Digirad Corporation Reports Third Quarter 2010 Financial ResultsDigirad Introduces ergo(TM) to Key Hospital Sites, Manages Strong Cash Position While Stabilizing Businesses
POWAY, CA -- (Marketwire - October 28, 2010) - Digirad Corporation (NASDAQ: DRAD) today reported third quarter revenue of $13.3 million, nine-month revenue of $41.5 million and an ending cash and available-for-sale securities balance of $28.6 million at September 30, 2010.
Digirad CEO Todd Clyde stated, "After a very difficult first half of 2010, the operational and market trends began to shift in a positive direction. During the third quarter, as the year-long isotope shortage abated in August, new contracts and activity resumed for both nuclear and ultrasound services. We are also seeing growth in our sales pipeline for our new ergo™ general purpose portable imaging system. During the quarter, we introduced the ergo to a number of key hospitals via a 'road show' marketing program that allows hospital personnel across the country to actually use the system in real clinical situations. The response has exceeded our expectations as orders have already been received and the majority of target facilities expressed an interest in purchasing a system within the next eighteen months."
Clyde continued, "Looking forward, we expect the positive trends established in the third quarter to continue, the growth in services to drive improved results through the rest of the year and the building demand for our new cameras to begin to measurably impact the top line in 2011 and beyond as the hospital buying cycles run their course."
Third Quarter 2010 Summary:
- Total revenue for the third quarter of 2010 was $13.3 million, compared to $16.9 million in the prior year period. Digirad Imaging Solutions (DIS) revenue for the third quarter of 2010 was $9.6 million, compared to $12.9 million for the prior year period, and Product revenue for the third quarter of 2010 was $3.7 million, compared to $4.0 million for the prior year period.
- Gross profit for the third quarter of 2010 was $3.1 million, or 23.4% of revenue, compared to $4.5 million, or 26.7% of revenue, in the prior year period.
- Net loss for the third quarter of 2010 was $1.3 million, or $0.07 per share, compared to a net loss of $0.4 million, or $0.02 per share, in the prior year period.
- Cash and cash equivalents and available-for-sale securities totaled $28.6 million, or $1.52 per share for the third quarter of 2010, after the purchase of approximately $1.0 million invested in the Company's stock since inception of its stock buyback program. Cash and cash equivalents and available-for-sale securities were $31.8 million at December 31, 2009.
- During the third quarter of 2010, DIS asset utilization was 61.5% on 131 systems (nuclear and ultrasound), compared to 63.9% on 144 systems (nuclear and ultrasound) in the prior year period, primarily due to the radioisotope shortage.
Year-to-Date Financial Highlights:
- Total revenue for the first nine months of 2010 was $41.5 million, compared to $53.2 million for the prior year period. DIS revenue for the first nine months of 2010 was $30.1 million, compared to $40.3 million for the prior year period, and Product revenue for the first nine months of 2010 was $11.4 million compared to $12.9 million for the prior year period.
- Gross profit for the first nine months of 2010 was $8.4 million, or 20.2% of revenue, compared to $15.5 million, or 29.2% of revenue, for the prior year period.
- Net loss for the first nine months of 2010 was $5.7 million, or $0.30 per share, compared to net income of $0.4 million, or $0.02 per share, for the prior year period.
- During the first nine months of 2010, DIS asset utilization was 61.8% on 133 systems (nuclear and ultrasound), compared to 63.2% on 151 systems (nuclear and ultrasound) in the prior year period.
Richard Slansky, CFO, added, "Our cash position remained strong as well as other key balance sheet measures of financial strength, including our current ratio of over 5 to 1. We continue to have no debt on our books, other than current payables and accruals."
Conference Call Information
A conference call is scheduled for 11:00 a.m. EDT today to discuss the results and management's outlook. The call may be accessed by dialing 877-941-4776 five minutes prior to the scheduled start time and referencing Digirad. A simultaneous webcast of the call may be accessed online from the Events & Presentations link on the Investor Relations page at www.digirad.com; an archived replay of the webcast will be available within 15 minutes of the end of the conference call.
About Digirad Corporation
Digirad is a leading provider of diagnostic imaging products, and personnel and equipment leasing services. For more information, please visit www.digirad.com. Digirad®, Digirad Imaging Solutions®, and Cardius® are registered trademarks 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 expanded product and service offerings, including, the addition of the first large-field-of-view, solid state portable camera to the hospital marketplace, and our ability to generate positive cash flow in excess of $2.0 million in 2010. 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 Annu al 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.
(Financial tables follow)
Digirad Corporation
Consolidated Statements of Operations
(Unaudited and in thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------------------------
2010 2009 2010 2009
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Revenues:
DIS $9,612 $12,903 $30,121 $40,319
Product 3,687 4,025 11,405 12,878
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Total revenues 13,299 16,928 41,526 53,197
Cost of revenues:
DIS 7,941 9,563 24,912 29,285
Product 2,244 2,852 8,218 8,402
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Total cost of revenues 10,185 12,415 33,130 37,687
--------------------------------------------
Gross profit 3,114 4,513 8,396 15,510
Operating expenses:
Research and development 683 864 2,278 2,490
Marketing and sales 1,389 1,698 4,569 5,422
General and administrative 2,417 2,139 6,817 6,783
Amortization of intangible
assets 94 133 333 448
Restructuring loss -- 193 355 338
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Total operating expenses 4,583 5,027 14,352 15,481
--------------------------------------------
Income (loss) from operations (1,469) (514) (5,956) 29
Other income (expense):
Interest income 80 174 289 399
Interest expense (1) (2) (5) (7)
Other income (expense) 54 (72) 17 (7)
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Total other income 133 100 301 385
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Net income (loss) ($1,336) ($414) ($5,655) $414
============================================
Net income (loss) per common
share - basic and diluted ($0.07) ($0.02) ($0.30) $0.02
============================================
Weighted average shares
outstanding - basic 18,811 18,681 18,704 18,839
============================================
Weighted average shares
outstanding - diluted 18,811 18,681 18,704 19,289
============================================
Stock-based compensation expense
is included in the above as
follows:
Cost of DIS revenue $ 5 $ 6 $ 22 $ 20
Cost of Product revenue 13 14 40 42
Research and development 13 9 40 27
Marketing and sales 27 21 77 70
General and administrative 280 94 509 302
--------------------------------------------
Total stock-based compensation
expense $ 338 $ 144 $ 688 $ 461
--------------------------------------------
Digirad Corporation
Consolidated Balance Sheets
(In thousands, except share amounts)
September 30, December 31,
2010 2009
------------------------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $20,170 $13,560
Securities available-for-sale 8,472 18,250
Accounts receivable, net 7,582 7,553
Inventories, net 6,051 6,402
Other current assets 1,174 1,234
------------------------------
Total current assets 43,449 46,999
Property and equipment, net 8,115 10,263
Intangible assets, net 910 1,243
Goodwill 184 184
------------------------------
Total assets $52,658 $58,689
==============================
Liabilities and stockholders' equity
Accounts payable $1,803 $1,797
Accrued compensation 2,046 2,344
Accrued warranty 275 332
Other accrued liabilities 1,819 2,106
Deferred revenue 2,134 2,594
------------------------------
Total current liabilities 8,077 9,173
Deferred rent 198 127
------------------------------
Total liabilities 8,275 9,300
------------------------------
Commitments and contingencies (Note 10)
Stockholders' equity:
Preferred stock, $0.0001 par value: 10,000,000
shares authorized; no shares issued or
outstanding -- --
Common stock, $0.0001 par value: 80,000,000
shares authorized; 18,562,872 and 18,476,293
shares issued and outstanding (net of
treasury shares) at September 30, 2010 and
December 31, 2009, respectively 2 2
Treasury stock, at cost; 573,218 shares and
547,418 shares at September 30, 2010 and
December 31, 2009, respectively (1,039) (991)
Additional paid-in capital 154,583 153,867
Accumulated other comprehensive income 130 149
Accumulated deficit (109,293) (103,638)
------------------------------
Total stockholders' equity 44,383 49,389
------------------------------
Total liabilities and stockholders' equity $52,658 $58,689
==============================
Investor Contact:
Matt Clawson
Allen & Caron
949-474-4300
matt@allencaron.com
Company Contact:
Richard Slansky
CFO
858-726-1600
ir@digirad.com
