Digirad Corporation Acquires ATRM Holdings, Inc.
September 10 2019 - 5:07PM
Digirad Corporation (NASDAQ: DRAD) (“Digirad” or the “Company”)
announced today that it completed the acquisition of ATRM Holdings,
Inc. (“ATRM”), which transforms the Company into a diversified
holding company (“HoldCo”). In addition, as a result of the
Merger, Digirad issued an aggregate of approximately 1.6 million
shares of its newly authorized 10.0% Series A Cumulative Perpetual
Preferred Stock, with a stated value and liquidation preference of
$10 per share (the “Digirad Preferred Stock”), in exchange for all
of the outstanding shares of ATRM’s common and preferred
stock. ATRM will deregister and delist its common stock and
ATRM will continue as a direct, wholly-owned subsidiary of the
Company. The Company anticipates that the Digirad Preferred
Stock issued pursuant to the Merger will begin trading on the The
Nasdaq Global Market under the ticker symbol “DRADP” on September
11, 2019.
In connection with the Merger, Digirad also
completed a private placement, issuing 300,000 shares of Digirad
Preferred Stock to Lone Star Value Investors, LP for a price of $10
per share for total proceeds to the Company of $3.0 million.
The Company intends to use the proceeds from this offering for the
repayment of debt owed by a wholly-owned subsidiary of ATRM.
The securities sold in the private placement have not been
registered under the Securities Act of 1933 (the “Act”) and may not
be resold absent registration under, or exemption from registration
under, the Act.
The Merger is part of the transformation of
Digirad into HoldCo. Following the Merger, the HoldCo
structure’s team includes Jeffrey Eberwein (Chairman), Matthew
Molchan (CEO of Digirad Health, Inc.), Daniel Koch (CEO of ATRM),
David Noble (Chief Operating Officer and Chief Financial Officer),
and Hannah Bible (VP – Legal). Digirad believes that
converting into a diversified holding company with a shared
services center will create significant value for Digirad
stockholders over time because the conversion is expected to
improve future revenue, cash flow, and earnings growth, and create
a platform for future bolt-on acquisitions and other growth
opportunities.
About Digirad
Digirad designs, manufactures, and distributes
diagnostic medical imaging products. Digirad operates in 3
segments: Diagnostic Services, Mobile Healthcare, and Diagnostic
Imaging. The Diagnostic Services segment offers imaging and
monitoring services to healthcare providers as an alternative to
purchasing the equipment or outsourcing the job. The Mobile
Healthcare segment provides contract diagnostic imaging, including
computerized tomography (“CT”), magnetic resonance imaging (“MRI”),
positron emission tomography (“PET”), PET/CT, and nuclear medicine
and healthcare expertise through a convenient mobile service. The
Diagnostic Imaging segment develops, sells, and maintains
solid-state gamma cameras.
About ATRM Holdings
ATRM manufactures modular housing units for
commercial and residential applications. ATRM operates in two
segments: (i) modular building manufacturing and (ii) structural
wall panel and wood foundation manufacturing, including building
supply retail operations. The modular building manufacturing
segment is operated by KBS Builders, and the structural wall panel
and wood foundation manufacturing segment is operated by
EdgeBuilder. Both KBS Builders and EdgeBuilder are wholly-owned
subsidiaries of ATRM.
Forward-Looking Statements
The Securities and Exchange Commission (the
“SEC”) encourages companies to disclose forward-looking information
so that investors can better understand a company’s future
prospects and make informed investment
decisions. Certain statements in this report are
forward-looking statements and are made pursuant to the safe harbor
provisions of the Securities Litigation Reform Act of 1995, as
amended. These forward-looking statements reflect, among
other things, the Company’s current expectations, plans,
strategies, and anticipated financial results. There are
a number of risks, uncertainties, and conditions that may cause the
Company’s actual results to differ materially from those expressed
or implied by these forward-looking statements. These
risks and uncertainties include the Company’s ability to
successfully integrate ATRM’s operations and realize the synergies
from the Merger, as well as a number of factors related to the
Company’s business and that of ATRM, including economic and
financial market conditions generally and economic conditions in
the Company’s and ATRM’s markets; various risks to preferred
stockholders of not receiving dividends and risks to the Company’s
ability to pursue growth opportunities if the Company continues to
pay dividends according to the terms of the Company Preferred
Stock; various risks to the price and volatility of the Company’s
Preferred Stock; the substantial amount of debt and the Company’s
ability to repay or refinance it or incur additional debt in the
future; the Company’s need for a significant amount of cash to
service and repay the debt and to pay dividends on the Company
Preferred Stock; restrictions contained in the debt agreements that
limit the discretion of management in operating the business;
regulatory changes, including changes to reimbursement policies,
development and introduction of new technologies and intense
competition in the healthcare industry; risks associated with the
Company’s possible pursuit of acquisitions; system failures; losses
significant contracts; disruptions in the relationship with third
party vendors; losses of key management personnel and the inability
to attract and retain highly qualified management and personnel in
the future; changes in the extensive governmental legislation and
regulations governing healthcare providers and the provision of
healthcare services; high costs of regulatory compliance; the
competitive impact of legislation and regulatory changes in the
healthcare industry; and liability and compliance costs regarding
environmental regulations. A detailed discussion of
these and other risks and uncertainties that could cause actual
results and events to differ materially from such forward-looking
statements are discussed in more detail in the Company’s filings
with the SEC, including their reports on Form 10-K and Form
10-Q. Many of these circumstances are beyond the
Company’s ability to control or predict. Moreover,
forward-looking statements necessarily involve assumptions on the
Company’s part. These forward-looking statements
generally are identified by the words “believe”, “expect”,
“anticipate”, “estimate”, “project”, “intend”, “plan”, “should”,
“may”, “will”, “would”, “will be”, “will continue” or similar
expressions. Such forward-looking statements involve
known and unknown risks, uncertainties and other factors that may
cause actual results, performance or achievements of the Company
and its subsidiaries to be different from those expressed or
implied in the forward-looking statements. All
forward-looking statements attributable to us or persons acting on
the Company’s behalf are expressly qualified in their entirety by
the cautionary statements that appear throughout this report.
Furthermore, forward-looking statements speak only as of the date
they are made. Except as required under the federal
securities laws or the rules and regulations of the SEC, the
Company disclaims any intention or obligation to update or revise
publicly any forward-looking statements. You should not
place undue reliance on forward-looking statements.
For more information contact: |
|
Digirad Corporation |
Investor Relations |
Chairman of the Board |
The Equity Group |
Jeffrey E. Eberwein |
Lena Cati |
203-489-9501 |
212-836-9611 |
ir@digirad.com |
lcati@equityny.com |
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