POWAY, CALIFORNIA, December 29, 2005 -- Digirad Corporation (NASDAQ:DRAD), a leading provider of cardiovascular imaging services and solid-state nuclear medicine imaging products to physician offices, hospitals and imaging centers, has announced the successful completion of the clinical testing of its mobile Cardius-3M imaging system. Digirad's subsidiary, Digirad Imaging Solutions (DIS), said that it plans to upgrade its fleet of mobile imaging systems over the next three years with this proprietary triple-head digital gamma camera. Digirad anticipates that the first Cardius-3M systems will be placed into regular operation in DIS in the first quarter of 2006.

"The upgrade of our DIS fleet is an important element of our strategy to bring the benefits of Digirad's most advanced mobile cardiac imaging technology to our DIS physician clients and their patients," said Chief Executive Officer Gary Burbach. "The Cardius-3M offers excellent image quality and faster imaging compared to traditional single and dual-head camera systems, which we believe will enhance workflow during the servicing day and increase DIS customer satisfaction. We also expect the Cardius-3M to create efficiencies in delivering the DIS service, as faster imaging should result in shorter work days for our technologists, reducing direct labor costs and employee turnover and helping to offset the anticipated higher system costs."

Mark Casner, President of DIS, added, "Our leadership in mobile nuclear cardiac imaging has supported a growing stream of revenue for Digirad. Together with our programs to increase the effectiveness of our sales efforts and address a lengthening sales cycle, we expect the roll-out of our Cardius-3M system to our DIS fleet to enhance our position in this market."
In connection with the DIS fleet upgrade, the Company said that it expects to report a non-cash charge of approximately $1.1 million in the fourth quarter ending December 31, 2005 related to a reduction in the depreciable life of its current DIS cameras to five years. Accordingly, while the Company continues to expect revenue for the fourth quarter of 2005 to be between $16.2 million and $17.0 million, it now anticipates the fourth quarter loss to be between $3.5 million and $4.1 million. For 2006, the Company anticipates incremental depreciation expense of approximately $1.0 million, of which approximately $700,000 is expected to be reflected in the Company's financial results for the year's first half. Digirad said that it expects to invest between $4.0 million and $5.0 million on the fleet upgrade during 2006.

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