Merge posts big Q3 loss on goodwill charges

Feb 20, 2008

Healthcare IT and advanced visualization developer Merge Healthcare posted a deep loss for the third quarter of 2007 (end-September 30).

For the quarter, Merge recorded revenue of $14.1 million, up slightly compared to $13.9 million in 2006. But the company's net loss for the quarter was $141.6 million, compared to a net loss of $11.2 million for the same period the previous year.

Merge said that the major factor behind the loss was a one-time charge of $131.6 million for impairment of goodwill and other long-lived assets, in accordance with U.S. Generally Accepted Accounting Principles (GAAP). Without the charge, the company had an operating loss of $5.5 million for the quarter, compared with an operating loss of $4.4 million in the corresponding quarter of 2006.

For the nine months ending September 30, the Milwaukee-based firm's revenues decreased 28% to $44 million as compared to $61.5 million in 2006. Operating loss for the nine months was $162.8 million, compared to $228.3 million for the same period in 2006.

On February 14, the company announced that by the end of this year, it would reduce its worldwide workforce from 600 to 420 staff members. Merge has also closed its Burlington, MA, office and indicated that it may spin off its Europe, Middle East, and Africa (EMEA) business units to local management teams.

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