KBS, a Subsidiary of Digirad Corporation, Announces Signing of Phase 1 of $5.2 Million Contract to Manufacture Multi-Family Housing Units for U.S. Army

SUWANEE, Ga., June 09, 2020 (GLOBE NEWSWIRE) -- Digirad Corporation (Nasdaq: DRAD; DRADP) (“Digirad” or the “Company”), a diversified holding company with three operating divisions: Healthcare, Building & Construction, and Real Estate & Investments, announced today that KBS Builders, Inc. (“KBS”) has signed a contract for the first phase of what is anticipated to become a $5.2 million project with Tocci Building Corporation (“Tocci”), a Massachusetts-based general contractor and construction management company.  KBS is the Maine-based modular building manufacturing business of the Company’s Building & Construction division.  Tocci is a regional leader in commercial-scale modular construction and previously built the largest-ever modular multifamily development in the Boston metropolitan area, a project that totaled of 125 living units constructed with 128 building modules.  

For phases 1 and 2, KBS’s partnership with Tocci on this new project is anticipated to result in the production of approximately 98 building modules for the modular construction of 22 single-family and townhouse units for the U.S. Army Natick Soldier Systems Center in Natick, MA.   Phase 1 of manufacturing (14 building modules) is scheduled to commence this month, and phase 2 (84 building modules) is expected to commence in July 2020.  In addition, the federal government may exercise its option on a 3rd phase, which could provide the opportunity to increase the total project size by an additional 26 building modules and 6 living units, bringing the total potential project revenue for KBS to $6.7 million.  Deliveries to Tocci for phases 1 and 2 are expected to be completed before the end of 2020.

These modular units will be manufactured at KBS’s plant in South Paris, ME.  At full capacity, this plant can produce between 500 and 600 building modules per year.   The Company will continue to evaluate the possibility of opening a second idle modular factory located a short distance away in Oxford, ME.  The decision to re-open this similar-sized second manufacturing facility will depend on KBS’s success in growing its backlog as it executes on its strategy to expand further into the commercial-scale multi-family market, predominantly in the Greater Boston area.  In May 2020, Digirad executed a public equity offering to fund the increased working capital needs associated with this growth, among other things, which raised $5.0 million in gross proceeds (before fees and expenses).

Jeff Eberwein, Digirad’s Chairman noted, “We are thrilled to be working on this project with Tocci, a company with extensive experience in the construction of modular buildings, including ‘Graphic,’ the largest modular housing project in Boston to date.  This contract marks KBS’s re-entry into the commercial construction market, which brings a significant growth opportunity to the Company.  In addition to the project announced today, KBS is currently involved in multiple discussions for various large commercial construction projects for the New England market and we expect some of these projects to start construction later this year.  KBS’s potential sales pipeline currently totals more than $50 million, representing potential future production of approximately 1,000 building modules.”

About Digirad Corporation
Digirad Corporation is a diversified holding company with three operating 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 Company’s real estate assets and investments.

Forward-Looking Statements Disclaimer Statement
“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 Company’s 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 Company’s ability to repay or refinance it or incur additional debt in the future; the Company’s need for a significant amount of cash to service and repay the debt and to pay dividends on the Company’s 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; disruptions in the relationship with third party vendors; accounts receivable turnover; insufficient cash flows and resulting in 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 Company’s common stock and preferred stock; stock volatility and in liquidity; risks to preferred stockholders of not receiving dividends and risks to the Company’s ability to pursue growth opportunities if the Company continues to pay dividends according to the terms of the Company’s preferred stock; the Company’s ability to execute on its business strategy (including any cost reduction plans); the Company’s failure to realize expected benefits of restructuring and cost-cutting actions; the Company’s ability to preserve and monetize its net operating losses; risks associated with the Company’s possible pursuit of acquisitions; the Company’s ability to consummate successful acquisitions and execute related integration, including to successfully integrate ATRM’s operations and realize the synergies from the acquisition of ATRM, as well as factors related to the Company’s business (including ATRM) including economic and financial market conditions generally and economic conditions in the Company’s 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 Company’s services.  For a detailed discussion of cautionary statements and risks that may affect the Company’s future results of operations and financial results, please refer to the Company’s filings with the Securities and Exchange Commission, including, but not limited to, the risk factors in the Company’s most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. This release reflects management’s 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 CorporationThe Equity Group
Jeffrey E. EberweinLena Cati
Chairman of the BoardThe Equity Group
203-489-9501212-836-9611
ir@digirad.comlcati@equityny.com

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