Healthcare IT and advanced visualization developer Merge Healthcare has announced a plan to split the company into two operating groups, one to focus on its products and services for healthcare providers and the other to adopt a consumer focus.
The company said its Merge Healthcare division will concentrate on interoperability, imaging, and clinical software for healthcare providers, a business that currently makes up 85% of the firm's revenues. The division will move toward a subscription-based model for its products and will be led by existing CEO Jeff Surges.
The second division will be called Merge Data and Analytics (DNA) and will focus on what the company calls "the emergence of consumerism in healthcare." Merge DNA will offer consumer health stations, clinical trials software, and other consumer-focused products, and like Merge Healthcare it will move toward a subscription-focused model. The division will be led by former Merge CEO Justin Dearborn.
The company predicts that its move toward a subscription-based pricing model will result in significantly lower upfront revenue but more revenue over the term of a typical contract. While the company expects to grow revenues year-over-year in 2012, the trend toward subscription-based pricing has changed its revenue and earnings expectations for the year.
Simultaneously, Merge reported financial results for the first quarter (end-March 31) that showed higher sales but a slightly increased net loss compared to the same period the year before.
Revenues for the quarter were $61 million, up 16% compared to $52.7 million for the same period of 2011. Merge posted a net loss of $1.8 million in the most recent period, compared with a net loss of $1.6 million in the first quarter of 2011.
