Merge Healthcare Incorporated (NASDAQ: MRGE), a leading medical imaging solutions provider, today announced financial results for the third quarter of 2008.

Third quarter results:

For the third quarter ended September 30, 2008, net sales totaled $14.6 million, compared to $14.1 million in the third quarter ended September 30, 2007 and $13.3 million in the second quarter ended June 30, 2008.

Operating income for the third quarter ended September 30, 2008 was $1.3 million, compared to operating losses of $141.9 million in the third quarter ended September 30, 2007 and $18.3 million in the second quarter ended June 30, 2008. Contributing to the operating loss for the third quarter of 2007 was a goodwill impairment charge of $122.4 million. Contributing to the operating loss for the second quarter of 2008 were a restructuring charge of $7.5 million and a $3.0 million charge associated with the settlement of a class action lawsuit against us.

Net income for the third quarter of 2008 was $0.4 million, or $0.01 earnings per basic and diluted share, compared to a net loss of $141.6 million, or a $4.17 loss per basic and diluted share, in the third quarter of 2007 and a net loss of $18.2 million, or a $0.45 loss per basic and diluted share, in the second quarter of 2008.

During the third quarter of 2008, the cash balance decreased by approximately $6.3 million to approximately $14.4 million at September 30, 2008. As discussed in the second quarter earnings call, this decreased cash balance was primarily attributable to non-core activities consisting primarily of $4.0 million in restructuring-related payments (primarily termination benefits) and $3.3 million of lawsuit settlement payments.

"These results are in line with the estimates set forth in our preliminary third quarter release and are in line with the expectations set in our second quarter earnings call," according to Justin Dearborn, CEO of Merge Healthcare. "Given the macro-economic environment and the challenging turnaround required at Merge, we are very pleased with the progress the company made in the third quarter of 2008."

Nine month results:

For the nine months ended September 30, 2008, net sales totaled $41.7 million, compared to $44.0 million for the nine months ended September 30, 2007. The operating loss for the nine months ended September 30, 2008 was $25.4 million compared to an operating loss of $162.8 million for the nine months ended September 30, 2007. Net loss for the nine months ended September 30, 2008 totaled $25.6 million, or a $0.59 loss per basic and diluted share, compared to a loss of $162.0 million, or $4.78 loss per basic and diluted share, for the nine months ended September 30, 2007.

Bookings:

Gross bookings in the third quarter ended September 30, 2008 were approximately $6 million compared to approximately $10 million in the third quarter ended September 30, 2007 and approximately $10 million in the second quarter ended June 30, 2008. Bookings are defined by the Company as the value of all contracts signed during a period, including the renewal of software term contracts and it specifically excludes maintenance contracts other than the first year of customer support. Management will not report this non-GAAP metric in the future as it is not an indicator that can be directly linked to revenue recognizable by the Company in the near term. This measure is not in accordance with GAAP and may be different from the non-GAAP definition of bookings used by other companies.

Financial results, business operations and strategy conference call:

Merge will hold a public web cast today at 4:15 pm (Eastern Daylight Time) to review third quarter 2008 results and to provide an update of business operations and strategy. There will also be a question and answer session immediately following the financial and business updates.

Investors will have the opportunity to listen to the conference call via telephone or internet. To listen to the call via web cast, investors should go to the web site at least fifteen minutes prior to the scheduled time to register, download, and install any necessary audio software. For those who cannot listen to the broadcast, a replay via the internet or telephone will also be available shortly after the call. To access the URL via the internet, go to Merge Healthcare Web Cast.

Publisher: Paola Accalai

Source: Merge Healthcare
Author:
Date: Friday, October 31, 2008