by John R. Fischer
, Senior Reporter | November 05, 2020
Digirad Corporation is set to sell its DMS Health Technologies business unit for $18.75 million.
The mobile health business provides contract diagnostic imaging, including MR, PET, PET/CT and nuclear medicine through a mobile service.
“The divestiture of DMS Health will allow us to streamline our portfolio of healthcare services by focusing our efforts on selling and servicing our Digirad-branded solid-state imaging cameras and providing on-site imaging services to hospitals and physicians all over the country,” said Digirad CEO Matt Molchan in a statement.
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Digirad runs businesses in healthcare, building and construction, and real estate and investments. Digirad Health also runs three businesses in diagnostic imaging, diagnostic services and mobile healthcare.
DMS Health has operated under Digirad since being acquired
by it in 2015 for $36 million. Its headquarters is in Fargo, North Dakota, from which it provides mobile diagnostic imaging and related sales and services to small and regional hospitals across the country. A large concentration of providers that depend on it are located in the upper Midwest region. It generated $41.3 million in revenue for 2019, which makes up approximately 40.1% of the total revenue of Digirad’s healthcare division.
“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,” said Jeff Eberwein, Digirad’s chairman. “Potential acquisitions could be bolt-ons in healthcare or building and construction, or entry into an entirely new business sector.”
Digirad previously sold another of its business units, its MDSS Service contracts, which provided post-warranty contract maintenance services for large diagnostic imaging equipment. It was sold to Philips North America
in 2018 for a total consideration of $8 million.
The net proceeds from the sale of DMS Health will be used to pay off debt and finance Digirad’s HoldCo growth strategy (as Digirad is a diversified holding company).
The agreement for the sale of DMS Health is subject to customary closing conditions and is expected to be completed in January 2021.