Attached files
| file | filename |
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| EX-99.2 - EXHIBIT 99.2 - STAR EQUITY HOLDINGS, INC. | exhibit99293016useofnon-ga.htm |
| 8-K - 8-K - STAR EQUITY HOLDINGS, INC. | digirad8-kq32016pressrelea.htm |
Exhibit 99.1
News Release
For immediate release | For more information contact: |
October 28, 2016 | Jeff Keyes |
Chief Financial Officer | |
858-726-1600 | |
ir@digirad.com | |
Digirad Corporation Reports Financial Results for the
Third Quarter and Nine Months ended September 30, 2016
•Announces third quarter revenue growth of 96 percent year over year
•Confirms financial guidance for 2016
•Announces a regular quarterly cash dividend of $0.05 cents per share
Suwanee, GA. - October 28, 2016 - Digirad Corporation (Nasdaq: DRAD) today reported its financial results for the third quarter and nine months ended September 30, 2016.
Total revenues for the 2016 third quarter were $31.1 million, an increase of 96 percent compared to the prior year’s third quarter revenues of $15.9 million.
Net loss for the 2016 third quarter was $0.3 million, or $0.01 net loss per diluted share, compared to net income of $19.1 million, or $0.97 per diluted share from the same period in the prior year. Adjusted net income for the 2016 third quarter was $1.0 million, or $0.05 per diluted share, compared to $1.5 million, or $0.08 per diluted share from the same period in the prior year.
Adjusted EBITDA for the 2016 third quarter was $3.6 million, compared to $2.2 million in the prior year third quarter.
Total revenues for the nine months ended September 30, 2016 were $94.3 million, an increase of 109 percent compared to the prior year’s revenues for the first nine months of $45.2 million.
Net income for the nine months ended September 30, 2016 was $12.3 million, or $0.62 per diluted share, compared to net income of $21.0 million, or $1.07 per diluted share in the same period in the prior year. Adjusted net income for the nine months ended September 30, 2016 was $4.4 million, or $0.22 per diluted share, compared to adjusted net income of $3.2 million, or $0.16 per diluted share in the same period in the prior year.
Adjusted EBITDA for the nine months ended September 30, 2016 was $11.4 million, compared to $5.0 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 third quarter and nine months ended September 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, “We are pleased with our results this quarter, and the performance of all our businesses, including the business units of DMS Health that we acquired at the beginning of the year. As we have stated before, our results can be affected by the timing of product sales on a quarter by quarter basis, and during the third quarter we did experience some of this timing as well as higher than normal parts cost for our product service businesses. However, we expect the product sales timing and underlying parts cost to balance out by the end of the year and continue to be confident of our full year financial guidance, which is supported by our significant year over year performance on a year to date basis through September 2016.”
Digirad Chief Financial Officer Jeff Keyes said, “We are also pleased with the momentum of our cash flow generation on a year to date basis, which beyond our normal quarterly dividend, allowed us to make three extra payments on the highest interest rate tranche of our credit facility. Paying down debt not only reduces our interest expense but it also accretes additional value to our shareholders. And finally, we are excited that we are nearly complete with our operational integration of DMS Health, and expect to finish all major planned integration activities by year end."
The Company also announced a cash dividend of $0.05 cents per share that will be paid on November 28, 2016, to shareholders of record on November 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 EBITDA 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 10:00 a.m. EDT on October 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; 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, 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.
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 October 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 (Loss)
(Unaudited)
Three Months Ended | Nine Months Ended | ||||||||||||||
September 30, | September 30, | ||||||||||||||
(in thousands, except per share amounts) | 2016 | 2015 | 2016 | 2015 | |||||||||||
Revenues: | |||||||||||||||
Services | $ | 23,825 | $ | 11,982 | $ | 72,496 | $ | 34,724 | |||||||
Product and product-related | 7,261 | 3,880 | 21,837 | 10,525 | |||||||||||
Total revenues | 31,086 | 15,862 | 94,333 | 45,249 | |||||||||||
Cost of revenues: | |||||||||||||||
Services | 19,110 | 9,201 | 56,795 | 26,920 | |||||||||||
Product and product-related | 3,675 | 1,859 | 10,407 | 5,112 | |||||||||||
Total cost of revenues | 22,785 | 11,060 | 67,202 | 32,032 | |||||||||||
Gross profit | 8,301 | 4,802 | 27,131 | 13,217 | |||||||||||
Total gross profit percentage | 26.7 | % | 30.3 | % | 28.8 | % | 29.2 | % | |||||||
Services gross profit percentage | 19.8 | % | 23.2 | % | 21.7 | % | 22.5 | % | |||||||
Product and product-related gross profit percentage | 49.4 | % | 52.1 | % | 52.3 | % | 51.4 | % | |||||||
Operating expenses: | |||||||||||||||
Marketing and sales | 2,426 | 1,212 | 7,888 | 3,689 | |||||||||||
General and administrative | 4,608 | 2,508 | 15,900 | 6,880 | |||||||||||
Amortization of intangible assets | 578 | 134 | 1,735 | 372 | |||||||||||
Total operating expenses | 7,612 | 3,854 | 25,523 | 10,941 | |||||||||||
Income from operations | 689 | 948 | 1,608 | 2,276 | |||||||||||
Other expense: | |||||||||||||||
Other expense, net | (428 | ) | — | (414 | ) | — | |||||||||
Interest expense, net | (342 | ) | (11 | ) | (1,092 | ) | (12 | ) | |||||||
Total other expense | (770 | ) | (11 | ) | (1,506 | ) | (12 | ) | |||||||
(Loss) income before income taxes | (81 | ) | 937 | 102 | 2,264 | ||||||||||
Income tax (expense) benefit | (202 | ) | 18,183 | 12,222 | 18,698 | ||||||||||
Net (loss) income | $ | (283 | ) | $ | 19,120 | $ | 12,324 | $ | 20,962 | ||||||
Net (loss) income per share: | |||||||||||||||
Basic | $ | (0.01 | ) | $ | 0.99 | $ | 0.63 | $ | 1.09 | ||||||
Diluted | $ | (0.01 | ) | $ | 0.97 | $ | 0.62 | $ | 1.07 | ||||||
Dividends declared per common share | $ | 0.05 | $ | 0.05 | $ | 0.15 | $ | 0.15 | |||||||
Weighted average shares outstanding – basic | 19,618 | 19,356 | 19,532 | 19,145 | |||||||||||
Weighted average shares outstanding – diluted | 19,618 | 19,798 | 20,026 | 19,608 | |||||||||||
Digirad Corporation
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands) | September 30, 2016 | December 31, 2015 | |||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 2,353 | $ | 15,868 | |||
Securities available-for-sale | 1,313 | 3,227 | |||||
Accounts receivable, net | 13,637 | 7,274 | |||||
Inventories, net | 5,909 | 4,381 | |||||
Restricted cash | 233 | 233 | |||||
Other current assets | 3,649 | 764 | |||||
Total current assets | 27,094 | 31,747 | |||||
Property and equipment, net | 31,119 | 6,252 | |||||
Intangible assets, net | 12,206 | 3,079 | |||||
Goodwill | 6,819 | 2,897 | |||||
Deferred tax assets | 26,100 | 18,578 | |||||
Restricted cash | 2,845 | — | |||||
Other assets | 903 | 1,560 | |||||
Total assets | $ | 107,086 | $ | 64,113 | |||
Liabilities and stockholders’ equity | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 6,466 | $ | 1,369 | |||
Accrued compensation | 4,232 | 2,453 | |||||
Accrued warranty | 153 | 213 | |||||
Deferred revenue | 3,317 | 1,673 | |||||
Current portion of long-term debt | 5,358 | — | |||||
Other current liabilities | 4,237 | 2,998 | |||||
Total current liabilities | 23,763 | 8,706 | |||||
Long-term debt, net of current portion | 17,340 | — | |||||
Other liabilities | 1,163 | 1,252 | |||||
Total liabilities | 42,266 | 9,958 | |||||
Stockholders’ equity: | |||||||
Preferred stock | — | — | |||||
Common stock | 2 | 2 | |||||
Treasury stock | (5,728 | ) | (5,728 | ) | |||
Additional paid-in capital | 151,961 | 153,860 | |||||
Accumulated other comprehensive loss | — | (240 | ) | ||||
Accumulated deficit | (81,415 | ) | (93,739 | ) | |||
Total stockholders’ equity | 64,820 | 54,155 | |||||
Total liabilities and stockholders’ equity | $ | 107,086 | $ | 64,113 | |||
Digirad Corporation
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
(in thousands, except per share amounts) | 2016 | 2015 | 2016 | 2015 | |||||||||||||
Net (loss) income | $ | (283 | ) | $ | 19,120 | $ | 12,324 | $ | 20,962 | ||||||||
Acquired intangible amortization | 578 | 131 | 1,735 | 365 | |||||||||||||
Acquisition related contingent consideration valuation adjustment(1) | (5 | ) | — | (8 | ) | (173 | ) | ||||||||||
Investment impairment loss(2) | 414 | — | 414 | — | |||||||||||||
Transaction and integration costs of DMS Health Technologies(3) | 127 | 435 | 1,748 | 743 | |||||||||||||
Income tax items(4) | 170 | (18,163 | ) | (11,860 | ) | (18,699 | ) | ||||||||||
Non-GAAP Adjusted net income | $ | 1,001 | $ | 1,523 | $ | 4,353 | $ | 3,198 | |||||||||
Net (loss) income per share - diluted(5) | $ | (0.01 | ) | $ | 0.97 | $ | 0.62 | $ | 1.07 | ||||||||
Acquired intangible amortization | 0.03 | 0.01 | 0.09 | 0.02 | |||||||||||||
Acquisition related contingent consideration valuation adjustment(1) | — | — | — | (0.01 | ) | ||||||||||||
Investment impairment loss(2) | 0.02 | — | 0.02 | — | |||||||||||||
Transaction and integration costs of DMS Health Technologies(3) | 0.01 | 0.02 | 0.09 | 0.04 | |||||||||||||
Income tax items(4) | 0.01 | (0.92 | ) | (0.59 | ) | (0.95 | ) | ||||||||||
Non-GAAP Adjusted net income per share - diluted(5) | $ | 0.05 | $ | 0.08 | $ | 0.22 | $ | 0.16 | |||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||||
(in thousands) | 2016 | 2015 | 2016 | 2015 | |||||||||||||
Net (loss) income | $ | (283 | ) | $ | 19,120 | $ | 12,324 | $ | 20,962 | ||||||||
Acquisition related contingent consideration valuation adjustment(1) | (5 | ) | — | (8 | ) | (173 | ) | ||||||||||
Investment impairment loss(2) | 414 | — | 414 | — | |||||||||||||
Transaction and integration costs of DMS Health Technologies(3) | 127 | 435 | 1,748 | 743 | |||||||||||||
Depreciation and amortization | 2,489 | 665 | 7,337 | 1,751 | |||||||||||||
Stock-based compensation | 274 | 165 | 754 | 450 | |||||||||||||
Interest income | (3 | ) | (10 | ) | (12 | ) | (32 | ) | |||||||||
Interest expense | 345 | 21 | 1,104 | 44 | |||||||||||||
Income tax expense (benefit) | 202 | (18,183 | ) | (12,222 | ) | (18,698 | ) | ||||||||||
Non-GAAP Adjusted EBITDA | $ | 3,560 | $ | 2,213 | $ | 11,439 | $ | 5,047 | |||||||||
(1) Reflects fair value adjustment to estimate of contingent consideration related to acquisitions.
(2) Reflects impairment losses related to investment in Perma-Fix Medical. Amount consists of 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 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.
Digirad Corporation
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
Three Months Ended | |||||||||||||||||||||
(in thousands, except per share amounts) | September 30, 2015 | December 31, 2015 | March 31, 2016 | June 30, 2016 | September 30, 2016 | ||||||||||||||||
Net income (loss) | $ | 19,120 | $ | 678 | $ | 11,609 | $ | 998 | $ | (283 | ) | ||||||||||
Acquired intangible amortization | 131 | 131 | 577 | 578 | 578 | ||||||||||||||||
Acquisition related contingent consideration valuation adjustment(1) | — | 113 | — | (3 | ) | (5 | ) | ||||||||||||||
Investment impairment loss(2) | — | 278 | — | — | 414 | ||||||||||||||||
Transaction and integration costs of DMS Health Technologies(3) | 435 | 595 | 1,450 | 171 | 127 | ||||||||||||||||
Income tax items(4) | (18,163 | ) | (446 | ) | (12,333 | ) | 67 | 170 | |||||||||||||
Non-GAAP Adjusted net income | $ | 1,523 | $ | 1,349 | $ | 1,303 | $ | 1,811 | $ | 1,001 | |||||||||||
Net income (loss) per share - diluted(5) | $ | 0.97 | $ | 0.03 | $ | 0.58 | $ | 0.05 | $ | (0.01 | ) | ||||||||||
Acquired intangible amortization | 0.01 | 0.01 | 0.03 | 0.03 | 0.03 | ||||||||||||||||
Acquisition related contingent consideration valuation adjustment(1) | — | 0.01 | — | — | — | ||||||||||||||||
Investment impairment loss(2) | — | 0.01 | — | — | 0.02 | ||||||||||||||||
Transaction and integration costs of DMS Health Technologies(3) | 0.02 | 0.03 | 0.07 | 0.01 | 0.01 | ||||||||||||||||
Income tax items(4) | (0.92 | ) | (0.02 | ) | (0.62 | ) | — | 0.01 | |||||||||||||
Non-GAAP Adjusted net income per share - diluted(5) | $ | 0.08 | $ | 0.07 | $ | 0.07 | $ | 0.09 | $ | 0.05 | |||||||||||
Three Months Ended | |||||||||||||||||||||
(in thousands) | September 30, 2015 | December 31, 2015 | March 31, 2016 | June 30, 2016 | September 30, 2016 | ||||||||||||||||
Net income (loss) | $ | 19,120 | $ | 678 | $ | 11,609 | $ | 998 | $ | (283 | ) | ||||||||||
Acquisition related contingent consideration valuation adjustment(1) | — | 113 | — | (3 | ) | (5 | ) | ||||||||||||||
Investment impairment loss(2) | — | 278 | — | — | 414 | ||||||||||||||||
Transaction and integration costs of DMS Health Technologies(3) | 435 | 595 | 1,450 | 171 | 127 | ||||||||||||||||
Depreciation and amortization | 665 | 690 | 2,465 | 2,383 | 2,489 | ||||||||||||||||
Stock-based compensation | 165 | 166 | 223 | 257 | 274 | ||||||||||||||||
Interest income | (10 | ) | (7 | ) | (5 | ) | (4 | ) | (3 | ) | |||||||||||
Interest expense | 21 | 19 | 375 | 383 | 345 | ||||||||||||||||
Income tax expense (benefit) | (18,183 | ) | (425 | ) | (12,461 | ) | 37 | 202 | |||||||||||||
Non-GAAP Adjusted EBITDA | $ | 2,213 | $ | 2,107 | $ | 3,656 | $ | 4,222 | $ | 3,560 | |||||||||||
(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 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.