Merge Healthcare Inc. (MRGE) recently agreed to acquire Confirma in an all-stock transaction. The transaction is valued at $22 million taking into account roughly 5.6 million shares of Merge’s common stock based on a ten-day volume weighted average price method. Post-acquisition, Confirma investors will own roughly 8.5% stake in Merge. Merge expects to close the transaction next month.
The acquisition gives Merge an access to Confirma’s patented and proven computer assisted detection (CAD) technology. CAD is a medical-imaging software that assists doctors in interpreting medical images. In early stages of implementation, the new technology significantly reduces healthcare costs while enhancing patient care.
Merge, a healthcare software and services company, was paralyzed by several issues in the past like dwindling cash balance, management turnover, accounting miscues and litigations. The real turnaround started from the second quarter of 2008 when the company received a much needed cash infusion of $20 million from Merrick RIS LLC in May 2008. Since then, the company started reporting net income.
Merge recently tapped the Chinese healthcare market by forming an alliance with the leading healthcare IT provider there. The alliance is likely to widen Merge’s customer base and increase its top line.
We think that like its competitors, AllScripts-Misys Healthcare Solutions (MDRX) and Amicas Inc. (AMCS), Merge will benefit from the US Congress’ approval of more than $20 billion in health-information technology spending, which will be realized between 2011 and 2015.
Read the full analyst report on “MRGE”
Read the full analyst report on “MDRX”
Read the full analyst report on “AMCS”
Zacks Investment Research
