Merge Healthcare announces fourth quarter and full year 2009 results

Merge Healthcare Incorporated (NASDAQ: MRGE), a health IT solutions provider, today announced financial results for the fourth quarter and full year 2009.

“Merge Healthcare ended 2009 as a much different company than it started the year”

“Merge Healthcare ended 2009 as a much different company than it started the year,” says Justin Dearborn, Merge CEO. “We have executed on a strategy to diversify the company to take advantage of opportunities within the broader global Healthcare IT market, while leveraging our core imaging expertise. We believe the investments we have made during 2009 in new products and international markets, along with our acquisition strategy, will benefit our shareholders in 2010 and beyond.”

Quarter Results:

Results comparing quarter over quarter and year over year are as follows (in millions):

Recurring revenue* comprised greater than 60% of total net sales in each of the fourth and third quarter of 2009, and greater than 50% of total net sales in the fourth quarter of 2008. Net sales in each of the periods indicated above have been reduced by the impact of purchase accounting, which was $1.0 million in the fourth quarter compared to $0.6 million in the third quarter of 2009.

Additionally, Merge completed a registered direct common stock offering in the fourth quarter that resulted in proceeds, net of advisor fees, of $25.2 million. These proceeds were used to retire an existing note payable, resulting in $7.1 million of net proceeds. The debt retirement timing led to an income statement charge of $3.3 million, and resulted in total debt-related charges of $3.7 million in the fourth quarter.

In the fourth quarter of 2009, the cash balance increased by $2.7 million to $19.6 million as of December 31, 2009. Cash flow from operations was reduced in the fourth quarter by $5.4 million, primarily as a result of $3.1 million of interest and early debt retirement cash costs. An additional $1.0 million was expended on an acquisition of assets in support of 2010 business initiatives, as well as another $1.0 million of real estate costs.

Year-to-Date Results:

Merge’s financial results for the year ended December 31, 2009, compared to 2008 are as follows (in millions):

Conference Call Information:

Merge will hold a public web cast tomorrow morning, February 11, 2010, at 8:30 AM EST to review these financial results, and to provide an update on business operations and strategy. Immediately following, there will be a question and answer session.

Investors will have the opportunity to listen to the conference call via telephone or over the Internet at Merge Healthcare Web Cast. To access the call, dial 1.800.221.2015 or 706.634.2159. The Conference ID Number to reference is 53230096. A replay via the Internet or telephone will be available shortly after the call at http://www.merge.com/investor/conferencecall.asp.