Merge Healthcare reports fiscal 2009 third-quarter results

Merge HealthcareOct 29 2009

Merge Healthcare Incorporated (NASDAQ:MRGE), a health IT solutions provider, today announced financial results for the third quarter of 2009.

“Our focus on the integration of our two acquisitions in the third quarter has driven a financial performance that exceeded our expectations,” said Justin Dearborn CEO. “We are excited about the improvement we continue to see in sales pipeline activity and customer bookings since these acquisitions closed. We expect that a continuation of this should lead to GAAP net income for the acquired entities beginning in the fourth quarter of 2009.”

“We have managed the business through a down cycle in the economy and depressed spending in our customer base. We are encouraged at the improvement starting to be felt in both.”

Mr. Dearborn further noted that the acquisitions of etrials Worldwide, Inc. (“etrials”, formerly NASDAQ:ETWC) and Confirma, Inc. (“Confirma”):

• Increase Merge’s addressable market;
• Create organic growth opportunities through improved cross-selling activity; and
• Are expected to be accretive in 2010.

Quarter Results:

Results compared to the same quarter in the prior year, as well as the prior quarter are as follows (in millions):

The third quarter of 2009 includes the results of etrials since July 20, 2009, and the results of Confirma since September 1, 2009, which are the respective dates we completed these two acquisitions. These results do not include $0.6 million in revenue that could not be recognized under GAAP due to the purchase accounting treatment related to the acquired entities. The impact on revenue due to purchase accounting treatment is anticipated to be $1.0 million in the fourth quarter of 2009 and $1.3 million for the full year 2010.

In the third quarter of 2009, the cash balance decreased by $3.1 million to $16.9 million at September 30, 2009. Cash generated from operating activities was $1.1 million, which was offset by $5.1 million of net cash paid for the two strategic acquisitions.