Exhibit 99.1
Digirad's Second Quarter Revenues Increase by 23%
POWAY, Calif.--(BUSINESS WIRE)--Aug. 9, 2004--Digirad Corp.
(Nasdaq NM:DRAD):
-- DIS Mobile Leasing Service Revenues Up 29%
-- Company Provides 2004 Financial Guidance
Digirad Corp. (Nasdaq NM:DRAD), a leader in providing solid-state
medical imaging products and services to physician offices, hospitals
and imaging centers, today reported financial results for the three
and six months ended June 30, 2004. For the second quarter of 2004,
total revenues rose 23% to $17.3 million, compared with total revenues
of $14.0 million in the second quarter of 2003. For the first half of
2004, total revenues rose 23% to $33.2 million, compared to $27.0
million for the first half of 2003.
2004 Financial Results
The Company generates revenue from mobile imaging leasing services
through Digirad Imaging Solutions (DIS) and from the sale of gamma
cameras and associated accessories and maintenance contracts. DIS
revenues rose 29% to $11.3 million in the second quarter of 2004,
compared to $8.8 million in the prior-year period. For the first six
months of 2004, DIS revenues rose 33% to $21.7 million, compared to
$16.3 million in the first six months of 2003. The DIS revenues
increase was driven mainly by additional physicians entering into DIS
service contracts and growth in existing DIS business. DIS added four
imaging systems to its operations during the second quarter of 2004,
taking the total DIS systems to 63 as of June 30, 2004, compared with
51 systems at June 30, 2003. Product revenues increased 14% to $6.0
million in the second quarter of 2004, compared to $5.2 million in the
prior-year period; for the first half of 2004, product revenues
increased 7% to $11.5 million, compared to $10.7 million in the
prior-year period. The increase in product revenues was due to
continued demand for our gamma cameras.
"We are extremely pleased with our second quarter and year-to-date
financial performance, in particular revenue growth from our mobile
imaging services," said David Sheehan, President and CEO of Digirad.
"Because Digirad affords physicians an in-office diagnostic solution
that also provides substantial benefits to patients, we believe that
we are well-positioned to respond to the growing demand for mobile and
fixed-site digital cardiac imaging systems."
Total gross margin for the second quarter of 2004 was 33%, up from
27% last year; gross margin for the first half of 2004 increased to
32%, up from 27% for the first half of 2003. Margin improvements were
due primarily to an increase in DIS revenues, lower DIS imaging
service costs and reductions in gamma camera production and per unit
warranty costs.
Total operating expenses for the second quarter of 2004 increased
28% to $5.3 million, compared to $4.1 million in the prior-year
period. For the first six months of 2004, operating expenses increased
22% to $10.1 million, compared to $8.2 million for the comparable 2003
period. The increase in total operating expenses resulted from
increases in sales personnel and expanded marketing efforts; higher
general and administrative headcount and recruiting costs; increased
insurance, legal and other costs associated with the Company's initial
public offering and operating as a public company; and increased
billing and collection costs correlated to the increase in DIS
revenues.
Net income for the second quarter of 2004 increased to $0.1
million, compared to a net loss in the second quarter of 2003 of $0.8
million. The net loss for the first six months of 2004 totaled $0.2
million, compared with a net loss of $1.7 million in the prior-year
period. Diluted earnings per share, when calculated on a pro forma
basis to account for the conversion of all our preferred stock into
common stock in Digirad's initial public offering, was $0.01 in the
second quarter of 2004 compared to a loss per share of $0.06 for the
second quarter of 2003. The pro forma net loss per share for the six
months of 2004 was $0.01, compared to a net loss of $0.14 for the
first six months of 2003.
The Company reported cash and cash equivalents of $60 million at
June 30, 2004.
"A highlight of the second quarter was the completion of our
initial public offering of 5.5 million shares of our common stock on
June 15, 2004," said Mr. Sheehan. "Digirad's strengthened cash
position will support our efforts to address a significant market
opportunity by further penetrating the non-hospital market, which
includes both physician offices and outpatient clinics."
Financial Guidance
The following guidance is based on current information and
expectations as of August 9, 2004. These and other statements herein
are forward-looking, and actual results could differ dramatically.
Please see the "Forward-Looking Statements" portion of this press
release for a description of certain risk factors and Digirad's
filings with the Securities and Exchange Commission for a more
complete discussion of risks.
Digirad anticipates 2004 total revenues to be between $67 million
and $70 million. Digirad expects quarterly results and growth rates to
continue to fluctuate, based on seasonality stemming from physician
vacations, holidays and inclement weather.
Operating expenses for 2004 will reflect increases in investments
to expand the Company's infrastructure, including a third quarter DIS
sales force expansion, as well as ongoing investments in research and
development and higher general and administrative costs associated
with operating as a public company. The Company anticipates 2004 net
income to range from $0.2 million to $0.5 million, or $0.01 to $0.03
on a per-share diluted basis.
Conference Call Information
Management will be hosting an investment community conference call
beginning at 4:45 p.m. Eastern Time (1:45 p.m. Pacific Time) today,
August 9, 2004, to discuss this announcement and to answer questions.
Individuals interested in listening to the conference call may do
so by dialing 888-803-8296 for domestic callers or 706-634-1250 for
international callers. A telephone replay will be available for 48
hours following the conclusion of the call by dialing 800-642-1687 for
domestic callers, or 706-645-9291 for international callers and
entering reservation code 8693347.
The live conference call will also be available via the Internet
on the investor relations section of the company's Web site at
www.digirad.com. A recording of the call will be available on the
investor relations section of the Company's Web site for one year
following the completion of the call.
About Digirad
Digirad Corp. develops, manufactures and markets solid-state,
medical imaging products and services to physician offices, hospitals
and imaging centers. Digirad offers a comprehensive line of
solid-state nuclear gamma cameras that can be used for the detection
of various medical conditions including cardiovascular disease.
Digirad believes that its imaging systems produce a high-quality
image, and due to their lightweight, compact design and easy fit
within small office spaces allow the delivery of nuclear imaging
procedures in a wide range of clinical settings -- physician offices,
outpatient clinics or within multiple departments in hospitals.
Through its wholly owned subsidiaries, Digirad Imaging Solutions
and Digirad Imaging Systems, Digirad also offers a comprehensive,
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 Corp., Digirad Imaging Solutions and Digirad Imaging
Systems are headquartered in Poway, Calif. For more information,
please visit www.digirad.com.
Forward-Looking Statements
Digirad cautions 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 or events. In particular, these include statements
relating to future actions, prospective products, services or market
opportunities, future performance or results of current and
anticipated products or services, sales efforts, expenses, the outcome
of contingencies such as legal proceedings, 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
press release due to the risks and uncertainties inherent in Digirad's
business including, without limitation: the degree to which Digirad's
existing 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 domestic and international legislation,
regulation or coverage and reimbursement policies of third-party
payors; Digirad's ability to timely develop new products, product
enhancements and services that are accepted by the market; Digirad's
lack of a diversified line of products and services; any technical
problems that may develop with respect to Digirad's imaging systems or
any manufacturing or supply problems or price fluctuations that may
affect Digirad's third-party suppliers; the ability of Digirad to
effectively market, sell and distribute its imaging systems and
services given its limited capabilities in these areas; 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;
Digirad's reliance on a limited number of customers for its products
and imaging services; Digirad's compliance with extensive and complex
product service and reimbursement 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 interpretations; Digirad's ability to
protect its intellectual property and proprietary technology through
patents and other means and defend against claims by third parties;
and other risks detailed in Digirad's Securities and Exchange
Commission filings, including its Prospectus filed pursuant to Rule
424(b) under the Securities Act of 1933, as amended, with the
Securities and Exchange Commission on June 10, 2004.
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.
Digirad(R) and Digirad Imaging Solutions(R) are registered
trademarks of Digirad Corp.
Digirad Corp.
Consolidated Balance Sheets
(Unaudited)
June 30, 2004 December 31, 2003
-------------------------------
Assets (Unaudited)
Current assets:
Cash and cash equivalents $60,394,364 $ 7,681,407
Accounts receivable, net 10,589,908 12,195,031
Inventories, net 4,405,163 3,709,321
Other current assets 982,101 854,170
-------------------------------
Total current assets 76,371,536 24,439,929
Property and equipment, net 11,141,698 10,087,030
Intangibles, net 514,674 511,832
Restricted cash 120,000 120,000
-------------- ---------------
Total assets $ 88,147,908 $ 35,158,791
============== ===============
Liabilities and stockholders' equity
(deficit)
Current liabilities:
Accounts payable $ 4,525,581 $ 3,036,209
Accrued compensation 2,119,839 1,893,336
Accrued warranty 1,268,535 1,051,242
Other accrued liabilities 4,190,275 2,647,741
Deferred revenue 2,036,744 1,514,488
Current portion of notes payable to
stockholders 81,667 245,000
Current portion of debt 2,296,899 11,473,619
-------------- ---------------
Total current liabilities 16,519,540 21,861,635
Deferred Rent 273,175 -
Notes payable to stockholders, net of
current portion 142,917 490,000
Long-term debt, net of current portion 3,246,570 4,232,071
Commitments and contingencies
Redeemable convertible preferred
stock, $0.0001 par value: no shares
and 46,023,000 shares authorized at
June 30, 2004 and December 31, 2003,
respectively; no shares and
43,555,313 shares issued and
outstanding at June 30, 2004
(unaudited) and December 31, 2003,
respectively - 84,277,992
Stockholders' equity (deficit):
Preferred stock, $0.0001 par value:
10,000,000 and no shares authorized
at June 30, 2004 and December 31,
2003, respectively; no shares issued
and outstanding at June 30, 2004 and
December 31, 2003, respectively - -
Common stock, $0.0001 par value:
150,000,000 and 53,000,000 shares
authorized at June 30, 2004 and
December 31, 2003, respectively;
18,008,390 and 23,540 shares issued
and outstanding at June 30, 2004
(unaudited) and December 31, 2003,
respectively 1,801 2
Additional paid-in capital 149,972,268 5,031,891
Deferred compensation (1,503,696 ) (554,375 )
Accumulated deficit (80,504,667 ) (80,180,425 )
-------------- ---------------
Total stockholders' equity (deficit) 67,965,706 (75,702,907 )
-------------- ---------------
Total liabilities and stockholders'
equity (deficit) $ 88,147,908 $ 35,158,791
=============== ===============
Digirad Corporation
Consolidated Statements of Operations
(Unaudited)
Three months ended June 30, Six months ended June 30,
------------------------------------------------------
2004 2003 2004 2003
------------- ------------ -------------- ------------
Revenues:
DIS $11,294,909 $ 8,763,586 $21,701,887 $16,266,512
Product 5,995,129 5,248,687 11,456,015 10,724,978
------------- ------------ -------------- ------------
Total revenues 17,290,038 14,012,273 33,157,902 26,991,490
Cost of
revenues:
DIS 7,509,457 6,087,476 14,774,023 11,729,380
Product 3,983,966 4,131,203 7,623,306 7,972,146
Stock-based
compensation 130,510 29,812 246,006 31,129
------------- ------------ -------------- ------------
Total cost of
revenues 11,623,933 10,248,491 22,643,335 19,732,655
------------- ------------ -------------- ------------
Gross profit 5,666,105 3,763,782 10,514,567 7,258,835
Operating
expenses:
Research and
development 684,916 595,728 1,325,067 1,175,002
Sales and
marketing 1,859,427 1,435,895 3,639,832 2,982,426
General and
administrative 2,497,690 1,983,060 4,643,160 3,834,387
Amortization
and impairment
of intangible
assets 16,076 94,409 32,152 213,658
Stock-based
compensation 249,980 29,651 437,272 30,359
Total
operating ------------- ------------ -------------- ------------
expenses 5,308,089 4,138,743 10,077,483 8,235,832
Income (loss)
from
operations 358,016 (374,961 ) 437,084 (976,997 )
Other income
(expense):
Interest income 33,886 9,091 41,793 20,034
Interest
expense (289,458 ) (429,430 ) (612,042 ) (765,161 )
Other 200 - (29,742 ) -
Total other
income
(expense) (255,372 ) (420,339 ) (599,991 ) (745,127 )
Net income
(loss) 102,644 (795,300 ) (162,907 ) (1,722,124 )
Accretion of
deferred
issuance
costs on
preferred
stock (72,797 ) (84,106 ) (161,335 ) (169,456 )
------------ ------------ ------------ ------------
Net income
(loss)
applicable to
common
stockholders $ 29,847 $ (879,406 )$ (324,242 )$(1,891,580 )
============ ============ ============ ============
Net income
(loss) per
common share:
Historical -
basic and
diluted $ 0.01 $ (63.08 )$ (0.16 )$ (137.67 )
============ ============ ============ ============
Pro forma -
basic and
diluted (1) $ 0.01 $ (0.06 )$ (0.01 )$ (0.14 )
============ ============ ============ ============
Shares used in
computing
historical
net income
(loss) per
share:
Weighted
average
shares
outstanding -
Basic 4,002,598 13,942 2,017,564 13,740
============ ============ ============ ============
Weighted
average
shares
outstanding -
Diluted 15,131,932 13,942 2,017,564 13,740
============ ============ ============ ============
Shares used in
computing pro
forma net
income
(loss) per
share (1):
Weighted
average
shares
outstanding -
Basic 13,711,8643 12,458,213 13,094,333 12,458,011
============ ============ ============ ============
Weighted
average
shares
outstanding -
Diluted 15,131,932 12,458,213 13,094,333 12,458,011
============ ============ ============ ============
(1) As a result of the conversion of our preferred stock into 12.4
million shares of our common stock upon completion of our initial
public offering in June 2004, there is a lack of comparability in the
basic and diluted net income (loss) per share amounts for the periods
presented above.
CONTACT: Digirad Corp.
Todd Clyde, Chief Financial Officer
858-726-1600
ir@digirad.com
or
Lippert/Heilshorn & Associates
Ina McGuinness or Bruce Voss
310-691-7100
imcguinness@lhai.com