Merge moves toward subscription model; reports lackluster Q1
Merge Healthcare has announced the creation of two operating groups—Merge Healthcare and Merge DNA (Data & Analytics), while also reporting net losses for the first quarter of 2012.
The Chicago-based company said this “change in operations is being driven by our clients’ purchasing requirements for subscription-based pricing to align more closely with their long-term operating plans.” These two operating groups are designed to allow for focus on its two primary end users: providers and consumers.
Merge Healthcare, which currently represents approximately 85 percent of the company’s total revenue, will continue to be led by Jeff Surges. Merge Healthcare sells and implements interoperability, imaging and clinical technologies to healthcare providers and is moving toward a subscription model.
Merge DNA, to be led by Justin Dearborn, will focus on the emergence of consumerism in healthcare. Merge DNA, also employing a subscription model, will include consumer health stations, clinical trials software and other consumer-focused technologies. In addition, Steve Oreskovich will resume his former role as chief financial officer of the company.
“Increasing demand for subscription offerings was a significant trend that we witnessed, and responded to, in the first quarter of 2012,” said Surges, CEO of Merge Healthcare. “With a subscription pricing model, we will recognize significantly lower upfront revenue, but anticipate more revenue over the contract term.”
Speaking to its revenues for the 2012 first quarter, Merge reported that revenue was $60.98 million in the quarter, compared with $52.67 million in the first quarter of 2011—an increase of 16 percent. About specific products, the company recorded $400,000 of revenue in the quarter related to the sale of health stations to higi (a related party), instead of the approximately $2 million of revenue that the company expected to record when it filed its Form 8-K related to that transaction on April 3. Thus, Merge expects an additional $2.4 million of revenue from that transaction to be recognized in the second quarter of 2012.
Despite its positive revenues, Merge also reported a net loss of $1.86 million in the most recent period, compared with a net loss of $1.59 million in the first quarter of 2011.
The Chicago-based company said this “change in operations is being driven by our clients’ purchasing requirements for subscription-based pricing to align more closely with their long-term operating plans.” These two operating groups are designed to allow for focus on its two primary end users: providers and consumers.
Merge Healthcare, which currently represents approximately 85 percent of the company’s total revenue, will continue to be led by Jeff Surges. Merge Healthcare sells and implements interoperability, imaging and clinical technologies to healthcare providers and is moving toward a subscription model.
Merge DNA, to be led by Justin Dearborn, will focus on the emergence of consumerism in healthcare. Merge DNA, also employing a subscription model, will include consumer health stations, clinical trials software and other consumer-focused technologies. In addition, Steve Oreskovich will resume his former role as chief financial officer of the company.
“Increasing demand for subscription offerings was a significant trend that we witnessed, and responded to, in the first quarter of 2012,” said Surges, CEO of Merge Healthcare. “With a subscription pricing model, we will recognize significantly lower upfront revenue, but anticipate more revenue over the contract term.”
Speaking to its revenues for the 2012 first quarter, Merge reported that revenue was $60.98 million in the quarter, compared with $52.67 million in the first quarter of 2011—an increase of 16 percent. About specific products, the company recorded $400,000 of revenue in the quarter related to the sale of health stations to higi (a related party), instead of the approximately $2 million of revenue that the company expected to record when it filed its Form 8-K related to that transaction on April 3. Thus, Merge expects an additional $2.4 million of revenue from that transaction to be recognized in the second quarter of 2012.
Despite its positive revenues, Merge also reported a net loss of $1.86 million in the most recent period, compared with a net loss of $1.59 million in the first quarter of 2011.