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): April 21, 2005


                               DIGIRAD CORPORATION
             (Exact name of registrant as specified in its charter)


           Delaware                 000-50789               33-0145723
 (State or Other Jurisdiction      (Commission           (I.R.S. Employer
       of Incorporation)           File Number)        Identification Number)


                                13950 Stowe Drive
                             Poway, California 92064
               (Address of Principal Executive Offices) (Zip Code)

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


         (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 (see General Instruction A.2. below):

|_|  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 1.01    Entry into a Material Definitive Agreement.

     As discussed below under Item 5.02, Departure of Directors or Principal
Officers; Election of Directors; Appointment of Principal Officers, on April 21,
2005, the Board of Directors of Digirad Corporation (the "Company") appointed
Gerhard F. ("Gary") Burbach as President and Chief Executive Officer, effective
April 25, 2005. Mr. Burbach has served as a member of the Board of Directors of
the Company since October 2004.

     In connection with this appointment, the Board of Directors approved terms
of an oral employment arrangement with Mr. Burbach recommended by its
Compensation Committee pursuant to which Mr. Burbach would receive $325,000 in
salary for his service to the Company through April 30, 2006 and be eligible to
receive an annual bonus at the discretion of the Board of Directors based upon
meeting certain financial and other performance criteria to be established. In
addition, pursuant to the arrangement, Mr. Burbach would be issued options to
purchase up to 240,000 shares of common stock pursuant to the Company's 2004
Stock Incentive Plan, which options would vest in equal monthly increments over
a one year period and have a per share exercise price as determined at the April
28, 2005 meeting of the Board of Directors. Mr. Burbach will also be entitled to
be reimbursed for reasonable travel and living expenses and for reasonable
expenses incurred in connection with any relocation.

     The description of the oral employment arrangement in this current report
is qualified in its entirety by reference to the summary of the employment
arrangement, or any written agreement that may be subsequently executed to
memorialize the agreement, either of which will be filed as an exhibit to the
Company's Quarterly Report on Form 10-Q for the fiscal quarter ending June 30,
2005.


Item 1.02    Termination of a Material Definitive Agreement.

     As discussed below under Item 5.02, Departure of Directors or Principal
Officers; Election of Directors; Appointment of Principal Officers and Item
8.01, Other Events, David M. Sheehan resigned as President and Chief Executive
Officer of the Company, as well as a member of its Board of Directors, effective
April 21, 2005. In addition, the Company terminated the employment of Herbert
Bellucci as Senior Vice President of Operations, effective April 21, 2005.
Messrs. Sheehan and Bellucci were each employed by the Company pursuant to an
oral, at-will arrangement, the principal terms of which are set forth and
described in the Current Report on Form 8-K (and the exhibit attached thereto)
filed with the Securities and Exchange Commission on March 18, 2005.


Item 2.02.   Results of Operations and Financial Condition.

     On April 21, 2005, the Company issued a press release announcing certain
financial results for the first fiscal quarter ended March 31, 2005. A copy of
the press release is attached to this current report as Exhibit 99.1.

     In accordance with General Instruction B.2 of Form 8-K, the information in
this Item 2.02, including Exhibit 99.1, shall not be deemed "filed" for purposes
of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or otherwise subject to the liabilities of that section, nor shall it 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 5.02.   Departure of Directors or Principal Officers; Election of
Directors; Appointment of Principal Officers.

     On April 21, 2005, David M. Sheehan resigned as President and Chief
Executive Officer of the Company, as well as a member of its Board of Directors,
effective immediately. In addition, the Company terminated the employment of
Herbert Bellucci as Senior Vice President of Operations, effective April 21,
2005.




     On April 21, 2005, the Board of Directors appointed Gerhard F. ("Gary")
Burbach as the Company's President and Chief Executive Officer, effective April
25, 2005. Mr. Burbach, 43, has served as a member of the Company's Board of
Directors since October 2004. Mr. Burbach has served as President and Chief
Executive Officer of Bacchus Vascular, Inc., a developer of catheter-based
medical devices for the removal of blood clots, since January 2001. Mr. Burbach
will assume his role as Digirad's President and Chief Executive Officer
immediately, devoting the majority of his time to his new responsibilities with
the Company while he transitions out of his current assignment with Bacchus
Vascular. Previously, Mr. Burbach held the position of Chief Executive Officer
of Phillips Nuclear Medicine, a division of Phillips Electronics, from January
2001 to July 2003. Prior to its acquisition by Phillips Electronics, Mr. Burbach
worked for four years for ADAC Laboratories, most recently as President and
General Manager of its nuclear medicine division. Mr. Burbach received a B.S. in
industrial engineering from Stanford University and an M.B.A. from Harvard
Business School.

     In connection with the appointment of Mr. Burbach, the Board of Directors
approved terms of an oral employment arrangement as recommended by its
Compensation Committee, the principal terms of which are discussed above under
Item 1.01, Entry into a Material Definitive Agreement.


Item 8.01.   Other Events.

     On April 5, 2005, the Audit Committee of the Board of Directors engaged
independent, outside counsel to conduct an investigation into whether the
Company properly recognized revenue with respect to the sale and delivery of a
single digital gamma camera in the first quarter of 2004 and related matters.
Based upon the results of the investigation, the Company and its independent
auditors have confirmed the propriety of the revenue recognition with respect to
the camera sale transaction. As a result, the Company and its independent
auditors have concluded that no adjustment to the Company's recorded revenue was
necessary and that no restatement of its prior issued financial statements was
required.

     Based upon the results of the investigation, however, the independent
auditors notified the Company of a material weakness in the Company's internal
controls, as defined by the Public Company Accounting Oversight Board's Auditing
Standard No. 2, which the Company has confirmed. A material weakness in internal
controls over financial reporting is considered to be a significant deficiency,
or a combination of significant deficiencies, that results in more than a remote
likelihood that a material misstatement of the annual or interim financial
statements will not be prevented or detected. Because the Audit Committee and
Board of Directors determined that certain Company employees attempted to
circumvent the Company's internal controls over financial reporting or failed to
reveal facts related to the delivery of the camera, the Company's independent
auditors determined that such facts gave rise to a material weakness in the
Company's internal controls. The Company has found no evidence of any other
material departure from its internal control policies.

     To address the results of the Company's investigation and the determination
of the existence of a material weakness in its internal controls, the Company
has implemented a series of remedial actions, including requesting and receiving
the resignation of David M. Sheehan as President and Chief Executive Officer and
terminating the employment of Herbert Bellucci as Senior Vice President of
Operations. In addition, the Company has requested and received the resignation
of one sales employee, terminated the employment of another sales employee,
assigned more senior accounting personnel to oversee revenue recognition and
adopted new and more stringent controls over delivery procedures and
documentation. The Company believes that these remedial actions will fully
address the identified material weakness in its internal controls.

     The Company has notified the Staff of the Securities and Exchange
Commission of the existence of the investigation. The Company anticipates
incurring extraordinary legal, accounting and other expenses in connection with
these matters which could have a material, adverse affect on the Company's
second quarter results of operations and previously issued financial guidance.

     On April 21, 2005, the Company issued a press release announcing the
matters described in this current report, a copy of which is attached to this
press release as Exhibit 99.1.




Item 9.01    Financial Statements and Exhibits.

(c)  Exhibits.

     Exhibit No.     Description
     -----------     -----------------------------------------------------------
     99.1            Press release dated April 21, 2005.








                                   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


April 22, 2005                                   By: /s/ Todd P. Clyde
                                                     ---------------------------
                                                     Todd P. Clyde
                                                     Chief Financial Officer







                                  EXHIBIT INDEX



Exhibit No.        Description
- -----------        -------------------------------------------------------------

99.1               Press Release, dated April 21, 2005.

EX-99.1

                                                                    Exhibit 99.1

   Digirad Names Gary Burbach CEO and President, Reports on Internal
                            Investigation;
 Company Announces Preliminary Financial Results for the First Quarter
   of 2005, to Hold Conference Call May 2 at 1:45 p.m. Pacific Time

    POWAY, Calif.--(BUSINESS WIRE)--April 21, 2005--Digirad
Corporation (Nasdaq:DRAD), a leader in providing solid-state imaging
products and services to physician offices, hospitals and imaging
centers, today announced that David M. Sheehan has resigned as its
President and Chief Executive Officer and as a member of its Board of
Directors, effective today. Gary F. Burbach (43), a member of the
Company's Board of Directors, has been appointed as President and
Chief Executive Officer, effective April 25, 2005.

    Appointment of President and CEO

    Mr. Burbach has served as a member of the Company's Board of
Directors since October 2004. Currently, he serves as President and
Chief Executive Officer of Bacchus Vascular, Inc., a developer of
catheter-based medical devices for the removal of blood clots. Mr.
Burbach will assume his role as Digirad's President and Chief
Executive Officer immediately, devoting the majority of his time to
his new responsibilities with the Company while he transitions out of
his current assignment with Bacchus Vascular. Previously, Mr. Burbach
held the position of Chief Executive Officer of Phillips Nuclear
Medicine, a division of Phillips Electronics, from January 2001 to
July 2003. Prior to its acquisition by Phillips Electronics, Mr.
Burbach worked for four years for ADAC Laboratories, most recently as
President and General Manager of its nuclear medicine division. Mr.
Burbach received a B.S. in industrial engineering from Stanford
University and an M.B.A. from Harvard Business School.
    "Our company is very fortunate to attract a senior executive with
tremendous industry experience and success, as well as significant
experience at larger companies," said Timothy Wollaeger, Chairman of
the Digirad Corporation Board of Directors. "Gary's extensive nuclear
imaging background and his knowledge of Digirad from his service on
the Board will allow us to continue to successfully execute on our
strategic opportunities."
    "Digirad's leading technology, unique dual distribution and other
competitive advantages provide an excellent foundation to expand on
the Company's success," said Mr. Burbach. "I am looking forward to
working with the management team and employees to continue Digirad's
commitment to providing superior products and services to our
customers."

    Internal Investigation

    Digirad also announced that it has conducted an investigation,
under the direction of the Audit Committee of the Company's Board of
Directors, into whether the Company properly recognized revenue with
respect to the sale and delivery of a single digital gamma camera in
the first quarter of 2004 and related matters. The Company and its
independent accountants have confirmed the propriety of the revenue
recognition with respect to the camera sale transaction. As a result,
the Company and its accounting firm have concluded that no adjustment
to its recorded revenue was necessary and no restatement of its prior
issued financial statements was required. However, our accounting firm
notified the Company of and we have confirmed a material weakness in
our internal controls relating to this camera sale transaction.
    Based upon the investigation, the Audit Committee and Board of
Directors have concluded that certain employees had attempted to
circumvent internal controls over the Company's financial reporting or
failed to reveal facts related to the delivery of the camera. The
Company has found no evidence of any other material departure from the
Company's internal control policies.
    To address the results of the investigation and the determination
of a material weakness in our internal controls, the Company has
implemented a series of remedial actions, including requesting and
receiving the resignation of David M. Sheehan as President and Chief
Executive Officer and terminating the employment of Herb Bellucci as
Senior Vice President of Operations. In addition, the Company has
requested and received the resignation of one sales employee,
terminated the employment of another sales employee, assigned more
senior accounting personnel to oversee revenue recognition and adopted
new and more stringent controls over delivery procedures and
documentation. The Company believes that these remedial actions will
fully address the material weakness in its internal controls. The
Company also has notified the Staff of the Securities and Exchange
Commission of the existence of the investigation. The Company
anticipates incurring extraordinary legal, accounting and other
expenses in connection with these matters which could have a material,
adverse affect on its second quarter results of operations and
previously issued financial guidance.

    First Quarter 2005 Financial Results and Conference Call on May 2,
2005

    Digirad Corporation also announced preliminary financial results
for the first quarter of 2005. The Company expects that total revenues
for the three months ended March 31, 2005 will be $17.7 million to
$18.0 million. The Company expects to report a net loss for the
quarter of $850,000 to $1.0 million, or $0.05 to $0.06 per share.
    Digirad will release first quarter 2005 financial results after
market close on Monday, May 2, 2005. Gary Burbach, Chief Executive
Officer and President, and Todd Clyde, Chief Financial Officer, will
host an investment community conference call beginning at 4:45 p.m.
Eastern Time (1:45 p.m. Pacific Time) to discuss those results and to
answer questions.
    To participate in the live call by telephone, from the U.S., dial
877-815-7177, or from outside the U.S. dial 706-634-1178. A live web
cast of the call can be accessed at www.digirad.com. The web site
replay will be available for one year and the telephone replay will be
available for 48 hours following the conclusion of the call by dialing
800-642-1687 from the U.S., or 706-645-9291 for international callers,
and entering reservation code 5586116.

    About Digirad

    Digirad Corporation develops, manufactures and markets
solid-state, digital gamma cameras to hospitals, imaging centers and
physician offices. Digirad offers a comprehensive line of solid-state
nuclear gamma cameras that produce a high-quality image for use in the
detection of many medical conditions including cardiovascular disease.
Digirad's cameras are unique as their lightweight and compact design
allows them to fit easily into small office spaces.
    Through its wholly owned subsidiaries, Digirad Imaging Solutions
and Digirad Imaging Systems, Digirad also offers a comprehensive and
mobile imaging leasing and services program for physicians who wish to
perform nuclear cardiology procedures in their offices but do not have
the patient volume, capital or resources to justify purchasing a gamma
camera. Digirad Corporation and subsidiaries are headquartered in
Poway, California. For more information, please visit www.digirad.com.
Digirad(R) and Digirad Imaging Solutions(R) are registered trademarks
of Digirad Corporation.

    Cautionary Language Regarding Forward-Looking Statements

    Digirad cautions you that statements included in this press
release that are not a description of historical facts are
forward-looking statements. Forward-looking statements give
expectations or forecasts of future events. You can identify these
statements by the fact that they do not relate strictly to historical
or current facts. They use words such as "anticipate," "estimate,"
"expect," "project," "intend," "plan," "believe," and other words and
terms of similar meaning in connection with a discussion of future
operating or financial performance. In particular, these include
statements relating to future actions, prospective products, future
performance or results of current and anticipated products, sales
efforts, and financial results. The inclusion of forward-looking
statements should not be regarded as a representation by Digirad that
any of its plans will be achieved. Actual results may differ
materially from those set forth in this release due to the risks and
uncertainties inherent in Digirad's business, including, without
limitation: whether the remedial actions described in this press
release will fully address the material weakness in the Company's
internal controls; whether there may have been other material
departures from the Company's policies; whether the Company will be
able to continue to execute on strategic opportunities; the degree to
which Digirad's imaging systems and services will be accepted by
physicians and hospitals; Digirad's ability to compete against large,
well-established competitors with significantly greater resources; any
unforeseen changes in legislation, regulation or coverage and
reimbursement policies of third-party payors; Digirad's ability to
timely develop new products and product enhancements that are accepted
by the market; any technical problems that may develop with respect to
Digirad's imaging systems or any supply problems or price fluctuations
that may affect Digirad's third-party suppliers; Digirad's reliance
upon its key technical, sales and managerial personnel, including its
President and Chief Executive Officer; the ability of Digirad to
effectively market, sell and distribute its imaging systems; Digirad's
ability to manage risks relating to product liability, warranty
claims, product recalls, property damage and personal injury with
respects to its imaging systems; Digirad's reliance on a limited
number of customers for its products and imaging services; Digirad's
compliance with extensive product regulations, licensure and reporting
requirements of the Food and Drug Administration and other state and
federal agencies, including, with respect to the DIS business, those
that are subject to variable interpretation; Digirad's ability to
protect its intellectual property and proprietary technology through
patents and other means; and other risks detailed in Digirad's
Securities and Exchange Commission filings, including its Annual
Report on Form 10-K and other reports filed with the Securities and
Exchange Commission.
    You are cautioned not to 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 this news release to reflect events or circumstances after the
date hereof.

    DRADG

    CONTACT: Digirad Corporation
             Todd Clyde, 858-726-1600
             ir@digirad.com
             or
             Lippert/Heilshorn & Associates
             Ina McGuinness or Bruce Voss, 310-691-7100
             imcguinness@lhai.com