Digirad Corporation (NASDAQ: DRAD; DRADP) (“Digirad” or the
“Company”) converted into a diversified holding company (“HoldCo”)
following the September 10, 2019 acquisition of ATRM Holdings, Inc.
(“ATRM”). Digirad announced today preliminary guidance for 2020 and
the primary tenets of its growth strategy.
HoldCo has three divisions*:
- Healthcare Imaging (Digirad Health): designs, manufactures, and
distributes diagnostic medical imaging products and offers mobile
healthcare services and solutions to healthcare providers
(hospitals and physicians)
- Building & Construction (ATRM): services residential and
commercial construction projects by manufacturing modular housing
units, structural wall panels, permanent wood foundation systems,
and other engineered wood products, and supplies general
contractors with building materials
- Real Estate & Investment Management: manages real estate
assets (currently three manufacturing plants in Maine) and
investment funds
* For more information download Digirad’s
investor presentation
at http://ir.digirad.com/events-presentations.
“We are very excited to commence operations as a
diversified holding company,” said Jeff Eberwein, Chairman of
Digirad. “Under this new structure, our objective is to maximize
shareholder value over the long term through high-return internal
investments that promote revenue growth, operating efficiencies,
and cash flow generation. We will also look for attractive
acquisition opportunities in two categories: bolt-on acquisitions
for our existing platform companies as well as acquisitions that
create new platform companies for HoldCo.”
FY 2020 Guidance
For FY 2020, Digirad’s guidance ranges are
revenues of $130 million to $150 million, adjusted EBITDA (as
defined below) of $10 million to $12 million, and free cash flow
(as defined below) of $7 million to $9 million. ($5 million to $7
million after preferred stock dividends). Free cash flow will be
used for debt reduction, internal growth initiatives, and
acquisitions.
The HoldCo structure allows each division to
benefit from the use of a shared services center, which will handle
corporate functions so that the management teams of the operating
businesses can focus on operations, growth, and bolt-on acquisition
opportunities. The Company believes that this model will result in
lower costs and improved operating and financial performance going
forward. It will also optimize the use of capital and other
internal resources.
Use of Non-GAAP Financial Measures
by Digirad Corporation
This Digirad news release presents the non-GAAP
financial measures “Adjusted EBITDA” (defined as “earnings before
interest, taxes, depreciation, amortization adjusted for
stock-based compensation, and other one-time transaction costs such
as merger and acquisitions, financing and etc.”) and “Free Cash
Flow” (defined as “net cash from operating activities excludes
expenditures on purchases of property and equipment, net of
dispositions”). The most directly comparable measures for these
non-GAAP financial measures are net income and diluted net income
per share. All figures based on Digirad guidance for 2019 and
projections for 2020 for Digirad are after conversion into a
diversified holding company (“HoldCo”).
These non-GAAP financial measures are intended
to supplement the GAAP financial information by providing
additional insight regarding results of operations of the Company.
The non-GAAP adjusted EBITDA financial measures used by the Company
are intended to provide an enhanced understanding of our underlying
operational measures to manage the Company’s business, to evaluate
performance compared to prior periods and the marketplace, and to
establish operational goals. Certain items are excluded from these
non-GAAP financial measures to provide additional comparability
measures from period to period. These non-GAAP financial measures
will not be defined in the same manner by all companies and may not
be comparable to other companies.
About Digirad Health
Digirad Health designs, manufactures, and
distributes diagnostic medical imaging products. Digirad
Health operates in three businesses: Diagnostic
Services, Mobile Healthcare, and Diagnostic Imaging. The
Diagnostic Services business offers imaging and monitoring services
to healthcare providers as an alternative to purchasing the
equipment or outsourcing the job. The Mobile
Healthcare business 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 business develops, sells,
and maintains solid-state gamma cameras.
About ATRM
ATRM manufactures modular housing units for
commercial and residential applications. ATRM operates in two
businesses: (i) modular building manufacturing and (ii) structural
wall panel and wood foundation manufacturing, including building
supply retail operations. The modular building manufacturing
business is operated by KBS Builders, the structural wall panel and
wood foundation manufacturing segment is operated by EdgeBuilder,
and the retail building supplies are sold through Glenbrook Lumber.
KBS Builders, EdgeBuilder and Glenbrook Lumber are wholly-owned
subsidiaries of ATRM.
Forward-Looking Statements
“Safe Harbor” Statement under the Private
Securities Litigation Reform Act of 1995: This presentation
contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. All statements in
this presentation that are not statements of historical fact are
hereby identified as “forward-looking statements” for the purpose
of the safe harbor provided by Section 27A of the Securities Act of
1933, as amended, and Section 21E of the Securities Exchange Act of
1934, as amended. Forward-looking Statements include, without
limitation, statements regarding (i) the plans and objectives of
management for future operations, including plans or objectives
relating to acquisitions and related integration, development of
commercially viable products, novel technologies, and modern
applicable services, (ii) projections of income (including
income/loss), EBITDA, earnings (including earnings/loss) per share,
free cash flow (FCF), capital expenditures, cost reductions,
capital structure or other financial items, (iii) the future
financial performance of Digirad Corporation (“Digirad,” “DRAD” or
the “Company”) or acquisition targets and (iv) the assumptions
underlying or relating to any statement described above. 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 are not meant to predict or guarantee
actual results, performance, events or circumstances and may not be
realized because they are based upon the Company's current
projections, plans, objectives, beliefs, expectations, estimates
and assumptions and are subject to a number of risks and
uncertainties and other influences, many of which the Company has
no control over. Actual results and the timing of certain events
and circumstances may differ materially from those described above
as a result of these risks and uncertainties. Factors that may
influence or contribute to the inaccuracy of forward-looking
statements or cause actual results to differ materially from
expected or desired results may include, without limitation, the
substantial amount of debt of the Company 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;
the restrictions contained in the debt agreements that limit the
discretion of management in operating the business; the length of
time associated with servicing customers; losses of significant
contracts; disruptions in the relationship with third party
vendors; accounts receivable turnover; insufficient cash flows and
resulting illiquidity; the Company's inability to expand the
Company's business; unfavorable changes in the extensive
governmental legislation and regulations governing healthcare
providers and the provision of healthcare services and the
competitive impact of such changes (including unfavorable changes
to reimbursement policies); high costs of regulatory compliance;
the liability and compliance costs regarding environmental
regulations; the underlying condition of the technology support
industry; the lack of product diversification; development and
introduction of new technologies and intense competition in the
healthcare industry; existing or increased competition; risks to
the price and volatility of the Company’s Common Stock and
Preferred Stock; stock volatility and illiquidity; 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; the Company’s ability to execute on its business
strategy (including any cost reduction plans); the Company’s
failure to realize expected benefits of restructuring and
cost-cutting actions; the Company’s ability to preserve and
monetize its net operating losses; risks associated with the
Company’s possible pursuit of acquisitions; the Company’s ability
to consummate successful acquisitions and execute related
integration, including to successfully integrate ATRM’s operations
and realize the synergies from the acquisition, as well as factors
related to the Company’s business (including ATRM) including
economic and financial market conditions generally and economic
conditions in the Company’s markets; failure to keep pace with
evolving technologies and difficulties integrating technologies;
system failures; losses of key management personnel and the
inability to attract and retain highly qualified management and
personnel in the future; and the continued demand for and market
acceptance of the Company’s services. For a detailed discussion of
cautionary statements and risks that may affect the Company’s
future results of operations and financial results, please refer to
the Company’s filings with the Securities and Exchange Commission,
including, but not limited to, the risk factors in the Company’s
most recent Annual Report on Form 10-K and Quarterly Reports on
Form 10-Q. This presentation reflects management’s views as of the
date presented.
All forward-looking statements are necessarily
only estimates of future results, and there can be no assurance
that actual results will not differ materially from expectations,
and, therefore, you are cautioned not to place undue reliance on
such statements. Further, any forward-looking statement speaks only
as of the date on which it is made, and we undertake no obligation
to update any forward-looking statement to reflect events or
circumstances after the date on which the statement is made or to
reflect the occurrence of unanticipated events.
Non-GAAP Financial Measures:
The information provided herein includes certain non-GAAP financial
measures. These non-GAAP financial measures are intended to
supplement the GAAP financial information by providing additional
insight regarding results of operations of the Company. The
non-GAAP adjusted EBITDA financial measures used by the Company are
intended to provide an enhanced understanding of our underlying
operational measures to manage the Company’s business, to evaluate
performance compared to prior periods and the marketplace, and to
establish operational goals. Certain items are excluded from these
non-GAAP financial measures to provide additional comparability
measures from period to period. These non-GAAP financial measures
will not be defined in the same manner by all companies and may not
be comparable to other companies.
Specifically, this presentation presents the
non-GAAP financial measures “Adjusted EBITDA” (defined as “earnings
before interest, taxes, depreciation, amortization adjusted for
stock-based compensation, and other one-time transaction costs such
as merger and acquisitions, financing and etc.”) and “Free Cash
Flow” (defined as “net cash from operating activities excludes
expenditures on purchases of property and equipment, net of
dispositions”). The most directly comparable measures for these
non-GAAP financial measures are net income and diluted net income
per share. All future figures based on guidance after conversion
into a diversified holding company (“HoldCo”).
For more information contact: |
|
Digirad Corporation |
Investor Relations |
Chairman of the Board |
The Equity Group |
Jeff Eberwein |
Lena Cati |
203-489-9501 |
212-836-9611 |
ir@digirad.com |
lcati@equityny.com |
PDF available
here: http://ml.globenewswire.com/Resource/Download/c5cfd884-6741-4123-a6ca-dc0cea03a2c9
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