0000707388-14-000006.txt : 20140226 0000707388-14-000006.hdr.sgml : 20140226 20140225202556 ACCESSION NUMBER: 0000707388-14-000006 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20140226 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20140226 DATE AS OF CHANGE: 20140225 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DIGIRAD CORP CENTRAL INDEX KEY: 0000707388 STANDARD INDUSTRIAL CLASSIFICATION: ELECTROMEDICAL & ELECTROTHERAPEUTIC APPARATUS [3845] IRS NUMBER: 330145723 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-35947 FILM NUMBER: 14642591 BUSINESS ADDRESS: STREET 1: 13950 STOWE DRIVE CITY: POWAY STATE: CA ZIP: 92064 BUSINESS PHONE: (858) 726-1600 MAIL ADDRESS: STREET 1: 13950 STOWE DRIVE CITY: POWAY STATE: CA ZIP: 92064 8-K 1 digirad8-kq42013pressrelea.htm 8-K DIGIRAD 8-K Q4 2013 Press Release


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: February 26, 2014
(Date of earliest event reported)



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.)

1048 Industrial Court,
Suwanee, GA 30024
(Address of principal executive offices, including zip code)

(858) 726-1600
(Registrant’s telephone number, including area code)

Not Applicable
(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:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
[ ] 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 February 26, 2014, Digirad Corporation issued a press release announcing financial results for the three and twelve months ended December 31, 2013. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K.

Item 9.01.  Financial Statements and Exhibits
 
(a) Financial statements:
None
(b) Pro forma financial information:
None
(c) Shell company transactions:
None
(d)  Exhibits:
99.1 Press Release of Digirad Corporation dated February 26, 2014
99.2 Information Related to the Use of Non-GAAP Financial Measures    
  




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.

 
 
DIGIRAD CORPORATION
 
 
 
 
By:
/s/ Jeffry R. Keyes
 
 
 
Jeffry R. Keyes
Chief Financial Officer

Date:    February 26, 2014



Exhibit Index

Exhibit No.
 
Description
 
 
 
99.1
 
Press Release dated February 26, 2014, announcing financial results for the three and twelve months ended December 31, 2013.
99.2
 
Information Related to the use of Non-GAAP Financial Measures.


 EX-99.1 2 exhibit991digirad12312013p.htm EXHIBIT Exhibit 99.1 DIGIRAD 12.31.2013 PRESS RELEASE


Exhibit 99.1
News Release
For immediate release
For more information contact:
February 26, 2014
Jeffry Keyes
 
Chief Financial Officer
 
858-726-1600
 
ir@digirad.com
 
 

Digirad Corporation Reports Fourth Quarter and Year-End Financial Results

Continued Profitability; $1.4 Million in Operating Cash Flow during the Quarter

Suwanee, GA. - February 26, 2014 - Digirad Corporation (NASDAQ: DRAD) today reported fourth quarter earnings of $0.8 million, or $0.04 per diluted share, with total revenues of $12.5 million. Ending cash, cash equivalents and available-for-sale securities was $26.4 million.

Digirad President and CEO Matt Molchan said, “The financial results and the operational progress made by the organization in the fourth quarter continues to be right on track and illustrate how we can continue to generate profitability and cash from the business while implementing the framework and business discipline necessary to sustain growth for the future.

In DIS, we added customers and leveraged our resources more efficiently, and as a result, increased our margins in our operating hubs. In Diagnostic Imaging, we increased margins on system sales during the period, and for all of Digirad, as expected, we generated cash flow from operations and profits. Along with our results for the fourth quarter, we also recently announced the termination of the lease of our former headquarters, a move we think will save between $400,000 to $500,000 annually, showing that we continue to look for meaningful ways to right-size our business and squeeze efficiency from it.” Molchan added, “Our general expectation continues to be that we will be a net cash flow generator on an annual basis and will continue to deliver value back to shareholders via a growing business enterprise and a continued and sustainable dividend.”
 
The Company previously announced on February 3, 2014 a dividend of $0.05 per share that was paid on February 24, 2014, to shareholders of record on February 14, 2014.

Fourth Quarter 2013 Summary

•
Total revenue for the fourth quarter of 2013 was $12.5 million, compared to $13.0 million for the same period in the prior year. DIS revenue for the fourth quarter of 2013 was $9.3 million, compared to $8.5 million for the same period of the prior year, and Diagnostic Imaging revenue for the fourth quarter of 2013 was $3.3 million, compared to $4.5 million for the same period of the prior year.

•
Gross profit for the fourth quarter of 2013 was $3.7 million, or 29.4% of revenue, compared to $2.6 million, or 20.1% of revenue in the prior year quarter.

•
Net income for the fourth quarter of 2013 was $0.8 million, or $0.04 net income per diluted share, compared to a net loss of $1.9 million, or $0.10 net loss per diluted share, in the same period of the prior year.





•
Operating expenses for the fourth quarter of 2013 were $2.9 million, compared to $4.5 million in the same period in the prior year.

•
Cash, cash equivalents and available-for-sale securities totaled $26.4 million as of December 31, 2013. Cash, cash equivalents and available-for-sale securities totaled $25.9 million at September 30, 2013 and $27.2 million as of December 31, 2012.

Full-Year 2013 Summary

•
Total revenue for 2013 was $49.4 million, compared to $50.5 million for the same period in the prior year. DIS revenue for 2013 was $37.2 million, compared to $36.1 million for the same period of the prior year. Diagnostic Imaging revenue for 2013 was $12.2 million, compared to $14.4 million for the same period of the prior year.

•
Gross profit for 2013 was $14.1 million, or 28.6% of revenue, compared to $13.1 million, or 25.9% of revenue in the same period of the prior year.

•
Net income for 2013 was $0.3 million, or $0.01 net income per diluted share, compared to a net loss of $4.9 million, or $0.26 net loss per diluted share, in the same period of the prior year. Adjusted net income for 2013, excluding expenses incurred for nonrecurring items related to restructuring activities and the gain on sale of assets and associated license agreement, was $0.4 million, or $0.02 adjusted net income per diluted share, compared to an adjusted net loss of $4.9 million, or $0.26 adjusted net loss per diluted share, for the same period in the prior year.

•
Operating expenses for 2013 were $13.9 million, compared to $18.2 million in the same period in the prior year. Adjusted operating expenses, excluding expenses incurred for nonrecurring items related to restructuring activities and the gain on sale of assets and associated license agreement, for 2013 were $13.8 million, compared to the $18.2 million in the same period of the prior year. In addition to the restructuring costs and the gain on sale of assets and associated license agreement, operating expenses for 2013 included approximately $0.7 million in costs related to the proxy contest and subsequent litigation with the dissident shareholder group that was settled earlier in the year.


Conference Call Information
A conference call is scheduled for 1:00 p.m. EST today to discuss the results and management's outlook. The call may be accessed by dialing 877-941-2321 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 for the quarters and years ended December 31, 2013 and 2012, which present the Company's results of operations after excluding restructuring charges 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 February 26, 2014.

About Digirad Corporation
Digirad delivers convenient, effective, and efficient diagnostic imaging solutions on an as needed, when needed, and where needed basis. Digirad is one of the largest national providers of in-office nuclear cardiology imaging and ultrasound services to physician practices, hospitals and imaging centers, and also sells medical diagnostic imaging systems for nuclear cardiology and general nuclear medicine applications. 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)








Digirad Corporation
Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
 
Three Months Ended
 
Year Ended
 
December 31,
 
December 31,
(in thousands, except per share amounts)
2013
 
2012
 
2013
 
2012
 

 

 

 

Revenues:
 
 
 
 
 
 
 
DIS
$
9,268

 
$
8,542

 
$
37,171

 
$
36,064

Diagnostic Imaging
3,259

 
4,475

 
12,205

 
14,449

Total revenues
12,527

 
13,017

 
49,376

 
50,513

Cost of revenues:
 
 
 
 
 
 
 
DIS
6,908

 
6,529

 
27,828

 
27,293

Diagnostic Imaging
1,931

 
3,878

 
7,432

 
10,128

Total cost of revenues
8,839

 
10,407

 
35,260

 
37,421

 
 
 
 
 
 
 
 
Gross profit
3,688

 
2,610

 
14,116

 
13,092

Total gross profit percentage
29.4
%
 
20.1
%
 
28.6
%
 
25.9
%
DIS gross profit percentage
25.5
%
 
23.6
%
 
25.1
%
 
24.3
%
Diagnostic Imaging gross profit percentage
40.7
%
 
13.3
%
 
39.1
%
 
29.9
%
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Research and development
5

 
718

 
1,025

 
3,716

Marketing and sales
1,124

 
1,667

 
4,411

 
6,402

General and administrative
1,691

 
2,019

 
8,118

 
7,839

Amortization of intangible assets
53

 
49

 
231

 
233

Restructuring charges
35

 
—

 
1,728

 
—

Gain on sale of assets and license agreement
—

 
—

 
(1,568
)
 
—

Total operating expenses
2,908

 
4,453

 
13,945

 
18,190

 
 
 
 
 
 
 
 
Income (loss) from operations
780

 
(1,843
)
 
171

 
(5,098
)
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
Interest and other income, net
11

 
19

 
63

 
101

Interest expense
(5
)
 
(1
)
 
(15
)
 
(4
)
Total other income
6

 
18

 
48

 
97

 
 
 
 
 
 
 
 
Income (loss) before income taxes
786

 
(1,825
)
 
219

 
(5,001
)
Income tax benefit (expense)
1

 
(34
)
 
45

 
77

Net income (loss)
$
787

 
$
(1,859
)
 
$
264

 
$
(4,924
)
 
 
 
 
 
 
 
 
Net income (loss) per share – basic
$
0.04

 
$
(0.10
)
 
$
0.01

 
$
(0.26
)
Net income (loss) per share – diluted
$
0.04

 
$
(0.10
)
 
$
0.01

 
$
(0.26
)
 
 
 
 
 
 
 
 
Weighted average shares outstanding – basic
18,491

 
19,276

 
18,789

 
19,274

Weighted average shares outstanding – diluted
18,803

 
19,276

 
19,159

 
19,274

 
 
 
 
 
 
 
 





DIGIRAD CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
 
 
As of December 31,
 (in thousands)
 
2013
 
2012
 
 
 
 
 
Assets
 
 
 
 
Current assets:
 
 
 
 
Cash and cash equivalents
 
$
18,744

 
$
19,514

Securities available-for-sale
 
7,673

 
7,679

Accounts receivable, net
 
5,430

 
6,329

Inventories, net
 
3,881

 
4,979

Other current assets
 
697

 
642

Restricted cash
 
244

 
244

Total current assets
 
36,669

 
39,387

Property and equipment, net
 
4,153

 
4,693

Intangible assets, net
 
353

 
584

Goodwill
 
184

 
184

Other assets
 
92

 
61

Total assets
 
$
41,451

 
$
44,909

 
 
 
 
 
Liabilities
 
 
 
 
Current liabilities:
 
 
 
 
Accounts payable
 
$
611

 
$
1,546

Accrued compensation
 
3,472

 
2,364

Accrued warranty
 
137

 
326

Deferred revenue
 
1,631

 
1,849

Other accrued liabilities
 
1,774

 
2,199

Total current liabilities
 
7,625

 
8,284

Other liabilities
 
440

 
176

Total liabilities
 
8,065

 
8,460

 
 
 
 
 
Stockholders’ equity:
 
 
 
 
  Preferred stock
 
—

 
—

Common stock
 
2

 
2

Treasury stock
 
(5,728
)
 
(2,086
)
  Additional paid-in capital
 
156,968

 
156,634

  Accumulated other comprehensive income (loss)
 
(2
)
 
17

  Accumulated deficit
 
(117,854
)
 
(118,118
)
  Total stockholders’ equity
 
33,386

 
36,449

Total liabilities and stockholders’ equity
 
$
41,451

 
$
44,909






Digirad Corporation
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
 
 
 
Three Months Ended December 31,
 
Year Ended December 31,
(in thousands, except per share amounts)
 
2013
 
2012
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
Total operating expenses
 
$
2,908

 
$
4,453

 
$
13,945

 
$
18,190

 
Restructuring charges(1)
 
(35
)
 
—

 
(1,728
)
 
—

 
Gain on sale of assets and license agreement(2)
 
—

 
—

 
1,568

 
—

 Non-GAAP Adjusted operating expenses
 
$
2,873

 
$
4,453

 
$
13,785

 
$
18,190

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
787

 
$
(1,859
)
 
$
264

 
$
(4,924
)
 
Restructuring charges(1)
 
35

 
—

 
1,728

 
—

 
Gain on sale of assets and license agreement(2)
 
—

 
—

 
(1,568
)
 
—

 
Income tax items(3)
 
—

 
—

 
—

 
—

Non-GAAP Adjusted net income (loss)
 
$
822

 
$
(1,859
)
 
$
424

 
$
(4,924
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share - diluted
 
$
0.04

 
$
(0.10
)
 
$
0.01

 
$
(0.26
)
 
Restructuring charges(1)(4)
 
—

 
—

 
0.09

 
—

 
Gain on sale of assets and license agreement(2)(4)
 
—

 
—

 
(0.08
)
 
—

 
Income tax items(3)(4)
 
—

 
—

 
—

 
—

Non-GAAP Adjusted net income (loss) per share - diluted(4)
 
$
0.04

 
$
(0.10
)
 
$
0.02

 
$
(0.26
)
 
 
 
 
 
 
 
 
 
 

 
 
 
Three Months Ended December 31,
 
Year Ended December 31,
(in thousands)
 
2013
 
2012
 
2013
 
2012
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
787

 
$
(1,859
)
 
$
264

 
$
(4,924
)
 
Restructuring charges(1)
 
35

 
—

 
1,728

 
—

 
Gain on sale of assets and license agreement(2)
 
—

 
—

 
(1,568
)
 
—

 
Depreciation and amortization
 
466

 
481

 
1,913

 
2,131

 
Stock-based compensation
 
40

 
159

 
340

 
630

 
Interest and other income, net
 
(11
)
 
(19
)
 
(63
)
 
(101
)
 
Interest expense
 
5

 
1

 
15

 
4

 
Income tax (benefit) expense
 
(1
)
 
34

 
(45
)
 
(77
)
Non-GAAP Adjusted EBITDA
 
$
1,321

 
$
(1,203
)
 
$
2,584

 
$
(2,337
)
 
 
 
 
 
 
 
 
 
 

(1) Reflects nonrecurring charges primarily related to restructuring of the Diagnostic Imaging reporting segment.
(2) Reflects a nonrecurring gain related to the sale of assets associated with an uncommercialized surgical imaging system, and the licensing of certain existing Company technology.
(3) Reflects income tax effect for adjusted financial data.
(4) 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.





Digirad Corporation
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
 
 
 
Three Months Ended
(in thousands, except per share amounts)
 
March 31, 2013
 
June 30, 2013
 
September 30, 2013
 
December 31, 2013
 
 
 
 
 
 
 
 
 
 
Total operating expenses
 
$
5,226

 
$
4,425

 
$
1,386

 
$
2,908

 
Restructuring charges(1)
 
(1,004
)
 
(610
)
 
(79
)
 
(35
)
 
Gain on sale of assets and license agreement(2)
 
—

 
—

 
1,568

 
—

 Non-GAAP Adjusted operating expenses
 
$
4,222

 
$
3,815

 
$
2,875

 
$
2,873

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
(2,419
)
 
$
(616
)
 
$
2,512

 
$
787

 
Restructuring charges(1)
 
1,004

 
610

 
79

 
35

 
Gain on sale of assets and license agreement(2)
 
—

 
—

 
(1,568
)
 
—

 
Income tax items(3)
 
—

 
—

 
—

 
—

Non-GAAP Adjusted net income (loss)
 
$
(1,415
)
 
$
(6
)
 
$
1,023

 
$
822

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share - diluted(4)
 
$
(0.13
)
 
$
(0.03
)
 
$
0.14

 
$
0.04

 
Restructuring charges(1)(4)
 
0.06

 
0.03

 
—

 
—

 
Gain on sale of assets and license agreement(2)(4)
 
—

 
—

 
(0.08
)
 
—

 
Income tax items(3)(4)
 
—

 
—

 
—

 
—

Non-GAAP Adjusted net income (loss) per share - diluted(4)
 
$
(0.07
)
 
$
—

 
$
0.06

 
$
0.04

 
 
 
 
 
 
 
 
 
 

 
 
 
Three Months Ended
(in thousands)
 
March 31, 2013
 
June 30, 2013
 
September 30, 2013
 
December 31, 2013
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
(2,419
)
 
$
(616
)
 
$
2,512

 
$
787

 
Restructuring charges(1)
 
1,004

 
610

 
79

 
35

 
Gain on sale of assets and license agreement(2)
 
—

 
—

 
(1,568
)
 
—

 
Depreciation and Amortization
 
493

 
479

 
475

 
466

 
Stock-based Compensation
 
121

 
105

 
74

 
40

 
Interest and other income, net
 
(23
)
 
(16
)
 
(13
)
 
(11
)
 
Interest expense
 
1

 
4

 
5

 
5

 
Income tax benefit (expense)
 
32

 
(4
)
 
(72
)
 
(1
)
Non-GAAP Adjusted EBITDA
 
$
(791
)
 
$
562

 
$
1,492

 
$
1,321

 
 
 
 
 
 
 
 
 
 

(1) Reflects nonrecurring charges primarily related to restructuring of the Diagnostic Imaging reporting segment.
(2) Reflects a nonrecurring gain related to the sale of assets associated with an uncommercialized surgical imaging system, and the licensing of certain existing Company technology.
(3) Reflects income tax effect for adjusted financial data.
(4) 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.



 EX-99.2 3 exhibit992123113useofnon-g.htm EXHIBIT Exhibit 99.2 12.31.13 USE OF NON-GAAP FINANCIAL MEASURES


Exhibit 99.2

Use of Non-GAAP Financial Measures

In addition to financial results calculated in accordance with U.S. generally accepted accounting principles (“GAAP”), information containing non-GAAP financial measures for Digirad Corporation (the “Company”) was disclosed in the Company's press release (the “Press Release”) dated February 26, 2014 announcing results for the three and twelve months ended December 31, 2013 that accompanied a conference call held by the Company on February 26, 2014 to discuss the Company's financial results for the three and twelve months ended December 31, 2013. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. The non-GAAP financial measures used by the Company may be calculated differently from, and therefore may not be comparable to, similarly titled measures used by other companies. The Company has provided reconciliations of the non-GAAP financial measures to the most directly comparable GAAP financial measures. Management encourages readers to rely upon the GAAP numbers, but includes the non-GAAP financial measures as supplemental metrics to assist readers. Definitions of the non-GAAP financial measures are included in the Press Release.
In the Press Release, the Company presented the non-GAAP financial measures “adjusted operating expenses”, “adjusted net income (loss)”, “adjusted net income (loss) per diluted share” and "adjusted EBITDA". Company management uses these non-GAAP financial measures to evaluate the Company's performance. As the Company's core business is providing healthcare services and products to the healthcare industry, Company management finds it useful to use financial measures that do not include charges associated with restructuring activities or monetization of uncommercialized technology previously under development. While we may have these types of items and charges in the future, Company management believes that they are not reflective of the day-to-day offering of its products and services and relate more to strategic, multi-year corporate actions, without predictable trends, and that may obscure the trends and financial performance of the Company's core business. In the case of "adjusted EBITDA", Company management believes the exclusion of interest, taxes, depreciation, amortization, and stock-based compensation is a very common measure utilized in the investment community and it helps Company management benchmark its operations and results with the industry.
The limitation associated with using these non-GAAP financial measures is that these measures exclude items that impact the Company's current period operating results. This limitation is best addressed by using these non-GAAP financial measures in combination with “operating expenses”, “net income (loss)” and “net income (loss) per diluted share” (the most comparable GAAP measures) because these non-GAAP financial measures do not reflect items that impact current period operating results and may be higher or lower than the most comparable GAAP measure.