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Merge Reports Subscription Backlog Up 82%

CHICAGO, Feb. 18, 2013 (GLOBE NEWSWIRE) -- Merge Healthcare Incorporated (NASDAQ: MRGE), a leading provider of clinical systems and innovations that seek to transform healthcare, today announced its financial and business results for the fourth quarter of 2012. Merge also confirmed the conclusion of its previously announced evaluation of strategic alternatives.

"After careful evaluation, we have determined that the alternatives evaluated did not offer more value than our own strategic plan," said Jeff Surges, CEO of Merge Healthcare. "We will continue to build upon the proven success over the last few years and further leverage our portfolio of solutions into a more present and ready marketplace than ever before. In addition, we are reiterating annual guidance for 2013 on revenue, adjusted EBITDA and subscription backlog growth."

Financial Highlights:

  • Sales increased to $64.7 million ($65.1 million on a pro forma basis) in the quarter, from $64.1 million ($65.1 million on a pro forma basis) in the fourth quarter of 2011;
  • Adjusted EBITDA, before consideration of one-time non-cash charges, was $13.9 million, representing 21% of pro forma revenue in the quarter, compared to $15.1 million and 23% in the fourth quarter of 2011 (see table at end of this press release for reconciliation);
  • Subscription-based pricing arrangements generated 13.5% of total sales in the quarter and subscription backlog grew 13% in the quarter and 82% for the year; and
  • Reiterating 2013 guidance of revenue in the range of $265 - $275 million with an adjusted EBITDA range of 22-24% and expected subscription backlog growth by the end of 2013 of at least $25 million.

Business Highlights for the Fourth Quarter of 2012:

  • Added 12 iConnect® contracts with leading healthcare systems including Northeast Georgia, Health Ventures, St. John Providence Health System, Edward Hospital and Altru Health System;
  • Executed 17 contracts for Merge Cardiology solutions with clients including Borgess Medical Center, DuPage Medical Center, Boca Raton Regional Hospital, St. Thomas and Palos Hospital among others;
  • Bookings growth in sales to end-user customers in the Healthcare segment grew by 38% in 2012;
  • Merge clients will be eligible to receive an estimated total of $14 million in Meaningful Use incentive payments by utilizing Merge's Meaningful Use solutions for Radiology and Orthopedics; and
  • eClinical signed over 190 contracts in the quarter driving year-over-year bookings growth of 79%.

Quarter Results:

Results compared to the same quarter in the prior year on a GAAP basis are as follows (in millions, except per share data):

  Q4 2012 Q4 2011
Net sales $64.7 $64.1
Operating income (8.4) 8.3
Net loss attributable to common shareholders (17.3) (1.3)
Net income (loss) per diluted share ($0.19) ($0.01)
     
Cash balance at period end $35.9 $39.3
Cash from business operations* 9.4 11.9
     
*See table at the back of this earnings release.    

Pro forma results and other, non-GAAP measures compared to the same quarter in the prior year are as follows (in millions, except percentages and per share data):

  Q4 2012 Q4 2011
Pro forma results    
Net sales $65.1 $65.1
Adjusted net income (11.6) 4.2
Adjusted EBITDA 0.9 15.1
     
Adjusted net income per diluted share ($0.13) $0.04
Adjusted EBITDA per diluted share $0.01 $0.16
     
Non-GAAP and other measures    
Subscription, maintenance & EDI revenue as % of net sales** 58.3% N/A
Subscription and non-recurring backlog at period end $76.9 $56.2
Days sales outstanding 102 100
     
**Comparable information for periods prior to 2012 is not available.

Reconciliation of GAAP net income (loss) to adjusted net income and adjusted EBITDA is included after the financial information below.

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