After a disappointing quarter,
Merge Healthcare Incorporated
) has witnessed events that favor the company. This series of
good news has been encouraging for investors. Recently,
this imaging and interoperability solutions provider revealed
encouraging data showing that its OrthoPACS have been used or is
being used by more than 650 orthopedic surgeons in over 50
practices. Additionally, in 2013, several practices using other
solutions of Merge intend to shift to OrthoPACS, a digital
templating solution useful for detailed image management,
launched last year.
Viewing the upward demand for imaging and interoperability
solutions in the growing orthopedic market, Merge is quite
confident about the success of OrthoPACS in this niche. The
company encouragingly noted that many practices are ready to
upgrade and adopt this new technology.
Technology released by Merge is also trusted by companies like
OrthoVirginia, which decided to adopt OrthoPACS. These companies
believe in Merge's commitment toward the market. Prior to Merge
OrthoPACS, OrthoVirginia used
) Office PACS 4.1. OrthoVirginia is also impressed with the
intrinsic technology and user-friendly upgrades.
Advantages for Merge OrthoPACS include the ability to diagnose
irrespective of place and time, planning operation with digital
template, and archiving studies safely. Additionally, it allows
access to images taken at more than one location in a single
viewer to orthopedic surgeons.
On the negative side, currently, Merge is facing major
difficulties in the form of increasing costs leading to pressure
on margin, decrease in medicare reimbursement owing to the
budgetary cuts starting Apr 1, as well as dependency on capital
investments by hospitals. Amid these headwinds, we are encouraged
by Merge's all-out effort for product expansion and business
development. We believe that OrthoPACS, as a part of Merge's
expanding portfolio, will help the company to revert back to its
original revenue trajectory in the coming quarters.
Innovation has been an aggressive strategy for Merge
Healthcare to drive growth. The company's efforts to expand its
portfolio to meet the growing needs of a multi-billion dollar
market are encouraging. Merge is also well placed to benefit from
the strong demand for EMR (Electronic Medical Records)-related
software in the near future on the back of the Stimulus bill. As
more healthcare providers adopt EMR, the demand for Merge
Healthcare's solutions is expected to increase.
With a consentient upward revision in earnings estimate, the
stock carries a Zacks Rank #3 (Hold). While we remain on the
sidelines for Merge, other medical devices stocks such as
Becton, Dickinson and Company
), carrying a Zacks Rank #2 (Buy), appear impressive.
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