8-K

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)

September 6, 2012

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:

[  ] 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 5.02.  Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

On September 6, 2012, Digirad Corporation, or the Company, announced that it had entered into an executive employment agreement with Jeffry R. Keyes and appointed him the Company’s Chief Financial Officer, effective immediately.  The description of the employment arrangement in this current report is qualified in its entirety by reference to Mr. Keyes’s written offer letter that is filed as an exhibit to this current report as Exhibit 10.27.

Prior to joining the Company, Mr. Keyes, age 39, was Corporate Controller of Sapphire Energy, Inc., a renewable energy company.  Mr. Keyes joined Sapphire Energy, Inc. in August 2011.  From April 2011 to August 2011, he was the Corporate Controller of Advanced BioHealing, Inc. (now Shire Regenerative Medicine), a provider of regenerative medicine solutions.  From March 2009 to April 2011, Mr. Keyes was the Senior Director, External Reporting and Technical Accounting, of CareFusion, a global medical technology company.  From June 2008 to February 2009, Mr. Keyes held the position of Corporate Audit Project Manager at Caterpillar Inc., a manufacturer of construction and mining equipment.  Prior to joining Caterpillar Inc., Mr. Keyes was the Senior Manager, Financial Reporting for Plum Creek Timber Company, a position he assumed in October 2005.  Mr. Keyes earned a bachelor’s degree in accounting from Western Washington University.  Mr. Keyes is a certified public accountant licensed by the Washington State Board of Accountancy.

As Chief Financial Officer of the Company, Mr. Keyes will be paid an annual base salary of $235,000 and was granted an option to purchase up to 125,000 shares of common stock pursuant to the Company’s 2011 Inducement Stock Incentive Plan.  One quarter of the shares subject to such option will vest on the one year anniversary of the date of grant of September 6, 2012 and the remainder will vest in equal monthly increments over a three year period beginning on the one year anniversary of the date of grant.  The option will have a per share exercise price equal to the closing price per share of the Company’s common stock as quoted on the Nasdaq National Market on September 6, 2012.  Mr. Keyes will also be eligible to participate in the Company’s management incentive bonus program for 2012.  Mr. Keyes’s performance bonus for 2012 will have a target amount equal to at least 40% of his annual base salary.  Mr. Keyes’s eligibility for such bonus is conditioned upon the achievement of certain corporate and personal goals.

Item 9.01.  Financial Statements and Exhibits.

(c)  Exhibits.

Exhibit No.		Description
10.27#		Offer Letter, dated August 21, 2012, by and between the Company and Jeffry R. Keyes.
99.1		Text of press release issued by Digirad Corporation, dated September 6, 2012.
#	Indicates management contract or compensatory plan.

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/ Todd P. Clyde
	Todd P. Clyde Chief Executive Officer

Date:           September 6, 2012

EX-10.27

Exhibit 10.27

August 21, 2012

Jeffry Keyes

6836 Citrine Drive

Carlsbad, CA 92008

Dear Jeff:

On behalf of Digirad Corporation, we are pleased to offer you the exempt position of Chief Financial Officer on a full-time basis. In this position you will report directly to Todd Clyde, President &Chief Executive Officer. Your agreed upon start date is Monday, September 10, 2012. Please report to Anna Soares in Human Resources for New Hire Orientation at 9:00a.m. on your first day. Anna's phone number is 858-726-1424.

Compensation: Your base pay will be $9,038.46 paid bi-weekly (which is equivalent to $235,000 annually), in accordance with Digirad's standard practices. In addition, you will be eligible for a performance bonus which pays up to 40% of your base salary upon achieving specific Company financial targets. This bonus program is prorated based on your date of hire for fiscal year 2012. The specific details of the bonus plan will be provided to you in a separate document.

As a material inducement for you to accept our offer of employment, the Company will grant to you 125,000 stock options from our inducement plan. The options will have a four (4) year vesting period with a one (1) year cliff vesting provision with monthly vesting thereafter. The stock options are subject to Board of Director approval.

Benefits: Digirad offers full-time employees a generous benefits package including: medical, dental and vision insurance coverage, 401(k) with company match, eight (8) holidays per year, and fifteen (15) days of paid time off (PTO), earned on an accrual basis. You will receive more information on these benefits after your start date. Employee benefits are subject to charge at the Company's sole discretion. You will become eligible for all health related insurance benefits as of the first of the month after your date of hire.

401(k): Digirad offers full-time employees a 401(k) Retirement Plan with company match. Digirad has adopted an Automatic Enrollment feature as part of the 401(k) Retirement Plan. You will be automatically enrolled at 3% upon your eligibility date. Eligibility to participate in the 401(k) begins on the first of the month following date of hire. Your contributions will be invested in the Principal Life Time investment option unless you elect a different investment option. If you wish to change your deferral percentage or investment option, you must log into www.principal.com after your hire date to make those changes. The maximum employer contribution is the IRS limit of $17,000 for 2012 with an employer match of 25% up to 31,000 per year.

Background Check and Drug Screening: Your employment is contingent upon the results of a satisfactory background check and drug screen. Please Nets: You cannot start working until you have successfully completed this process.

Keyes, J. Page 2

Employment with Digirad is not for a specific term and can be terminated by you or by the Company at any time for any reason, with or without cause or notice. Any contrary representations which may have been made or which may be made to you are superseded by this offer. We request that all of our employees, to the extent possible, give us advance notice if they intend to resign.

In your position, you are required to execute an Employee Proprietary Information and Invention Assignment Agreement as a condition of employment. Please note that it is also a condition of your employment with Digirad that you will not disclose to Digirad, or use in the performance of your responsibilities at Digirad, any trade secret information of any former employer, unless you obtain written authorization for its disclosure and use. These documents are part of this offer letter and need to signed and returned at the same time.

If you accept this offer, the terms described in this letter shall be the terms of your employment. Any additions to or modifications of these terms would have to be in writing and signed by yourself and the CEO of Digirad. Please note that this offer of employment is contingent upon verification of application information, satisfactory references/background check, and the execution and return of all employment documents. Your employment pursuant to this offer is also subject to you providing Digirad with the legally required proof "original documents" of your identity and authorization to work in the United States within three days of commencing work.

Again, we look forward to your joining the Digirad team and believe this opportunity will provide you with a challenging and stimulating work environment. If you accept the above-described offer, please sign and return via the instructions provided. This offer, if not accepted, will expire at 5:00 PM (PST) on August 27, 2012. Please fax the signed documents to 866-973-8503.

Sincerely,

/s/ Teresa Melanson  

Teresa Melanson

Director, Human Resources

This will acknowledge my acceptance of this offer of employment.

Signature  /s/ Jeffry Keyes        

Printed NameJeffry Keyes     

Date8/21/12                          

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

Digirad Names Jeffry R. Keyes as CFO

POWAY, CA – September 6, 2012 – Digirad Corporation (NASDAQ: DRAD) today announced that Jeffry R. Keyes has been named Chief Financial Officer, effective immediately. Keyes will report directly to Chief Executive Officer Todd P. Clyde.

Keyes, 39, a resident of Carlsbad, California, has more than 15 years of experience in all areas of finance and accounting, including financial modeling and forecasting, SEC compliance reporting, mergers and acquisitions and strategic planning. Keyes has served in key accounting financial management roles at two fast-growing medical device companies and, most recently, since August 2011, he has been Corporate Controller of San Diego-based Sapphire Energy, a developer of alternative energy solutions.

“Jeff has demonstrated an ability to manage financial teams and contribute strategically to the business in a variety of different corporate settings,” Clyde said. “We all look forward to working closely with Jeff during this very exciting time for our Company.”

Keyes replaces Clyde, who had assumed the CFO responsibilities on an interim basis in April following the resignation of Richard B. Slansky, who left to accept another executive position.

Prior to working for Sapphire Energy, Keyes was employed by San Diego-based Advanced BioHealing, Inc., a company focused on regenerative medicine, as Corporate Controller.  For the two prior years, he held the position of Senior Director, External Reporting and Technical Accounting at San Diego-based CareFusion, a $3.5 billion publicly held spin-off from Cardinal Health, where he oversaw SEC reporting, accounting policy creation and maintenance and oversaw and performed analysis, due diligence and accounting for multiple acquisitions and dispositions, as well as review of business models related to integrating new businesses.

Previously, Keyes worked as a Corporate Audit Project Manager, for Peoria, IL-based Caterpillar, and a Senior Manager, Financial Reporting for Seattle-based Plum Creek Timber Company.

Keyes earned a Bachelor of Arts degree in accounting at Western Washington University. He is also a Certified Public Accountant.

As part of his inducement to join the Company, on September 6, 2012, Mr. Keyes was granted an option to purchase up to 125,000 shares of common stock pursuant to the Company’s 2011 Inducement Stock Incentive Plan.  One quarter of the shares subject to such option will vest on the one year anniversary of the date of grant and the remainder will vest in equal monthly increments over a three year period beginning on the one year anniversary of the date of grant.  The option has a per share exercise price equal to the closing price per share of the Company’s common stock as quoted on the Nasdaq National Market on September 6, 2012.

About Digirad

Digirad is a leading provider of diagnostic imaging products, and personnel and equipment leasing services. For more information, please visit www.digirad.com. Digirad® is a registered trademark 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. These include statements regarding our ability to deliver value to customers, our actions to enhance our corporate governance practices, and our desire to maximize stockholder value. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made, including the risks associated with changes in business conditions, technology, customers’ business conditions, reimbursement, radiopharmaceutical shortages, 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, 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.

Investor Contact

Matt Clawson

Allen & Caron

949-474-4300

Company Contact

Todd Clyde

Chief Executive Officer

858-726-1600