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CST: 09/12/2019 06:34:31   

Digirad Corporation Reports Financial Results for the Third Quarter and Nine Months Ended September 30, 2019

24 Days ago

SUWANEE, Ga., Nov. 14, 2019 (GLOBE NEWSWIRE) -- Digirad Corporation (Nasdaq: DRAD; DRADP) (“Digirad” or the “Company”) reported today its financial results for the third quarter (Q3) and nine months (9M) ended September 30, 2019.

As previously announced, on September 10, 2019 Digirad completed the acquisition of ATRM Holdings, Inc. (“ATRM”) and transformed from a healthcare services provider into a diversified holding company (“HoldCo”) with three business divisions: Healthcare, Building & Construction, and Real Estate & Investments. The acquisition of ATRM was completed by way of a merger between ATRM and a newly formed wholly owned subsidiary of the Company, with ATRM surviving the merger as a wholly owned subsidiary of the Company.

Q3 2019 Financial Highlights vs. Q3 2018 *

  • Total revenue increased to $28.3 million from $25.7 million
  • Gross profit increased to $5.2 million from $4.4 million
  • Net loss from continuing operations was $1.5 million and included $1.1 million of merger related expenses; this compared to a net loss from continuing operations of $1.2 million
  • Non-GAAP adjusted EBITDA from continuing operations increased to $2.0 million from $1.6 million

*Digirad’s Q3 2019 results include financial and operational data of the two newly created divisions - Building & Construction and Real Estate & Investments from September 11, 2019 to September 30, 2019.  There were no operational or financial data recorded in the 2018 period from these two divisions.

Jeff Eberwein, Chairman of Digirad, noted, “Following the acquisition of ATRM we are now operating as a HoldCo, the mandate of which is to maximize long-term shareholder value through high-return internal investments that promote revenue growth, operating efficiencies, and cash flow generation. In that regard, we have established a Shared Services Center (“SSC”) which, once fully operational, should provide cost savings throughout the Company and its subsidiaries that will likely grow over time with additional acquisitions.”

“Our two-fold growth strategy is to:

  • Organically grow our existing business divisions by focusing on higher margin segments such as camera sales and mobile scanning services in our Healthcare division, and increasing the utilization rate at existing factories and opening idle facilities to fully take advantage of the significant market opportunities available in our Building & Construction division.
  • Seek attractive acquisition opportunities in two categories: bolt-on acquisitions for our existing platform companies, and acquisitions that create new platform companies for the Company.”

Revenues

The Company’s total Q3 2019 revenues increased by 10% to $28.3 million from $25.7 million in the third quarter of the prior year. 9M 2019 total revenues of $78.0 million slightly decreased from 9M 2018 revenues of $78.3 million.

Revenue in $ million Q3 2019   Q3 2018   % change   9M 2019   9M 2018   % change
Healthcare $ 25,596     $ 25,707     (0.4 )%   $ 75,306     $ 78,252     (3.8 )%
Building & Construction 2,729         100.0 %   2,729         100 %
Real Estate & Investments 8         100.0 %   8         100 %
Total Revenue $ 28,333     $ 25,707     10.2 %   $ 78,043     $ 78,252     (0.3 )%

Revenues for the Healthcare division for both Q3 and 9M periods of 2019 slightly decreased from respective periods of 2018 due to the sale of our Telerhythmics business in October 2018. Telerhythmics’ revenues for Q3 2018 and 9M 2018, were $0.9 million and $3.1 million, respectively. This division’s core business remains strong with higher revenues from the sale of cameras and scanning services.

Gross Profit

Gross profit in $ million Q3 2019   Q3 2018   % change   9M 2019   9M 2018   % change
Healthcare $ 4,777     $ 4,358     9.6 %   $ 13,939     $ 14,532     (4.1 )%
Building & Construction 477         100.0 %   477         100 %
Real Estate & Investments (58 )       100.0 %   (235 )       100 %
Total Gross Profit $ 5,196     $ 4,358     19.2 %   $ 14,181     $ 14,532     (2.4 )%

Q3 2019 gross profit of our Healthcare division increased by 9.6% from prior year’s same quarter, driven by higher scan volume and higher utilization rate of our imaging systems. Gross profit for the 9M 2019 period was lower due to higher material variance costs from scrapped equipment in the Diagnostic Imaging business.

Operating Expenses

Q3 2019 marketing, sales, general and administrative (MSG&A) expenses slightly increased by 3.4% or $0.2 million from the same period of 2018, mainly due to increased expenses from the Building & Construction Division and offset by lower headcount and reduced costs for contracted outside services particularly in the information technology (IT) and human resources (HR) areas from the Healthcare division. Our 9M 2019 MSG&A expenses decreased by 6.3% to $14.6 million, compared to the same period of 2018 due to lower salaries and benefits resulting from lower headcount following the sale of our Telerhythmics business in October 2018 and reduced costs for contracted outside services particularly in IT and HR areas as a result of steps we took to streamline our internal operations.

Furthermore, the HoldCo structure will enable Digirad to reduce corporate overhead costs by consolidating certain marketing, sales and administrative functions thus generating cost savings and improved earnings. The Company expects to begin realizing meaningful benefits of the HoldCo structure in 2020.

Non-GAAP adjusted EBITDA

Q3 2019 non-GAAP adjusted EBITDA from continuing operations rose to $2.0 million from $1.6 million in the same quarter of the prior year due to higher revenues from sale of cameras and from our high-margin mobile scanning services. 9M 2019 non-GAAP adjusted EBITDA from continuing operations decreased to $4.9 million, compared to $5.2 million in the same period in the prior year, reflecting higher equipment material costs.

Net loss

Q3 2019 net loss from continuing operations for the third quarter was $1.5 million, or $0.74 per basic and diluted share, compared to net loss from continuing operations of $1.2 million, or $0.59 per basic and diluted share in the same period in the prior year. Q3 2019 non-GAAP adjusted net income from continuing operations was $14 thousand, or $0.01 per basic and diluted share, compared to adjusted net loss of $0.6 million, or $0.31 per basic and diluted share in the same period in the prior year.

9M 2019 net loss from continuing operations was $4.6 million, or $2.27 per basic and diluted share, compared to net loss from continuing operations of $2.9 million, or $1.45 per basic and diluted share in the same period in the prior year. 9M 2019 non-GAAP adjusted net loss from continuing operations decreased to $0.9 million, or $0.46 per basic and diluted share, compared to adjusted net loss of $1.6 million, or $0.78 per basic and diluted share in the same period in the prior year.

The increase in net loss from continuing operations in both Q3 2019 and 9M 2019 periods was mainly due to non-recurring legal costs, other expenses, totaling $1.1 million and $2.1 million, respectively, related to the acquisition of ATRM and establishment of HoldCo.

Operating cash flow

Q3 2019 cash flow from operation was an outflow of $1.1 million, compared to an outflow of $0.8 million for the same period in the prior year. 9M 2019 cash flow from operations was an outflow of $0.8 million, compared to an inflow of $2.2 million for the same period in the prior year.

Free Cash Flow

The Company calculates a non-GAAP measure of free cash flow. The Company defines free cash flow as net cash provided by (used in) operating activities, less purchases of property and equipment, plus net dispositions and estimated level of one-time acquisition related net working capital adjustment at the closing date. The Company believes that this measure of free cash flow provides management and investors further useful information on cash generation or use in our primary operations.

Q3 2019 non-GAAP free cash flow was an inflow of $0.4 million for the third quarter, compared to an outflow of $0.4 million in the same quarter in the prior year. 9M 2019 non-GAAP free cash flow was an inflow of $1.6 million, compared to an inflow of $2.1 million in the same period in the prior year.

Net operating loss (NOL)

Finally, Digirad Corporation has approximately $83.7 million of usable net operating losses (“NOL”) in the U.S. as of yearend 2018, which the Company considers to be a very valuable asset for its stockholders. In order to protect the value of the NOL for all stockholders, the Company has a charter amendment in place that limits beneficial ownership of Digirad common stock to 4.99%. Stockholders who wish to own more than 4.99% of Digirad common stock, or who already own more than 4.99% of Digirad common stock and wish to buy more, may only acquire additional shares with the Board’s prior written approval. Digirad’s NOL is expected to increase in 2019 due to operating results.

Conference Call Information

A conference call is scheduled for 10:00 a.m. EDT on November 14, 2019 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://ir.digirad.com/events-presentations; an archived replay of the webcast will be available within 15 minutes of the end of the conference call.

If you have any questions, either prior to or after our scheduled Earnings Conference call, please e-mail ir@digirad.com or lcati@equityny.com.

Use of Non-GAAP Financial Measures by Digirad Corporation

This release presents the non-GAAP financial measures “adjusted net income (loss),” “adjusted net income (loss) per basic and diluted share,” “free cash flow”, and “adjusted EBITDA.” The most directly comparable measure for these non-GAAP financial measures are net income and basic 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, unrealized gain (loss) on available-for-sale securities, 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 November 14, 2019.

About Digirad Corporation

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

Digirad: Healthcare Division

Digirad Health designs, manufactures, and distributes diagnostic medical imaging products. Digirad Health operates in three businesses: Diagnostic Services, Mobile Healthcare, and Diagnostic Imaging. The Diagnostic Services business offers imaging and monitoring services to healthcare providers as an alternative to purchasing the equipment or outsourcing the job. 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. The Diagnostic Imaging business develops, sells, and maintains solid-state gamma cameras.

ATRM Holdings: Building & Construction Division

ATRM manufactures modular housing units for commercial and residential applications. 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 Builders, EdgeBuilder and Glenbrook are wholly-owned subsidiaries of ATRM.

Real Estate & Investments Division

This business division manages the real estate assets and investments of HoldCo.

Forward-Looking Statements

“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. Forward-looking Statements include, without limitation, statements regarding (i) the plans and objectives of management for future operations, including plans or objectives relating to acquisitions and related integration, development of commercially viable products, novel technologies, and modern applicable services, (ii) projections of income (including income/loss), EBITDA, earnings (including earnings/loss) per share, free cash flow (FCF), capital expenditures, cost reductions, capital structure or other financial items, (iii) the future financial performance of Digirad Corporation (“Digirad,” “DRAD” or the “Company”) or acquisition targets and (iv) the assumptions underlying or relating to any statement described above. Moreover, forward-looking statements necessarily involve assumptions on the Company’s part.  These forward-looking statements generally are identified by the words “believe”, “expect”, “anticipate”, “estimate”, “project”, “intend”, “plan”, “should”, “may”, “will”, “would”, “will be”, “will continue” or similar expressions.  Such forward-looking statements are not meant to predict or guarantee actual results, performance, events or circumstances and may not be realized because they are based upon the Company's current projections, plans, objectives, beliefs, expectations, estimates and assumptions and are subject to a number of risks and uncertainties and other influences, many of which the Company has no control over.  Actual results and the timing of certain events and circumstances may differ materially from those described above as a result of these risks and uncertainties.  Factors that may influence or contribute to the inaccuracy of forward-looking statements or cause actual results to differ materially from expected or desired results may include, without limitation, the substantial amount of debt of the Company and the Company’s ability to repay or refinance it or incur additional debt in the future; the Company’s need for a significant amount of cash to service and repay the debt and to pay dividends on the Company Preferred Stock; the restrictions contained in the debt agreements that limit the discretion of management in operating the business; the length of time associated with servicing customers; losses of significant contracts; disruptions in the relationship with third party vendors; accounts receivable turnover; insufficient cash flows and resulting in liquidity; the Company's inability to expand the Company's business; unfavorable changes in the extensive governmental legislation and regulations governing healthcare providers and the provision of healthcare services and the competitive impact of such changes (including unfavorable changes to reimbursement policies); high costs of regulatory compliance; the liability and compliance costs regarding environmental regulations; the underlying condition of the technology support industry; the lack of product diversification; development and introduction of new technologies and intense competition in the healthcare industry; existing or increased competition; risks to the price and volatility of the Company’s Common Stock and Preferred Stock; stock volatility and in liquidity; risks to preferred stockholders of not receiving dividends and risks to the Company’s ability to pursue growth opportunities if the Company continues to pay dividends according to the terms of the Company Preferred Stock; the Company’s ability to execute on its business strategy (including any cost reduction plans); the Company’s failure to realize expected benefits of restructuring and cost-cutting actions; the Company’s ability to preserve and monetize its net operating losses;  risks associated with the Company’s possible pursuit of acquisitions; the Company’s ability to consummate successful acquisitions and execute related integration, including to successfully integrate ATRM’s operations and realize the synergies from the acquisition, as well as factors related to the Company’s business (including ATRM) including economic and financial market conditions generally and economic conditions in the Company’s markets; failure to keep pace with evolving technologies and difficulties integrating technologies; system failures; losses of key management personnel and the inability to attract and retain highly qualified management and personnel in the future; and the continued demand for and market acceptance of the Company’s services.  For a detailed discussion of cautionary statements and risks that may affect the Company’s future results of operations and financial results, please refer to the Company’s filings with the Securities and Exchange Commission, including, but not limited to, the risk factors in the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. 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 Corporation The Equity Group  
Jeffrey E. Eberwein Lena Cati  
Chairman of the Board The Equity Group  
203-489-9501 212-836-9611  
ir@digirad.com lcati@equityny.com  


(Financial tables follow)

Digirad Corporation
Condensed Consolidated Statements of Operations
(Unaudited)
(In thousands, except for per share amounts)

       
  Three Months Ended September 30,   Nine Months Ended September 30,
  2019   2018   2019   2018
Revenues:              
Healthcare $ 25,596     $ 25,707     $ 75,306     $ 78,252  
Building and Construction 2,729         2,729      
Real Estate and Investments 8         8      
Total revenues 28,333     25,707     78,043     78,252  
Cost of revenues:              
Healthcare 20,819     21,349     61,367     63,720  
Building and Construction 2,252         2,252      
Real Estate and Investments 66         243      
Total cost of revenues 23,137     21,349     63,862     63,720  
Gross profit 5,196     4,358     14,181     14,532  
Total gross profit percentage 18.3 %   17.0 %   18.2 %   18.6 %
Healthcare percentage 18.7 %   17.0 %   18.5 %   18.6 %
Building and Construction gross profit percentage 17.5 %   %   17.5 %   %
Real Estate and Investments (725 )%   %   (2,938 )%   %
Operating expenses:              
Marketing, sales and general and administrative expenses 4,948     4,785     14,648     15,627  
Amortization of intangible assets 399     356     965     1,069  
Merger and finance costs 1,058         2,058      
Goodwill impairment             476  
Total operating expenses 6,405     5,141     17,671     17,172  
Loss from operations (1,209 )   (783 )   (3,490 )   (2,640 )
Other expense:              
Other income (expense), net 3     (76 )   (200 )   (112 )
Interest expense, net (292 )   (200 )   (727 )   (563 )
Loss on sale of building (4 )   (507 )   (236 )   (507 )
Loss on extinguishment of debt         (151 )   (43 )
Total other expense (293 )   (783 )   (1,314 )   (1,225 )
Loss before income taxes (1,502 )   (1,566 )   (4,804 )   (3,865 )
Income tax (expense) benefit (2 )   379     168     940  
Net loss from continuing operations (1,504 )   (1,187 )   (4,636 )   (2,925 )
Net (loss) income from discontinued operations     (239 )   266     5,255  
Net (loss) income $ (1,504 )   $ (1,426 )   $ (4,370 )   $ 2,330  
               
Net (loss) income per share - basic and diluted              
Continuing operations $ (0.74 )   $ (0.59 )   $ (2.27 )   $ (1.45 )
Discontinued operations     (0.12 )   0.13     2.61  
Net (loss) income per share - basic and diluted $ (0.74 )   $ (0.71 )   $ (2.14 )   $ 1.16  
Dividends declared per common share $     $ 0.06     $     $ 0.17  
Weighted-average shares outstanding – basic and diluted 2,046     2,018     2,038     2,013  
               
Net (loss) income $ (1,504 )   $ (1,426 )   $ (4,370 )   $ 2,330  
Other comprehensive income (loss):              
Reclassification of tax provision impact         22      
Reclassification of unrealized gains on equity securities to retained earnings             (17 )
Total other comprehensive income (loss)         22     (17 )
Comprehensive (loss) income $ (1,504 )   $ (1,426 )   $ (4,348 )   $ 2,313  


Digirad Corporation
Condensed Consolidated Balance Sheets
(Unaudited)
(In thousands)

  September 30,
 2019
  December 31,
 2018
Assets:      
Current assets:      
Cash and cash equivalents $ 1,479     $ 1,545  
Restricted cash 194     167  
Equity securities 21     153  
Accounts receivable, net 16,643     12,642  
Inventories, net 8,179     5,402  
Other current assets 1,805     1,285  
Total current assets 28,321     21,194  
Property and equipment, net 23,401     21,645  
Operating lease right-of-use assets 5,015      
Intangible assets, net 23,723     5,228  
Goodwill 9,975     1,745  
Restricted cash     101  
Deferred tax assets 75      
Investments in and receivables from related parties     275  
Other assets 851     406  
Total assets $ 91,361     $ 50,594  
       
Liabilities, Mezzanine Equity and Stockholders’ Equity      
Current liabilities:      
Accounts payable $ 9,480     $ 5,206  
Accrued compensation 4,101     3,862  
Accrued warranty 342     197  
Deferred revenue 1,756     1,687  
Short-term debt 3,988      
Operating lease liabilities, current portion 1,790      
Other current liabilities 4,708     2,265  
Total current liabilities 26,165     13,217  
Long-term debt 17,217     9,500  
Long-term payable from related parties 1,925      
Deferred tax liabilities 121     121  
Operating lease liabilities, net of current portion 3,356      
Other liabilities 1,749     1,956  
Total liabilities 50,533     24,794  
       
Preferred stock, $0.0001 par value: 10,000,000 shares authorized: 10% Series A Cumulative Redeemable preferred stock, 8,000,000 shares liquidation preference ($10.00 per share), 1,915,637 shares issued or outstanding at September 30, 2019 19,156      
       
Stockholders’ equity:      
Common stock, $0.0001 par value: 30,000,000 shares authorized; 2,048,743 and 2,024,979 shares issued and outstanding (net of treasury shares) at September 30, 2019 and December 31, 2018, respectively      
Treasury stock, at cost; 258,849 shares at September 30, 2019 and December 31, 2018 (5,728 )   (5,728 )
Additional paid-in capital 145,672     145,430  
Accumulated other comprehensive loss     (22 )
Accumulated deficit (118,272 )   (113,880 )
Total stockholders’ equity 21,672     25,800  
Total liabilities, mezzanine equity and stockholders’ equity $ 91,361     $ 50,594  


Digirad Corporation
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(In thousands)

  Three Months Ended September 30,   Nine Months Ended September 30,
  2019   2018   2019   2018
               
Net loss from continuing operations $ (1,504 )   $ (1,187 )   $ (4,636 )   $ (2,925 )
Acquired intangible amortization 399     356     965     1,069  
Unrealized (gain) loss on equity securities (1) (6 )   76     (29 )   112  
Restructuring costs (2) 60         122     97  
Loss on extinguishment of debt (3)         151     43  
Goodwill impairment             476  
Loss on sale of buildings 4     507     236     507  
Write-off of Star Real Estate Holding Assets         143      
Transaction cost (4) 1,059         2,015      
Write-off of preferred stock issuance cost (5)         273      
Income tax benefit 2     (379 )   (168 )   (940 )
Non-GAAP adjusted net income (loss) from continuing operations $ 14     $ (627 )   $ (928 )   $ (1,561 )
               
Net loss per diluted share from continuing operations $ (0.74 )   $ (0.59 )   $ (2.27 )   $ (1.45 )
Acquired intangible amortization 0.20     0.18     0.47     0.53  
Unrealized (gain) loss on equity securities (1)     0.04     (0.01 )   0.06  
Restructuring costs (2) 0.03         0.06     0.05  
Loss on extinguishment of debt (3)         0.07     0.02  
Goodwill impairment             0.24  
Loss on sale of buildings     0.25     0.12     0.25  
Write-off of Star Real Estate Holding Assets     0.25     0.07     0.25  
Transaction cost (4) 0.52         0.99      
Write-off of preferred stock issuance cost (5)         0.13      
Income tax benefit     (0.19 )   (0.08 )   (0.47 )
Non-GAAP adjusted net income (loss) per basic and diluted share from continuing operations (6) $ 0.01     $ (0.31 )   $ (0.46 )   $ (0.78 )


Digirad Corporation
Reconciliation of Non-GAAP Financial Measures
(Unaudited)
(In thousands)

  Three Months Ended September 30,   Nine Months Ended September 30,
  2019   2018   2019   2018
Net loss from continuing operations $ (1,504 )   $ (1,187 )   $ (4,636 )   $ (2,925 )
Unrealized (gain) loss on equity securities (1) (6 )   76     (29 )   112  
Restructuring costs (2) 60         122     97  
Loss on extinguishment of debt (3)         151     43  
Depreciation and amortization 1,975     2,165     5,635     6,718  
Stock-based compensation 114     174     416     546  
Loss on sale of building 4     507     236     507  
Interest expense, net 292     200     727     563  
Goodwill impairment             476  
Write-off of Star Real Estate Holding Assets         143      
Transaction cost (4) 1,059         2,015      
Write-off of preferred stock issuance cost (5)         273      
Income tax benefit 2     (379 )   (168 )   (940 )
Non-GAAP adjusted EBITDA from continuing operations $ 1,996     $ 1,556     $ 4,885     $ 5,197  

(1)   Reflects change in fair value of investments in equity securities.

(2)   Reflects severance related costs.

(3)   Reflects write-off of unamortized deferred financing costs associated with the Comerica Credit Agreement.

(4)   Reflects legal and other costs related to the ATRM merger and HoldCo establishment.

(5)   Reflects write-off of costs related to a potential offering of preferred stock the Company does not expect to complete.

(6)   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 Operating Cash Flow to Free Cash Flow
(Unaudited)
(In thousands)

  Three Months Ended September 30,   Nine Months Ended September 30,
  2019   2018   2019   2018
Net cash (used in) provided by operating activities $ (1,133 )   $ (823 )   $ (765 )   $ 2,218  
Less Purchases of Property and Equipment     (1,000 )   (1,182 )   (1,919 )
Gross Free Cash Flow (1,133 )   (1,823 )   (1,947 )   299  
Plus Net Dispositions 440     1,455     1,496     1,780  
Plus Merger related net working capital adjustment 1,058         2,058      
Free cash flow $ 365     $ (368 )   $ 1,607     $ 2,079  


Digirad Corporation
Supplemental Debt Information
(Unaudited)
(In thousands)

The following table reflects outstanding principal balances and interest rates for the Company’s debt:

  September 30, 2019   December 31, 2018
  Amount   Interest Rate   Amount   Interest Rate
Revolving Credit Facility - SNB (1) $ 17,217     4.52 %   $     %
Revolving Credit Facility - Comerica (2) $     %   $ 9,500     4.87 %
Revolving Credit Facility - Gerber  (3) $ 1,349     7.75 %   $     %
Revolving Credit Facility - Premier (4) $ 2,639     6.75 %   $     %

(1)   Entered into with Sterling National Bank in March 2019 by Digirad. The agreement consists of a revolving credit facility with a five-year term, maturing in March 2024.

(2)   Entered into with Comerica Bank in June 2017 by Digirad, which was subsequently amended on January 30, 2018 and September 30, 2018. The Company used a portion of the financing made available under the SNB Credit Facility to refinance and terminate, effective as of March 29, 2019, its credit facility with Comerica Bank.

(3)   Entered into with Gerber Finance Inc. by KBS prior to the Company’s acquisition of ATRM, and subsequently became Company debt upon consummation of the ATRM acquisition.

(4)   Entered into with Premier Bank by EdgeBuilder and Glenbrook prior to the Company’s acquisition of ATRM, and subsequently became Company debt upon consummation of the ATRM acquisition.


Digirad Corporation
Supplemental Segment Information
(Unaudited)
(In thousands)

  Three Months Ended September 30,   Nine Months Ended September 30,
  2019   2018 (1)   2019   2018 (1)
Revenue by segment              
Diagnostic Services $ 11,670     $ 12,412     $ 35,714     $ 37,704  
Diagnostic Imaging 3,351     2,803     8,923     8,401  
Mobile Healthcare 10,575     10,492     30,669     32,147  
Building and Construction 2,729         2,729      
Real Estate and Investments 43         43      
Corporate, eliminations and other (35 )       (35 )    
Consolidated revenue $ 28,333     $ 25,707     $ 78,043     $ 78,252  
               
Gross profit by segment:              
Diagnostic Services $ 2,162     $ 2,404     $ 7,548     $ 7,620  
Diagnostic Imaging 1,174     1,154     3,040     3,665  
Mobile Healthcare 1,441     800     3,351     3,247  
Building and Construction 477         477      
Real Estate and Investments (23 )       (200 )    
Corporate, eliminations and other (35 )       (35 )    
Consolidated gross profit $ 5,196     $ 4,358     $ 14,181     $ 14,532  
               
Income (loss) from continuing operations by segment:              
Diagnostic Services $ 1,344     $ 1,761     $ 5,037     $ 3,850  
Diagnostic Imaging 755     160     1,663     1,814  
Mobile Healthcare 551     (192 )   367     (171 )
Building and Construction 26         26      
Real Estate and Investments (61 )       (260 )    
Corporate, eliminations and other (35 )       (35 )    
Unallocated corporate and other expenses (2,731 )   (2,512 )   (8,230 )   (7,657 )
Segment income from operations (151 )   (783 )   (1,432 )   (2,164 )
Goodwill impairment (2)             (476 )
Merger and finance costs (3) (1,058 )       (2,058 )    
Consolidated loss from operations $ (1,209 )   $ (783 )   $ (3,490 )   $ (2,640 )
               
Depreciation and amortization by segment:              
Diagnostic Services $ 333     $ 510     $ 942     $ 1,750  
Diagnostic Imaging 64     70     215     221  
Mobile Healthcare 1,272     1,322     4,137     4,500  
Building and Construction 124         124      
Real Estate and Investments 208         243      
Total depreciation and amortization $ 2,001     $ 1,902     $ 5,661     $ 6,471  

(1)  Segment information has been recast for all periods presented to reflect the allocation of corporate and other expenses

(2)  Reflects goodwill impairment adjustment for Telerhythmics reporting unit.

(3)  Reflects legal and other costs related to the ATRM merger and HoldCo establishment. 

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