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)

January 10, 2008

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 (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 7.01. Regulation FD Disclosure

On January 10, 2008, Digirad Corporation, or Digirad, made a presentation concerning its business at the 26th Annual JPMorgan Healthcare Conference in San Francisco, California. The materials utilized during the presentation are attached as Exhibit 99.1 to this report.

This information and the exhibits hereto 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

(d) Exhibits.

Exhibit No.	Description
99.1	Digirad Corporation Investor Slide Presentation

2

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/ Marc E. Shapiro
	Marc E. Shapiro Vice President Human Resources

Date: January 10, 2008

3

EX-99.1

Digirad Corporation

Digirad Corporation

Nasdaq:  DRAD

January 2008

Exhibit 99.1

®

Forward-Looking Statements

Certain statements in this presentation that are not a description of historical facts are

forward-looking statements as determined by the Private Securities Litigation Reform Act of

1995. Forward-looking statements do not relate strictly to historical or current facts and include

words such as "anticipate," "estimate," "expect," "project," "intend," "plan," "believe" and other

terms that discuss future operating or financial performance and/or events. Examples of such

forward-looking statements include, but are not limited to, statements about the Company’s

revenues, expenses, margins, operations, mobile imaging services, centers of influence

strategy and benefits, market conditions and trends, demand for imaging services and

products,

imaging

modality

trends,

strategic

growth,

acquisition

strategies,

competitive

advantages, utilization, cost control, financial results. These forward-looking statements are

based upon current assumptions and expectations that involve risks and uncertainties that

could cause actual events and financial performance to differ materially. Risks and

uncertainties include but are not limited to, technological change, industry trends, changes in

the company’s markets, and competition. More information about risks and uncertainties is

available in the Company’s filings with the U.S. Securities & Exchange Commission, including

Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and Current Reports on Form

8-K. The information discussed in and during this presentation should be used in conjunction

with

the

consolidated

financial

statements

and

notes

included

in

those

Reports

and

speak

only

as of the date hereof. The Company undertakes no obligation to update these forward-looking

statements. All such statements are qualified in their entirety by this cautionary statement, and

Digirad undertakes no obligation to revise or update this presentation to reflect events or

circumstances after the date hereof.

®

Digirad Corporation provides medical diagnostic imaging products

and services to physicians’

offices, hospitals and imaging centers.

Business Summary

Digirad

Mobile

Imaging

Services

®

Unique solid-state technology

Compact designs

500 lb. patient-weight capacity

Portable

Multi-head (1-2-3) platform

XPO

Innovation Makes it Happen

®

Hospital

Operating Room

Departmental

Bedside

Satellite Facilities

Cardiology

Groups

General Practice

High-Quality, High-Performance Mobile Equipment

®

In-Office

Primary Care

Internal Medicine

Satellite Facilities

Cardiology

Groups

General Practice

®

Source: IMV Nuclear Survey, Oct 2007

Market decline in 2006:

-

Greater pre-certification burdens

-

PET impacting oncology NM

Resuming Yearly Uptrend in

Nuclear Imaging Patient Visits

Continuing Trend To Non-Hospital Providers

Market recovery in 2007:

-

Secular uptrend resuming

-

Trend away from hospitals

-

IM/GPs becoming service providers    

-

Higher use of imaging by IM/GPs

Nuclear Imaging Market Trend

1997     1998     1999     2000     2001     2002     2003     2004    2005     2006     2007

®

2007*

2006

2005

16.3M     100%

15.2M    100%

17.2M    100%

Total

6.5M    40%

6.1M    41%  

7.9M    46%

Non-Cardiac

9.8M    60%

9.1M    59%

9.3M    54%

Cardiac

Nuclear Imaging Patient Visits

*Estimated from 1H2007 data

Source: IMV Nuclear Survey, Oct 2007

Cardiac Studies:

Largest Segment of Nuclear Imaging Market,

Growing as Percent of Annual Market

Nuclear Imaging Market:

Cardiac Segment

®

Growth Strategy

Core imaging services

•

Increase utilization rate of existing fleet, personnel

•

Open mobile imaging services hubs in target regions

•

Expand client base: add new primary-care physicians

Centers of Influence (COI)

•

Grow revenues from existing Centers of Influence

•

Add new Centers of Influence

Strategic acquisitions

•

Complement growth platform

•

Diversify imaging services, modalities

•

Expand geographic coverage

•

Add revenues, earnings

®

Core Imaging Services

–

meeting current

physician needs

Mobile Imaging For

Today’s Patient, Physician Needs 

Diagnostic requirements for aging population

Trend to decentralized (non-hospital) services

Facilitates outreach programs for academia and cardiology groups

Patients prefer own primary-care physicians

Flexible, scalable response to patient loads

Solves cost issues: fixed equipment, space, upkeep

New revenue stream for primary-care practices

“We Make Office Calls”

®

Economic Benefits for Physicians’

Practices

Digirad

Imaging

Services

Trend:

Costs rising faster than revenues for traditional practices

Solution:

Add imaging for 29% to 60% growth of revenues

$175K     

Avg. Annual

Revenue

$20K–$50K

New Annual

Revenue

$30K–$60K

New Annual

Revenue

Traditional Services   +   Nuclear Imaging   +   Ultrasound Imaging

+

®

Core Imaging Services

California

Oregon

Washington

Montana

Idaho

Nevada

Utah

Colorado

Arizona

New Mexico

Texas

Oklahoma

Tennessee

Wyoming

Kentucky

Kansas

Nebraska

South Dakota

North Dakota

Minnesota

Iowa

Missouri

Arkansas

Ohio

Indiana

Illinois

Wisconsin

Michigan

Florida

Georgia

Louisiana

S. Carolina

N. Carolina

Alabama

Mississippi

Maine

Virginia

Pennsylvania

New

York

Vermont

New Hampshire

W. Virginia

Delaware

Maryland

Massachusetts

Connecticut

Rhode Island

New

Jersey

EXISTING Hubs

®

Primary-Care Physicians

–

Affiliation with luminary institution

–

Expert readings by cardiologists on staff at institution

–

Higher retention of patients

–

Ancillary revenue

Centers of Influence

–

New revenues from reading fees improve staff retention

–

New revenue from intervention via readings

–

Coordination with primary-care physicians improves relationships,

increases referrals

Digirad 

–

Fuller utilization of mobile imaging services assets, personnel

–

Aligned with high-profile academic medical institutions

–

Greater penetration of local base of primary-care physicians

–

Potential for significant long-term revenue growth

A win-win-win

strategy

Centers of Influence Strategy

®

= Existing COI (5)

4

UCLA

5

The Methodist

Hospital

2

Vanderbilt University.

Emory

University

1

3

Penn State

University

Centers of Influence

®

Estimated COI Revenue Growth

-

Cumulative

Hypothetical Example Based on COI Expansion 2008-2011

$0

$25

$50

$75

$100

$125

2008

2009

2010

2011

Potential Cumulative Revenue From Existing 5 COIs

Potential Incremental Revenue From Addition of 15 COIs

At 36 months COI adds $3 million to

$8 million per year in revenue based on

size/population of region

20 COIs

= $110 Million in Cumulative

Annual Revenue by End 2011

Center of Influence Process

COI Partnership

Execution

Perform Planning

Meeting

•

Finalize Blitz Timeline

•

Target Market

•

Top 10 customers (COI)

•

Additional targeted accounts (DIS)

•

General Database search within 60 miles

•

Sign LOU

•

Finalize PSA

•

Review billing / collection requirements

•

Identify Online viewing solution

•

Finalize Lunch & Learn Strategy

Blitz Planning

Handoff to

Operations

•

Operations Planning Meeting

•

Hub Location to target customers

•

Identify resources and logistics

•

Equipments

•

Training

•

COI Protocols

•

Implement Online Solution

•

Initiate routs and service

•

Confirm timeline

•

Identify resources

•

Identify collaterals needed

•

Finalize databases

…. A list –

called by corporate

…. B List –

Residing TM blitz territory

…. C List –

General list by all TM’s

•

Inside Sales Strategy and script

…. Generate COI Script

…. Confirm appointments

•

Sales conference call

•

Blitz schedule and training

•

Execute Blitz

®

Strategic Acquisition(s)

Complements to growth platform

•

Mobile imaging services

•

Centers of Influence

Diversify imaging services, modalities

•

Pre-imaging services

•

Potential addition of complimentary services to nuclear and ultrasound

Expand geographic coverage

•

Meet demand in existing regional markets

•

Add regions with unmet/underserved/rising demand for imaging services

Potential accretion (not in 2008 guidance)

•

Incremental revenues

•

Incremental net income

®

-$10

$0

$10

$20

$30

$40

$50

$60

$70

$80

$90

2005

2006

2007est*

2008 est*

Consolidated Results: Trend, Outlook

*Midpoints of guidance as of January 8, 2008; net excludes estimated stock-based compensation expense.

Revenue Growth, Potential for Profitability in 2008

Net Loss/Income     Revenue

®

Comparative Operating Results

(In millions, except per share)

9-Mos 2007      Full-Year 2006          Full-Year 2005

Revenues

$55.1

$71.9                      $68.2

Gross Profit

16.0

19.1                        15.2

Operating Expenses

17.6

27.3

Operating Income (Loss)

(1.5)

(8.2)                     (11.0)

EBITDA

4.1

(1.9)

Net Income (Loss)

$(0.3)

$(6.3)                     $(9.6)

Earnings (Loss) Per Share

$(0.01)

$(0.34)                   $(0.52)

Shares Outstanding

18.8

18.8

26.2

(5.2)

18.5

®

Margins: Trend, Targets

29%

23%

27%

28%

32%

31%

10%

20%

30%

40%

2005

2006

2007est*

Gross Margin

SG&A as % of Rev

Gross Margin Rising, SG&A Declining as % of Revenue

33%

22%

Future Targets

®

Balance Sheet

(In millions, except per share data)

Liquid, Strong Ratios, No Long-Term Debt

Sep 30, 2007          Dec 31, 2006

Cash/equivalents and securities

$30.8

$44.3

Total current assets

47.9

59.2

Total current liabilities

13.1

13.4

Long-term debt

0.0

0.1

Shareholders’

equity

56.2

55.4

Current ratio

3.7:1

4.4:1

Quick ratio

2.4:1

3.3:1

Working capital

$34.8

$45.8

Shareholders’

equity per share

$2.99

$2.95

®

2008 Guidance (January 8, 2008)

2008 Guidance

Revenue

DIS

$ 59.0M -

$ 61.0M

Product

$ 21.0M -

$ 23.0M

Total Revenue

$ 80.0M -

$ 84.0M

Net Income/(Loss)

$ (1.0M) -

$  0.5M

Note: Net income/(loss) includes stock-based comp. expense of $1M

®

Investment Merits

Growing demand for imaging services, decentralization 

Expecting revenue growth in 2008: Centers Of Influence, core services

Continuing control of costs/expenses

Potential net income for 2008

Strong balance sheet (September 30, 2007)

–

$30+ million cash/equivalents

–

No long-term debt

–

$2.99 shareholders’

equity per share

Valuation lagging peer averages

Market-cap to 2008 estimated sales: 0.8 vs. 1.6 to 1.7 for peers

Evaluating acquisition(s)

–

Complement growth platform

–

Incremental revenues, net income (not in 2008 guidance)

®

Stock Data

Nasdaq

symbol

DRAD

Three-year trading range

$2.94 to $9.05

Close 12/31/07

$3.64

Average daily trading volume

29,600 shares

Shares outstanding

18.8 million

Float (shares)

12.3 million

Institutional holdings (shares)

7.7 million

Market capitalization

$68.4 million

®

Digirad Corporation

13950 Stowe Drive

Poway, CA 92064

858-726-1600

www.digirad.com