Merge Healthcare
(
MRGE
) reported adjusted EPS of 4 cents in the fourth quarter of fiscal
2011, which remained flat year over year but surpassed the Zacks
Consensus Estimate of one cent. For fiscal 2011, adjusted EPS was
19 cents compared with 10 cents in 2010 and the Zacks Consensus
Estimate of 13 cents.
Solid growth across all the company's segments triggered a 39%
year-over-year increase in total revenue to $64.1 million during
the quarter. However, revenues missed the Zacks Consensus Estimate
of $66 million. Higher adoption of Meaningful Use solutions coupled
with growing demand for enterprise imaging solutions were primarily
responsible for the year-over-year growth. Total revenue in fiscal
2011 surged 65.6% annually to $232.4 million, but lagged the Zacks
Consensus Estimate of $288 million.
Merge primarily derives revenues from three segments - software
and others, professional services, and maintenance and EDI. The
three segments registered annualized growth of 81.6% to $24.6
million, 57.9% to $10.9 million and 11.3% to $28.5 million,
respectively, during the quarter. Recurring revenues in the quarter
were nearly 55% of net sales versus 65% in the year-ago
quarter.
Gross margin in the quarter was 62.7% versus 53.4% in the
year-ago quarter. The adjusted operating margin (excluding the
impact of certain one-time expenses) was 17.7% during the quarter
compared with 6.7% in the fourth quarter of 2010.
Merge exited the fiscal with cash (including restricted cash) of
$39.3 million compared with $41 million at the end of fiscal 2010.
Cash from core business operations in the fourth quarter was $11.9
million as against $12.2 million in the year-ago quarter.
Outlook
Earlier, while reporting the third quarter result, Merge
provided revenue guidance for fiscal 2012. The company had
projected revenues in the range of $288- $300 million for fiscal
2012. However, the company has not provided any update on its
outlook in the reported quarter.
Merge's growth prospect is highly dependent on capital
investments by hospitals for advanced imaging solutions, which are
in turn tied to the general economic condition. The presence of big
players like
General Electric Co
(
GE
) and
McKesson Corporation
(
MCK
) has made the diagnostic imaging market highly competitive.
However, there is immense potential in the diagnostic imaging
market, especially with government's emphasis on HIT and an ageing
population.
Presently, Merge retains a short-term Zacks #3 Rank (Hold),
which also corresponds to our long-term 'Neutral' recommendation on
the stock.
GENL ELECTRIC (
GE
): Free Stock Analysis Report
MCKESSON CORP (
MCK
): Free Stock Analysis Report
MERGE HEALTHCAR (
MRGE
): Free Stock Analysis Report
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