Digirad (DRAD) Stock Is Climbing On Strong Financial Results

Digirad DRAD Stock News

Digirad Corporation (NASDAQ: DRAD) is making a run for the top in the market this morning, trading on gains of more than 80% early on. The gains come after the company annunced its financial results for the fourth quarter and full year. Here’s what’s going on:

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DRAD Stock Heads Up On Financial Results

As mentioned above, investors are excited about Digirad this morning after the company annunced its financial results for the fourth quarter and full year. Here’s what we saw:

Revenue – Revenue for the fourth quarter came in at $36.1 million. That proved to be a 39.4% increase year over year from $25.9 million. For the full year, revenue came in at $114.2 million, representing a 9.6% year over year increase.

Gross Profit – Gross profits came in at $7.9 million for the fourth quarter, working out to a 112.2% year over year increase from $3.7 million. For the full year, gross prfits increased 21% from $18.3 million to $22.1 million.

Net Loss – DRAD said that net loss from continued operations in the fourth quarter came to $0.3 million, or $0.13 per share. Importantly, this figure included merger related expenses. Without these expenses, the company generated net income of $27 thousand in the fourth quarter. For the full year, net loss came in at $4.9 million, including $2.3 million in merger-related expenses.

Non-GAAP EBITDA – In the fourth quarter, Non-GAAP adjusted EITDA came in at $2.8 million. That proved to be a 262.3% increase year over year. On a full year basis, Non-GAAP adjusted EBITDA climbed 29.2% to $7.7 million.

In a statement, Jeff Eberwein, Chairman at DRAD, had the following to offer:

FY 2019 was a transition year for Digirad. With the acquisition of ATRM we are now operating and reporting financial results as a HoldCo with three business divisions. For Q4 2019, which reflects a full quarter of operations as a HoldCo, as compared to the same period of 2018, we reported higher revenue and gross profit. These improvements were mainly due to additional revenue and gross profit generated by our recently established Building & Construction division and the steps taken to increase sales of higher margin products in our Healthcare division.

For FY 2020, as previously announced, our focus will be on growing our business organically by expanding higher margin segments such as camera sales and mobile scanning services in our Healthcare division, and increasing the utilization rate at existing factories and potentially opening an idle facility in our Building & Construction division. We will also seek bolt-on acquisitions for our existing platform companies and attractive acquisition opportunities to create new business for our HoldCo structure.

Important Key Points From The Report

First and foremost, one look at the numbers shows you why investors are so excited about Digirad at the moment. With dramatic growth across all metrics, saying that the company performed well would be an understatement.

However, it’s important to keep in mind that in September of last year, DRAD completed the acquisition of ATRM Holdings. With the acquisition, the company underwent a key transtion.

In fact, with the acquisition, the company has been transforemd from a healthcare servce provider into a holding company with three business divisions. These business divisions include Healthcare, Building & Construction, and Real Estate & Investments.

With the company’s transformation now complete, profits are likely on the horizon. Keep in mind that without acquisition-related expenses the company would have reported net income rather than a net loss. Considering that the acquisition expenses are behind us, should the company continue on this path, profits are likely ahead for DRAD.

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