Digirad Corporation (Digirad) has reported total revenues of $80.4 million for the full year of 2008, compared with the total revenues of $73.9 million in the previous year-end. It has also reported net loss of $6.9 million, or $0.36 per share, for the full year of 2008, compared with the net loss of $1.4 million, or $0.07 per share, in the previous year-end.
Digirad chief executive officer Todd Clyde said that steps taken in 2008 allowed the company’s product division to achieve profitability in the quarter and for the full year. The focus is now on reshaping a more powerful DIS core footprint from which we will further penetrate our markets and expand our Centers of Influence locations, which pair leading academic institutions with physicians in those communities.
“Progress toward consistent profitability and positive cash flow are the priority at Digirad today,” Clyde said. “Achieving that stable financial and operating platform allows us to make investments to drive product evolution, establish new service initiatives, increase market share, and ultimately make growth possible in 2010 and beyond.”
Fourth-quarter Highlights:
Total revenue rose to a record $22.0 million, compared to $18.8 million in fourth-quarter 2007. Product sales grew to $7.8 million from $5.4 million in fourth-quarter 2007, and DIS revenues increased to $14.2 million from $13.4 million in fourth-quarter 2007.
Gross profit was $6.3 million, or 29 percent of revenue, compared to $4.5 million, or 24 percent, in fourth-quarter 2007.
Net loss was $3.4 million, or $(0.18) per share, including $3.8 million in restructuring charges and goodwill impairment that are not expected to recur in coming periods, compared to net loss of $1.1 million, or $(0.06) per share, in fourth-quarter 2007.
Cash and cash equivalents and securities available-for-sale totaled $28.3 million, or $1.50 per share, on December 31, 2008. Cash and cash equivalents and securities available-for-sale were $31.7 million on December 31, 2007 and $25.6 million on September 30, 2008. The increase during the 2008 fourth quarter resulted primarily from strong camera sales coupled with consistent cash collections of accounts receivables in both the product business and the personnel and equipment leasing services business.
DIS asset utilization was 56 percent on 160 systems (nuclear and ultrasound), compared to 61 percent on 136 systems (nuclear and ultrasound) during fourth-quarter 2007.
Full year 2008 summary:
Product sales were $24.2 million, compared to $21.5 million for 2007, and DIS revenues were $56.2 million compared to $52.4 million for 2007.
Gross profit was $20.1 million, or 25 percent of revenue, compared to $20.5 million, or 28 percent, for 2007. The decline in gross margin was largely the result of costs related to initiatives to reduce turnover of mobile imaging services personnel and upgrading the Company’s fleet of mobile imaging systems.
The increase in net loss reflected costs associated with the restructuring and goodwill impairment charge and lower gross margins in the first three quarters of 2008 and lower interest income, compared to 2007.
Clyde continued, “The financial and operational performance in the fourth quarter was a strong indication that a leaner Digirad organization is adopting the changes necessary to move the company forward and generate greater value for our customers and shareholders.”
Corporate Goals in 2009
Creating greater efficiency as we sell or close additional underperforming hub operations;
Continually improving our approach to launching and growing Centers of Influence;
Introducing new imaging technologies during the year;
Moving forward with the development of a longer-term technology platform designed to attract new customer segments and take market share from our competitors; and,
Progressing toward consistent profitability and positive cash flow.
Share Buyback approved
The company also announced that its board of directors has authorized a stock buyback program to repurchase up to an aggregate of $2 million of its issued and outstanding common shares. Digirad had approximately 19 million shares outstanding as of December 31, 2008. At current valuations, this repurchase plan would authorize the buyback of approximately 2.1 million shares, or approximately 11 percent of the company’s outstanding shares.
Chairman of the Digirad board of directors R. King Nelson said, “The board believes the Company’s direction and goals towards generating positive cash flow and earnings coupled with an undervalued stock price present a unique investment opportunity. We are confident this will provide a solid return to our shareholders.”
The timing of stock repurchases and the number of shares of common stock to be repurchased will be made in compliance with Rule 10b-18 under the Securities Exchange Act of 1934. The timing and extent of the repurchase will depend upon market conditions, applicable legal and contractual requirements, and other factors.