KBS, a Subsidiary of Digirad Corporation, Announces Signing of Phase 1 of $5.2 Million Contract to Manufacture Multi-Family Housing Units for U.S. Army

Poway, California, UNITED STATES

SUWANEE, Ga., June 09, 2020 (GLOBE NEWSWIRE) -- Digirad Corporation (Nasdaq: DRAD; DRADP) (“Digirad” or the “Company”), a diversified holding company with three operating divisions: Healthcare, Building & Construction, and Real Estate & Investments, announced today that KBS Builders, Inc. (“KBS”) has signed a contract for the first phase of what is anticipated to become a $5.2 million project with Tocci Building Corporation (“Tocci”), a Massachusetts-based general contractor and construction management company.  KBS is the Maine-based modular building manufacturing business of the Company’s Building & Construction division.  Tocci is a regional leader in commercial-scale modular construction and previously built the largest-ever modular multifamily development in the Boston metropolitan area, a project that totaled of 125 living units constructed with 128 building modules.  

For phases 1 and 2, KBS’s partnership with Tocci on this new project is anticipated to result in the production of approximately 98 building modules for the modular construction of 22 single-family and townhouse units for the U.S. Army Natick Soldier Systems Center in Natick, MA.   Phase 1 of manufacturing (14 building modules) is scheduled to commence this month, and phase 2 (84 building modules) is expected to commence in July 2020.  In addition, the federal government may exercise its option on a 3rd phase, which could provide the opportunity to increase the total project size by an additional 26 building modules and 6 living units, bringing the total potential project revenue for KBS to $6.7 million.  Deliveries to Tocci for phases 1 and 2 are expected to be completed before the end of 2020.

These modular units will be manufactured at KBS’s plant in South Paris, ME.  At full capacity, this plant can produce between 500 and 600 building modules per year.   The Company will continue to evaluate the possibility of opening a second idle modular factory located a short distance away in Oxford, ME.  The decision to re-open this similar-sized second manufacturing facility will depend on KBS’s success in growing its backlog as it executes on its strategy to expand further into the commercial-scale multi-family market, predominantly in the Greater Boston area.  In May 2020, Digirad executed a public equity offering to fund the increased working capital needs associated with this growth, among other things, which raised $5.0 million in gross proceeds (before fees and expenses).

Jeff Eberwein, Digirad’s Chairman noted, “We are thrilled to be working on this project with Tocci, a company with extensive experience in the construction of modular buildings, including ‘Graphic,’ the largest modular housing project in Boston to date.  This contract marks KBS’s re-entry into the commercial construction market, which brings a significant growth opportunity to the Company.  In addition to the project announced today, KBS is currently involved in multiple discussions for various large commercial construction projects for the New England market and we expect some of these projects to start construction later this year.  KBS’s potential sales pipeline currently totals more than $50 million, representing potential future production of approximately 1,000 building modules.”

About Digirad Corporation
Digirad Corporation is a diversified holding company with three operating divisions: Healthcare, Building & Construction, and Real Estate & Investments.

Healthcare Division (Digirad Health)
Digirad Health designs, manufactures, and distributes diagnostic medical imaging products and services.  Digirad Health operates in three businesses:  Diagnostic Imaging, Diagnostic Services, and Mobile Healthcare.  The Diagnostic Imaging business designs, manufactures, and sells proprietary solid-state gamma cameras.  It also services the installed base of these proprietary cameras.  The Diagnostic Services business offers imaging and monitoring services to healthcare providers as an alternative to purchasing equipment or outsourcing procedures.  The Mobile Healthcare business provides contract diagnostic imaging, including computerized tomography (“CT”), magnetic resonance imaging (“MRI”), positron emission tomography (“PET”), PET/CT, and nuclear medicine and healthcare expertise through a convenient, mobile service.

Building & Construction Division (ATRM)
ATRM Holdings, Inc. (“ATRM”) manufactures modular housing units for commercial and residential real estate projects. ATRM operates in two businesses: (i) modular building manufacturing and (ii) structural wall panel and wood foundation manufacturing, including building supply retail operations. The modular building manufacturing business is operated by KBS Builders, Inc. (“KBS”), the structural wall panel and wood foundation manufacturing segment is operated by EdgeBuilder, Inc. (“EdgeBuilder”), and the retail building supplies are sold through Glenbrook Building Supply, Inc. (“Glenbrook”).  KBS, EdgeBuilder, and Glenbrook are wholly-owned subsidiaries of ATRM, which is a wholly-owned subsidiary of Digirad.

Real Estate & Investments Division
This business division manages the Company’s real estate assets and investments.

Forward-Looking Statements Disclaimer Statement
“Safe Harbor” Statement under the Private Securities Litigation Reform Act of 1995: This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.  All statements in this release that are not statements of historical fact are hereby identified as “forward-looking statements” for the purpose of the safe harbor provided by Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. 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This release reflects management’s views as of the date presented.

All forward-looking statements are necessarily only estimates of future results, and there can be no assurance that actual results will not differ materially from expectations, and, therefore, you are cautioned not to place undue reliance on such statements. Further, any forward-looking statement speaks only as of the date on which it is made, and we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events.

For more information contact: 
Digirad CorporationThe Equity Group
Jeffrey E. EberweinLena Cati
Chairman of the BoardThe Equity Group