8-K

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                                  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)


                                 January 9, 2006



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


        Delaware                        000-50789               33-0145723
        --------                        ---------               ----------
(State or other jurisdiction    (Commission File Number)      (IRS Employer
        of 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 1.01.  Entry into a Material Definitive Agreement.

As set forth in Section 5.02 below, effective January 15, 2006, the annual
compensation for Mark L. Casner, the new President and Chief Executive Officer
of Digirad Corporation (the "Company"), will be increased to $295,000, and he
was granted options, effective January 9, 2006, to purchase up to 35,000 shares
of common stock pursuant to the Company's 2004 Stock Incentive Plan, which
options will vest in equal monthly increments over a four year period and 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 January 9, 2006. Mr.
Casner is also eligible to participate in the Company's management incentive
bonus program for 2006.

The description of the employment arrangement in this current report is
qualified in its entirety by reference to Mr. Casner's written employment
agreement that will be filed as an exhibit to the Company's Annual Report on
Form 10-K for the fiscal year ending December 31, 2005.

In addition, effective January 15, 2006, pursuant to an oral employment
agreement, the annual compensation for Peter Sullivan, the Company's new
President, Digirad Imaging Products, will be increased to $230,000, and he was
granted options, effective January 9, 2006, to purchase up to 25,000 shares of
common stock pursuant to the Company's 2004 Stock Incentive Plan, which options
will vest in equal monthly increments over a four year period and 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 January 9, 2006. Mr.
Sullivan is also eligible to participate in the Company's management incentive
bonus program for 2006.

In addition, pursuant to an oral employment agreement, effective January 15,
2006, the annual compensation for Todd Clyde, the Company's Chief Financial
Officer, will be increased to $240,000.

All other terms of such officers' employment arrangements are unchanged.

In connection with Gerhard Burbach's resignation as the Company's President and
Chief Executive Officer as set forth in Section 5.02 below, Mr. Burbach will
cease to receive compensation as an officer of the Company effective January 15,
2006. As a non-employee director of the Company, Mr. Burbach will receive the
same compensation paid to all non-employee directors, prorated to January 15,
2006.


Item 1.02.  Termination of a Material Definitive Agreement.

As set forth in Section 5.02 below, Gerhard Burbach's will resign as the
Company's President and Chief Executive Officer effective as of January 15,
2006. Mr. Burbach was employed by the Company pursuant to an oral, at-will
employment arrangement described in the Current Report on Form 8-K filed by the
Company with the Securities and Exchange Commission on April 22, 2005. Such
arrangement shall be terminated effective as of January 15, 2006. Mr. Burbach
will remain a member of the Company's Board of Directors.

Item 5.02. Departure of Directors or Principal Officers; Election of Directors;
Appointment of Principal Officers.

On January 10, 2006, the Company  announced that Gerhard  Burbach will resign as
the Company's  President and Chief Executive Officer effective as of January 15,
2006. Mr. Burbach will remain a member of the Company's Board of Directors.

The Company also announced that Mark L. Casner will replace Mr. Burbach as the
Company's President and Chief Executive Officer, effective as of January 15,
2006. In addition, Mr. Casner will be appointed to the Company's Board of
Directors, effective as of January 15, 2006, to serve until his successor is
duly elected and qualified. Mr. Casner will remain as President of Digirad
Imaging Solutions, Inc. ("DIS"), a wholly-owned subsidiary of the Company, a
position he has held since September 2005. Prior to joining DIS, Mr. Casner, age
50, was President of DMS Imaging, a mobile imaging company offering MRI, CT,
PET/CT and nuclear imaging services through its fleet of 200 systems. From 1995
through 2003 he was a member of Radiologix and its predecessor organizations,
most recently as the Senior Vice President of Operations. Mr. Casner holds a BA
from Miami University of Ohio, an MA from the University of Maryland, and an MBA
from Marymount University. As President and Chief Executive Officer of the





Company and President of DIS, Mr. Casner will be paid a new annual base salary
of $295,000, and was granted options on January 9, 2006, to purchase up to
35,000 shares of common stock pursuant to the Company's 2004 Stock Incentive
Plan, which options will vest in equal monthly increments over a four year
period and 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 January
9, 2006. Mr. Casner is also eligible to participate in the Company's management
incentive bonus program for 2006.

The Company also announced that, effective January 15, 2006, Peter Sullivan will
be appointed President, Digirad Imaging Products, reporting directly to Mr.
Casner. In such capacity, Mr. Sullivan will be paid a new annual base salary of
$230,000, and was granted options on January 9, 2006, to purchase up to 25,000
shares of common stock pursuant to the Company's 2004 Stock Incentive Plan,
which options will vest in equal monthly increments over a four year period and
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 January 9,
2006. Mr. Sullivan is also eligible to participate in the Company's management
incentive bonus program for 2006.

A copy of the press release announcing Mr. Burbach's termination and Mr.
Casner's and Mr. Sullivan's appointments is furnished as Exhibit 99.1 to this
Current Report on Form 8-K. 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
- -----------     ----------------------------------------------------------------

99.1            Press Release dated January 10, 2006.





                                   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:  January 10, 2006

EX-99.1

                                                                    Exhibit 99.1


                   Mark Casner Named CEO of Digirad;

         He Succeeds Gary Burbach, Who Will Continue to Serve
            Digirad as a Member of the Board of Directors;

  Peter Sullivan Promoted to President of Digirad's Product Business;

       Randy Weatherhead Promoted to SVP of Sales and Marketing

    POWAY, Calif.--(BUSINESS WIRE)--Jan. 10, 2006--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 that Mark L.
Casner has been named Chief Executive Officer and a member of the
Board of Directors. Casner, age 50, who joined Digirad in September
2005 as President of the Company's Digirad Imaging Solutions (DIS)
leasing services subsidiary, succeeds Gary Burbach, who will remain a
member of Digirad's Board of Directors. These changes will become
effective on January 15, 2005.
    "My primary objectives since stepping in as CEO last April have
been to put in place the proper business strategy, operating plan and
management team to allow the Company to achieve its growth and
profitability potential. I am pleased by the progress we have made in
reaching these goals. We have recruited key additions to our
management team, and implemented appropriate operational strategies
for both our product and DIS businesses that I believe have positioned
Digirad for improved performance. I look forward to remaining involved
with Digirad as a Board member.
    "Since coming on board in September, Mark has demonstrated his
leadership, commitment and knowledge of our business, extending an
impressive record of accomplishment over his 27-year career in the
healthcare services industry. Prior to joining Digirad Mark served in
a progression of senior management positions at companies providing
medical imaging services. Of particular significance, Mark was
President and Chief Operating Officer of DMS Imaging, which offers
mobile diagnostic services to more than 450 healthcare facilities
nationwide. During his tenure, Casner increased profitability,
improved customer service and employee retention, expanded into new
geographic regions, and negotiated new agreements with customers and
vendors that enhanced opportunities for growth and profitability. He
also served in various positions with Radiologix, Inc., most recently
as Senior Vice President, Operations. These experiences in leading
large scale medical imaging organizations make him particularly
well-equipped to assume his new responsibilities as CEO," Burbach
said.
    Burbach also announced that Peter Sullivan has been promoted to
President of Digirad's product business. Sullivan joined Digirad as a
consultant in January 2005 and as Senior Vice President of Operations
in April of 2005. Previously, he was Vice President and General
Manager at Asyst Technologies. "With Peter's many years of experience
in the semiconductor and medical imaging industries, I am confident
that he will continue to drive operational excellence and improved
financial results in our product business," Burbach said.
    Additionally, Burbach said that Randy Weatherhead, who joined
Digirad in July 2005 as Vice President, Marketing, will assume an
expanded leadership role as the new Senior Vice President of Sales &
Marketing. Weatherhead previously served as VP of Sales and Marketing
at Siemens Nuclear Medicine. "It is evident from the many
contributions that Randy has made to Digirad that he is the right
person to lead both our sales and marketing efforts to help us gain
increasing market momentum in 2006," Burbach said.
    New CEO Mark Casner stated, "We have assembled a highly capable
and experienced management team with key senior and mid-level
additions in our Digirad Imaging Solutions business as well as in our
sales, marketing, and operations groups. I believe our team has the
skills, energy and desire to achieve our goals for growth and
profitability, as we take advantage of our opportunities in both
physician-based imaging services (DIS) and the nuclear cardiology
camera market in our product business. I look forward to leading
Digirad during this exciting time in the Company's development."

    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. Digirad7 and Digirad Imaging Solutions7
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
improved or continued performance of Digirad and our DIS and product
businesses or our expectations of Messrs. Casner's, Sullivan's or
Weatherhead's success in their new roles with the company and the
expectations of achieving operational excellence and improved
financial results in the product business. 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 personnel
changes and related disruptions in our business 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
             Neil Berkman Associates (Investor Contact)
             310-277-5162
             info@BerkmanAssociates.com