EX-99.1 2 exhibit991digirad9302014pr.htm EXHIBIT Exhibit 99.1 DIGIRAD 9.30.2014 PRESS RELEASE


Exhibit 99.1
News Release
For immediate release
For more information contact:
October 30, 2014
Jeffry Keyes
 
Chief Financial Officer
 
858-726-1600
 
ir@digirad.com

Digirad Corporation Reports Financial Results for Third Quarter and Nine Months of 2014

•
Year over year revenue growth of 12% for the quarter and 13% for the nine months ended 2014
•
Updates 2014 financial guidance to the high end of previously announced ranges
•
Announces a regular quarterly cash dividend of $0.05 cents per share

Suwanee, GA.- October 30, 2014 - Digirad Corporation (Nasdaq: DRAD) today reported its financial results for the third quarter and nine months ended September 30, 2014.
Total revenues for the 2014 third quarter were $13.9 million, an increase of 12 percent compared to the prior year’s third quarter revenues of $12.4 million. Adjusted income for the 2014 third quarter was $1.2 million, or $0.06 per diluted share, the same as the prior year quarter. Adjusted EBITDA for the 2014 third quarter was $1.7 million, compared to $1.5 million for the prior year quarter.
Total revenues for the first nine months of 2014 were $41.5 million, an increase of 13 percent compared to the same period in the prior year. Adjusted net income for the first nine months of 2014 was $2.6 million, or $0.14 per diluted share, compared to adjusted net loss of $0.2 million, or $0.01 loss per diluted share for the same period in the prior year. Adjusted EBITDA for the first nine months of 2014 was $4.0 million, compared to $1.3 million for 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 very pleased with the results this quarter, and also for our 2014 year so far. Our revenues once again increased this quarter, and also for the first nine months of 2014. Excluding the impact of our recent Telerhythmics acquisition, our year over year revenues increased 3 percent during the third quarter; showing we are growing both organically as well as from our acquisitions.”
“The integration of Telerhythmics, our new cardiac event monitoring business, continues to go well, and as planned. We are continuing to work on full integration of our sales programs and operational activities so we can poise Telerhythmics for growth in the future.”
The Company’s cash, cash equivalents and available-for-sale securities balance at September 30, 2014 was $21.8 million, an increase from the June 30, 2014 balance of $21.4 million. This increase primarily reflects cash flow generation of the business, partially offset by payment of cash dividends.
The Company also announced a cash dividend of $0.05 cents per share that will be paid on November 24, 2014, to shareholders of record on November 12, 2014.









2014 Financial Guidance
The Company also today announced that it expects to achieve at the upper end of its previously announced financial guidance ranges for revenue, non-GAAP adjusted diluted earnings per share and non-GAAP adjusted EBITDA.
The previously announced 2014 financial guidance was 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.
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 on October 31, 2014, 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 http://drad.client.shareholder.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 October 30, 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)








Digirad Corporation
Condensed Consolidated Statements of Income (Loss)
(Unaudited)
 
Three Months Ended
 
Nine Months Ended
 
September 30,
 
September 30,
(in thousands, except per share amounts)
2014
 
2013
 
2014
 
2013
 

 

 
 
 
 
Revenues:
 
 
 
 
 
 
 
Diagnostic Services
$
10,821

 
$
9,489

 
$
31,716

 
$
27,903

Diagnostic Imaging
3,060

 
2,924

 
9,749

 
8,946

Total revenues
13,881

 
12,413

 
41,465

 
36,849

Cost of revenues:
 
 
 
 
 
 
 
Diagnostic Services
8,063

 
6,916

 
23,801

 
20,920

Diagnostic Imaging
1,409

 
1,679

 
5,308

 
5,501

Total cost of revenues
9,472

 
8,595

 
29,109

 
26,421

 
 
 
 
 
 
 
 
Gross profit
4,409

 
3,818

 
12,356

 
10,428

Total gross profit percentage
31.8
%
 
30.8
%
 
29.8
%
 
28.3
%
Diagnostic Services gross profit percentage
25.5
%
 
27.1
%
 
25.0
%
 
25.0
%
Diagnostic Imaging gross profit percentage
54.0
%
 
42.6
%
 
45.6
%
 
38.5
%
 
 
 
 
 
 
 
 
Operating expenses:
 
 
 
 
 
 
 
Research and development
—

 
24

 
—

 
1,020

Marketing and sales
1,157

 
1,042

 
3,497

 
3,287

General and administrative
2,047

 
1,754

 
6,235

 
6,427

Amortization of intangible assets
93

 
55

 
263

 
178

Restructuring charges
80

 
79

 
659

 
1,693

Gain on sale of assets and license agreement
—

 
(1,568
)
 
—

 
(1,568
)
Total operating expenses
3,377

 
1,386

 
10,654

 
11,037

 
 
 
 
 
 
 
 
Income (loss) from operations
1,032

 
2,432

 
1,702

 
(609
)
 
 
 
 
 
 
 
 
Other income (expense):
 
 
 
 
 
 
 
Interest and other income, net
14

 
13

 
46

 
52

Interest expense
(10
)
 
(5
)
 
(27
)
 
(10
)
Total other income
4

 
8

 
19

 
42

 
 
 
 
 
 
 
 
Income (loss) before income taxes
1,036

 
2,440

 
1,721

 
(567
)
Income tax benefit (expense)
(8
)
 
72

 
(18
)
 
44

Net income (loss)
$
1,028

 
$
2,512

 
$
1,703

 
$
(523
)
 
 
 
 
 
 
 
 
Net income (loss) per share – basic
$
0.06

 
$
0.14

 
$
0.09

 
$
(0.03
)
Net income (loss) per share – diluted
$
0.05

 
$
0.14

 
$
0.09

 
$
(0.03
)
Dividends declared per common share
$
0.05

 
$
—

 
$
0.15

 
$
—

 
 
 
 
 
 
 
 
Weighted average shares outstanding – basic
18,601

 
18,328

 
18,558

 
18,890

Weighted average shares outstanding – diluted
18,895

 
18,580

 
18,853

 
18,890

 
 
 
 
 
 
 
 





Digirad Corporation
Condensed Consolidated Balance Sheets
(Unaudited)
 
(in thousands)
September 30,
2014
 
December 31,
2013
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
12,793

 
$
18,744

Securities available-for-sale
9,022

 
7,673

Accounts receivable, net
6,594

 
5,430

Inventories, net
3,543

 
3,881

Other current assets
760

 
697

Restricted cash
477

 
244

 Total current assets
33,189

 
36,669

 
 
 
 
Property and equipment, net
4,902

 
4,153

Intangible assets, net
2,670

 
353

Goodwill
1,337

 
184

Other assets
70

 
92

Total assets
$
42,168

 
$
41,451

 
 
 
 
Liabilities and stockholders’ equity
 
 
 
Accounts payable
$
1,760

 
$
611

Accrued compensation
3,247

 
3,472

Accrued warranty
139

 
137

Deferred revenue
1,423

 
1,631

Other accrued liabilities
2,043

 
1,774

Total current liabilities
8,612

 
7,625

Other liabilities
889

 
440

Total liabilities
9,501

 
8,065

 
 
 
 
Stockholders’ equity:
 
 
 
Preferred stock
—

 
—

Common stock
2

 
2

Treasury stock
(5,728
)
 
(5,728
)
Additional paid-in capital
154,565

 
156,968

Accumulated other comprehensive loss
(21
)
 
(2
)
Accumulated deficit
(116,151
)
 
(117,854
)
Total stockholders’ equity
32,667

 
33,386

Total liabilities and stockholders’ equity
$
42,168

 
$
41,451







Digirad Corporation
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(in thousands, except per share amounts)
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
Total operating expenses
 
$
3,377

 
$
1,386

 
$
10,654

 
$
11,037

 
Restructuring charges(1)
 
(80
)
 
(79
)
 
(659
)
 
(1,693
)
 
Gain on sale of assets and license agreement(4) 
 
—

 
1,568

 
—

 
1,568

 Non-GAAP Adjusted operating expenses
 
$
3,297

 
$
2,875

 
$
9,995

 
$
10,912

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
1,028

 
$
2,512

 
$
1,703

 
$
(523
)
 
Restructuring charges(1)
 
80

 
79

 
659

 
1,693

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

 
(1,568
)
 
—

 
(1,568
)
 
Acquired intangible amortization
 
90

 
51

 
256

 
169

 
Income tax items(2)
 
(1
)
 
—

 
(7
)
 
—

Non-GAAP Adjusted net income (loss)
 
$
1,197

 
$
1,074

 
$
2,611

 
$
(229
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss) per share - diluted
 
$
0.05

 
$
0.14

 
$
0.09

 
$
(0.03
)
 
Restructuring charges(1)(3)
 
—

 
—

 
0.03

 
0.09

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

 
(0.08
)
 
—

 
(0.08
)
 
Acquired intangible amortization(3)
 
—

 
—

 
0.01

 
0.01

 
Income tax items(2)(3)
 
—

 
—

 
—

 
—

Non-GAAP Adjusted net income (loss) per share - diluted(3)
 
$
0.06

 
$
0.06

 
$
0.14

 
$
(0.01
)
 
 
 
 
 
 
 
 
 
 

 
 
 
Three Months Ended September 30,
 
Nine Months Ended September 30,
(in thousands)
 
2014
 
2013
 
2014
 
2013
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
1,028

 
$
2,512

 
$
1,703

 
$
(523
)
 
Restructuring charges(1)
 
80

 
79

 
659

 
1,693

 
Gain on sale of assets and license agreement(4)

 
—

 
(1,568
)
 
—

 
(1,568
)
 
Depreciation and amortization
 
497

 
475

 
1,441

 
1,447

 
Stock-based compensation
 
96

 
74

 
207

 
300

 
Interest and other income, net
 
(14
)
 
(13
)
 
(46
)
 
(52
)
 
Interest expense
 
10

 
5

 
27

 
10

 
Income tax expense (benefit)
 
8

 
(72
)
 
18

 
(44
)
Non-GAAP Adjusted EBITDA
 
$
1,705

 
$
1,492

 
$
4,009

 
$
1,263

 
 
 
 
 
 
 
 
 
 

(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.
(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 a nonrecurring gain related to the sale of assets associated with an uncommercialized surgical imaging system, and the licensing of certain existing Company technology.





Digirad Corporation
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
 
 
 
Three Months Ended
(in thousands, except per share amounts)
 
September 30, 2013
 
December 31, 2013
 
March 31, 2014
 
June 30, 2014
 
September 30, 2014
 
 
 
 
 
 
 
 
 
 
 
 
Total operating expenses
 
$
1,386

 
$
2,908

 
$
3,597

 
$
3,680

 
$
3,377

 
Restructuring charges(1)
 
(79
)
 
(35
)
 
(441
)
 
(138
)
 
(80
)
 
Gain on sale of assets and license agreement(2)
 
1,568

 
—

 
—

 
—

 
—

 Non-GAAP Adjusted operating expenses
 
$
2,875

 
$
2,873

 
$
3,156

 
$
3,542

 
$
3,297

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
2,512

 
$
787

 
$
(148
)
 
$
823

 
1,028

 
Restructuring charges(1)
 
79

 
35

 
441

 
138

 
80

 
Gain on sale of assets and license agreement(2)
 
(1,568
)
 
—

 
—

 
—

 
—

 
Acquired intangible amortization
 
$
51

 
$
51

 
64

 
102

 
90

 
Income tax items(3)
 
—

 
—

 
(4
)
 
(2
)
 
(1
)
Non-GAAP Adjusted net income (loss)
 
$
1,074

 
$
873

 
$
353

 
$
1,061

 
$
1,197

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

 
$
0.04

 
$
(0.01
)
 
$
0.04

 
0.05

 
Restructuring charges(1)(4)
 
—

 
—

 
0.02

 
0.01

 
—

 
Gain on sale of assets and license agreement(2)(4)
 
(0.08
)
 
—

 
—

 
—

 
—

 
Acquired intangible amortization(4)
 
—

 
—

 
—

 
0.01

 
—

 
Income tax items(3)(4)
 
—

 
—

 
—

 
—

 
—

Non-GAAP Adjusted net income per share - diluted(4)
 
$
0.06

 
$
0.05

 
$
0.02

 
$
0.06

 
$
0.06

 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
Three Months Ended
(in thousands)
 
September 30, 2013
 
December 31, 2013
 
March 31, 2014
 
June 30, 2014
 
September 30, 2014
 
 
 
 
 
 
 
 
 
 
 
 
Net income (loss)
 
$
2,512

 
$
787

 
$
(148
)
 
$
823

 
$
1,028

 
Restructuring charges(1)
 
79

 
35

 
441

 
138

 
80

 
Gain on sale of assets and license agreement(2)
 
(1,568
)
 
—

 
—

 
—

 
—

 
Depreciation and Amortization
 
475

 
466

 
453

 
485

 
497

 
Stock-based Compensation
 
74

 
40

 
50

 
61

 
96

 
Interest and other income, net
 
(13
)
 
(11
)
 
(17
)
 
(15
)
 
(14
)
 
Interest expense
 
5

 
5

 
8

 
9

 
10

 
Income tax benefit (expense)
 
(72
)
 
(1
)
 
2

 
8

 
8

Non-GAAP Adjusted EBITDA
 
$
1,492

 
$
1,321

 
$
789

 
$
1,509

 
$
1,705

 
 
 
 
 
 
 
 
 
 
 
 

(1) Reflects nonrecurring charges primarily related to restructuring of the Diagnostic Imaging reporting segment and lease termination of the Poway, CA facility.
(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, and sum of individual items may not equal the total.