- Year over year quarterly revenue and adjusted EBITDA growth of 10% and 44% respectively
- Year over year full year revenue and adjusted EBITDA growth of 9% and 31% respectively
- Exceeded the high end of the 2015 financial guidance for adjusted EBITDA and adjusted EPS
- Provides an update on the DMS Health Technologies acquisition
- Releases financial guidance for 2016
- Company continues to pay regular quarterly cash dividend of $0.05 per share
SUWANEE, Ga., Feb. 26, 2016 (GLOBE NEWSWIRE) -- Digirad Corporation (Nasdaq:DRAD) today reported its financial results for the fourth quarter and twelve months ended December 31, 2015.
Total revenues for the 2015 fourth quarter were $15.6 million, an increase of 10 percent compared to the prior year’s fourth quarter revenues of $14.1 million.
Adjusted net income for the 2015 fourth quarter was $1.3 million, or $0.07 per diluted share, compared to $0.9 million, or $0.05 per diluted share in the prior year fourth quarter. Adjusted EBITDA for the 2015 fourth quarter was $2.1 million, compared to $1.5 million in the prior year fourth quarter.
Total revenues for the full year 2015 were $60.8 million, an increase of 9 percent compared to 2014 revenue of $55.6 million.
Adjusted net income for the full year 2015 was $4.5 million, or $0.23 per diluted share, compared to adjusted net income of $3.5 million, or $0.18 per diluted share in 2014. Adjusted EBITDA for the full year 2015 was $7.2 million, compared to $5.5 million in 2014.
A reconciliation of adjusted net income, adjusted net income per diluted share, and adjusted EBITDA is provided later in this release.
Digirad President and CEO Matt Molchan said, “I am very pleased with our performance this quarter and also for the full year 2015 as we close out the most profitable year in Digirad’s history. All our businesses continue to perform well, and we expect to continue this momentum into 2016. Further, we ended solidly above our guidance range on both adjusted EBITDA and adjusted EPS.”
Molchan continued, “We are also very excited about our recent acquisition of DMS Health Technologies, which offers mobile healthcare solutions, as well as medical equipment sales and services, mainly serving the Upper Midwest region of the United States, which closed on January 1, 2016. Getting this deal closed was a tremendous effort by many individuals at both Companies, for which I am very thankful. We now are moving forward with our integration efforts, which have been ongoing since the closing and mainly involve harmonizing back office operations. This transaction is truly transformational for Digirad, doubling our operational footprint, and for 2016, effectively doubling our estimated revenues and more than doubling our estimated adjusted EBITDA. We are very excited and are looking forward to future opportunities of the combined companies as we move into 2016.”
The Company also announced the DMS Health Technologies operational and financial performance will be included in overall Digirad results effective January 1, 2016, with the first published financial results being included in the Company’s first quarter 2016 earnings release.
2016 Financial Guidance
For fiscal year 2016, the Company expects to generate revenues between $125 million and $130 million and non-GAAP adjusted EBITDA between $17 million and $18 million. This financial guidance includes the result of DMS Health Technologies effective January 1, 2016.
Conference Call Information
A conference call is scheduled for 10:00 a.m. EST on February 26, 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 in this release unaudited adjusted financial information, which presents the Company's results of operations after excluding restructuring charges, acquired intangible asset amortization, acquisition related contingent consideration valuation 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 February 26, 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 health care solutions and medical equipment and services, including diagnostic imaging and patient monitoring, provides hospitals, physician practices, and imaging centers throughout 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 close and execute on 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) | 2015 | 2014 | 2015 | 2014 | |||||||||||
| Revenues: | |||||||||||||||
| Diagnostic Services | $ | 11,683 | $ | 10,454 | $ | 46,407 | $ | 42,170 | |||||||
| Diagnostic Imaging | 3,895 | 3,689 | 14,419 | 13,438 | |||||||||||
| Total revenues | 15,578 | 14,143 | 60,826 | 55,608 | |||||||||||
| Cost of revenues: | |||||||||||||||
| Diagnostic Services | 9,048 | 7,920 | 35,968 | 31,721 | |||||||||||
| Diagnostic Imaging | 1,838 | 1,939 | 6,949 | 7,247 | |||||||||||
| Total cost of revenues | 10,886 | 9,859 | 42,917 | 38,968 | |||||||||||
| Gross profit | 4,692 | 4,284 | 17,909 | 16,640 | |||||||||||
| Total gross profit percentage | 30.1 | % | 30.3 | % | 29.4 | % | 29.9 | % | |||||||
| Diagnostic Services gross profit percentage | 22.6 | % | 24.2 | % | 22.5 | % | 24.8 | % | |||||||
| Diagnostic Imaging gross profit percentage | 52.8 | % | 47.4 | % | 51.8 | % | 46.1 | % | |||||||
| Operating expenses: | |||||||||||||||
| Marketing and sales | 1,051 | 1,233 | 4,741 | 4,730 | |||||||||||
| General and administrative | 3,009 | 2,109 | 9,888 | 8,344 | |||||||||||
| Amortization of intangible assets | 134 | 93 | 506 | 356 | |||||||||||
| Restructuring charges | — | 33 | — | 692 | |||||||||||
| Total operating expenses | 4,194 | 3,468 | 15,135 | 14,122 | |||||||||||
| Income from operations | 498 | 816 | 2,774 | 2,518 | |||||||||||
| Other income (expense): | |||||||||||||||
| Interest and other income, net | 7 | 12 | 39 | 58 | |||||||||||
| Interest and other expense, net | (252 | ) | (12 | ) | (296 | ) | (39 | ) | |||||||
| Total other income (expense) | (245 | ) | — | (257 | ) | 19 | |||||||||
| Income before income taxes | 253 | 816 | 2,517 | 2,537 | |||||||||||
| Income tax benefit (expense) | 425 | (44 | ) | 19,123 | (62 | ) | |||||||||
| Net income | $ | 678 | $ | 772 | $ | 21,640 | $ | 2,475 | |||||||
| Net income per share: | |||||||||||||||
| Basic | $ | 0.03 | $ | 0.04 | $ | 1.13 | $ | 0.13 | |||||||
| Diluted | $ | 0.03 | $ | 0.04 | $ | 1.10 | $ | 0.13 | |||||||
| Dividends declared per common share | $ | 0.05 | $ | 0.05 | $ | 0.20 | $ | 0.20 | |||||||
| Weighted average shares outstanding – basic | 19,404 | 18,609 | 19,210 | 18,571 | |||||||||||
| Weighted average shares outstanding – diluted | 19,933 | 18,979 | 19,690 | 18,878 | |||||||||||
| Digirad Corporation | |||||||
| Condensed Consolidated Balance Sheets | |||||||
| (Unaudited) | |||||||
| (in thousands, except share data) | December 31, 2015 | December 31, 2014 | |||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 15,868 | $ | 14,051 | |||
| Securities available-for-sale | 3,227 | 7,935 | |||||
| Accounts receivable, net | 7,274 | 5,989 | |||||
| Inventories, net | 4,381 | 3,644 | |||||
| Other current assets | 764 | 856 | |||||
| Restricted cash | 233 | 477 | |||||
| Total current assets | 31,747 | 32,952 | |||||
| Property and equipment, net | 6,252 | 4,766 | |||||
| Intangible assets, net | 3,079 | 2,577 | |||||
| Goodwill | 2,897 | 1,337 | |||||
| Long-term deferred tax assets | 18,578 | — | |||||
| Other assets | 1,560 | 269 | |||||
| Total assets | $ | 64,113 | $ | 41,901 | |||
| Liabilities and stockholders’ equity | |||||||
| Accounts payable | $ | 1,369 | $ | 1,423 | |||
| Accrued compensation | 2,453 | 3,261 | |||||
| Accrued warranty | 213 | 176 | |||||
| Deferred revenue | 1,673 | 1,644 | |||||
| Other current liabilities | 2,998 | 1,789 | |||||
| Total current liabilities | 8,706 | 8,293 | |||||
| Other liabilities | 1,252 | 963 | |||||
| Total liabilities | 9,958 | 9,256 | |||||
| Stockholders’ equity: | |||||||
| Preferred stock | — | — | |||||
| Common stock | 2 | 2 | |||||
| Treasury stock | (5,728 | ) | (5,728 | ) | |||
| Additional paid-in capital | 153,860 | 153,769 | |||||
| Accumulated other comprehensive loss | (240 | ) | (19 | ) | |||
| Accumulated deficit | (93,739 | ) | (115,379 | ) | |||
| Total stockholders’ equity | 54,155 | 32,645 | |||||
| Total liabilities and stockholders’ equity | $ | 64,113 | $ | 41,901 | |||
| 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) | 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net income | $ | 678 | $ | 772 | $ | 21,640 | $ | 2,475 | |||||||||
| Restructuring charges(1) | — | 33 | — | 692 | |||||||||||||
| Acquired intangible amortization | 131 | 90 | 496 | 346 | |||||||||||||
| Acquisition related contingent consideration valuation adjustment(2) | 113 | — | (60 | ) | — | ||||||||||||
| Investment impairment loss(6) | 278 | — | 278 | — | |||||||||||||
| Transaction and integration costs of DMS Health Technologies(3) | 595 | — | 1,338 | — | |||||||||||||
| Income tax items(4) | (446 | ) | (3 | ) | (19,145 | ) | (26 | ) | |||||||||
| Non-GAAP Adjusted net income | $ | 1,349 | $ | 892 | $ | 4,547 | $ | 3,487 | |||||||||
| Net income per share - diluted | 0.03 | 0.04 | 1.10 | 0.13 | |||||||||||||
| Restructuring charges(1)(5) | — | — | — | 0.04 | |||||||||||||
| Acquired intangible amortization(5) | 0.01 | — | 0.03 | 0.02 | |||||||||||||
| Acquisition related contingent consideration adjustment(2)(5) | 0.01 | — | — | — | |||||||||||||
| Investment impairment loss(5)(6) | 0.01 | — | 0.01 | — | |||||||||||||
| Transaction and integration costs of DMS Health Technologies(5) | 0.03 | — | 0.07 | — | |||||||||||||
| Income tax items(4)(5) | (0.02 | ) | — | (0.97 | ) | — | |||||||||||
| Non-GAAP Adjusted net income per share - diluted(5) | $ | 0.07 | $ | 0.05 | $ | 0.23 | $ | 0.18 | |||||||||
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||
| (in thousands) | 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net income | $ | 678 | $ | 772 | $ | 21,640 | $ | 2,475 | |||||||||
| Restructuring charges(1) | — | 33 | — | 692 | |||||||||||||
| Acquisition related contingent consideration valuation adjustment(2) | 113 | — | (60 | ) | — | ||||||||||||
| Investment impairment loss(6) | 278 | — | 278 | — | |||||||||||||
| Transaction and integration costs of DMS Health Technologies(3) | 595 | — | 1,338 | — | |||||||||||||
| Depreciation and amortization | 690 | 494 | 2,441 | 1,929 | |||||||||||||
| Stock-based compensation | 166 | 119 | 616 | 326 | |||||||||||||
| Interest and other income, net | (7 | ) | (12 | ) | (39 | ) | (58 | ) | |||||||||
| Interest expense | 19 | 12 | 63 | 39 | |||||||||||||
| Income tax expense (benefit) | (425 | ) | 44 | (19,123 | ) | 62 | |||||||||||
| Non-GAAP Adjusted EBITDA | $ | 2,107 | $ | 1,462 | $ | 7,154 | $ | 5,465 | |||||||||
(1) Reflects nonrecurring charges primarily related to the lease termination of the Poway, CA facility.
(2) Reflects fair value adjustment to estimate of contingent consideration related to acquisitions.
(3) Reflects diligence, transaction, and integration costs related to the acquisition of DMS Health Technologies. Twelve months ended December 31, 2015 has been reclassified from previously reported amounts to reflect this adjustment.
(4) Reflects income tax effect for adjusted financial data, acquisition related income tax adjustments, and release of previously reserved net operating loss carry forwards.
(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.
(6) 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.
| Digirad Corporation | |||||||||||||||||||||
| Reconciliation of Non-GAAP Financial Measures | |||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||
| (in thousands, except per share amounts) | December 31, 2014 | March 31, 2015 | June 30, 2015 | September 30, 2015 | December 31, 2015 | ||||||||||||||||
| Net income | 772 | 745 | $ | 1,097 | $ | 19,120 | $ | 678 | |||||||||||||
| Restructuring charges(1) | 33 | — | — | — | — | ||||||||||||||||
| Acquired intangible amortization | 90 | 103 | 130 | 131 | 131 | ||||||||||||||||
| Acquisition related contingent consideration valuation adjustment(2) | — | — | (173 | ) | — | 113 | |||||||||||||||
| Investment impairment loss(6) | — | — | — | — | 278 | ||||||||||||||||
| Transaction and integration costs of DMS Health Technologies(3) | — | 25 | 283 | 435 | 595 | ||||||||||||||||
| Income tax items(4) | (3 | ) | (587 | ) | 51 | (18,163 | ) | (446 | ) | ||||||||||||
| Non-GAAP Adjusted net income | $ | 892 | $ | 286 | $ | 1,388 | $ | 1,523 | $ | 1,349 | |||||||||||
| Net income per share - diluted(5) | 0.04 | 0.04 | $ | 0.06 | 0.97 | 0.03 | |||||||||||||||
| Restructuring charges(1)(5) | — | — | — | — | — | ||||||||||||||||
| Acquired intangible amortization(5) | — | 0.01 | 0.01 | 0.01 | 0.01 | ||||||||||||||||
| Acquisition related contingent consideration valuation adjustment(2)(5) | — | — | (0.01 | ) | — | 0.01 | |||||||||||||||
| Investment impairment loss(5)(6) | — | — | — | — | 0.01 | ||||||||||||||||
| Transaction and integration costs of DMS Health Technologies(5) | — | — | 0.01 | 0.02 | 0.03 | ||||||||||||||||
| Income tax items(4)(5) | — | (0.03 | ) | — | (0.92 | ) | (0.02 | ) | |||||||||||||
| Non-GAAP Adjusted net income per share - diluted(5) | $ | 0.05 | $ | 0.02 | $ | 0.07 | $ | 0.08 | $ | 0.07 | |||||||||||
| Three Months Ended | |||||||||||||||||||||
| (in thousands) | December 31, 2014 | March 31, 2015 | June 30, 2015 | September 30, 2015 | December 31, 2015 | ||||||||||||||||
| Net income | $ | 772 | $ | 745 | $ | 1,097 | $ | 19,120 | $ | 678 | |||||||||||
| Restructuring charges(1) | 33 | — | — | — | — | ||||||||||||||||
| Acquisition related contingent consideration valuation adjustment(2) | — | — | (173 | ) | — | 113 | |||||||||||||||
| Investment impairment loss(6) | — | — | — | — | 278 | ||||||||||||||||
| Transaction and integration costs of DMS Health Technologies(3) | — | 25 | 283 | 435 | 595 | ||||||||||||||||
| Depreciation and amortization | 494 | 488 | 598 | 665 | 690 | ||||||||||||||||
| Stock-based compensation | 119 | 144 | 141 | 165 | 166 | ||||||||||||||||
| Interest and other income, net | (12 | ) | (11 | ) | (11 | ) | (10 | ) | (7 | ) | |||||||||||
| Interest expense | 12 | 11 | 12 | 21 | 19 | ||||||||||||||||
| Income tax expense (benefit) | 44 | (580 | ) | 65 | (18,183 | ) | (425 | ) | |||||||||||||
| Non-GAAP Adjusted EBITDA | $ | 1,462 | $ | 822 | $ | 2,012 | $ | 2,213 | $ | 2,107 | |||||||||||
(1) Reflects nonrecurring charges primarily related to the lease termination of the Poway, CA facility.
(2) Reflects fair value adjustment to estimate of contingent consideration related to acquisitions.
(3) Reflects diligence, transaction, and integration costs related to the acquisition of DMS Health Technologies. The three months ended March 31, 2015 and June 30, 2015 has been reclassified from previously reported amounts to reflect this adjustment.
(4) Reflects income tax effect for adjusted financial data, acquisition related income tax adjustments, and release of previously reserved net operating loss carry forwards.
(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.
(6) 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.