Diagnostics imaging devices maker Digirad Corp.(NSDQ:DRAD) announced some big changes for its primary business, as well as an executive shift and a number of layoffs.
The company hopes to "reduce costs and to focus on maximizing cash flow," and expects to complete restructuring efforts by the end of this year, according to a recent regulatory filing.
Those efforts will include an undisclosed number of layoffs and a new CEO. Current Digirad Corp. president & CEO Todd Clyde will vacate the corner office, fully effective July 1, 2013, to be replaced by Matthew Molchan, who has served as president for Digirad Imaging Solutions since January 2012. Clyde will stay on as CEO until the end of June to help smooth the transition while the company undergoes its restructuring, Clyde told investors during a conference call last week. Molchan has already gained the president title as of late last month.
During the conference call, Clyde explained the rationale behind the change in leadership.
"Keeping the current executive structure in place, after the restructuring, would result in a top-heavy organization and our principal goal is to create a lean company," he said. "In order to reduce costs further, we also plan on relocating the Digirad corporate headquarters to Atlanta, where Matt is based, from our current San Diego base, pending a complete examination of the cost of relocation."
The company is relocating its headquarters from Poway, Cali., to Atlanta, Ga..
Digirad’s diagnostic restructuring aims to reduce operating costs by $3-$4 million annually, with a focus on optimizing cash flow from the service and maintenance of its installed base of cameras, according to its latest financial report.
"We will continue to sell our solid-state cameras into the marketplace, we will simply be restructuring the imaging camera part of the diagnostics imaging business to no longer burn cash in this business," Clyde said. "We will thoughtfully pursue new opportunities to increase our DIS service, increase the asset utilization of that business and of course, with a total focus of increasing the cash flow by executing on financially disciplined acquisitions that align to our DIS business."
