MILWAUKEE, March 8 /PRNewswire-FirstCall/ — Merge Technologies Incorporated, d.b.a. Merge Healthcare (Nasdaq: MRGE; TSX: MRG), today announced financial results for the quarter and year ended December 31, 2006.
(Logo: http://www.newscom.com/cgi-bin/prnh/20030430/MRGELOGO )Fourth Quarter Results:
For the fourth quarter ended December 31, 2006, revenue totaled $13.2 million compared to $25.5 million in the fourth quarter ended December 31, 2005. During the fourth quarter of 2006, the Company recognized a goodwill impairment, trade name impairment and restructuring charge of $11.3 million, or $0.33 per share, primarily related to the right-sizing initiative announced in November 2006. Including this charge, Merge’s GAAP loss was $27.0 million or $0.80 per diluted share versus earnings of $2.8 million or $0.08 per diluted share during the same period last year.
Additionally, Merge Healthcare recorded a full income tax valuation allowance during the fourth quarter, relating primarily to the uncertainty of our ability to utilize our tax net operating loss carry forwards in future years.
Fiscal 2006 Year-end Results:
For the year ended December 31, 2006, revenue totaled $75.0 million compared to $82.6 million in the prior year. The Company’s GAAP loss totaled $258.5 million or $7.67 per diluted share, which included a goodwill impairment, trade name impairment and restructuring charge of $230.8 million, or $6.85 per share, versus a net loss of $2.7 million or $0.11 per diluted share in fiscal 2005.
The Company’s cash balance as of December 31, 2006 was $45.9 million, a decrease from $52.2 million at September 30, 2006 and a decrease from $64.3 million at December 31, 2005. Deferred revenue totaled $21.4 million at December 31, 2006, an increase from $20.4 million at September 30, 2006 and a decrease from $34.7 million at December 31, 2005.
Analysis of Results:
“These last few months have witnessed tremendous change at Merge. While our financial results will continue to lag some of our strategic decisions, we have made great strides in repositioning the company to become a leading global supplier of medical imaging and clinical applications solutions in the future,” stated Ken Rardin, Chief Executive Officer of Merge Healthcare. “While our return to profitability will not happen overnight, we are working diligently on the integration of our Cedara and Merge Healthcare businesses, and are seeing the fruits of our labor as the new senior management team is beginning to work very effectively together.” Mr. Rardin concluded, “We believe the worst is behind us and we are confident that the changes that we have made over the past several months will begin to pay off over the next several quarters. As I have stated previously, I still believe we are on track to return to a profitable growth company by the fourth quarter of this year.”
Conference Call Details:
The management of Merge Technologies Incorporated will conduct a conference call on Friday, March 9, 2007 at 10:00 AM (Eastern) to review fourth quarter results and provide an update of the company’s business operations and strategy. Following the review, a question and answer session will be conducted.
Investors will have the opportunity to listen to the conference call via phone or over the Internet at http://www.videonewswire.com/event.asp?id=38336 . To listen to the live call, investors should go to the web site at least fifteen minutes early to register, download, and install any necessary audio software. For those who cannot listen to the live broadcast, a replay via the Internet will also be available shortly after the call. Detailed call and web cast information is also listed at: http://www.merge.com/CORP/investorrelations/confcalllist.asp .
Merge Healthcare is a developer of medical imaging and clinical software applications and developmental tools that are on the forefront of medicine. We develop medical imaging software solutions that support end-to-end business and clinical workflow for radiology department and specialty practices, imaging centers and hospitals. Our software technologies accelerate market delivery for our OEM customers, while our end-user solutions improve our customers’ productivity and enhance the quality of the patient experience. For additional information, visit our website at http://www.merge.com/ .
Except for the historical information herein, the matters discussed in this news release include forward-looking statements that may involve a number of risks and uncertainties. When used in this press release, the words “will,” “believes,” “intends,” “anticipates,” “expects” and similar expressions are intended to identify forward-looking statements. Actual results could differ materially from those expressed in, or implied by, the forward-looking statements based on a number of factors, including, but not limited to, the risk factors detailed in the Company’s filings with the Securities and Exchange Commission. Except as expressly required by the federal securities laws, the Company undertakes no obligation to update such factors or to publicly announce the results of any of the forward-looking statements contained herein to reflect future events, developments, or changed circumstances, or for any other reason.
MERGE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)December 31, December 31,
2006 2005Current assets:
Cash $45,945 $64,278
Accounts receivable, net 17,210 23,624
Inventory 2,164 2,440
Prepaid expenses 1,660 2,646
Deferred income taxes 196 11,213
Other current assets 812 3,208
Total current assets 67,987 107,409Property and equipment, net 3,940 4,440
Purchased and developed software, net 16,628 19,539
Other intangibles, net 9,511 11,789
Goodwill 124,407 350,634
Other 12,190 7,862
Total assets $234,663 $501,673Current liabilities:
Accounts payable $8,284 $5,938
Accrued wages 6,244 5,870
Income taxes payable 4,033 3,894
Other accrued liabilities 2,381 3,453
Deferred revenue 18,175 30,918
Total current liabilities 39,117 50,073Deferred income taxes – 3,491
Deferred revenue 3,218 3,784
Other 633 484
Total liabilities 42,968 57,832Total shareholders’ equity 191,695 443,841
Total liabilities and shareholders’
equity $234,663 $501,673The condensed consolidated balance sheets should be read in conjunction
with the Company’s Annual Report on Form 10-K for 2006 which was filed
with the Securities and Exchange Commission on March 8, 2007.MERGE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except share data)Three Months Ended Twelve Months Ended
December 31, December 31,
2006 2005 2006 2005
(unaudited) (unaudited)
Net sales
Software and other $5,688 $17,702 $40,635 $60,120
Services and maintenance 7,486 7,758 34,407 22,481
Total net sales 13,174 25,460 75,042 82,601
Cost of sales:
Software and other 1,969 1,959 9,611 6,921
Services and maintenance 3,479 3,543 14,464 11,106
Amortization 1,944 3,989 5,532 7,740
Total cost of sales 7,392 9,491 29,607 25,767
Gross margin 5,782 15,969 45,435 56,834
Operating costs and
expenses:
Sales and marketing 5,326 5,001 20,132 13,647
Product research and
development 5,381 4,000 20,440 9,914
General and administrative 8,295 2,433 28,629 11,622
Acquired in-process
research and development – – – 13,046
Goodwill impairment,
restructuring and other
expenses 11,329 (219) 230,813 530
Depreciation and
amortization 995 1,120 4,033 3,549
Total operating costs and
expenses 31,326 12,335 304,047 52,308
Operating income (loss) (25,544) 3,634 (258,612) 4,526
Other income 636 382 2,614 706
Income (loss) before
income taxes (24,908) 4,016 (255,998) 5,232
Income tax expense 2,130 1,237 2,460 7,889
Net income (loss) $(27,038) $2,779 $(258,458) $(2,657)Net income (loss) per
share – basic $(0.80) $0.08 $(7.67) $(0.11)
Weighted average number of
common shares outstanding
– basic 33,848,978 33,523,440 33,701,735 24,696,762Net income (loss) per
share – diluted $(0.80) $0.08 $(7.67) $(0.11)
Weighted average number of
common shares
outstanding – diluted 33,848,978 34,930,278 33,701,735 24,696,762The condensed consolidated statements of operations should be read in
conjunction with the Company’s Annual Report on Form 10-K for 2006 which
was filed with the Securities and Exchange Commission on March 8, 2007.MERGE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands, except share data)Twelve Months Ended
December 31,
2006 2005Cash flows from operating activities:
Net loss $(258,458) $(2,657)
Adjustments to reconcile net loss to
net cash provided by (used in)
operating activities:
Depreciation and amortization 9,565 11,288
Provision for doubtful accounts receivable 289 723
Deferred income taxes 4,223 7,374
In-process research and development – 13,046
Stock-based compensation 5,961 979
Goodwill and trade name impairment charge 226,118 –
Change in assets and liabilities,
excluding effects from acquisitions:
Accounts receivable 6,125 (5,421)
Inventory 276 (439)
Prepaid expenses 986 (76)
Accounts payable 2,370 (3,474)
Accrued wages 350 765
Other accrued liabilities (923) (69)
Deferred revenue (13,309) 6,973
Other assets 1,328 (5,117)
Other 139 (293)
Net cash provided by (used in)
operating activities (14,960) 23,602
Cash flows from investing activities:
Cash acquired in acquisitions, net of
cash paid – 9,644
Purchases of property, equipment and
leasehold improvements (1,252) (2,996)
Purchased technology (367) –
Capitalized software development (2,257) (3,621)
Net cash provided by (used in)
investing activities (3,876) 3,027
Cash flows from financing activities:
Proceeds from exercise of stock options 471 9,508
Proceeds from employee stock purchase plan 33 65
Net cash provided by financing activities 504 9,573
Effect of exchange rate changes on cash (1) 9
Net increase (decrease) in cash (18,333) 36,211
Cash and cash equivalents, beginning
of period 64,278 28,067
Cash and cash equivalents, end of period 45,945 64,278The condensed consolidated statements of cash flows should be read in
conjunction with the Company’s Annual Report on Form 10-K for 2006 which
was filed with the Securities and Exchange Commission on March 8, 2007.
First Call Analyst:
FCMN Contact: mgretzon@merge.com
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Source: Merge Healthcare
