SEC Filings Details

Digirad Corporation Reports Financial Results for the Second Quarter and Six Months ended June 30, 2016

Press Release

Jul 28, 2016

Digirad Corporation Reports Financial Results for the Second Quarter and Six Months ended June 30, 2016

  • Announces second quarter revenue growth of 106 percent year over year
  • Confirms financial guidance for 2016
  • Announces a regular quarterly cash dividend of $0.05 cents per share

SUWANEE, Ga., July 28, 2016 (GLOBE NEWSWIRE) -- Digirad Corporation (Nasdaq:DRAD) today reported its financial results for the second quarter and six months ended June 30, 2016.

Total revenues for the 2016 second quarter were $32.1 million, an increase of 106 percent compared to the prior year's second quarter revenues of $15.5 million.

Net income for the 2016 second quarter was $1.0 million, or $0.05 per diluted share, or $0.06 per diluted share from the same period in the prior year. Adjusted net income for the 2016 second quarter was $1.8 million, or $0.09 per diluted share, compared to $1.4 million, or $0.07 per diluted share from the same period in the prior year.

Adjusted EBITDA for the 2016 second quarter was $4.2 million, compared to $2.0 million in the prior year second quarter.

Total revenues for the six months ended June 30, 2016 were $63.2 million, an increase of 115 percent compared to the prior year's revenues for the first six months of $29.4 million.

Net income for the six months ended June 30, 2016 was $12.6 million, or $0.63 per diluted share, compared to net income of $1.8 million, or $0.09 per diluted share in same period in the prior year.  Adjusted net income for the six months ended June 30, 2016 was $3.2 million, or $0.16 per diluted share, compared to adjusted net income of $1.7 million, or $0.09 per diluted share in same period in the prior year.

Adjusted EBITDA for the six months ended June 30, 2016 was $7.9 million, compared to $2.8 million in the same period in the prior year. A reconciliation of adjusted net income and adjusted EBITDA is provided later in this release.

The results for the quarter and six months ended June 30, 2016 include the results of the recent acquisition of DMS Health, which closed on January 1, 2016.

Digirad President and CEO Matt Molchan said, "I am very pleased with our results this quarter.  With the recent acquisition of DMS Health, we have more than doubled our year over year revenues, and our bottom line results are right in line with our expectations.  We continue to believe that the acquisition of DMS Health is a very compelling and strategic acquisition for Digirad, adding scale, diversity and further services to Digirad as a premier provider of healthcare solutions.  In addition, all our existing core businesses are performing well and in line with our expectations, ending a very solid quarter."

Molchan continued, "Our integration efforts for DMS Health are going well, and we are on track to complete most major integration activities by the end of the year.  Based on the performance of our businesses so far this year and the results of our integration efforts, we feel very confident we will achieve our full year guidance."

The Company also announced a cash dividend of $0.05 cents per share that will be paid on August 29, 2016, to shareholders of record on August 17, 2016.

2016 Financial Guidance

The Company reaffirms its previously announced fiscal year 2016 financial guidance of revenues between $125 million and $130 million, non-GAAP adjusted EBTIDA between $17 million and $18 million, and adjusted diluted earnings per share of between $0.30 and $0.35.

Conference Call Information

A conference call is scheduled for 11:00 a.m. EDT on July 28, 2016 to discuss the results and management's outlook. The call may be accessed by dialing 1-877-407-9039 (international callers: +1-201-689-8470) 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/events.cfm; 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 net income,"  "adjusted net income per diluted share," and "adjusted EBITDA." The most directly comparable measure for these non-GAAP financial measures are net income and diluted net income per share. The Company has included below unaudited adjusted financial information, which presents the Company's results of operations after excluding acquired intangible asset amortization, acquisition related contingent consideration adjustments, transaction and integration costs associated with DMS Health Technologies, and non-recurring related income tax adjustments.  Further excluded in the measure of adjusted EBITDA are 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 July 28, 2016.

About Digirad Corporation

Digirad delivers convenient, effective, and efficient healthcare solutions on an as needed, when needed, and where needed basis.  Digirad's diverse portfolio of mobile healthcare solutions and medical equipment and services, including diagnostic imaging and patient monitoring, provides hospitals, physician practices, and imaging centers through the United States access to technology and services necessary to provide exceptional patient care in the rapidly changing healthcare environment.  For more information, please visit www.digirad.com.

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 Six Months Ended
 June 30, June 30,
(in thousands, except per share amounts)2016 2015 2016 2015
        
Revenues:       
Services$24,666  $12,179  $48,671  $22,742 
Product and product-related7,424   3,368  14,576  6,645 
Total revenues32,090  15,547   63,247  29,387 
Cost of revenues:       
Services19,179  9,213  37,685  17,719 
Product and product-related3,146  1,567  6,732  3,253 
Total cost of revenues22,325  10,780  44,417  20,972 
        
Gross profit9,765  4,767  18,830  8,415  
Total gross profit percentage30.4% 30.7% 29.8% 28.6%
Services gross profit percentage22.2% 24.4% 22.6% 22.1%
Product and product-related gross profit percentage57.6% 53.5%  53.8% 51.0%
         
Operating expenses:       
Marketing and sales2,837  1,268  5,462  2,478 
General and administrative4,878  2,203  11,292  4,371 
Amortization of intangible assets578  133  1,157  238 
Total operating expenses8,293  3,604  17,911  7,087 
        
Income from operations1,472  1,163  919  1,328 
        
Other (expense) income:       
Other (expense) income, net(58)    14   
Interest expense, net(379) (1) (750) (1)
Total other expense(437) (1) (736) (1)
        
Income before income taxes1,035  1,162  183  1,327 
Income tax (expense) benefit(37) (65) 12,424  515 
Net income$998  $1,097  $ 12,607  $1,842 
        
Net income per share:       
Basic$0.05  $0.06  $0.65  $0.10 
Diluted$0.05  $0.06  $0.63  $0.09 
Dividends declared per common share$0.05  $0.05  $0.10  $0.10 
        
Weighted average shares outstanding - basic19,529  19,263  19,489  19,036 
Weighted average shares outstanding - diluted20,038  19,726  19,991  19,511 
        
        


Digirad Corporation
Condensed Consolidated Balance Sheets
(Unaudited)
 
(in thousands, except share data)June 30,
2016
 December 31,
2015
Assets   
Current assets:   
Cash and cash equivalents$3,284  $15,868 
Securities available-for-sale2,259  3,227 
Accounts receivable, net14,067  7,274 
Inventories, net5,806  4,381 
Restricted cash233  233 
Other current assets3,441  764 
 Total current assets29,090  31,747 
Property and equipment, net32,019  6,252 
Intangible assets, net12,783  3,079 
Goodwill6,819  2,897 
Deferred tax assets26,804  18,578 
Restricted cash1,892   
Other assets1,131   1,560 
Total assets$110,538  $64,113 
     
Liabilities and stockholders' equity   
Current liabilities:   
Accounts payable$5,480  $1,369 
Accrued compensation4,875  2,453 
Accrued warranty195  213 
Deferred revenue3,583  1,673 
Current portion of long-term debt5,358   
Other current liabilities4,418  2,998 
Total current liabilities23,909  8,706 
Long-term debt, net of current portion19,240   
Other liabilities2,038  1,252 
Total liabilities45,187  9,958 
    
Stockholders' equity:   
Preferred stock   
Common stock2  2 
Treasury stock(5,728) (5,728)
Additional paid-in capital152,472  153,860 
Accumulated other comprehensive loss(263) (240)
Accumulated deficit(81,132) (93,739)
Total stockholders' equity65,351  54,155 
Total liabilities and stockholders' equity$110,538  $64,113 
        
        


 
Digirad Corporation
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
 
   Three Months Ended
June 30,
 Six Months Ended
June 30,
(in thousands, except per share amounts)  2016 2015 2016 2015
          
Net income $998  $1,097  $12,607  $1,842 
 Acquired intangible amortization 578  130  1,157  233 
 Acquisition related contingent consideration valuation adjustment(1) (3) (173) (3) (173)
 Transaction and integration costs of DMS Health Technologies(2) 171   283  1,621  308 
 Income tax items(3) 67  51  (12,207) (536)
Non-GAAP Adjusted net income $1,811  $1,388  $3,175   $1,674 
          
Net income per share - diluted(4) $0.05  $0.06  $0.63  $0.09 
 Acquired intangible amortization 0.03  0.01  0.06  0.01 
  Acquisition related contingent consideration valuation adjustment(1)   (0.01)   (0.01)
 Transaction and integration costs of DMS Health Technologies(2) 0.01  0.01  0.08  0.02  
 Income tax items(3)     (0.61) (0.03)
Non-GAAP Adjusted net income per share - diluted(4) $0.09  $0.07  $0.16  $0.09 
          


   Three Months Ended
June 30,
 Six Months Ended
June 30,
(in thousands) 2016 2015 2016 2015
          
Net income $998  $1,097  $12,607  $1,842 
 Acquisition related contingent consideration valuation adjustment(1) (3) (173) (3) (173)
 Transaction and integration costs of DMS Health Technologies(2) 171  283  1,621  308 
 Depreciation and amortization 2,383  598  4,848  1,086 
 Stock-based compensation 257  141  480  285 
 Interest income (4) (11) (8 ) (22)
 Interest expense 383  12  758  23 
 Income tax expense (benefit) 37  65  (12,424) (515)
Non-GAAP Adjusted EBITDA $4,222  $2,012  $7,879  $2,834 


 (1)Reflects fair value adjustment to estimate of contingent consideration related to acquisitions.
 (2) Reflects diligence, transaction, and integration costs related to the acquisition of DMS Health Technologies. Three and six months ended June 30, 2015 has been reclassified from previously reported amounts to reflect this adjustment.
 (3)Reflects income tax effect for adjusted financial data and acquisition related income tax adjustments, and release of previously reserved net operating loss carryforwards.
  (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.
  


 
Digirad Corporation
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
 
   Three Months Ended
(in thousands, except per share amounts) June 30,
2015
 September 30,
2015
 December 31,
2015
 March 31,
2016
 June 30,
2016
            
Net income $1,097  $19,120  $678  $11,609  $998 
  Acquired intangible amortization 130  131   131   577  578 
 Acquisition related contingent consideration valuation adjustment(1) (173)     113    (3)
 Investment impairment loss(2)       278     
 Transaction and integration costs of DMS Health Technologies(3) 283  435   595   1,450  171 
 Income tax items(4) 51  (18,163)  (446)  (12,333) 67 
Non-GAAP Adjusted net income $1,388  $1,523  $1,349  $1,303  $1,811 
            
Net income per share - diluted(5) $0.06  $0.97  $0.03  0.58  $0.05 
 Acquired intangible amortization 0.01  0.01   0.01   0.03  0.03 
 Acquisition related contingent consideration valuation adjustment(1) (0.01)    0.01     
 Investment impairment loss(2)      0.01     
 Transaction and integration costs of DMS Health Technologies(3) 0.01  0.02   0.03   0.07  0.01 
 Income tax items(4)   (0.92)  (0.02)  (0.62)  
Non-GAAP Adjusted net income per share - diluted(5) $0.07  $0.08  $0.07  $0.07  $0.09 
            


   Three Months Ended
(in thousands) June 30,
2015
 September 30,
2015
 December 31,
2015
 March 31,
2016
 June 30,
2016
            
Net income $1,097  $19,120  $678  $11,609  $998 
 Acquisition related contingent consideration valuation adjustment(1) (173)   113    (3)
 Investment impairment loss(2)     278     
 Transaction and integration costs of DMS health Technologies(3) 283  435  595  1,450  171 
 Depreciation and amortization 598  665  690  2,465  2,383 
 Stock-based compensation 141  165  166  223  257 
 Interest income (11) (10) (7) (5) (4)
 Interest expense 12  21  19  375  383 
 Income tax expense (benefit) 65  (18,183) (425) (12,461) 37 
Non-GAAP Adjusted EBITDA $2,012  $2,213  $2,107  $ 3,656  $4,222 


 (1)Reflects fair value adjustment to estimate of contingent consideration related to acquisitions.
 (2)Reflects impairment loss related to investment in Perma-Fix Medical.  Total amount consists of impairment of a Supply Agreement entered into between the two parties and a loss related to the initial excess of the transaction price over fair value.
 (3)Reflects diligence, transaction, and integration costs related to the acquisition of DMS Health Technologies. Three and six months ended June 30, 2015 has been reclassified from previously reported amounts to reflect this adjustment.
 (4)Reflects income tax effect for adjusted financial data and acquisition related income tax adjustments, and release of previously reserved net operating loss carryforwards.
 (5)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.
  
For more information contact:

Jeff Keyes

Chief Financial Officer

858-726-1600

ir@digirad.com

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Source: Digirad Corporation

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