Merge executives resign, firm to restate 2002 through 2005 statements

Jul 2, 2006

Radiology IT and advanced visualization developer Merge Healthcare has completed an investigation of accounting and financial disclosure matters and announced the resignation of several executives, including its founder and interim CEO William Mortimore. The company also indicated that financial statements from 2002 through 2005 should no longer be relied upon.

Independent national law firm Sidley Austin and Alvarez & Marsal reported their findings from a comprehensive investigation of the company's accounting and financial reporting practices to the Milwaukee-based firm's audit committee on June 29. The audit committee then presented its recommendations to all of the nonemployee directors on June 30, according to Merge.

On July 2, the board of directors held a meeting, and accepted the resignations of Mortimore; chief financial officer, treasurer, and secretary Scott Veech; and senior vice president, strategic business development David Noshay.

Also at the meeting, chairman Michael Dunham was appointed as principal executive office on an interim basis. Senior vice president and Cedara Software president Brian Pedlar and senior vice president and Merge eMed president Robert White were named co-presidents and co-CEOs on an interim basis.

Along with their responsibilities with Cedara and Merge eMed, Pedlar and White will also have additional responsibilities with the company's combined operations, Merge said. They will report to Dunham, who will be overseeing Merge's day-to-day operations, according to the vendor.

Dunham has resigned as a member of the board's audit committee. The board is continuing its search for a permanent CEO.

In other developments, Merge said that financial statements for each of the reporting periods in 2002 through 2005 should no longer be relied upon, due to improper accounting and financial reporting practices. The firm anticipates that the restatements will primarily relate to the timing of revenue recognition, with a significant amount of revenue recognized in 2002 through early 2005 expected to be recognized in late 2005 and 2006.

Merge said it can't yet provide a precise estimate of the impact of these noncash adjustments to the financial statements.

By AuntMinnie.com staff writers
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