Digirad Corporation (DRAD) Stock Rockets On Asset Sale

Digirad Corporation DRAD Stock News

Digirad Corporation (NASDAQ: DRAD) is making a run for the top in the market this morning after announcing the sale of an asset that will bring more than $18 million through the doors. Here’s what’s going on:

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DRAD Stock Climbs After Selling DMS Health Technologies

In the press release, Digirad announced that it has entered into a Stock Purchase Agreement surrounding the sale of its DMS Health Technologies business unit. According to the agreement, DRAD will precieve a price of just under $18.75 million in the sale.

As is always the case in deals like this, the agreement is subject to customary closing conditions. The company also said that the sale is expected to come to a close in January of 2021.

In the release, the company reminded investors that DMS Health is the Mobile Healthcare business unit of the Digirad Healthcare division. The business unit provides contract diagnostic imaging, including CT scans, MRIs, PET/CT scans, and nuclear medicine through a convenient mobile service.

In a statement, Matt Molchan CEO at DRAD, had the following to offer:

The divestiture of DMS Health will allow us to streamline our portfolio of healthcare services by focusing our efforts on selling and servicing our Digirad branded solid-state imaging cameras and providing on-site imaging services to hospitals and physicians all over the country.

The above statement was followed up by Jeff Eberwein, who said:

As previously announced, we have been exploring the potential divestiture of assets in addition to pursuing our HoldCo growth strategy. The sale of DMS Health will substantially improve our balance sheet and better position us to fund high-return organic growth investments and to pursue acquisitions. Potential acquisitions could be bolt-ons in Healthcare or Building & Construction or entry into an entirely new business sector.

This Is Big News

The news released by Digirad this morning proved to be overwhelmingly positive. After all, the company is selling an asset with a value of more than $18 million. Don’t forget, we’re talking about a company with a market cap of around $12 million.

So, in order to get a 30%+ premium to the total market cap of the comapny, DRAD didn’t have to sell itself. Instead, it sold a business unit within a business unit. DMS Health only represents about 40.1% of the revenue generated by Digirad’s Healthcare business.

So, all in all, this is a very big deal, with a very big premium, ultimately strengthening the company’s balance sheet and making DRAD stock one that’s hard to ignore.

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