- Company pays down $1.3 million on its credit facility during the quarter
- Announces 2017 financial guidance
- Announces cash dividend of $0.05 cents per share
SUWANEE, Ga., April 28, 2017 (GLOBE NEWSWIRE) -- Digirad Corporation (Nasdaq:DRAD) today reported its financial
results for the first quarter ended March 31, 2017.
Total revenues for the first quarter were $29.1 million, compared to $31.2 million in the first quarter of the
prior year.
Net loss for the first quarter was $2.1 million, or $0.10 net loss per diluted share, compared to net income of
$11.6 million, or $0.58 net income per diluted share in the same period in the prior year. Non-GAAP adjusted net loss for the first
quarter was $0.2 million, or $0.01 adjusted net loss per diluted share, compared to adjusted net income of $1.3 million, or $0.07
adjusted net income per diluted share in the same period in the prior year. Non-GAAP adjusted EBITDA for the first quarter was $1.8
million, compared to $3.7 million in the same period in the prior year.
Operating cash flow for the first quarter was $1.9 million, compared to $0.7 million in the prior year. Non-GAAP
free cash flow was $1.4 million for the first quarter, compared to negative $0.3 million in the same period in the prior year.
Digirad President and CEO Matt Molchan said, “Overall, our core businesses are performing well and within our
expectations. Seasonality impacts us each year in the first quarter, with a little more impact this year than in the prior
year.” Molchan continued, “We have had some challenges recently in our Mobile Healthcare services business, but believe these
problems to be confined to the provisional service offering of this business segment. We have addressed these challenges by
changing our leadership, operations and sales approach in our Mobile Healthcare services business, focusing on our core customers
and improving delivery of our high-quality healthcare services. With these changes, we are very confident that we will
improve on the recent results, and expect to resume growth in 2018. We continue to expect more cash generation in 2017 than in
2016, which we will use to pay down debt and fund our ongoing dividend, both of which we believe deliver value to
shareholders.”
The Company also announced a cash dividend of $0.05 cents per share that will be paid on May 30, 2017, to
shareholders of record on May 15, 2017.
2017 Financial
Guidance
The Company announced its financial guidance for 2017, which is to generate revenues of approximately $125 million, non-GAAP
adjusted EBITDA of between $14 and $15 million, adjusted net income per diluted share of between $0.10 and $0.15, and free cash
flow of between $9 and $10 million.
Conference Call
Information
A conference call is scheduled for 11:00 a.m. EDT on April 28, 2017 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; 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 (loss),” “adjusted net
income (loss) per diluted share,” “adjusted EBITDA”, and "free cash flow". The most directly comparable measure for these non-GAAP
financial measures are net income (loss), net income (loss) per diluted share, and operating cash flow. The Company has included
below unaudited adjusted financial information, which presents the Company's results of operations after excluding acquired
intangible asset amortization, goodwill impairment, acquisition related contingent consideration adjustments, investment impairment
loss, 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. Free cash flow is calculated by subtracting cash paid for capital expenditures from operating cash
flow.
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 April 28, 2017.
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
Operations |
| (Unaudited) |
| |
| |
Three Months Ended |
| |
March 31, |
| (in
thousands, except per share amounts) |
2017 |
|
2016 |
| |
|
|
|
| Revenues: |
|
|
|
| Services |
$ |
22,874 |
|
|
$ |
24,005 |
|
| Product and product-related |
6,206 |
|
|
7,152 |
|
| Total revenues |
29,080 |
|
|
31,157 |
|
| Cost of revenues: |
|
|
|
| Services |
18,455 |
|
|
18,506 |
|
| Product and product-related |
3,518 |
|
|
3,586 |
|
| Total cost of revenues |
21,973 |
|
|
22,092 |
|
| |
|
|
|
| Gross profit |
7,107 |
|
|
9,065 |
|
| Total gross profit percentage |
24.4 |
% |
|
29.1 |
% |
| Services gross profit percentage |
19.3 |
% |
|
22.9 |
% |
| Product and product-related gross profit
percentage |
43.3 |
% |
|
49.9 |
% |
| |
|
|
|
| Operating expenses: |
|
|
|
| Marketing and sales |
2,400 |
|
|
2,625 |
|
| General and administrative |
5,104 |
|
|
6,414 |
|
| Amortization of intangible assets |
578 |
|
|
579 |
|
| Total operating expenses |
8,082 |
|
|
9,618 |
|
| |
|
|
|
| Loss from operations |
(975 |
) |
|
(553 |
) |
| |
|
|
|
| Other expense: |
|
|
|
| Other income, net |
— |
|
|
71 |
|
| Interest expense, net |
(315 |
) |
|
(370 |
) |
| Total other expense |
(315 |
) |
|
(299 |
) |
| |
|
|
|
| Loss before income taxes |
(1,290 |
) |
|
(852 |
) |
| Income tax (expense) benefit |
(786 |
) |
|
12,461 |
|
| Net (loss) income |
$ |
(2,076 |
) |
|
$ |
11,609 |
|
| |
|
|
|
| Net (loss) income per share: |
|
|
|
| Basic |
$ |
(0.10 |
) |
|
$ |
0.60 |
|
| Diluted |
$ |
(0.10 |
) |
|
$ |
0.58 |
|
| Dividends declared per common share |
$ |
0.05 |
|
|
$ |
0.05 |
|
| |
|
|
|
| Weighted average shares outstanding – basic |
19,933 |
|
|
19,448 |
|
| Weighted average shares outstanding – diluted |
19,933 |
|
|
19,943 |
|
| Digirad Corporation |
| Condensed Consolidated Balance
Sheets |
| (Unaudited) |
| |
| (in
thousands) |
March 31,
2017 |
|
December
31, 2016 |
| Assets: |
|
|
|
| Current assets: |
|
|
|
| Cash and cash equivalents |
$ |
1,913 |
|
|
$ |
2,203 |
|
| Securities available-for-sale |
17 |
|
|
917 |
|
| Accounts receivable, net |
13,633 |
|
|
14,503 |
|
| Inventories, net |
5,942 |
|
|
5,987 |
|
| Restricted cash |
3,283 |
|
|
1,376 |
|
| Other current assets |
1,771 |
|
|
2,093 |
|
| Total current assets |
26,559 |
|
|
27,079 |
|
| Property and equipment, net |
31,250 |
|
|
31,407 |
|
| Intangible assets, net |
11,050 |
|
|
11,628 |
|
| Goodwill |
6,237 |
|
|
6,237 |
|
| Deferred tax assets |
26,831 |
|
|
27,019 |
|
| Restricted cash |
100 |
|
|
2,100 |
|
| Other assets |
799 |
|
|
793 |
|
| Total assets |
$ |
102,826 |
|
|
$ |
106,263 |
|
| |
|
|
|
| Liabilities: |
|
|
|
| Current liabilities: |
|
|
|
| Accounts payable |
$ |
6,110 |
|
|
$ |
6,514 |
|
| Accrued compensation |
3,920 |
|
|
3,962 |
|
| Accrued warranty |
170 |
|
|
196 |
|
| Deferred revenue |
3,314 |
|
|
3,123 |
|
| Current portion of long-term debt |
5,358 |
|
|
5,358 |
|
| Other current liabilities |
3,070 |
|
|
3,520 |
|
| Total current liabilities |
21,942 |
|
|
22,673 |
|
| Long-term debt, net of current portion |
14,793 |
|
|
16,070 |
|
| Other liabilities |
2,036 |
|
|
1,039 |
|
| Total liabilities |
38,771 |
|
|
39,782 |
|
| |
|
|
|
| Stockholders’ equity: |
|
|
|
| Preferred stock, $0.0001 par value: 10,000,000
shares authorized; no shares issued or outstanding |
— |
|
|
— |
|
| Common stock, $0.0001 par value: 80,000,000 shares
authorized; 19,977,984 and 19,892,557 shares issued and outstanding (net of treasury shares) at March 31, 2017 and
December 31, 2016, respectively |
2 |
|
|
2 |
|
| Treasury stock, at cost; 2,588,484 shares at March
31, 2017 and December 31, 2016 |
(5,728 |
) |
|
(5,728 |
) |
| Additional paid-in capital |
150,773 |
|
|
151,696 |
|
| Accumulated other comprehensive loss |
(14 |
) |
|
(52 |
) |
| Accumulated deficit |
(80,978 |
) |
|
(79,437 |
) |
| Total stockholders’ equity |
64,055 |
|
|
66,481 |
|
| Total liabilities and stockholders’ equity |
$ |
102,826 |
|
|
$ |
106,263 |
|
| Digirad Corporation |
| Reconciliation of Non-GAAP Financial
Measures |
| (Unaudited) |
| |
| |
|
|
Three Months Ended March
31, |
| (in thousands, except per share amounts) |
|
2017 |
|
2016 |
| |
|
|
|
|
|
| Net (loss) income |
|
$ |
(2,076 |
) |
|
$ |
11,609 |
|
| |
Acquired intangible amortization |
|
578 |
|
|
577 |
|
| |
Acquisition related contingent consideration valuation
adjustment(1) |
|
(57 |
) |
|
— |
|
| |
Transaction and integration costs of DMS Health Technologies(2) |
|
— |
|
|
1,450 |
|
| |
Income tax items(3) |
|
1,348 |
|
|
(12,333 |
) |
| Non-GAAP Adjusted net (loss) income |
|
$ |
(207 |
) |
|
$ |
1,303 |
|
| |
|
|
|
|
|
| Net (loss) income per share -
diluted(4) |
|
$ |
(0.10 |
) |
|
$ |
0.58 |
|
| |
Acquired intangible amortization |
|
0.03 |
|
|
0.03 |
|
| |
Acquisition related contingent consideration valuation
adjustment(1) |
|
— |
|
|
— |
|
| |
Transaction and integration costs of DMS Health Technologies(2) |
|
— |
|
|
0.07 |
|
| |
Income tax items(3) |
|
0.07 |
|
|
(0.62 |
) |
| Non-GAAP Adjusted net (loss) income per share -
diluted(4) |
|
$ |
(0.01 |
) |
|
$ |
0.07 |
|
| |
|
|
|
|
|
| |
|
|
Three Months Ended March
31, |
| (in thousands) |
|
2017 |
|
2016 |
| |
|
|
|
|
|
| Net (loss) income |
|
$ |
(2,076 |
) |
|
$ |
11,609 |
|
| |
Acquisition related contingent consideration valuation
adjustment(1) |
|
(57 |
) |
|
— |
|
| |
Transaction and integration costs of DMS Health Technologies(2) |
|
— |
|
|
1,450 |
|
| |
Depreciation and amortization |
|
2,579 |
|
|
2,465 |
|
| |
Stock-based compensation |
|
263 |
|
|
223 |
|
| |
Interest income |
|
(1 |
) |
|
(5 |
) |
| |
Interest expense |
|
316 |
|
|
375 |
|
| |
Income tax expense (benefit) |
|
786 |
|
|
(12,461 |
) |
| Non-GAAP Adjusted EBITDA |
|
$ |
1,810 |
|
|
$ |
3,656 |
|
| |
|
|
|
|
|
(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.
(3) Reflects income tax effect for adjusted financial data and acquisition related income tax adjustments, and
adjustment to 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.
| |
|
| |
Three Months Ended March 31, |
| (in
thousands) |
2017 |
|
2016 |
| Net cash provided by operating activities |
$ |
1,924 |
|
|
$ |
736 |
|
| Purchases of property and equipment |
(492 |
) |
|
(1,016 |
) |
| Free cash flow |
$ |
1,432 |
|
|
$ |
(280 |
) |
| Digirad Corporation |
| Reconciliation of Non-GAAP Financial
Measures |
| (Unaudited) |
| |
| |
|
|
Three Months Ended |
| (in thousands, except per share amounts) |
|
March 31, 2016 |
|
June 30, 2016 |
|
September 30, 2016 |
|
December 31, 2016 |
|
March 31, 2017 |
| |
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
11,609 |
|
|
$ |
998 |
|
|
$ |
(283 |
) |
|
$ |
1,978 |
|
|
$ |
(2,076 |
) |
| |
Acquired intangible amortization |
|
577 |
|
|
578 |
|
|
578 |
|
|
578 |
|
|
578 |
|
| |
Acquisition related contingent consideration valuation
adjustment(1) |
|
— |
|
|
(3 |
) |
|
(5 |
) |
|
(56 |
) |
|
(57 |
) |
| |
Investment impairment loss(2) |
|
— |
|
|
— |
|
|
414 |
|
|
— |
|
|
— |
|
| |
Transaction and integration costs of DMS Health Technologies(3) |
|
1,450 |
|
|
171 |
|
|
127 |
|
|
173 |
|
|
— |
|
| |
Goodwill impairment |
|
— |
|
|
— |
|
|
— |
|
|
338 |
|
|
— |
|
| |
Income tax items(4) |
|
(12,333 |
) |
|
67 |
|
|
170 |
|
|
25 |
|
|
1,348 |
|
| Non-GAAP Adjusted net income (loss) |
|
$ |
1,303 |
|
|
$ |
1,811 |
|
|
$ |
1,001 |
|
|
$ |
3,036 |
|
|
$ |
(207 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) per share -
diluted(5) |
|
$ |
0.58 |
|
|
$ |
0.05 |
|
|
$ |
(0.01 |
) |
|
$ |
0.10 |
|
|
$ |
(0.10 |
) |
| |
Acquired intangible amortization |
|
0.03 |
|
|
0.03 |
|
|
0.03 |
|
|
0.03 |
|
|
0.03 |
|
| |
Acquisition related contingent consideration valuation
adjustment(1) |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| |
Investment impairment loss(2) |
|
— |
|
|
— |
|
|
0.02 |
|
|
— |
|
|
— |
|
| |
Transaction and integration costs of DMS Health Technologies(3) |
|
0.07 |
|
|
0.01 |
|
|
0.01 |
|
|
0.01 |
|
|
— |
|
| |
Goodwill impairment |
|
— |
|
|
— |
|
|
— |
|
|
0.02 |
|
|
— |
|
| |
Income tax items(4) |
|
(0.62 |
) |
|
— |
|
|
0.01 |
|
|
— |
|
|
0.07 |
|
| Non-GAAP Adjusted net income (loss) per share -
diluted(5) |
|
$ |
0.07 |
|
|
$ |
0.09 |
|
|
$ |
0.05 |
|
|
$ |
0.15 |
|
|
$ |
(0.01 |
) |
| |
|
|
|
|
|
|
|
|
|
|
|
| |
|
|
Three Months Ended |
| (in thousands) |
|
March 31, 2016 |
|
June 30, 2016 |
|
September 30, 2016 |
|
December 31, 2016 |
|
March 31, 2017 |
| |
|
|
|
|
|
|
|
|
|
|
|
| Net income (loss) |
|
$ |
11,609 |
|
|
$ |
998 |
|
|
$ |
(283 |
) |
|
$ |
1,978 |
|
|
$ |
(2,076 |
) |
| |
Acquisition related contingent consideration valuation
adjustment(1) |
|
— |
|
|
(3 |
) |
|
(5 |
) |
|
(56 |
) |
|
(57 |
) |
| |
Investment impairment loss(2) |
|
— |
|
|
— |
|
|
414 |
|
|
— |
|
|
— |
|
| |
Transaction and integration costs of DMS Health Technologies(3) |
|
1,450 |
|
|
171 |
|
|
127 |
|
|
173 |
|
|
— |
|
| |
Goodwill impairment |
|
— |
|
|
— |
|
|
— |
|
|
338 |
|
|
— |
|
| |
Depreciation and amortization |
|
2,465 |
|
|
2,383 |
|
|
2,489 |
|
|
2,552 |
|
|
2,579 |
|
| |
Stock-based compensation |
|
223 |
|
|
257 |
|
|
274 |
|
|
270 |
|
|
263 |
|
| |
Interest income |
|
(5 |
) |
|
(4 |
) |
|
(3 |
) |
|
(2 |
) |
|
(1 |
) |
| |
Interest expense |
|
375 |
|
|
383 |
|
|
345 |
|
|
322 |
|
|
316 |
|
| |
Income tax (benefit) expense |
|
(12,461 |
) |
|
37 |
|
|
202 |
|
|
(194 |
) |
|
786 |
|
| Non-GAAP Adjusted EBITDA |
|
$ |
3,656 |
|
|
$ |
4,222 |
|
|
$ |
3,560 |
|
|
$ |
5,381 |
|
|
$ |
1,810 |
|
| |
|
|
|
|
|
|
|
|
|
|
|
(1) Reflects fair value adjustment to estimate of contingent consideration related to
acquisitions.
(2) Reflects impairment losses related to investment in Perma-Fix Medical. Amounts consist of impairment
of a Supply Agreement entered into between the two parties, a loss related to the initial excess of the transaction price over fair
value and a write-down of the investment to its fair market value that was considered other than temporary.
(3) Reflects diligence, transaction, and integration costs related to the acquisition of DMS Health
Technologies.
(4) Reflects income tax effect for adjusted financial data and acquisition related income tax adjustments, and
adjustment to 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.
| |
| Digirad Corporation |
| Supplemental Debt Information |
| (Unaudited) |
| |
| The following table reflects outstanding principal balances and
interest rates under the Company's credit facility at March 31, 2017 and December 31, 2016: |
| |
| |
March 31, 2017 |
|
December 31, 2016 |
| (in
thousands) |
Balance |
Interest Rate |
|
Balance |
Interest Rate |
| Term A(1) |
$ |
16,668 |
|
3.33 |
% |
|
$ |
17,382 |
|
3.15 |
% |
| Term B(2) |
3,956 |
|
5.83 |
% |
|
4,581 |
|
5.65 |
% |
| Revolver |
— |
|
2.81 |
% |
|
— |
|
2.69 |
% |
| Total borrowing |
$ |
20,624 |
|
|
|
$ |
21,963 |
|
|
| |
(1) Term A amortizes over a 7-year period with scheduled amortization ending in January
2021, with the remaining amount due in a balloon payment.
(2) Term B amortizes over a 3-year period with scheduled amortization ending in January 2019. Through March 31,
2017, the Company has made three extra payments in the same amount as the scheduled payments.
| |
| Digirad Corporation |
| Supplemental Segment Information |
| (Unaudited) |
| |
| |
Three Months Ended March
31, |
| (in
thousands) |
2017 |
|
2016 (2) |
| Revenue by segment: |
|
|
|
| Diagnostic Services |
$ |
12,202 |
|
|
$ |
12,012 |
|
| Diagnostic Imaging |
2,782 |
|
|
3,582 |
|
| Mobile Healthcare |
10,672 |
|
|
11,993 |
|
| Medical Device Sales and Service |
3,424 |
|
|
3,570 |
|
| Condensed consolidated revenue |
$ |
29,080 |
|
|
$ |
31,157 |
|
| Gross profit by segment: |
|
|
|
| Diagnostic Services |
$ |
2,836 |
|
|
$ |
2,548 |
|
| Diagnostic Imaging |
1,127 |
|
|
1,715 |
|
| Mobile Healthcare |
1,583 |
|
|
2,951 |
|
| Medical Device Sales and Service |
1,561 |
|
|
1,851 |
|
| Condensed consolidated gross profit |
$ |
7,107 |
|
|
$ |
9,065 |
|
| Income (loss) from operations by segment: |
|
|
|
| Diagnostic Services |
$ |
336 |
|
|
$ |
(19 |
) |
| Diagnostic Imaging |
(202 |
) |
|
381 |
|
| Mobile Healthcare |
(814 |
) |
|
422 |
|
| Medical Device Sales and Service |
(295 |
) |
|
113 |
|
| Segment (loss) income from operations |
(975 |
) |
|
897 |
|
| Unallocated items (1) |
— |
|
|
(1,450 |
) |
| Condensed consolidated loss from operations |
$ |
(975 |
) |
|
$ |
(553 |
) |
| |
(1) Includes transaction and integration costs associated with the DMS Health acquisition.
(2) Segment information has been reclassified to conform to the current year presentation.
For more information contact: Jeff Keyes Chief Financial Officer 858-726-1600 ir@digirad.com
