Digirad posts losses in 2008 Q2, despite imaging revenue growth

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Digirad has reported a decline in profit for its financial results for second quarter and six months of 2008, which ended June 30.

For the quarter, the Poway, Calif.-based company reported that consolidated revenues rose to $19.9 million from $18.8 million in second-quarter 2007. Digirad Imaging Solutions' (DIS) revenue grew 7 percent to $14.2 million, from $13.3 million in second-quarter 2007, which Digirad said is due to the addition of ultrasound services last year and growth in both nuclear and ultrasound services.

According to CEO Mark Casner, DIS margins during the first half of 2008 were under pressure “as we consciously made a decision in late 2007 to put in place a guaranteed work-hour program to reduce employee turnover and increase customer retention. We expect DIS margins to increase during the second half of 2008, returning to the mid-20 percent range. We still believe we can drive DIS margins close to 30 percent, as we increase our mobile camera utilization and improve efficiencies with our DIS labor and fixed costs while we grow revenues.”

Net loss for the second-quarter 2008 was $1.2 million, or, compared to net income of $238,000, in second-quarter 2007. Stock-based compensation expense was $233,000, compared to $351,000 for second-quarter 2007.

Gross profit declined to $4.6 million, or 23 percent of revenue in the second-quarter 2008, from $5.8 million, or 31 percent of revenue, in second-quarter 2007.

The company reported that operational expenses were flat, compared to second-quarter 2007, representing 30 percent of second-quarter 2008 revenue, compared to 32 percent of second-quarter 2007 revenue. Increases in marketing and sales expenses in 2008 were offset by declines in general and administrative and research and development expenses, according to the company.

Cash and equivalents and securities available for sale on June 30, 2008, totaled $26.9 million, compared to $26.4 million on March 31, and $31.7 million on Dec. 31, 2007, according to Digirad.