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Digirad Corporation Reports Financial Results for 2008 Second Quarter and Six Months
Date:7/24/2008

the intention of achieving profit in DIS, finalize the DIS mobile camera fleet upgrade program, and reach profitability for the first time in the history of our product business through increasing product-related revenue, reducing cost and improving product reliability.

"At the mid-point of 2008 I am pleased with our progress with driving DIS revenue growth, which was up over prior year and first-quarter 2008, specifically around four of our centers of influence locations. We completed the upgrade of our DIS mobile camera fleet and made significant strides in recovering from the disappointing product revenue for the first-quarter 2008, as product bookings reached a record high. We hit our mid-year product cost reduction and reliability targets and expect these efforts to translate into improved product margins for the second half of 2008."

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.

Casner continued: "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. This had been a major contributor to flat margins over the past three quarters. Although we are pleased this and other initiatives have resulted in reduced employee turnover, about 30 percent annualized, we are not content with the margin result. We looked at this program and, beginning June 1, fine-tuned the program to benefit employee and customer retention but at the same time, improve margins. 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."

Operational expenses wer
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SOURCE Digirad Corporation
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