Exhibit 99.1
Digirad Announces First Quarter Total Revenues up 13%;
DIS Revenues Up 18%
POWAY, Calif.--(BUSINESS WIRE)--May 2, 2005--Digirad Corporation
(Nasdaq: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 months ended
March 31, 2005.
For the first quarter of 2005, total revenues rose 13% to $18.0
million, compared with $15.9 million in the first quarter of 2004.
Digirad Imaging Solutions' (DIS) mobile leasing services revenues rose
18% to $12.3 million, compared with $10.4 million for the first
quarter of the prior year. Product revenues, which include sales of
gamma cameras, upgrades, accessories and maintenance contract
revenues, were $5.6 million, up 3% from $5.5 million one year ago.
Consolidated gross profit margin for the first quarter of 2005 was
28.7%, compared with 30.6% in the prior-year period, due primarily to
lower product gross margins. Product gross margins were 26.5%,
compared with 32.3% in the prior-year period, reflecting a lower
number of camera sales, lower manufacturing volumes and the sale of
lower-margin Cardius(TM)-2 imagers, partially offset by sales of
higher-margin Cardius-3 imagers. DIS gross margins held steady
compared with the prior-year period at 29.7%.
Operating expenses were $6.4 million for the 2005 first quarter,
compared with $4.8 million for the comparable 2004 period, due to
additional sales headcount in conjunction with the DIS expansion
efforts, higher research and development costs related to new products
and an increase in various general and administrative costs required
to operate as a public company.
The net loss for the first quarter of 2005 was $981,000, or $0.05
per share, compared with a net loss of $266,000 for the first quarter
of 2004.
Cash, cash equivalents and short-term investments as of March 31,
2005 totaled $50.6 million, compared with $55.6 million as of December
31, 2004, reflecting a $2 million pre-payment of principal on
outstanding debt to eliminate approximately $300,000 of interest
expense and the use of working capital to purchase inventory.
"While this quarter's financial performance was below our
expectations, we saw several trends that support the strength of the
Digirad business model. Notably, DIS service days increased to 3,381
this quarter from 2,734 in the prior-year period and from 3,256 during
the fourth quarter of 2004, and DIS margins improved to 29.7% this
quarter from 27.3% in the fourth quarter of 2004. Our Cardius-3
imager, which offers faster acquisition times and improved work flow
in both the physician office and hospital settings and therefore
commands premium pricing, continues to be positively received. We
delivered three of these units in the first quarter of 2005," said
Gary Burbach, Chief Executive Officer of Digirad.
"We also are pleased to have achieved targeted DIS revenue levels
during the quarter and to have expanded into an additional state,
bringing the number of states in which DIS operates to 19 plus the
District of Columbia. However, territory expansion has been somewhat
hampered by the slower-than-expected ramp up of new sales people who
have been added during the last six months. Meanwhile, we redeployed a
few underutilized imaging systems as we focus on improving DIS asset
utilization rates at existing hubs," said Burbach.
"My initial priority is to focus on building relationships with
Digirad's customers and employees while becoming fully familiar with
our business operations and strategies. Once this process is complete,
Digirad will comment on the Company's financial guidance for the
remainder of 2005," said Burbach. "I have great confidence in the
Digirad team and I look forward to driving the Company toward
achieving its leadership potential in 2005 and beyond."
Conference Call Information
Management will host an investment community conference call today
at 4:45 p.m. Eastern Time (1:45 p.m. Pacific Time) to discuss the
Company's financial results and to answer questions.
To participate in the live call by telephone, from the U.S., dial
877-815-7177, or from outside the U.S. dial 706-634-1178. A live web
cast of the call can be accessed at www.digirad.com. The web site
replay will be available for one year and the telephone replay will be
available for 48 hours following the conclusion of the call by dialing
800-642-1687 from the U.S., or 706-645-9291 for international callers,
and entering reservation code 5586116.
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) and Digirad Imaging
Solutions(R) are registered trademarks of Digirad Corporation.
Cardius(TM) is a trademark and DigiTech(SM) is a service mark of
Digirad Corporation.
Forward-Looking Statements
Digirad cautions that statements included in this press release
that are not a description of historical facts (including, without
limitation, favorable trends in Digirad Imaging Solutions' revenues
per day and number of lease days and demand for Cardius-3 imagers) 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 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. 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
the departure of senior executives and sales employees may affect
Digirad's customers, work force, suppliers and overall business
prospects and operations; 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,
including the Cardius-3, 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, including the Cardius-3, 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, including the Cardius-3;
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 Annual Report on Form 10-K and other
reports filed 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 Corporation
Consolidated Statements of Operations
(In thousands, except per share amounts)
(Unaudited)
Three months ended
March 31,
------------------
2005 2004
-------- --------
Revenues:
DIS $12,322 $10,407
Product 5,648 5,461
-------- --------
Total revenues 17,970 15,868
Cost of revenues:
DIS 8,625 7,265
Product 4,129 3,639
Stock-based compensation 59 116
-------- --------
Total cost of revenues 12,813 11,020
-------- --------
Gross profit 5,157 4,848
Operating expenses:
Research and development 900 640
Sales and marketing 2,018 1,780
General and administrative 3,329 2,145
Amortization and impairment of intangible
assets 16 16
Stock-based compensation 119 188
-------- --------
Total operating expenses 6,382 4,769
-------- --------
Income (loss) from operations (1,225) 79
Other income (expense):
Interest income 342 8
Interest expense (90) (323)
Other (8) (30)
-------- --------
Total other income (expense) 244 (345)
-------- --------
Net loss (981) (266)
Accretion of deferred issuance costs on preferred
stock - (88)
-------- --------
Net loss applicable to common stockholders $ (981) $ (354)
======== ========
Net loss per share (1):
Historical - Basic and diluted net loss per share $ (0.05) $(10.88)
======== ========
Pro-forma - Basic and diluted net loss per share $(0.05) $(0.02)
======== ========
Shares used in per share calculations (1):
Historical weighted average shares outstanding -
basic and diluted 18,105 33
======== ========
Pro-forma weighted average shares outstanding -
basic and diluted 18,105 12,477
======== ========
(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 historical basic and diluted net income (loss) per share
amounts for the periods presented above. Accordingly, the pro
forma per share information presented assumes the conversion of
all the shares of preferred stock into common stock as of the
beginning of each period presented or the date of issuance, if
later.
Digirad Corporation
Consolidated Balance Sheets
(In thousands, except par value amounts)
March 31, December 31,
2005 2004
----------- ---------
Assets (Unaudited)
Current assets:
Cash and cash equivalents $ 8,036 $ 11,348
Short-term investments 42,557 44,215
Accounts receivable, net 11,618 10,017
Inventories, net 8,083 6,980
Other current assets 1,687 1,620
----------- ---------
Total current assets 71,981 74,180
Property and equipment, net 11,734 11,182
Intangibles, net 523 542
Restricted cash 120 120
----------- ---------
Total assets $ 84,358 $ 86,024
=========== =========
Liabilities and stockholders' equity
Current liabilities:
Accounts payable $ 5,012 $ 4,313
Accrued compensation 1,963 2,410
Accrued warranty 1,211 1,219
Other accrued liabilities 3,255 2,651
Deferred revenue 2,908 2,344
Current portion of debt 923 2,228
----------- ---------
Total current liabilities 15,272 15,165
Deferred rent 366 371
Long-term debt, net of current portion 876 1,754
Commitments and contingencies
Stockholders' equity
Preferred stock, $0.0001 par value: 10,000
shares authorized at March 31, 2005 and
December 31, 2004; no shares issued and
outstanding at March 31, 2005 and December
31, 2004 - -
Common stock, $0.0001 par value: 150,000 shares
authorized at March 31, 2005 and December 31,
2004; 18,134 and 18,075 shares issued and
outstanding at March 31, 2005 and December 31,
2004, respectively 2 2
Additional paid-in capital 149,835 149,845
Accumulated other comprehensive loss (214) (97)
Deferred compensation (702) (920)
Accumulated deficit (81,077) (80,096)
----------- ---------
Total stockholders' equity 67,844 68,734
----------- ---------
Total liabilities and stockholders' equity $ 84,358 $ 86,024
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News release code: DRADG
CONTACT: Digirad Corporation
Todd Clyde, Chief Financial Officer
ir@digirad.com
858-726-1600
or
Lippert/Heilshorn & Associates
Ina McGuinness or Bruce Voss
imcguinness@lhai.com
310-691-7100