Digirad intends to use its net proceeds from the sale to repay its debt and finance HoldCo growth strategy.
Shares of Digirad Corporation (DRAD) made a strong move making it one of the leading volume stocks in the market today. The stock pushed higher after the company announced to sell its DMS Health Technologies, Inc. business unit for a purchase price of $18.75 million.
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Digirad shares traded higher in the premarket soaring up to 25%. DRAD began the session at $3.10 compared to the previous close of $2.55. The trading volume is up by 40 million as it continues to increase.
At the time of press at 11:34 A.M. EDT, DRAD was trading at $3.18 surging by 24.70%.
An $18 Million Sales Agreement for DMS Health
Digirad Corporation on Nov. 3 announced that it has entered into a Stock Purchase Agreement to sell its DMS Health Technologies business unit for almost $18.75 million.
As the sale of DMS Health Technologies will be taking place in form of a Stock Purchase Agreement, the agreement is expected to close in January 2021 based on the satisfaction of customary closing conditions.
Based in Fargo, United States, DMS Health Technologies provides diagnostic health services focusing on patient care. DMS offers contract diagnostic imaging, including computerized tomography (CT), positron emission tomography (PET), magnetic resonance imaging (MRI), and nuclear medicine and healthcare expertise through a suitable mobile service.
Digirad reported that its DMS Health business recorded $41.3 million in revenue, which accounted for 40.1% of the total revenue of the Healthcare division.
The sale of DMS Health Technologies business will allow Digirad to shape their healthcare portfolio and improve healthcare services by focusing on selling and servicing its branded solid-state imaging cameras and offering on-site imaging services to physicians and hospitals across the globe.
Strong tactical move
Digirad Corporation (DRAD) is focusing on the implementation of its HoldCo growth strategy. To enhance the business structure and achieve future goals, the divestiture of assets will help Digirad in supporting its HoldCo growth strategy.
The Chairman of the company, Jeff Eberwein said:
“The sale of DMS Health will substantially improve our balance sheet and better position us to fund high-return organic growth investments and to pursue acquisitions. Potential acquisitions could be bolt-on in Healthcare or Building & Construction or entry into an entirely new business sector.”
Above all, the company is selling an asset worth more than $18 billion, the point here is that Digirad has a market capitalization of around $14 million.
So, in order to get a 30%+ premium to the total market cap of the company, DRAD did not have to sell itself. Rather, it sold its business unit from the healthcare sector.
Tactically it is a great move to achieve the strategic goals which means that Digirad Corporation (DRAD) is heading in right direction.