Recently,
Merge Healthcare
(
MRGE
) showcased its new cloud-based platform 'Merge Honeycomb' along
with its first application in the cloud, namely 'free image
sharing' at the Radiological Society of North America (RSNA). This
application enables users to upload, download, view and share
medical images everywhere without the help of any additional
software. Through this new solution the company intends to improve
image interoperability and achieve the 'Meaningful Use' stamp from
the federal government.
Earlier this month, Merge selected
Dell, Inc
(
DELL
) as its preferred cloud computing services provider. The company
expects to launch "Merge Honeycomb" in the first quarter of 2012,
which led to a 17.5% increase in the stock price to $5.18 on
Monday. Presently, Merge boasts the largest image sharing network
opportunity with 6,000 clinics across the US,
This apart, Merge also displayed its Enterprise-Wide Image
Interoperability with iConnect at the RSNA and demonstrated Merge
RIS v7.0. Earlier, in October this year, Merge got the complete EHR
Ambulatory certification for its RIS v7.0, which enables healthcare
providers to efficiently record patient details. Merge also
showcased Anywhere, Anytime Image Access with Merge PACS.
Furthermore, the company hosted Hands-On CADstream Workshops for
MRI Studies.
As per estimates, the US health IT (
HIT
) market, valued at $7.6 billion in 2010, is expected to grow to
$9.6 billion by 2014. The US HIT market is gradually adopting EHRs
to meet the funding requirements under the Health Information
Technology for Economic and Clinical Health (HITECH) Act. It aims
to expand the use of EHR by medical practitioners, in both
ambulatory and hospital-based settings. As a result, selected
companies in this space are witnessing heightened investor
interest. Favorable demographic trends, reinforced by a supportive
regulatory environment, are expected to sustain strong growth in
demand for EHR-related software in the foreseeable future.
We believe this will benefit Merge in the long run. Merge is
presently well placed to garner a meaningful share in the
multi-billion dollar HIT investment opportunity.However, in recent
years, medicare reimbursement for advanced medical imaging has
declined significantly.
Further, the Centers for Medicare and Medicaid Services (
CMS
) implemented additional reimbursement changes using the Physician
Payment Information Survey (PPIS) data, resulting in further
reimbursements cuts in the range of 30%-40% for advanced modalities
by 2013. This could negatively affect hospital and imaging clinic
revenue, which in turn could reduce demand for imaging-related
software and services offered by Merge.
Furthermore, the presence of many big players like
General Electronics
(
GE
) and
McKesson Corporation
(
MCK
) has made the diagnostic imaging market highly competitive.
Presently, Merge retains a short-term Zacks #3 Rank (Hold) which
also corresponds to our long-term 'Neutral' recommendation on the
stock.
DELL INC (
DELL
): Free Stock Analysis Report
GENL ELECTRIC (
GE
): Free Stock Analysis Report
MCKESSON CORP (
MCK
): Free Stock Analysis Report
MERGE HEALTHCAR (MRGE): Free Stock Analysis
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