GlobeNewswire Inc | Nov 13, 2020 06:00AM EST

November 13, 2020

SUWANEE, Ga., Nov. 13, 2020 (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 September30, 2020.

Q3 2020 Financial Highlights vs. Q3 2019*

-- Total revenue increased to $30.4 million from $28.3 million -- Gross profit decreased to $4.8 million from $5.2 million -- Net loss from continuing operations was $1.8 million (or $0.37 per basic and diluted share) compared to a net loss of continuing operations $1.5 million (or $0.74 per basic and diluted share) ** -- Non-GAAP adjusted EBITDA from continuing operations decreased to $1.1 million from $2.0 million -- Non-GAAP free cash outflow of $2.2 million versus inflow of $0.4 million -- Cash and cash equivalents and restricted cash of $4.4 million versus $1.7 million and net debt of $18.9 million versus $21.4 million

9M 2020 Financial Highlights vs. 9M 2019*

-- Total revenue increased to $81.6 million from $78.0 million -- Gross profit decreased to $13.3 million from $14.2 million -- Net loss from continuing operations was $6.0 million (or $1.83 per basic and diluted share) compared to a net loss from continuing operations of $4.6 million (or $2.27 per basic and diluted share) ** -- Non-GAAP adjusted EBITDA from continuing operations decreased to $3.4 million from $4.9 million -- Non-GAAP free cash outflow of $2.3 million versus inflow of $1.6 million

*Since September 10, 2019, Digirad has been operating as a diversified holding company (HoldCo) with three divisions: Healthcare, Building & Construction, and Real Estate & Investments. Digirads Q3 2020 and 9M 2020 results include financial and operational data for the two newly created divisions - Building & Construction and Real Estate & Investments. Partial operational and financial data were recorded in the 2019 corresponding periods for these two divisions.

** In May 28, 2020, Digirad completed a public offering through the issuance of 2,225,000 shares of its common stock. Per share amounts for Q3 2020 and 9M 2020 periods, reflect the new share count. For the nine months ended September 30, 2020, there were 395,140 warrants exercised and converted into 197,570 shares of common stock.

Subsequent to the end of the quarter, the Company entered into a Stock Purchase Agreement (Agreement) with Knob Creek Acquisition Corp., to sell its DMS Health Technologies, Inc. (DMS Health) business unit. The initial purchase price under the Agreement is $18.75 million. The Agreement is subject to customary closing conditions and is expected to close in January 2021.

Jeff Eberwein, Chairman of Digirad, noted, Our Q3 2020 operating and financial results continued to be impacted by the slowdown due to COVID-19. Although doctor offices and hospitals started to return to normal operations in Q3, activity levels remained below normal during the quarter, causing our Healthcare divisions revenue and gross profit to be lower than the prior year quarter. Our Diagnostic Services business has begun to rebound, but our Diagnostic Imaging business has seen a slowdown in camera sales due to purchase delays related to capital funding decisions driven by the pandemic.

Our Building & Construction division has significant momentum as shown by Q3 revenue increasing 70% versus the preceding quarter. KBS Builders, Inc. (KBS), our modular building manufacturing business focused on the Northeast, increased production at its South Paris, Maine plant in Q3 due to recently won commercial projects. In addition, KBS recently re-opened an ancillary building at its previously idle Oxford, Maine plant to manufacture wall panels for the New England market, creating a new business line for KBS. Because of the strong demand outlook for KBS, we are studying ways to increase our production capacity and are excited about the outlook for this business.

Mr. Eberwein concluded, We continue to execute on our HoldCo growth strategy and value enhancement initiatives to maximize stockholder value. Our HoldCo structure allows division CEOs to focus on operations and organic growth while HoldCo management focuses on corporate strategy and capital allocation. In addition to looking for attractive bolt-on acquisitions for our existing operating businesses, we are also looking to create new business divisions in the future through the disciplined acquisition of businesses complementary to our HoldCo structure. Furthermore, the sale of DMS Health, once completed, will substantially improve our balance sheet and better position us to fund high-return internal growth investments and pursue acquisitions.

Revenue

The Companys total Q3 2020 revenue increased by 7.1% to $30.4 million from $28.3 million in the third quarter of the prior year. 9M 2020 total revenue of $81.6 million increased by 4.5% from 9M 2019 revenue of $78.0 million.

Revenue in $ Q3 2020 Q3 2019 % change 9M 2020 9M 2019 % changethousandsHealthcare $ 21,794 $ 25,596 (14.9 )% $ 62,441 $ 75,306 (17.1 )%Building & 8,542 2,729 213.0 % 19,061 2,729 598.5 %ConstructionReal Estate& 175 43 307.0 % 525 43 1,120.9 %InvestmentsCorporate,eliminations (158 ) (35 ) 351.4 % (475 ) (35 ) 1,257.1 %and otherTotal $ 30,353 $ 28,333 7.1 % $ 81,552 $ 78,043 4.5 %Revenue

Revenue for the Healthcare division for Q3 2020 decreased from Q3 2019 by $3.8 million due to the slowdown related to the COVID-19 pandemic. Although many doctor offices have reopened and many hospitals have started to once again perform non-emergency procedures, activity remains below pre-COVID levels.

The increase in revenue for the Building & Construction division was due to a full quarter of operational and financial data in Q3 2020 compared to only a partial quarter in 2019 and an increase in KBS activity levels due to $2.2 million revenue recognized from recently won commercial projects. More importantly, in Q3 2020, Building & Construction division revenue increased to $8.5 million from $5.0 million Q2 2020, representing a 70% increase.

Gross Profit

Gross Profitin $ Q3 2020 Q3 2019 % change 9M 2020 9M 2019 % changethousandsHealthcare $ 3,630 $ 4,777 (24.0 )% $ 10,739 $ 13,939 (23.0 )%Building & 1,253 477 162.7 % 2,709 477 467.9 %ConstructionReal Estate& 110 (23 ) (578.3 )% 329 (200 ) (264.5 )%InvestmentsCorporate,eliminations (158 ) (35 ) 351.4 % (475 ) (35 ) 1,257.1 %and otherTotal Gross $ 4,835 $ 5,196 (6.9 )% $ 13,302 $ 14,181 (6.2 )%Profit

Q3 2020 gross profit for the Healthcare division decreased by 24.0% from the prior years quarter due to reduced revenue as a result of the COVID-19 pandemic. Additionally, some costs remained fairly constant such as employee costs, insurance, workers compensation, rents, utilities, and repairs and maintenance. Q3 2020 gross profit for Building & Construction division increased by 162.7% from the prior years quarter due to a full quarter in 2020 versus a partial quarter in 2019 and increased production activity due to recently won commercial projects.

Operating Expenses

Q3 2020 marketing, sales, general and administrative (MSG&A) expenses increased by 12.5% or $0.6million from the prior year period, mainly due an increase in expenses from including a full quarter of the Building & Construction division compared to only 20 days in three months ended September 30, 2019. Similarly, our 9M 2020 MSG&A expenses increased by 13.0% or $1.9million, compared to the same period of 2019 due to an increase of $2.7 million of expenses from the Building & Construction division and offset by a $0.8 million decrease from the Digirad Health division.

Non-GAAP Adjusted EBITDA

Q3 2020 non-GAAP adjusted EBITDA from continuing operations decreased to $1.1 million from $2.0 million in the same quarter of the prior year due to lower revenue generated from high-margin mobile scanning services because of the COVID-19 pandemic. 9M 2020 non-GAAP adjusted EBITDA from continuing operations decreased to $3.4 million, compared to $4.9 million in the prior year period, reflecting COVID-19 impact.

Net Loss

Q3 2020 net loss from continuing operations was $1.8 million, or $0.37 per basic and diluted share, compared to net loss of $1.5 million, or $0.74 per basic and diluted share, in the same period in the prior year. Q3 2020 non-GAAP adjusted net loss from continuing operations was $0.9 million, or $0.19 per basic and diluted share, compared to adjusted net income from continuing operations of $14 thousand, or $0.01 per basic and diluted share, in the prior year period.

9M 2020 net loss from continuing operations was $6.0 million, or $1.83 per basic and diluted share, compared to net loss from continuing operations of $4.6 million, or $2.27 per basic and diluted share, in the same period in the prior year. 9M 2020 non-GAAP adjusted net loss from continuing operations decreased to $2.9 million, or $0.89 per basic and diluted share, compared to adjusted net loss from continuing operations of $0.9 million, or $0.46 per basic and diluted share, in the prior year period.

Operating cash flow

Q3 2020 cash flow from operations was an outflow of $1.9 million, compared to an outflow of $1.1 million for the same period in the prior year due to increased investment in working capital to fund the revenue growth in the Building & Construction division. 9M 2020 cash flow from operations was an outflow of $1.9 million, compared to an outflow of $0.8 million for the prior year period.

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 of property and equipment, and the acquisition-related net working capital. The Company believes this measure of free cash flow provides management and investors further useful information about cash generation (or use) in our primary operations.

Q3 2020 non-GAAP free cash flow was an outflow of $2.2 million, compared to an inflow of $0.4 million in the same quarter of the prior year period. 9M 2020 non-GAAP free cash flow was an outflow of $2.3 million, compared to an inflow of $1.6 million in the prior year period also due to increased investment in working capital to fund the revenue growth in the Building & Construction division.

Net Operating Loss Carryforward (NOL)

Digirad Corporation has approximately $91.6 million of usable net operating losses (NOL) in the U.S. as of year-end 2019, 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 limiting 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 Boards prior written approval.

Conference Call Information

A conference call is scheduled for 11:00 a.m. ET (8:00 a.m. PT) on November13, 2020 to discuss the results and managements 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 from continuing operations. The most directly comparable measure for these non-GAAP financial measures are net income and basic and diluted net income per share, and cash flows from operating activities. The Company has included below unaudited adjusted financial information, which presents the Companys results of operations after excluding acquired intangible asset amortization, one time transaction costs, litigation costs, restructuring costs, loss on sale of buildings, COVID-19 protection equipment, unrealized gain (loss) on available-for-sale securities, non-recurring costs related to sales and use tax and 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 Digirads financial condition and results of operations is included as Exhibit 99.2 to Digirads report on Form 8-K filed with the Securities and Exchange Commission on November13, 2020.

About Digirad Corporation

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

Healthcare Division (Digirad Health)

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

Building & Construction Division (ATRM)

ATRM Holdings, Inc. (ATRM) manufactures modular housing units for commercial and residential real estate projects. 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, EdgeBuilder, and Glenbrook are wholly-owned subsidiaries of ATRM, which is a wholly-owned subsidiary of Digirad.

Real Estate & Investments Division

This business division manages the Companys real estate assets and investments.

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 or acquisition targets and (iv) the assumptions underlying or relating to any statement described above. Moreover, forward-looking statements necessarily involve assumptions on the Companys 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 Companys ability to repay or refinance it or incur additional debt in the future; the Companys need for a significant amount of cash to service and repay the debt and to pay dividends on the Companys preferred stock; the restrictions contained in the debt agreements that limit the discretion of management in operating the business; legal, regulatory, political and economic risks in markets and public health crises that reduce economic activity and cause restrictions on operations (including the recent coronavirus COVID-19 outbreak); the length of time associated with servicing customers; losses of significant contracts or failure to get potential contracts being discussed; disruptions in the relationship with third party vendors; accounts receivable turnover; insufficient cash flows and resulting lack of 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 Companys common stock and preferred stock; stock volatility and in liquidity; risks to preferred stockholders of not receiving dividends and risks to the Companys ability to pursue growth opportunities if the Company continues to pay dividends according to the terms of the Companys preferred stock; the Companys ability to execute on its business strategy (including any cost reduction plans); the Companys failure to realize expected benefits of restructuring and cost-cutting actions; the Companys ability to preserve and monetize its net operating losses; risks associated with the Companys possible pursuit of acquisitions; the Companys ability to consummate successful acquisitions and execute related integration, including to successfully integrate ATRMs operations and realize the synergies from the acquisition of ATRM, as well as factors related to the Companys business (including ATRM) including economic and financial market conditions generally and economic conditions in the Companys 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 Companys services. For a detailed discussion of cautionary statements and risks that may affect the Companys future results of operations and financial results, please refer to the Companys filings with the Securities and Exchange Commission, including, but not limited to, the risk factors in the Companys most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. This release reflects managements 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 GroupJeffrey E. Eberwein Lena CatiChairman of the Board The Equity Group203-489-9501 212-836-9611ir@digirad.com lcati@equityny.com

(Financial tables follow)

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

ThreeMonthsEnded Nine Months Ended September 30, September 30, 2020 2019 2020 2019Revenues: Healthcare $ 21,794 $ 25,596 $ 62,441 $ 75,306 Building & Construction 8,542 2,729 19,061 2,729 Real Estate & Investments 17 8 50 8 Total revenues 30,353 28,333 81,552 78,043 Cost of revenues: Healthcare 18,164 20,819 51,702 61,367 Building & Construction 7,289 2,252 16,352 2,252 Real Estate & Investments 65 66 196 243 Total cost of revenues 25,518 23,137 68,250 63,862 Gross profit 4,835 5,196 13,302 14,181 Operating expenses: Marketing, sales andgeneral and administrative 5,566 4,948 16,545 14,648 expensesAmortization of intangible 802 399 2,420 965 assetsMerger and finance costs ? 1,058 ? 2,058 Total operating expenses 6,368 6,405 18,965 17,671 Loss from operations (1,533 ) (1,209 ) (5,663 ) (3,490 )Other income (expense): Other income (expense), net 135 3 967 (200 )Interest expense, net (356 ) (292 ) (1,214 ) (727 )Loss on sale of building ? (4 ) ? (236 )Loss on extinguishment of ? ? ? (151 )debtTotal other expense (221 ) (293 ) (247 ) (1,314 )Loss before income taxes (1,754 ) (1,502 ) (5,910 ) (4,804 )Income tax (expense) (6 ) (2 ) (90 ) 168 benefitNet loss from continuing (1,760 ) (1,504 ) (6,000 ) (4,636 )operationsNet income from ? ? ? 266 discontinued operationsNet loss (1,760 ) (1,504 ) (6,000 ) (4,370 )Deemed dividend on Series A (474 ) (106 ) (1,442 ) (106 )redeemable preferred stockNet loss attributable to $ (2,234 ) $ (1,610 ) $ (7,442 ) $ (4,476 )common shareholders Net loss per share,attributable to common $ (0.47 ) $ (0.79 ) $ (2.27 ) $ (2.20 )shareholders ? basic anddiluted:Weighted-average sharesoutstanding ? basic and 4,724 2,046 3,280 2,038 diluted Net loss $ (1,760 ) $ (1,504 ) $ (6,000 ) $ (4,370 )Other comprehensive income (loss):Reclassification of tax ? ? ? 22 provision impactTotal other comprehensive ? ? ? 22 incomeComprehensive loss $ (1,760 ) $ (1,504 ) $ (6,000 ) $ (4,348 )

Digirad Corporation Condensed Consolidated Balance Sheets (Unaudited) (In thousands, except share amounts)

September December 30, 31, 2020 2019Assets: Current assets: Cash and cash equivalents $ 4,267 $ 1,821 Restricted cash 169 240 Equity securities 31 26 Accounts receivable, net 15,751 18,571 Inventories, net 9,000 7,097 Other current assets 2,360 1,794 Total current assets 31,578 29,549 Property and equipment, net 18,129 22,138 Operating lease right-of-use assets 4,631 4,827 Intangible assets, net 20,484 22,903 Goodwill 9,978 9,978 Other assets 1,155 1,165 Total assets $ 85,955 $ 90,560 Liabilities, Mezzanine Equity and Stockholders? Equity Current liabilities: Accounts payable $ 7,025 $ 8,932 Accrued compensation 3,735 4,579 Accrued warranty 237 421 Deferred revenue 2,293 1,786 Short-term debt and current portion of long-term debt 4,260 4,036 Payable to related parties 2,155 1,920 Operating lease liabilities, current portion 1,839 1,866 Other current liabilities 3,355 4,638 Total current liabilities 24,899 28,178 Long-term debt, net of current portion 16,896 17,038 Deferred tax liabilities 90 23 Operating lease liabilities, net of current portion 2,881 3,073 Other liabilities 1,031 1,551 Total liabilities 45,797 49,863 Preferred stock, $0.0001 par value: 10,000,000 sharesauthorized: 10% Series A Cumulative Redeemablepreferred stock, 8,000,000 shares liquidation 21,041 19,602 preference ($10.00 per share), 1,915,637 shares issuedor outstanding at September 30, 2020 and December 31,2019, respectively Stockholders? equity: Common stock, $0.0001 par value: 30,000,000 sharesauthorized; 4,750,951 and 2,050,659 shares issued and ? ? outstanding (net of treasury shares) at September 30,2020 and December31, 2019, respectivelyTreasury stock, at cost; 258,849 shares at September (5,728 ) (5,728 )30, 2020 and December31, 2019, respectivelyAdditional paid-in capital 149,374 145,352 Accumulated deficit (124,529 ) (118,529 )Total stockholders? equity 19,117 21,095 Total liabilities, mezzanine equity and stockholders? $ 85,955 $ 90,560 equity

Digirad Corporation Reconciliation of Non-GAAP Financial Measures(Unaudited)(In thousands, except per share amounts)

ThreeMonthsEnded Nine Months Ended September 30, September 30, 2020 2019 2020 2019 Net loss from continuing $ (1,760 ) $ (1,504 ) $ (6,000 ) $ (4,636 )operationsAcquired intangible 802 399 2,420 965 amortizationUnrealized gain on equity (53 ) (6 ) (33 ) (29 )securities ^(1)Litigation costs ^(2) 65 ? 244 ? Restructuring costs ^(3) ? 60 ? 122 Loss on extinguishment of ? ? ? 151 debtLoss on sale of buildings ? 4 ? 236 Write-off of DMS assets due 7 ? 142 ? to litigation ^(4)Write-off of Star Real ? ? ? 143 Estate Holding assetsTransaction cost ^(5) ? 1,059 115 2,015 Write-off of preferred ? ? ? 273 stock issuance cost ^(6)COVID-19 protection 17 ? 46 ? equipment ^(7)Sales and use tax costs ^ ? ? 73 ? (8)Income tax expense 6 2 90 (168 )(benefit)Non-GAAP adjusted net(loss) income from $ (916 ) $ 14 $ (2,903 ) $ (928 )continuing operations Net loss per diluted share $ (0.37 ) $ (0.74 ) $ (1.83 ) $ (2.27 )from continuing operationsAcquired intangible 0.17 0.20 0.74 0.47 amortizationUnrealized gain on equity (0.01 ) ? (0.01 ) (0.01 )securities ^(1)Litigation costs ^(2) 0.01 ? 0.07 ? Restructuring costs ^(3) ? 0.03 ? 0.06 Loss on extinguishment of ? ? ? 0.07 debtLoss on sale of buildings ? ? ? 0.12 Write-off of DMS assets due ? ? 0.04 ? to litigation ^(4)Write-off of Star Real ? ? ? 0.07 Estate Holding assetsTransaction cost ^(5) ? 0.52 0.04 0.99 Write-off of preferred ? ? ? 0.13 stock issuance cost ^(6)COVID-19 Protection ? ? 0.01 ? Equipment ^(7)Sales and use tax costs ^ ? ? 0.02 ? (8)Income tax expense ? ? 0.03 (0.08 )(benefit)Non-GAAP adjusted net(loss) income per basic and $ (0.19 ) $ 0.01 $ (0.89 ) $ (0.46 )diluted share fromcontinuing operations ^(9)

(1) Reflects change in fair value of investments in equity securities.(2) Reflects one time litigation costs.(3) Reflects severance related costs.(4) Reflects write-off of assets related to litigation.(5) Reflects legal and other costs related to the ATRM merger and HoldCo conversion.(6) Reflects write-off of costs related to a potential offering of preferred stock the Company did not complete.(7) Reflects purchases related to COVID-19 Protection Equipment.(8) Reflects additional sales and use tax as a result of a South Dakota sales tax audit.(9) 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 Non-GAAP Financial Measures(Unaudited)(In thousands)

For TheThree Months Diagnostic Diagnostic Mobile Building & Real Estate Corporate,Ended Services Imaging Healthcare Construction & eliminations TotalSeptember Investments and other30, 2020 Net income(loss) from $ 1,438 $ 270 $ 174 $ (628 ) $ 92 $ (3,106 ) $ (1,760 )continuingoperationsDepreciationand 280 60 1,388 580 65 ? 2,373 amortizationInterest 18 15 6 214 ? 103 356 expenseIncome tax ? 2 ? 4 ? ? 6 expenseEBITDA fromcontinuing 1,736 347 1,568 170 157 (3,003 ) 975 operations Unrealizedgain onequity ? ? ? ? ? (53 ) (53 )securities ^(1)Litigation ? ? ? ? ? 65 65 costs ^(2)Stock-based ? ? ? ? ? 122 122 compensationWrite-off ofDMS assetsdue to ? ? 7 ? ? ? 7 litigation ^(4)PersonalProtection ? 17 ? ? ? ? 17 Equipment ^(7)Non-GAAPadjustedEBITDA from $ 1,736 $ 364 $ 1,575 $ 170 $ 157 $ (2,869 ) $ 1,133 continuingoperations

For The Three Real Estate Corporate,Months Ended Diagnostic Diagnostic Mobile Building & & eliminations TotalSeptember 30, Services Imaging Healthcare Construction Investments and other2019 Net income(loss) from $ 1,319 $ 828 $ 299 $ (163 ) $ (66 ) $ (3,721 ) $ (1,504 )continuingoperationsDepreciationand 333 64 1,272 124 182 ? 1,975 amortizationInterest 22 ? 11 39 ? 220 292 expenseIncome tax ? ? 1 1 ? ? 2 expenseEBITDA fromcontinuing 1,674 892 1,583 1 116 (3,501 ) 765 operations Unrealizedgain onequity ? ? ? ? ? (6 ) (6 )securities ^(1)Restructuring ? ? 60 ? ? ? 60 costs ^(3)Stock-based ? ? ? ? ? 114 114 compensationLoss on sale ? ? 4 ? ? ? 4 of buildingsTransaction ? ? ? ? ? 1,059 1,059 cost ^(5)Non-GAAPadjustedEBITDA from $ 1,674 $ 892 $ 1,647 $ 1 $ 116 $ (2,334 ) $ 1,996 continuingoperations

For The Nine Real Estate Corporate,Months Ended Diagnostic Diagnostic Mobile Building & & eliminations TotalSeptember Services Imaging Healthcare Construction Investments and other30, 2020 Net income(loss) from $ 2,935 $ 2,145 $ (11 ) $ (1,748 ) $ (266 ) $ (9,055 ) $ (6,000 )continuingoperationsDepreciationand 917 189 4,130 1,723 196 ? 7,155 amortizationInterest 56 9 23 708 ? 418 1,214 expenseIncome tax 12 68 4 6 ? ? 90 expenseEBITDA fromcontinuing 3,920 2,411 4,146 689 (70 ) (8,637 ) 2,459 operations Unrealizedgain onequity ? ? ? ? ? (33 ) (33 )securities ^(1)Litigation ? ? ? ? ? 244 244 costs ^(2)Stock-based ? ? ? ? ? 382 382 compensationWrite-off ofDMS assetsdue to ? ? 142 ? ? ? 142 litigation ^(4)Transaction ? ? ? ? ? 115 115 cost ^(5)PersonalProtection ? 46 ? ? ? ? 46 Equipment ^(7)Sales and ? ? 73 ? ? ? 73 use Tax ^(8)Non-GAAPadjustedEBITDA from $ 3,920 $ 2,457 $ 4,361 $ 689 $ (70 ) $ (7,929 ) $ 3,428 continuingoperations

For The Nine Real Estate Corporate,Months Ended Diagnostic Diagnostic Mobile Building & & eliminations TotalSeptember 30, Services Imaging Healthcare Construction Investments and other2019 Net income(loss) from $ 4,942 $ 1,919 $ (539 ) $ (128 ) $ (300 ) $ (10,530 ) $ (4,636 )continuingoperationsDepreciationand 942 215 4,137 124 217 ? 5,635 amortizationInterest 63 ? 36 39 ? 589 727 expenseIncome taxexpense/ ? (98 ) (71 ) 1 ? ? (168 )(benefit)EBITDA fromcontinuing 5,947 2,036 3,563 36 (83 ) (9,941 ) 1,558 operations Unrealizedgain on equity ? ? ? ? ? (29 ) (29 )securities ^(1)Restructuring ? ? 122 ? ? ? 122 costs ^(3)Loss onextinguishment ? 151 ? ? ? ? 151 of debtStock-based ? ? ? ? ? 416 416 compensationLoss on sale ? ? 236 ? ? ? 236 of buildingsWrite off ofStar Real ? ? ? ? 143 ? 143 Estate HoldingAssetsTransaction ? ? ? ? ? 2,015 2,015 cost ^(5)Write off ofpreferred ? ? ? ? ? 273 273 stock issuancecost ^(6)Non-GAAPadjustedEBITDA from $ 5,947 $ 2,187 $ 3,921 $ 36 $ 60 $ (7,266 ) $ 4,885 continuingoperations

(1) Reflects change in fair value of investments in equity securities.(2) Reflects one-time litigation costs.(3) Reflects severance related costs.(4) Reflects write-off of assets related to litigation.(5) Reflects legal and other costs related to the ATRM merger and HoldCo conversion.(6) Reflects write-off of costs related to a potential offering of preferred stock the Company did not complete.(7) Reflects purchases related to COVID-19 Protection Equipment.(8) Reflects additional sales and use tax as a result of a South Dakota sales tax audit.

Digirad Corporation Reconciliation of Operating Cash Flow to Free Cash Flow(Unaudited)(In thousands)

ThreeMonthsEnded Nine Months Ended September 30, September 30, 2020 2019 2020 2019Net cash used in operating $ (1,929 ) $ (1,133 ) $ (1,880 ) $ (765 )activitiesLess purchases of property and (360 ) ? (646 ) (1,182 )equipmentGross free cash flow (2,289 ) (1,133 ) (2,526 ) (1,947 )Plus net dispositions 72 440 156 1,496 Plus merger related net ? 1,058 115 2,058 working capital adjustmentFree cash flow $ (2,217 ) $ 365 $ (2,255 ) $ 1,607

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

A summary of the Companys credit facilities and related party notes are as follows (in thousands):

September 30, 2020 December 31, 2019 Amount Weighted-Average Amount Weighted-Average Interest Rate Interest RateRevolvingCredit Facility $ 46 6.00 % $ 1,111 7.50 %- Gerber KBSRevolvingCredit Facility ? ? % 2,925 6.25 %- PremierTotalShort-TermRevolving $ 46 6.00 % $ 4,036 6.59 %CreditFacilitiesRevolvingCredit Facility $ 10,849 2.65 % $ 17,038 4.26 %- SNBRevolvingCredit Facility 1,257 6.00 % ? ? %- Gerber EBGLTotal Long-TermRevolving $ 12,106 3.00 % $ 17,038 4.26 %CreditFacilitiesLSV Co-Invest IPromissory Note $ 668 12.00 % $ 595 12.00 %(?JanuaryNote?)LSV Co-Invest IPromissory Note 1,150 12.00 % 1,023 12.00 %(?June Note?)LSVM Note 337 12.00 % 302 12.00 %Total NotesPayable From $ 2,155 12.00 % $ 1,920 12.00 %Related PartiesShort TermPaycheck $ 3,625 1.00 % $ ? ? %ProtectionProgram NotesLong TermPaycheck 3,023 1.00 % ? ? %ProtectionProgram NotesTotal PaycheckProtection $ 6,648 1.00 % $ ? ? %Program Notes

Term Loan Facilities

The following table presents the Star and Premier term loans balance net of unamortized debt issuance costs as of September30, 2020 (in thousands):

September 30, 2020 AmountGerber - Star Term Loan $ 1,900 Premier - Term Loan 819 Total Principal 2,719 Unamortized debt issuance costs (363 )Total $ 2,356

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

ThreeMonthsEnded Nine Months Ended September 30, September 30, 2020 2019 2020 2019Revenue by segment Diagnostic Services $ 10,711 $ 11,670 $ 28,665 $ 35,714 Diagnostic Imaging 2,048 3,351 7,242 8,923 Mobile Healthcare 9,035 10,575 26,534 30,669 Building & Construction 8,542 2,729 19,061 2,729 Real Estate & Investments 175 43 525 43 Corporate, eliminations and (158 ) (35 ) (475 ) (35 )otherConsolidated revenue $ 30,353 $ 28,333 $ 81,552 $ 78,043 Gross profit by segment: Diagnostic Services $ 2,076 $ 2,162 $ 5,034 $ 7,548 Diagnostic Imaging 399 1,174 2,500 3,040 Mobile Healthcare 1,155 1,441 3,205 3,351 Building & Construction 1,253 477 2,709 477 Real Estate & Investments 110 (23 ) 329 (200 )Corporate, eliminations and (158 ) (35 ) (475 ) (35 )otherConsolidated gross profit $ 4,835 $ 5,196 $ 13,302 $ 14,181 Income (loss) from continuing operations by segment:Diagnostic Services $ 1,424 $ 1,304 $ 2,904 $ 4,914 Diagnostic Imaging 138 755 1,592 1,662 Mobile Healthcare 176 310 5 (357 )Building & Construction (496 ) (125 ) (2,445 ) (125 )Real Estate & Investments 93 (61 ) 209 (260 )Corporate, eliminations and (158 ) (35 ) (475 ) (35 )otherUnallocated corporate and other (2,710 ) (2,299 ) (7,453 ) (7,231 )expensesSegment loss from operations (1,533 ) (151 ) (5,663 ) (1,432 )Merger and finance costs ? (1,058 ) ? (2,058 )Consolidated loss from $ (1,533 ) $ (1,209 ) $ (5,663 ) $ (3,490 )operations Depreciation and amortization by segment:Diagnostic Services $ 280 $ 333 $ 917 $ 942 Diagnostic Imaging 60 64 189 215 Mobile Healthcare 1,388 1,272 4,130 4,137 Building & Construction 580 124 1,723 124 Real Estate & Investments 65 208 196 243 Total depreciation and $ 2,373 $ 2,001 $ 7,155 $ 5,661 amortization