02 Aug Cedara acquisition costs hit Merge Technologies numbers
MILWAUKEE – Merge Technologies, Inc., a developer and provider of medical imaging and information management software and services, announced its second quarter results Tuesday morning, showing both growth and losses.
Although quarterly revenue was at a record high of $18.8 million, the company took a loss of slightly under $12 million, or $0.62 per share, owing largely to merger and transition costs after acquiring Cedara Software, Inc., a medical imaging company.
“Strategically, we focused on … the closing of the merger with Cedara Software (and) implementing all near-term integration plans needed to support a successful third and fourth quarter of 2005,” company president Richard Linden explained during the company’s quarterly conference call.
Linden pointed out the company’s non-GAAP pre-tax earnings of $0.33 per share and the increased revenue as signs of the company’s health. Linden stressed his belief that the pre-tax earnings figure better reflected the company’s overall condition, stressing total revenues and excluding one-time expenses as a result of the merger.
“If you exclude approximately $15 million of merger-related one-time charges, you get an adjusted earnings per share of 17 cents for the quarter,” Linden said, which would be an increase from the first quarter’s $0.15 per share and the $0.11 from the second quarter of 2004.
Linden said the pre-tax earnings figure would be a more reliable figure in the short run, given merger costs, variations in effective tax rates and actual cash, as well as only having had one quarter of earnings form Cedara since the merger was finalized in early June.
Linden also cited as evidence of the company’s overall health solid sales of the company’s RIS/PACS software and other products in the medical market, as well as expansion of the company’s e-commerce business end and preparations for launching new software packages for accessing medical images and reports.
“I think they’ve done a very good with the integration of the merger,” said Ron Opel, senior vice president of research for Boston-based investment firm Moors and Cabot.
Opel added that the losses were not to be taken too seriously, as they were a product of the merger and necessary overhead for expansion.
“They really were technical losses,” Opel explained. “They were not losses on a cash basis.” He predicted the firm would see 25-30% growth per year over the next five years.