabilities and stockholders' equity   
Accounts payable$2,752  $1,423 
Accrued compensation2,343  3,261 
Accrued warranty166  176 
Deferred revenue1,613  1,644 
Other accrued liabilities2,429  1,789 
Total current liabilities9,303  8,293 
Other liabilities1,114  963 
Total liabilities10,417  9,256 
    
Stockholders' equity:   
Preferred stock   
Common stock2  2 
Treasury stock(5,728) (5,728)
Additional paid-in capital155,276  153,769 
Accumulated other comprehensive loss(6) (19)
Accumulated deficit(113,537) (115,379)
Total stockholders' equity36,007  32,645 
Total liabilities and stockholders' equity$46,424  $41,901 




 Digirad Corporation
 Reconciliation of Non-GAAP Financial Measures
 (Unaudited)
  
   Three Months Ended
June 30,
 Six Months Ended
June 30,
(in thousands, except per share amounts) 2015 2014 2015 2014
          
Net income $1,097  $823  $1,842  $675 
 Restructuring charges(1)   138    579 
 Acquired intangible amortization 130  102  233  165 
 Acquisition related contingent consideration valuation adjustment(4) (173)   (173)  
 Income tax items(2) 45  (2) (542) (6)
Non-GAAP Adjusted net income $1,099  $1,061  $1,360  $1,413 
          
Net income per share - diluted $0.06  $0.04  $0.09  $0.04 
 Restructuring charges(1)(3)   0.01    0.03 
 Acquired intangible amortization(3) 0.01  0.01  0.01  0.01 
 Acquisition related contingent consideration valuation adjustment(3)(4)
 (0.01)   (0.01)  
 Income tax items(2)(3)     (0.03)  
Non-GAAP Adjusted net income per share - diluted(3) $0.06  $0.06  $0.07  $0.08 
          


   Three Months Ended
June 30,
 Six Months Ended
June 30,
(in thousands) 2015 2014 2015 2014
          
Net income $1,097  $823  $1,842  $675 
 Restructuring charges(1)   138    579 
 Acquisition related contingent consideration valuation adjustment(4)
 (173)   (173)  
 Depreciation and amortization 598  485  1,086  938 
 Stock-based compensation 141  61  285  111 
 Interest and other income, net (11) (15) (22) (32)
 Interest expense 12  9  23  17 
 Income tax expense (benefit) 65  8  (515) 10 
Non-GAAP Adjusted EBITDA $1,729  $1,509  $2,526  $2,298 
          


(1) Reflects nonrecurring charges primarily related to the lease termination of the Poway, CA facility.
(2) Reflects income tax effect for adjusted financial data and acquisition related income tax adjustments.
(3) Per share amounts are computed independently for each discrete item presented. Therefore, the sum of the quarterly per share amounts will not necessarily equal to the total for the year, and sum of individual items may not equal the total.
(4) Reflects fair value adjustment to estimate of contingent consideration related to acquisitions




 Digirad Corporation
 Reconciliation of Non-GAAP Financial Measures
 (Unaudited)
  
   Three Months Ended
(in thousands, except per share amounts) June 30,
2014
 September 30,
2014
 December 31,
2014
 March 31,
2015
 June 30,
2015
            
Net income $823  $1,028  772  745  $1,097 
 Restructuring charges(1) 138  80  33     
 Acquired intangible amortization 102  90  90  103  130 
 Acquisition related contingent consideration valuation adjustment(4)         (173)
 Income tax items(2) (2) (1) (3) (587) 45 
Non-GAAP Adjusted net income $1,061  $1,197  $892  $261  $1,099 
            
Net income per share - diluted(3) $0.04  $0.05  0.04  0.04  $0.06 
 Restructuring charges(1)(3) 0.01         
 Acquired intangible amortization(3) 0.01      0.01  0.01 
 Acquisition related contingent consideration valuation adjustment(3)(4)         (0.01)
 Income tax items(2)(3)       (0.03)  
Non-GAAP Adjusted net income per share - diluted(3) $0.06  $0.06  $0.05  $0.01  $0.06 
            


   Three Months Ended
(in thousands) June 30,
2014
 September 30,
2014
 December 31, 
2014
 March 31,
2015
 June 30,
2015
            
Net income $823  $1,028  $772  $745  $1,097 
 Restructuring charges(1) 138  80  33     
 Acquisition related contingent consideration valuation adjustment(4)         (173)
 Depreciation and amortization 485  497  494  488  598 
 Stock-based compensation 61  96  119  144  141 
 Interest and other income, net (15) (14) (12) (11) (11)
 Interest expense 9  10  12  11  12 
 Income tax expense (benefit) 8  8  44  (580) 65 
Non-GAAP Adjusted EBITDA $1,509  $1,705  $1,462  $797  $1,729 
            


(1) Reflects nonrecurring charges primarily related to restructuring of the Diagnostic Imaging reporting segment and lease termination of the Poway, CA facility.
(2) Reflects income tax effect for adjusted financial data and acquisition related income tax adjustments.
(3) Per share amounts are computed independently for each discrete item presented. Therefore, the sum of the quarterly per share amounts will not necessarily equal to the total for the year, and sum of individual items may not equal the total.
(4) Reflects fair value adjustment to estimate of contingent consideration related to acquisitions

 

For more information contact: Jeffry Keyes Chief Financial Officer 858-726-1600 ir@digirad.com

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