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Digirad Corporation Reports Financial Results for Fourth Quarter and Twelve Months of 2014

  • Beats the upper end of previously announced 2014 financial guidance
  • Year over year revenue growth of 13% for the quarter and twelve months ended 2014
  • Announces financial guidance for 2015
  • Discusses acquisition of MD Office Solutions

SUWANEE, Ga., March 6, 2015 (GLOBE NEWSWIRE) -- Digirad Corporation (Nasdaq:DRAD) today reported its financial results for the fourth quarter and twelve months ended December 31, 2014.

Total revenues for the 2014 fourth quarter were $14.1 million, an increase of 13 percent compared to the prior year's fourth quarter revenues of $12.5 million. Adjusted net income for the 2014 fourth quarter was $892,000, or $0.05 per diluted share, compared to adjusted net income $873,000, or $0.05 per diluted share in the prior year's fourth quarter. Adjusted EBITDA for the 2014 fourth quarter was $1.5 million, compared to $1.3 million for the prior year quarter.

Total revenues for all of 2014 were $55.6 million, an increase of 13 percent compared to 2013 revenue of $49.4 million. Adjusted net income for all of 2014 was $3.5 million, or $0.18 per diluted share, compared to adjusted net income of $645,000, or $0.03 per diluted share for 2013. Adjusted EBITDA for all of 2014 was $5.5 million, compared to $2.6 million for 2013. A reconciliation of adjusted net income and adjusted EBITDA is provided later in this release.

Digirad President and CEO Matt Molchan said, "I am extremely pleased with the results this quarter, and also for all of 2014. We have closed out a very successful year for Digirad, not just financially, but strategically and operationally as well."

Molchan continued, "With 2014 closed out, we are now focusing our efforts on growing our business in 2015 in the near term, and in the long-term, our overall strategic plan of organic growth, growth from new services, and growth from financially disciplined acquisitions. To that point, I am very pleased about our other announcement this morning, the acquisition of MD Office Solutions. MD Office is a very well-run business that puts us in a market that we are not currently in, and we are very excited about the potential this acquisition brings. Finally, we continue to believe the market is moving in our direction and we believe there are other potential opportunities from disciplined acquisitions in the healthcare services arena moving forward."

The Company's cash, cash equivalents and available-for-sale securities balance at December 31, 2014 was $22.0 million, a slight increase from the September 30, 2014 balance of $21.8 million. Cash activity for the quarter mainly included cash generation from the businesses, partially offset by payment of cash dividends.

2015 Financial Guidance

For fiscal year 2015, the Company expects to generate revenues between $61.0 million and $63.0 million; non-GAAP adjusted diluted earnings per share between $0.19 and $0.21; and non-GAAP adjusted EBITDA between $6.5 million and $6.9 million.

The Company's non-GAAP financial measure adjusted diluted earnings per share excludes restructuring charges and acquired intangible asset amortization. Adjusted EBITDA further excludes stock-based compensation expense.

Conference Call Information

A conference call is scheduled for 11:00 a.m. EST on March 6, 2015 to discuss the results and management's outlook. The call may be accessed by dialing 1-877-407-9039 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 http://drad.client.shareholder.com; an archived replay of the webcast will be available within 15 minutes of the end of the conference call.

Use of Non-GAAP Financial Measures by Digirad Corporation

This Digirad news release presents the non-GAAP financial measures "adjusted operating expenses," "adjusted net income (loss)," "adjusted net income (loss) per diluted share" and "adjusted EBITDA." The most directly comparable measure for these non-GAAP financial measures are operating expenses, net income (loss) and diluted net income (loss) per share. The Company has included below unaudited adjusted financial information, which present the Company's results of operations after excluding restructuring charges, acquired intangible asset amortization, and gain on the sale of assets and license agreement, and in the measure of adjusted EBITDA, interest, taxes, depreciation, amortization and stock-based compensation.

A discussion of the reasons why management believes that the presentation of non-GAAP financial measures provides useful information to investors regarding Digirad's financial condition and results of operations is included as Exhibit 99.2 to Digirad's report on Form 8-K filed with the Securities and Exchange Commission on March 6, 2015.

About Digirad Corporation

Digirad delivers convenient, effective, and efficient diagnostic solutions on an as needed, when needed, and where needed basis. Digirad is one of the largest national providers of in-office nuclear cardiology and ultrasound imaging services, and also provides cardiac event monitoring services. These services are provided to physician practices, hospitals and imaging centers through its Diagnostic Services business. Digirad also sells medical diagnostic imaging systems, including solid-state gamma cameras, for nuclear cardiology and general nuclear medicine applications, as well as provides service on the products sold through its Diagnostic Imaging business. For more information, please visit www.digirad.com. Digirad® 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. Some of these forward-looking statements can be identified by the use of forward-looking words such as "believes," "expects," "may," "will," "should," "seek," "approximately," "intends," "plans," "estimates," or "anticipates," or the negative of those words or other comparable terminology, or in specific statements such as the Company's ability to deliver value to customers, the ability to grow and generate positive cash flow, the ability to execute on restructuring activities, and ability to successfully execute acquisitions. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from the statements made. These risks are detailed in Digirad's filings with the U.S. Securities and Exchange Commission, including the 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
Condensed Consolidated Statements of Income
(Unaudited)
Three Months Ended Twelve Months Ended
December 31, December 31,
(in thousands, except per share amounts) 2014 2013 2014 2013
Revenues:
Diagnostic Services $ 10,454 $ 9,268 $ 42,170 $ 37,171
Diagnostic Imaging 3,689 3,259 13,438 12,205
Total revenues 14,143 12,527 55,608 49,376
Cost of revenues:
Diagnostic Services 7,920 6,908 31,721 27,828
Diagnostic Imaging 1,939 1,931 7,247 7,432
Total cost of revenues 9,859 8,839 38,968 35,260
Gross profit 4,284 3,688 16,640 14,116
Total gross profit percentage 30.3% 29.4% 29.9% 28.6%
Diagnostic Services gross profit percentage 24.2% 25.5% 24.8% 25.1%
Diagnostic Imaging gross profit percentage 47.4% 40.7% 46.1% 39.1%
Operating expenses:
Research and development 5 1,025
Marketing and sales 1,233 1,124 4,730 4,411
General and administrative 2,109 1,691 8,344 8,118
Amortization of intangible assets 93 53 356 231
Restructuring charges 33 35 692 1,728
Gain on sale of assets and license agreement (1,568)
Total operating expenses 3,468 2,908 14,122 13,945
Income from operations 816 780 2,518 171
Other income (expense):
Interest and other income, net 12 11 58 63
Interest expense (12) (5) (39) (15)
Total other income 6 19 48
Income before income taxes 816 786 2,537 219
Income tax benefit (expense) (44) 1 (62) 45
Net income $ 772 $ 787 $ 2,475 $ 264
Net income per share – basic $ 0.04 $ 0.04 $ 0.13 $ 0.01
Net income per share – diluted $ 0.04 $ 0.04 $ 0.13 $ 0.01
Dividends declared per common share $ 0.05 $ 0.05 $ 0.20 $ 0.05
Weighted average shares outstanding – basic 18,609 18,491 18,571 18,789
Weighted average shares outstanding – diluted 18,979 18,803 18,878 19,159
Digirad Corporation
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands) December 31, December 31,
2014 2013
Assets
Current assets:
Cash and cash equivalents $ 14,051 $ 18,744
Securities available-for-sale 7,935 7,673
Accounts receivable, net 5,989 5,430
Inventories, net 3,644 3,881
Other current assets 856 697
Restricted cash 477 244
Total current assets 32,952 36,669
Property and equipment, net 4,766 4,153
Intangible assets, net 2,577 353
Goodwill 1,337 184
Other assets 269 92
Total assets $ 41,901 $ 41,451
Liabilities and stockholders' equity
Accounts payable $ 1,423 $ 611
Accrued compensation 3,261 3,472
Accrued warranty 176 137
Deferred revenue 1,644 1,631
Other accrued liabilities 1,789 1,774
Total current liabilities 8,293 7,625
Other liabilities 963 440
Total liabilities 9,256 8,065
Stockholders' equity:
Preferred stock
Common stock 2 2
Treasury stock (5,728) (5,728)
Additional paid-in capital 153,769 156,968
Accumulated other comprehensive loss (19) (2)
Accumulated deficit (115,379) (117,854)
Total stockholders' equity 32,645 33,386
Total liabilities and stockholders' equity $ 41,901 $ 41,451
Digirad Corporation
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Three Months Ended
December 31,
Twelve Months Ended
December 31,
(in thousands, except per share amounts) 2014 2013 2014 2013
Total operating expenses $ 3,468 $ 2,908 $ 14,122 $ 13,945
Restructuring charges(1) (33) (35) (692) (1,728)
Gain on sale of assets and license agreement(4) 1,568
Non-GAAP Adjusted operating expenses $ 3,435 $ 2,873 $ 13,430 $ 13,785
Net income $ 772 $ 787 $ 2,475 $ 264
Restructuring charges(1) 33 35 692 1,728
Gain on sale of assets and license agreement(4) (1,568)
Acquired intangible amortization 90 51 346 221
Income tax items(2) (3) (26)
Non-GAAP Adjusted net income $ 892 $ 873 $ 3,487 $ 645
Net income per share - diluted $ 0.04 $ 0.04 $ 0.13 $ 0.01
Restructuring charges(1)(3) 0.04 0.09
Gain on sale of assets and license agreement(4) (0.08)
Acquired intangible amortization(3) 0.02 0.01
Income tax items(2)(3)
Non-GAAP Adjusted net income per share - diluted(3) $ 0.05 $ 0.05 $ 0.18 $ 0.03
Three Months Ended
December 31,
Twelve Months Ended
December 31,
(in thousands) 2014 2013 2014 2013
Net income $ 772 $ 787 $ 2,475 $ 264
Restructuring charges(1) 33 35 692 1,728
Gain on sale of assets and license agreement(4) (1,568)
Depreciation and amortization 494 466 1,929 1,913
Stock-based compensation 119 40 326 340
Interest and other income, net (12) (11) (58) (63)
Interest expense 12 5 39 15
Income tax expense (benefit) 44 (1) 62 (45)
Non-GAAP Adjusted EBITDA $ 1,462 $ 1,321 $ 5,465 $ 2,584
(1) Reflects nonrecurring charges primarily related to restructuring of the Diagnostic Imaging reporting segment and lease termination of the Poway, CA facility.
(2) Reflects income tax effect for adjusted financial data.
(3) Per share amounts are computed independently for each discrete item presented. Therefore, the sum of the quarterly per share amounts will not necessarily equal to the total for the year, and sum of individual items may not equal the total.
(4) Reflects a nonrecurring gain related to the sale of assets associated with an uncommercialized surgical imaging system, and the licensing of certain existing Company technology.
Digirad Corporation
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Three Months Ended
(in thousands, except per share amounts) December 31,
2013
March 31,
2014
June 30,
2014
September 30,
2014
December 31,
2014
Total operating expenses $ 2,908 $ 3,597 $ 3,680 $ 3,377 $ 3,468
Restructuring charges(1) (35) (441) (138) (80) (33)
Gain on sale of assets and license agreement(2)
Non-GAAP Adjusted operating expenses $ 2,873 $ 3,156 $ 3,542 $ 3,297 $ 3,435
Net income (loss) $ 787 $ (148) $ 823 $ 1,028 $ 772
Restructuring charges(1) 35 441 138 80 33
Gain on sale of assets and license agreement(2)
Acquired intangible amortization 51 64 102 90 90
Income tax items(3) (4) (2) (1) (3)
Non-GAAP Adjusted net income $ 873 $ 353 $ 1,061 $ 1,197 $ 892
Net income (loss) per share - diluted(4) $ 0.04 $ (0.01) $ 0.04 $ 0.05 $ 0.04
Restructuring charges(1)(4) 0.02 0.01
Gain on sale of assets and license agreement(2)(4)
Acquired intangible amortization(4) 0.01
Income tax items(3)(4)
Non-GAAP Adjusted net income per share - diluted(4) $ 0.05 $ 0.02 $ 0.06 $ 0.06 $ 0.05
Three Months Ended
(in thousands) December 31,
2013
March 31,
2014
June 30,
2014
September 30,
2014
December 31,
2014
Net income (loss) $ 787 $ (148) $ 823 $ 1,028 $ 772
Restructuring charges(1) 35 441 138 80 33
Gain on sale of assets and license agreement(2)
Depreciation and amortization 466 453 485 497 494
Stock-based compensation 40 50 61 96 119
Interest and other income, net (11) (17) (15) (14) (12)
Interest expense 5 8 9 10 12
Income tax expense (benefit) (1) 2 8 8 44
Non-GAAP Adjusted EBITDA $ 1,321 $ 789 $ 1,509 $ 1,705 $ 1,462
(1) Reflects nonrecurring charges primarily related to restructuring of the Diagnostic Imaging reporting segment and lease termination of the Poway, CA facility.
(2) Reflects a nonrecurring gain related to the sale of assets associated with an uncommercialized surgical imaging system, and the licensing of certain existing Company technology.
(3) Reflects income tax effect for adjusted financial data.
(4) Per share amounts are computed independently for each discrete item presented. Therefore, the sum of the quarterly per share amounts will not necessarily equal to the total for the year, and sum of individual items may not equal the total.

CONTACT: For more information contact: Jeffry Keyes Chief Financial Officer 858-726-1600 ir@digirad.com

Source:Digirad Corporation