Digirad Corporation (NASDAQ: DRAD) today reported second quarter
revenue of $13.2 million, six month revenue of $28.2 million and an
ending cash and available-for-sale securities balance of $29.9
million at June 30, 2010.
Digirad CEO Todd Clyde stated, "We planned on the first half of
2010 being tough as the physicians in our product and service
markets dealt with significant reimbursement cuts. We proactively
worked with our physician customers to adjust our DIS service model
in response to these cuts. We also managed our way through the
acute radiopharmaceutical shortages that had a significantly
negative impact on our revenues and margins during the second
quarter. These shortages were worse than we had anticipated and
continued during the month of July.
"These external events have affected our business more than we
had anticipated. In response, we reduced our annualized expense
base by approximately $3.0 million and took restructuring charges
of $0.4 million and additional inventory reserves of $0.9 million.
It looks like the worst of the radiopharmaceutical shortage is just
about over as the AECL Chalk River nuclear reactor in Canada is
scheduled to start producing radiopharmaceuticals in the next few
weeks after being down for more than a year."
Clyde continued, "In our Product business, we continue our focus
on selling into the hospital market and I am happy to report that
we booked our first commercial orders of the new ergo™
general-purpose portable imaging system in Q2 after a positive
reception by physicians at the Society of Nuclear Medicine
conference in Salt Lake City in early June. While capital equipment
hospital sales cycles can be long, the initial response and growth
in our sales pipeline for the ergo™ camera is very encouraging. In
the new healthcare environment, hospitals and clinics are seeking
flexible, cost-effective imaging systems that can provide a range
of capabilities in several locations in the facility, and our ergo™
meets those needs."
Second Quarter 2010 Summary:
- Total revenue for the second quarter of 2010 was $13.2 million,
compared to $18.6 million in the prior year period. Digirad Imaging
Solutions (DIS) revenue for the second quarter of 2010 was $9.8
million, compared to $13.6 million for the prior year period, and
Product revenue for the second quarter of 2010 was $3.4 million,
compared to $5.0 for the prior year period.
- Gross profit for the second quarter of 2010 was $1.9 million,
or 14.5% of revenue, compared to $5.9 million, or 31.7% of revenue,
in the prior year period.
- Net loss for the second quarter of 2010 was $3.1 million, or
$0.16 per share, compared to net income of $0.8 million, or $0.04
per share, in the prior year period.
- Cash and cash equivalents and available-for-sale securities
totaled $29.9 million, or $1.60 per share for the second quarter of
2010, net of approximately $1.0 million invested in the Company's
stock as part of its stock buyback program. Cash and cash
equivalents and available-for-sale securities were $31.8 million at
December 31, 2009.
- During the second quarter of 2010, DIS asset utilization was
62.1% on 131 systems (nuclear and ultrasound), compared to 63.3% on
151 systems (nuclear and ultrasound) in the prior year period.
Year-to-Date Financial
Highlights:
- Total revenue for the first six months of 2010 was $28.2
million, compared to $36.3 million for the prior year period. DIS
revenue for the first six months of 2010 was $20.5 million,
compared to $27.4 million for the prior year period, and Product
revenue for the first six months of 2010 was $7.7 million compared
to $8.9 million for the prior year period.
- Gross profit for the first six months of 2010 was $5.3 million,
or 18.7% of revenue, compared to $11.0 million, or 30.3% of
revenue, for the prior year period.
- Net loss for the first six months of 2010 was $4.3 million, or
$0.23 per share, compared to net income of $0.8 million, or $0.04
per share, for the prior year period.
- During the first six months of 2010, DIS asset utilization was
61.9% on 131 systems (nuclear and ultrasound), compared to 62.9% on
155 systems (nuclear and ultrasound) in the prior year period.
Richard Slansky, CFO, added, "We now believe that achieving
positive cash flow or earnings will be pushed out beyond year end.
However, our balance sheet remains strong as evidenced by our cash
and available-for-sale securities balance of nearly $30 million and
no long term debt."
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
877-941-1428 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 Annual 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
Unaudited Condensed Consolidated Statements of Operations
(In thousands, except per share amounts)
Three Months Six Months
Ended Ended
June 30, June 30,
----------------- -----------------
2010 2009 2010 2009
-------- -------- -------- --------
Revenues:
DIS $ 9,787 $ 13,565 $ 20,509 $ 27,416
Product 3,372 4,994 7,718 8,853
-------- -------- -------- --------
Total revenues 13,159 18,559 28,227 36,269
Cost of revenues:
DIS 8,172 9,528 16,974 19,722
Product 3,079 3,143 5,974 5,550
-------- -------- -------- --------
Total cost of revenues 11,251 12,671 22,948 25,272
-------- -------- -------- --------
Gross profit 1,908 5,888 5,279 10,997
Operating expenses:
Research and development 870 854 1,595 1,626
Marketing and sales 1,551 2,016 3,181 3,724
General and administrative 2,139 2,235 4,400 4,644
Amortization of intangible assets 107 145 239 315
Restructuring loss 352 -- 352 145
-------- -------- -------- --------
Total operating expenses 5,019 5,250 9,767 10,454
-------- -------- -------- --------
Income (loss) from operations (3,111) 638 (4,488) 543
Interest and other, net 27 146 169 285
-------- -------- -------- --------
Net income (loss) $(3,084) $ 784 $(4,319) $ 828
======== ======== ======== ========
Net income (loss) per share - basic and
diluted $ (0.16) $ 0.04 $ (0.23) $ 0.04
======== ======== ======== ========
Weighted average shares outstanding:
Basic 18,738 18,941 18,704 18,979
======== ======== ======== ========
Diluted 18,738 19,258 18,704 19,201
======== ======== ======== ========
Stock-based compensation expense is
included in the above as follows:
Cost of DIS revenue $ 10 $ 5 $ 18 $ 13
Cost of Product revenue 16 15 27 28
Research and development 17 9 26 18
Marketing and sales 31 24 50 49
General and administrative 95 98 228 208
Digirad Corporation
Condensed Consolidated Balance Sheets
(in thousands)
June 30, December 31,
2010 2009
------------- -------------
(unaudited)
Assets
Cash and cash equivalents $ 14,815 $ 13,560
Securities available-for-sale 15,111 18,250
Accounts receivable, net 7,594 7,553
Inventories, net 6,158 6,402
Other current assets 1,115 1,234
------------- -------------
Total current assets 44,793 46,999
Property and equipment, net 8,882 10,263
Intangible assets, net 1,004 1,243
Goodwill 184 184
Total assets $ 54,863 $ 58,689
============= =============
Liabilities and stockholders' equity
Accounts payable $ 1,732 $ 1,797
Accrued compensation 2,573 2,344
Accrued warranty 277 332
Other accrued liabilities 2,393 2,106
Deferred revenue 2,379 2,594
------------- -------------
Total current liabilities 9,354 9,173
Deferred rent 206 127
Total stockholders' equity 45,303 49,389
------------- -------------
Total liabilities and stockholders' equity $ 54,863 $ 58,689
============= =============
Investor Contact: Matt Clawson Allen & Caron
949-474-4300 Email Contact Company Contact: Richard Slansky,
CFO 858-726-1600 Email Contact
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