8-K

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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

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                                    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)

                                December 29, 2005

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

             Delaware                  000-50789                 33-0145723
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 (State or other jurisdiction of  (Commission File Number)     (IRS Employer
         incorporation)                                      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 (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))

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Item 8.01.    Other Events.

         On December 28, 2005, the board of directors of Digirad Corporation
(the "Company") approved a non-cash charge related to a reduction in the
depreciable life of the current digital cameras of Digirad Imaging Solutions
("DIS"), a subsidiary of the Company, to five years. The reduction in the
depreciable life of the current DIS cameras is being taken in connection with
the upgrade of the DIS mobile imaging systems fleet. The Company estimates that
the amount of the non-cash charge is expected to be approximately $1.1 million
in the fourth quarter ending December 31, 2005. For 2006, the Company
anticipates incremental depreciation expense of approximately $1.0 million.

         On December 29, 2005, the Company issued a press release announcing the
completion of the testing program of its mobile Cardius-3M imaging system and
plans for a phased upgrade of its mobile DIS fleet. A copy of this press release
is attached hereto as Exhibit 99.1. This summary is qualified in its entirety by
reference to Exhibit 99.1 to this current report. The press release and the
information therein are being furnished and shall not be deemed to be "filed"
for purposes of Section 18 of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or otherwise subject to the liability of that section, nor
shall they 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 9.01     Financial Statements and Exhibits.

(c)  Exhibits.

Exhibit No.                                Description
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99.1            Press Release dated December 29, 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

                             By:/s/ Todd P. Clyde
                               --------------------
                               Todd P. Clyde
                               Chief Financial Officer

Date:  December 29, 2005

EX-99

                                                                   Exhibit 99.1


            Digirad Announces Successful Completion of Clinical
        Testing of Its Mobile Cardius(R)-3 Camera and Plans for
                Phased Upgrade of Its Mobile DIS Fleet

    POWAY, Calif.--(BUSINESS WIRE)--Dec. 29, 2005--Digirad Corporation
(NASDAQ:DRAD), a leading provider of cardiovascular imaging services and
solid-state nuclear medicine imaging products to physician offices, hospitals
and imaging centers, announced today the successful completion of the clinical
testing of its mobile Cardius-3M imaging system. Digirad's subsidiary, Digirad
Imaging Solutions (DIS), said that it plans to upgrade its fleet of mobile
imaging systems over the next three years with this proprietary triple-head
digital gamma camera. Digirad anticipates that the first Cardius-3M systems will
be placed into regular operation in DIS in the first quarter of 2006.
    "The upgrade of our DIS fleet is an important element of our strategy to
bring the benefits of Digirad's most advanced mobile cardiac imaging technology
to our DIS physician clients and their patients," said Chief Executive Officer
Gary Burbach. "The Cardius-3M offers excellent image quality and faster imaging
compared to traditional single and dual-head camera systems, which we believe
will enhance workflow during the servicing day and increase DIS customer
satisfaction. We also expect the Cardius-3M to create efficiencies in delivering
the DIS service, as faster imaging should result in shorter work days for our
technologists, reducing direct labor costs and employee turnover and helping to
offset the anticipated higher system costs."
    Mark Casner, President of DIS, added, "Our leadership in mobile nuclear
cardiac imaging has supported a growing stream of revenue for Digirad. Together
with our programs to increase the effectiveness of our sales efforts and address
a lengthening sales cycle, we expect the roll-out of our Cardius-3M system to
our DIS fleet to enhance our position in this market."
    In connection with the DIS fleet upgrade, the Company said that it expects
to report a non-cash charge of approximately $1.1 million in the fourth quarter
ending December 31, 2005 related to a reduction in the depreciable life of its
current DIS cameras to five years. Accordingly, while the Company continues to
expect revenue for the fourth quarter of 2005 to be between $16.2 million and
$17.0 million, it now anticipates the fourth quarter loss to be between $3.5
million and $4.1 million. For 2006, the Company anticipates incremental
depreciation expense of approximately $1.0 million, of which approximately
$700,000 is expected to be reflected in the Company's financial results for the
year's first half. Digirad said that it expects to invest between $4.0 million
and $5.0 million on the fleet upgrade during 2006.
    Mr. Casner said, "We are pleased to bring our newest imaging technology to
our valued DIS customers and believe that by doing so, we will also be able to
increase our operational efficiencies in DIS. This is a significant element of
our plan to improve our overall performance during 2006 and beyond."

    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. Digirad's wholly owned subsidiaries Digirad Imaging Solutions and
Digirad Imaging Systems offer a comprehensive and mobile imaging leasing and
services program for physicians who wish to perform in-office nuclear cardiology
procedures but do not have the patient volume, capital or resources to justify
purchasing a gamma camera. For more information, please visit www.digirad.com.
Digirad(R), Digirad Imaging Solutions(R) and Cardius(R) are registered
trademarks of Digirad Corporation.

    Forward-Looking Statements

    Digirad cautions that statements included in this press release that are not
a description of historical facts are forward-looking statements. You can
identify these statements by the fact that they do not relate strictly to
historical or current facts and 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 or events. Examples of such statements include the statements
regarding our plans for introducing the Cardius-3M system and upgrading our DIS
fleet, the timing and anticipated benefits of these initiatives and our programs
to increase the effectiveness of our sales efforts and to address a lengthening
sale cycle, an expected non-cash charge in the fourth quarter of 2005 relating
to a reduction in the depreciable life of our DIS cameras, anticipated
depreciation expenses in the first half and full year of 2006, and expected
levels of investment in upgrading our DIS fleet during 2006. The inclusion of
these and other 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 press release due to the
risks and uncertainties inherent in Digirad's business including, without
limitation: the degree to which the departure of employees and related
disruptions in our sales activities may affect Digirad's products, customers,
work force, suppliers, the introduction of our Cardius-3M system and the related
upgrade of our DIS fleet, and our overall business prospects and operations; the
degree to which Digirad's Cardius-3M system and related services will be
accepted by physicians and hospitals some of whom may experience reliability
issues or technical problems; the ability of Digirad to effectively market, sell
and distribute its Cardius-3M system, and related services given its limited
capabilities in these areas; the degree to which recent changes in customer
profiles may reduce the number of days service initiated per new contract or
otherwise impact Digirad's business; Digirad's ability to retain and attract key
executives, qualified managers, engineers and imaging technologists; Digirad's
ability to manage risks relating to product liability, warranty claims, recalls,
property damage and personal injury with respect to its imaging systems,
including the Cardius-3M system; 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. Given
these uncertainties, readers 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 press
release including the forward-looking statements contained herein to reflect
events or circumstances after the date hereof or to update the reasons actual
results could differ materially from those anticipated in these forward-looking
statements, even if new information becomes available in the future.

    CONTACT: Digirad Corporation
             Todd Clyde, 858-726-1600
             ir@digirad.com
             or
             Investor Contact:
             Neil Berkman Associates, 310-277-5162
             info@BerkmanAssociates.com