Imaging systems maker Digirad Corp.(NSDQ:DRAD) announced this week that it’s shifting its headquarters to Georgia and scaling down its manufacturing in attempts to save some cash and streamline its operations.
The company worked out a deal with its former Poway, Calif., landlord to terminate the lease, moving its camera manufacturing, service and support operations to an outsourced provider in the San Diego area. The move follows a decision last year to move its headquarters from California to Georgia.
"Based on our strategic decision to focus on growing our Digirad Imaging Solutions business, outsourcing our manufacturing operations and moving our headquarters to Atlanta, we no longer needed the large manufacturing facility in Poway," president & CEO Matthew Molchan said in prepared remarks. "This is another important step in our ongoing effort to find savings in our new business model and right-size our business going forward. It will obviously benefit us in terms of cash flow and profits on a go-forward basis and it places our camera and camera support services operation in an appropriately-sized facility."
Digirad in September 2013 signed an exclusive manufacturing agreement to outsource manufacturing of its solid-state nuclear imaging cameras to Spectrum Assembly, saying at the time that the move fell in line with efforts to make camera production "more cost effective, nimble and flexible to meet the demands of our customers and the market."
The company expects to incur lease termination fees and moving costs totaling about $720,000, according to an SEC filing.
DRAD shares remained relatively flat today, trading at a 0.9% increase of $3.58 as of about 2:05 p.m.