Merge Healthcare to Delay Filing of Quarterly Report on Form 10-Q for Quarter Ended June 30, 2007

MILWAUKEE, Aug. 10 /PRNewswire-FirstCall/ — Merge Technologies Incorporated, doing business as Merge Healthcare (Nasdaq: MRGE; TSX: MRG), a leading provider of medical imaging software and services, announces that it will delay the filing of its Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 and will be filing a Form 12b-25 with the Securities and Exchange Commission to report this delay. The Company is unable to file its Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 at this time because it is examining whether it has been properly recognizing revenue from certain software contracts dating back to 2004 and earlier periods. The contracts at issue include both a license of software and related maintenance and support. Specifically, the Company is reviewing, in consultation with its public accountants, whether the Company should have recognized the entire value of the bundled contract as revenue over the period for which maintenance and support may be provided to the customer. The approach being considered is different from the Company’s historical practice of recognizing the fair value of the software principally in the initial year of the contract and the fair value of the maintenance over the maintenance period. This issue involves the application of very specific accounting literature and does not affect the total amount of revenue that will ultimately be recognized from these contracts, but rather the timing of the recognition of the revenues. The Company is diligently working with its professional advisors to resolve this issue and intends to file its Quarterly Report on Form 10-Q for the quarter ended June 30, 2007 as soon as possible.


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As a result of the matters more fully discussed above, the Company may be required to restate prior financial results. However, the Company is not yet in a position to determine what, if any, restatements will be required or to quantify any impact on prior reported results. The Company does not expect such restatement would have any impact on the total amount of revenue recognized from the contracts at issue.


The Company plans to host a conference call for investors promptly after it announces its operating results for the second quarter of 2007.


Merge Healthcare is a market leader in the development and delivery of medical imaging and information management software and services. Our innovative software solutions use leading-edge imaging software technologies that accelerate market delivery for our OEM customers, while our end-user solutions improve our customers’ productivity and enhance the quality of patient care they provide. For additional information, visit our website at http://www.mergehealthcare.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, costs, risks and effects of the past and any future restatement of financial statements of the Company and other actions that may be taken or required as a result of such restatement; the Company’s inability to timely file reports with the Securities and Exchange Commission; risks associated with the Company’s inability to meet the requirements of The NASDAQ Stock Market for continued listing, including possible delisting; costs, risks and effects of legal proceedings and investigations, including the formal investigation being conducted by the Securities and Exchange Commission (formerly an informal investigation) and class action, derivative, and other lawsuits; the uncertainty created by, the adverse impact on relationships with customers, potential customers, suppliers and investors potentially resulting from, and other risks associated with, the changes in the Company’s senior management; risks in product and technology development, market acceptance of new products and continuing product demand; the impact of competitive products and pricing; the Company’s ability to integrate acquisitions; changing economic conditions; credit and payment risks associated with end-user sales, the Company’s dependence on major customers; the Company’s dependence on key personnel; and other 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.


First Call Analyst:
FCMN Contact: [email protected]

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Source: Merge Healthcare


CONTACT: Melanie Gretzon, Director, Corporate Services, +1-414-977-4000,
[email protected], or Press, Beth Frost-Johnson, Senior Vice President,
Marketing, +1-414-977-4254,
[email protected], both of Merge
Healthcare


Web site: http://www.mergehealthcare.com/