14 Aug Merge Healthcare again faces delisting from the NASDAQ
Milwaukee, Wis. – Merge Healthcare has announced that it will be required to correct an error in how it has recognized revenue from software and maintenance contracts dating back to 2004, and that it once again faces delisting from the NASDAQ Global Market.
The Milwaukee-based provider of medical imaging software and services was notified on Aug. 13 that its common stock is subject to delisting from the NASDAQ. That announcement came several days after the company announced it would postpone the release of financial results for the three- and six-month periods that ended on June 30, 2007.
Merge determined that that previous accounting for the revenue from contracts that contain both a license of software and related maintenance and support was in error following a review by its independent registered public accounting firm, management, and Audit Committee.
The company said it cannot at this time quantify the impact of the restatement, but it will be required to restate its audited financial statements for all of 2004, 2005, and 2006, plus other financial information included in its annual report for 2006 and unaudited financial statements included in its 2007 first quarter report.
Chief executive Ken Rardin said in a release that the issue relates to a complex technical interpretation of the accounting rules and the company’s software and maintenance contracts with customers. “The customer contracts affected are the same contracts that have been used for several years, and the restatement is not the result of improprieties by any of our personnel,” he said. “We are committed to resolving this matter quickly, and while doing so, will not lose our focus on our business and our customers.”
Merge received written notice of a NASDAQ staff determination that it has not satisfied a rule for continued listing on NASDAQ because the company did not timely file its financial report for the quarter that ended June 30, 2007. Merge intends to request a hearing before a NASDAQ Listing Qualifications Panel to review the staff determination, and no action will be taken to delist the company’s common stock until the panel has completed its review.
Following the disclosure of inaccurate financial reporting dating back to 2003, Merge also faced delisting from the NASDAQ in 2006. Several top executives resigned in the wake of the disclosure.
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