UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report: July 30, 2003
(Date of earliest event reported)
MERGE TECHNOLOGIES INCORPORATED
(Exact name of registrant as specified in the charter)
Wisconsin 0-29486 39-1600938
(State or other jurisdiction (Commission File No.) (IRS Employer
of incorporation) Identification No.)
1126 South 70th Street, Milwaukee, Wisconsin 53214-3151
(Address of Principal Executive Offices)
(414) 977-4000
(Registrant's telephone number including area code)
N/A
(Former name or former address, if changed since last report)
ITEM 12. RESULT OF OPERATIONS & FINANCIAL CONDITION
On July 30, 2003, Merge Technologies Incorporated dba Merge eFilm
announced the financial results for its second quarter of its fiscal year 2003.
A copy of the earnings press release announcing financial results for
the second quarter, together with Condensed Consolidated Statements of
Operations for the three and six months ended June 30, 2003 and 2002,
respectively, as well as Summary Balance Sheet Data for June 30, 2003 and
December 31, 2002, included therein, is filed as an exhibit to this Form 8-K
and is incorporated by reference herein.
(a) Exhibit
99.1 Press Release announcing financial results for second quarter
of its fiscal year 2003.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
MERGE TECHNOLOGIES INCORPORATED
Dated: July 30, 2003 By: /s/ Richard A. Linden
-------------------------------------
Richard A. Linden,
President and Chief Executive Officer
MERGE TECHNOLOGIES INCORPORATED
Dated: July 30, 2003 By: /s/ Scott T. Veech
-------------------------------------
Scott T. Veech,
Chief Financial Officer, Treasurer
and Secretary
EXHIBIT 99.1
[MERGE EFILM LOGO]
NEWS RELEASE
For Immediate Release
Contact: Scott Veech, Chief Financial Officer
Richard Linden, President & CEO
(414) 977-4000
MERGE TECHNOLOGIES INCORPORATED
ANNOUNCES RECORD SECOND QUARTER 2003 EARNINGS
Revenues grow 54%; Company completes strategic acquisition
Milwaukee, WI, July 30, 2003 - Merge Technologies Incorporated
(NASDAQ:MRGE), d.b.a Merge eFilm, today announced financial results for the
quarter and six months ended June 30, 2003.
Revenues for the quarter ended June 30, 2003 were $6,434,000, an
increase of 54% over revenues of $4,183,000 for the quarter ended June 30,
2002. Revenues were $12,552,000 for the six months ended June 30, 2003, an
increase of 44% over revenues of $8,718,000 for the six months ended June 30,
2002.
Net income for the quarter ended June 30, 2003, was $1,400,000, an
increase of 133% over net income of $600,000 for the quarter ended June 30,
2002. Basic EPS was $0.13 and diluted EPS was $0.12 for the quarter ended
June 30, 2003 compared to basic EPS of $0.07 and diluted EPS of $0.06 for the
quarter ended June 30, 2002.
Net income for the six months ended June 30, 2003 was $2,716,000, an
increase of 108% over net income of $1,304,000 for the six months ended June
30, 2002. Basic EPS was $0.25 and diluted EPS was $0.23 for the six months
ended June 30, 2003 compared to basic EPS of $0.16 and diluted EPS of $0.12
for the six months ended June 30, 2002.
Gross margins increased to 75% for the quarter ended June 30, 2003,
from 61% for the quarter ended June 30, 2002. Gross margins for the six
months ended June 30, 2003 increased to 71% compared to 61% for the six months
ended June 30, 2002. Cash at June 30, 2003 increased 107% to $9,150,000 from
$4,411,000 at December 31, 2002.
Analysis of Results:
"I am pleased to report that we successfully completed several
strategic, financial and operational objectives during the second quarter,"
said Richard A. Linden, President and CEO. "Our performance continues to
demonstrate the market's acceptance of our product and service offering and our
ability to successfully execute our strategy. We demonstrated a strong focus
on operational execution and a continued alignment of our strategy within our
target market, where the value of our expanded RIS/PACS product and service
offering is evident.
"Operationally, we strengthened our direct sales pipeline and VAR
partnerships through a steady combination of additional trade show exposure,
adding sales and pre-sales resources and growing our VAR partnership presence.
We continue to be pleased with the steady growth in our full FUSION Solution
PACS customer base, along with the market presence of our eFilm workstation
product, which has now reached over 34,000 users. We are a market leader in
installations of desktop diagnostic imaging software, and continue to see that
leadership position translate into full FUSION solution sales.
"We continued to make steady progress with respect to the innovation
of our FUSION and eFilm Workstation software products. New releases of our
FUSION Server and eFilm Workstation entered clinical trials at several
customer sites during the second quarter. These new releases bring added
functionality and performance that is expected to enhance our competitive
position in the marketplace. We continue to meet our product innovation
goal of releasing new products or upgrades every three to four months and
accelerating the cycle time from new product design to commercialization,"
said Linden.
"In addition to strong financial and operational performance, we
successfully planned and closed two important transactions consistent with our
strategy for growth. Our acquisition of RIS Logic, which closed in early
July, has positioned us to accelerate our previously stated strategy as a
global healthcare software and services company focused on providing our
customers an integrated RIS/PACS solution. Combining RIS Logic's Radiology
Information System (RIS) with our FUSION PACS (Picture Archiving Communication
System) solution fully automates the operation of imaging services, achieving
a filmless and paperless workflow environment. This customer-driven solution
allows Merge eFilm to be the single source provider for our customers'
mission-critical workflow needs, supported by comprehensive professional
services. The integration plan is in progress, with an initial focus on
marketing, sales and RIS/PACS product integration. Through our combined direct
sales force of fifteen, we anticipate incremental sales through cross selling
and joint RIS/PACS opportunities as demonstrated with CDI, a national
outpatient imaging center company, which is now a joint Merge eFilm and RIS
Logic customer. Beyond the strategy, target market and product synergies
shared by the two companies, the combined organization will benefit from the
addition of several experienced RIS Logic executives, including Dan Quigg,
President RIS Logic Division, who brings extensive experience in developing
and leading software and professional service companies.
"In addition, we successfully moved to NASDAQ's National Market and
completed a common stock private placement in July, to add approximately $8
million in cash to our strong balance sheet. These accomplishments continue
to expand our institutional investor base and provide the Company with the
financial strength and flexibility to continue our strategic growth
initiatives," said Linden.
Guidance:
The Company anticipates market conditions to remain supportive of its
software-centric product and service offerings, which are focused primarily on
small to medium sized hospitals and imaging centers. The target market's
receptiveness to the expanded RIS/PACS offering with the acquisition of RIS
Logic reinforces the Company's belief regarding continued healthcare IT
expenditures on integrated RIS/PACS solutions. The Company's year-to-date
performance combined with the recent acquisition of RIS Logic positions the
Company to increase its guidance for 2003 revenues to the range of $29 million
to $30 million, with year-over-year growth of approximately 38% to 40%.
Furthermore, the Company is increasing its estimate for diluted EPS on an
after-tax basis to a range of $0.49 to $0.52, excluding charges associated
with the acquisition. The Company expects the RIS Logic acquisition to be
earnings neutral, excluding charges associated with the acquisition, for the
remainder of 2003 and accretive in 2004 and beyond.
# # #
About Merge eFilm
Merge eFilm is a global healthcare software and services company focused on
delivering a suite of RIS/PACS software solutions and professional services to
hospitals and imaging centers. Our strength lies in our ability to automate,
integrate and replicate optimal image and information workflow for everyone
involved in the care of the patient. For more than sixteen years, Merge eFilm
has leveraged its healthcare IT, clinical and engineering experience to create
elegant and affordable solutions that improve the clinicians' productivity and
enhance the quality of the care they provide. For additional information,
visit our websites at www.merge-efilm.com and www.rislogic.com.
Except for the historical information herein, the matters discussed in this
news release include forward-looking statements that may involve a number of
risks and uncertainties. When used in this press release, the words: believes,
intends, anticipates, expects, and similar expressions are intended to
identify forward-looking statements. Actual results could differ materially
from those projected in the forward-looking statements based on a number of
factors, including, but not limited to, risks in product and technology
development, market acceptance of new products and continuing product demand,
the impact of competitive products and pricing, changing economic conditions,
credit and payment risks associated with end-user sales, dependence on major
customers, dependence on key personnel, and other risk factors detailed in
filings with the Securities and Exchange Commission. The Company undertakes
no obligation to publicly release the result of any revisions to these
forward-looking statements that may be made to reflect any future events or
circumstances.
(Financial statements attached)
MERGE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (1)
(Dollars in thousands, except share data)
(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
-----------------------------------------------------------
2003 2002 2003 2002
----------- ----------- ----------- -----------
Net sales..................................... $ 6,434 $ 4,183 $ 12,552 $ 8,718
Cost of sales................................. 1,628 1,629 3,680 3,417
----------- ----------- ----------- -----------
Gross profit.................................. 4,806 2,554 8,872 5,301
----------- ----------- ----------- -----------
Operating costs and expenses:
sales and marketing.......................... 1,477 899 2,802 1,766
Product research and development............. 397 350 836 714
General and administrative................... 865 480 1,587 1,149
Depreciation and amortization................ 117 119 223 232
Acquired in-process research and development. ---- 148 ---- 148
----------- ----------- ----------- -----------
Total operating costs and expenses............ 2,856 1,996 5,448 4,009
----------- ----------- ----------- -----------
Operating income.............................. 1,950 558 3,424 1,292
----------- ----------- ----------- -----------
Total other income (loss)..................... (241) 56 (219) 46
----------- ----------- ----------- -----------
Net income before income taxes................ 1,709 614 3,205 1,338
----------- ----------- ----------- -----------
Income tax expense............................ 309 14 489 34
----------- ----------- ----------- -----------
Net income.................................... $ 1,400 $ 600 $ 2,716 $ 1,304
=========== =========== =========== ===========
Net income per share - basic.................. $ 0.13 $ 0.07 $ 0.25 $ 0.16
=========== =========== =========== ===========
Weighted average number of common shares
outstanding - basic.......................... 10,762,195 7,751,870 10,612,970 7,415,664
=========== =========== =========== ===========
Net income per share - diluted................ $ 0.12 $ 0.06 $ 0.23 $ 0.12
=========== =========== =========== ===========
Weighted average number of common shares
outstanding - diluted........................ 11,677,051 9,910,400 11,749,134 9,740,228
=========== =========== =========== ===========
(1) These condensed consolidated statements of operations should be read in
conjunction with the Company's Annual Report on Form 10-KSB for fiscal
2002 and its Quarterly Report on Form 10-Q for the three and six months
ended June 30, 2003 proposed to be filed on or prior to August 14, 2003.
MERGE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
SUMMARY BALANCE SHEET DATA(1)
(In thousands, except for current ratio)
(unaudited)
June 30, December 31,
2003 2002 Change
-------- -------- --------
Cash.................................. $ 9,150 $ 4,411 107%
Accounts receivable................... 5,916 7,148 -17%
Inventory............................. 828 453 83%
Accounts payable...................... 710 1,493 -52%
Deferred revenue...................... 2,551 1,892 35%
Total current assets.................. $ 16,333 $ 12,213 34%
Total current liabilities............. 4,814 4,341 11%
Total assets.......................... $ 31,892 $ 27,246 17%
Total liabilities..................... 5,349 5,563 -4%
Current ratio......................... 3.39 2.81 21%
(1) This summary balance sheet data should be read in conjunction with
the Company's Annual Report on Form 10-KSB for fiscal 2002 and its
Quarterly Report on Form 10-Q for the three and six months ended
June 30, 2003 proposed to be filed on or prior to August 14, 2003.