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Digirad Corp. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: October 22, 2009 06:05AM
Digirad Corp. (DRAD) filed Quarterly Report for the period ended 2009-09-30. DIGIRAD CORPORATION provides diagnostic nuclear and ultrasound imaging systems and services to physicians' offices hospitals and other medical services providers for cardiac vascular and general imaging applications. Digirad's Cardius XPO line of nuclear imaging cameras use patented solid-state technology and unique multi head design for superior performance and advanced features for sharper digital images faster processing compact size lighter weight for portability ability to handle patients up to 500 pounds and improved patient comfort compared to standard nuclear cameras. Digirad's 2020tc general-purpose nuclear imager has a small footprint and may also be configured for fixed or mobile use to supplement primary imaging. Digirad's installed base of equipment exceeds 550 systems; in addition a mobile fleet of 164 nuclear and ultrasound imaging systems is being used in 22 states and the District of Columbia primarily in the eastern midwestern and southwestern Unit Digirad Corp. has a market cap of $51.2 million; its shares were traded at around $2.6 with a P/E ratio of 134.9 and P/S ratio of 0.6.
Highlight of Business Operations:
Our consolidated revenues were $53.2 million during the nine months ended September 30, 2009 (2009), which represented a decrease of $5.2 million, or 8.9%, over the comparable prior year period (2008) due to a decrease in revenue within both the Product and DIS segments. DIS revenue decreased $1.7 million, or 4.1%, due to the sale or closure of several underperforming locations in connection with our restructuring plan initiated in the fourth quarter of 2008. Product revenues decreased $3.5 million, or 21.2%, as economic factors and capital budget constraints of potential buyers contributed to a decline in the number of cameras sold from 54 cameras in the nine months ended September 30, 2008 to 35 cameras in the same period of 2009, and a shift in our gamma camera sales mix to a larger number of refurbished cameras. The decline in our camera sales revenues was partially mitigated by a 13.1% increase in maintenance contract revenues in 2009 compared to 2008.
DIS. Cost of DIS revenue consists primarily of labor, radiopharmaceuticals, equipment depreciation, and other costs associated with the provision of services. Cost of DIS revenue was $9.6 million for 2009, representing a decrease of $1.7 million, or 14.9%, compared to the prior year quarter. The decrease in cost of DIS revenue is primarily a result of decreased labor, radiopharmaceutical, and depreciation costs predominantly attributed to the increased utilization of our personnel and assets. DIS gross profit was $3.3 million for 2009, which represents an increase of $0.6 million, or 22.8%. DIS gross profit as a percentage of revenue increased to 25.9% for 2009 from 19.5% for 2008. The improvement in operational performance is primarily associated with the realignment of the segment, which included the sale or closure of underperforming locations and a focus on selling within certain geographical areas, along with improved asset utilization.
DIS. Cost of DIS revenue was $29.3 million for 2009, representing a decrease of $4.2 million, or 12.7%, over the prior year period, primarily due to decreased labor, radiopharmaceutical, depreciation, and maintenance costs. DIS gross profit was $11.0 million for 2009, which represents an increase of $2.5 million, or 29.8% compared to the prior year period. DIS gross profit as a percentage of revenue increased to 27.4% for 2009 from 20.2% for 2008. The improvement in operational performance is primarily associated with the realignment of the segment, which included the sale or closure of underperforming locations and a focus on selling within certain geographical areas, along with improved asset utilization.
Product. Cost of goods sold was $8.4 million for 2009, representing a decrease of $2.6 million, or 23.9%, compared to the prior year period. Product gross profit was $4.5 million for 2009, representing a decrease of $0.8 million, or 15.4%, compared to the prior year period. Product gross profit as a percentage of revenue increased to 34.8% for 2009 from 32.4% for 2008 as our product sales mix was represented by a larger number of refurbished cameras with higher margins, along with certain efficiency and cost improvements.
Our net income was $0.4 million for 2009 compared to a net loss of $3.4 million for 2008, an improvement of $3.8 million, primarily as a result of increased DIS segment gross profits and a reduction in our operating expenses. The increase in DIS gross profit is primarily due to decreased labor, radiopharmaceutical, depreciation, and maintenance costs. The reduction in our operating expenses was primarily achieved through the flattening of the management structure and other restructuring initiatives implemented by us in the fourth quarter of 2008, the first quarter of 2009 and the third quarter of 2009.
cash used in investing activities amounted to $3.2 million in 2009 and is primarily due to net purchases of securities available-for-sale, partially offset by the net proceeds from sales of fixed assets associated with our restructuring initiative. Net cash used in financing activities amounted to approximately $0.8 million in 2009, which primarily represents the repurchase of our common stock under a Rule 10b-18 plan. On February 4, 2009, our board of directors authorized a stock buyback program to repurchase up to an aggregate of $2.0 million of our issued and outstanding common shares. The timing of stock repurchases and the number of shares of common stock to be repurchased has been, and will be made, in compliance with Rule 10b-18 under the Securities Exchange Act of 1934 and will depend upon market conditions, applicable legal and contractual requirements, and other factors. Purchases under this program totaled $0.8 million during the nine months ended September 30, 2009.George Soros of Soros Fund Management LLC.
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