Merge Technologies Incorporated Announces First Quarter 2001 Results

Company Posts Revenue Growth, Stable Gross Margins and

A Positive Pro Forma Operating Income



Expense Management Initiatives Take Hold While Neutral Cash Flow Is Achieved



Apr 26, 2001, 01:00 ET from Merge Technologies Incorporated

    MILWAUKEE, April 26 /PRNewswire/ --
     Merge Technologies Incorporated (Nasdaq: MRGE) today announced financial
 results for the quarter ended March 31, 2001.
     Revenues for the quarter were $3,344,000, an increase of 2% over revenues
 of $3,269,000 in the quarter ended March 31, 2000.  Net loss for the first
 quarter of 2001 and 2000 was $82,000 and $634,000, respectively.  Earnings per
 share for the quarter improved to $(0.02), from $(0.12) in the first quarter
 of 2000 and $(0.27) in the fourth quarter of 2000.
     Gross margin was 65% in each of the first quarters of 2001 and 2000.  The
 current quarters' growth margin represents a significant improvement over the
 gross margin of 50% in the fourth quarter of 2000.  Operating expenses
 decreased 16% or $438,000 to $2,302,000 in the first quarter of 2001, compared
 to $2,740,000 in the first quarter of 2000.
     On a pro forma basis, operating income improved to $16,000 compared to
 $(177,000) in the fourth quarter of 2000.  Expense management initiatives
 resulted in a reduction of cash operating expenses, net of non-recurring
 charges to $2,073,000 this quarter from $2,415,000 and $2,632,000,
 respectively in the fourth and third quarters of 2000.
     The Company's current ratio at March 31, 2001 was 1.06, equal to the
 current ratio at December 31, 2000.  Cash at the end of this quarter was
 $881,000 and accounts receivable increased to $2.5 million.  Inventory and
 accounts payable balances decreased from year end due to cash management
 initiatives and our ongoing effort to improve inventory turns.
 
     Analysis of Results:
     "We have successfully completed several important first steps in moving
 the Company towards profitability," said Richard A. Linden, Merge's President
 and Chief Executive Officer.  "Our objectives for the first quarter of 2001
 were to stabilize our current ratio, strengthen gross margins, improve our
 revenue generating capabilities and realize the full benefit of the expense
 management initiatives launched during the fourth quarter of 2000.  We have
 accomplished these objectives and are well positioned to build on these
 accomplishments as we move forward.
     "In addition to achieving our near-term financial objectives, we formed
 several new strategic partnerships and launched new product releases during
 the first quarter.  Our relationships with Fuji U.K. and Elk Corporation of
 Japan represent new distribution channels in these regions.  Our new
 ExamWorks+(TM), MergeWeb 3.0 -- Healthcare Development Platform(TM), and Java
 DICOM Toolkit products were released, representing our continued emphasis on
 product innovation and staying focused on meeting the emerging needs of our
 customer base.
     "We are pleased with the progress of our direct sales distribution channel
 during the first quarter.  In addition, the Company has a strong pipeline of
 prospective new business.  The launch of our new clinical workflow software
 applications and a loyal customer base of approximately 400 domestic
 healthcare clients will result in steady direct sales revenue growth going
 forward."
 
     Guidance:
     Mr. Linden further stated, "We are on track to achieve our targeted
 revenue range of $15 - $15.5 million for 2001, with gross margins and
 operating expenses remaining consistent with first quarter results.  We expect
 to build on the first quarter's improved financial performance and begin to
 realize profitability in the second half of 2001.
     "Additionally, we anticipate launching the clinical trial of a new
 workflow software application during the second quarter.  Revenues from this
 new software application are anticipated to begin in the third quarter of this
 year.
     "Finally, we continue to carefully monitor the impact of a slowing economy
 on the buying behavior of our OEM/VAR and institutional healthcare clients.
 At this time we believe the change in economic conditions will not have a
 material impact on our ability to achieve our financial goals for 2001."
 
     Merge Technologies Incorporated is a global leader in the drive toward an
 integrated healthcare enterprise.  The Company's unique, phased solutions
 represent a customer friendly blend of innovative technologies, professional
 consulting services and an intimate knowledge of the healthcare and diagnostic
 imaging enterprise.  With approximately 400 clinical networks and products in
 thousands of healthcare facilities worldwide, Merge partners with its
 customers to offer customized solutions that improve radiology workflow
 efficiencies, reduce operational costs and improve decision making.
 
     Except for the historical information herein, the matters discussed in
 this news release include forward-looking statements that may involve a number
 of risks and uncertainties.  Actual results may vary significantly based on a
 number of factors, including, but not limited to, risks in product and
 technology development, market acceptance of new products and continuing
 product demand, the impact of competitive products.
 
 
                MERGE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                 (Dollars in thousands, except per share date)
                                  (unaudited)
 
                                                         Three Months Ended
                                                              March 31,
                                                        2001           2000
 
     Net sales                                         $3,344         $3,269
 
     Cost of goods sold:
      Purchased components                                940            803
      Amortization of purchased and developed software    224            356
     Total cost of goods sold                           1,164          1,159
     Gross profit                                       2,180          2,110
 
     Operating costs and expenses:
      Sales and marketing                                 990          1,352
      Product research and development                    504            524
      General and administrative                          579            644
      Depreciation and amortization                       194            220
      Restructuring and related items                      35             --
     Total operating costs and expenses                 2,302          2,740
     Operating loss                                      (122)          (630)
 
      Interest expense, net                               (30)             2
      Other, net                                           85              6
     Loss before income taxes                             (67)          (622)
     Income taxes                                         (15)           (12)
     Net loss                                             (82)          (634)
 
     Accretion of put options                              35             35
 
     Loss available to common shareholders              $(117)          (669)
 
     Basic and diluted net loss per share              $(0.02)         (0.12)
 
     Shares used to compute basic and diluted
      net loss per share                            5,850,389      5,782,341
 
     These consolidated statements of operations should be read in conjunction
 with the Company's 10-QSB for the three months ended March 31, 2001.
 
 
                 MERGE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
                            SUMMARY BALANCE SHEET DATA
                     (In thousands, except for current ratio)
 
                                     March 31,     December 31,
                                       2001            2000          Change
 
     Cash                              $ 881           $ 812            8%
     Accounts receivable              $2,505          $2,049           22%
     Inventory                         $ 820          $1,159          -29%
     Accounts payable                 $1,707          $1,975          -14%
     Bank line of credit payable      $1,350          $1,350            0%
 
     Total current assets             $4,606          $4,490            3%
     Total current liabilities        $4,333          $4,229            2%
     Current ratio                      1.06            1.06            0%
 
     Long term assets                 $4,903          $5,035           -3%
     Long term liabilities            $1,563          $1,544            1%
 
     The above summary balance sheet data should be read in conjunction with
 the Company's 10-QSB for the three months ended March 31, 2001.
 
     Contact:  Colleen M. Doan, Chief Financial Officer
               Richard A. Linden, President and CEO
               414-977-4000
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X68083555
 
 

SOURCE Merge Technologies Incorporated
    MILWAUKEE, April 26 /PRNewswire/ --
     Merge Technologies Incorporated (Nasdaq: MRGE) today announced financial
 results for the quarter ended March 31, 2001.
     Revenues for the quarter were $3,344,000, an increase of 2% over revenues
 of $3,269,000 in the quarter ended March 31, 2000.  Net loss for the first
 quarter of 2001 and 2000 was $82,000 and $634,000, respectively.  Earnings per
 share for the quarter improved to $(0.02), from $(0.12) in the first quarter
 of 2000 and $(0.27) in the fourth quarter of 2000.
     Gross margin was 65% in each of the first quarters of 2001 and 2000.  The
 current quarters' growth margin represents a significant improvement over the
 gross margin of 50% in the fourth quarter of 2000.  Operating expenses
 decreased 16% or $438,000 to $2,302,000 in the first quarter of 2001, compared
 to $2,740,000 in the first quarter of 2000.
     On a pro forma basis, operating income improved to $16,000 compared to
 $(177,000) in the fourth quarter of 2000.  Expense management initiatives
 resulted in a reduction of cash operating expenses, net of non-recurring
 charges to $2,073,000 this quarter from $2,415,000 and $2,632,000,
 respectively in the fourth and third quarters of 2000.
     The Company's current ratio at March 31, 2001 was 1.06, equal to the
 current ratio at December 31, 2000.  Cash at the end of this quarter was
 $881,000 and accounts receivable increased to $2.5 million.  Inventory and
 accounts payable balances decreased from year end due to cash management
 initiatives and our ongoing effort to improve inventory turns.
 
     Analysis of Results:
     "We have successfully completed several important first steps in moving
 the Company towards profitability," said Richard A. Linden, Merge's President
 and Chief Executive Officer.  "Our objectives for the first quarter of 2001
 were to stabilize our current ratio, strengthen gross margins, improve our
 revenue generating capabilities and realize the full benefit of the expense
 management initiatives launched during the fourth quarter of 2000.  We have
 accomplished these objectives and are well positioned to build on these
 accomplishments as we move forward.
     "In addition to achieving our near-term financial objectives, we formed
 several new strategic partnerships and launched new product releases during
 the first quarter.  Our relationships with Fuji U.K. and Elk Corporation of
 Japan represent new distribution channels in these regions.  Our new
 ExamWorks+(TM), MergeWeb 3.0 -- Healthcare Development Platform(TM), and Java
 DICOM Toolkit products were released, representing our continued emphasis on
 product innovation and staying focused on meeting the emerging needs of our
 customer base.
     "We are pleased with the progress of our direct sales distribution channel
 during the first quarter.  In addition, the Company has a strong pipeline of
 prospective new business.  The launch of our new clinical workflow software
 applications and a loyal customer base of approximately 400 domestic
 healthcare clients will result in steady direct sales revenue growth going
 forward."
 
     Guidance:
     Mr. Linden further stated, "We are on track to achieve our targeted
 revenue range of $15 - $15.5 million for 2001, with gross margins and
 operating expenses remaining consistent with first quarter results.  We expect
 to build on the first quarter's improved financial performance and begin to
 realize profitability in the second half of 2001.
     "Additionally, we anticipate launching the clinical trial of a new
 workflow software application during the second quarter.  Revenues from this
 new software application are anticipated to begin in the third quarter of this
 year.
     "Finally, we continue to carefully monitor the impact of a slowing economy
 on the buying behavior of our OEM/VAR and institutional healthcare clients.
 At this time we believe the change in economic conditions will not have a
 material impact on our ability to achieve our financial goals for 2001."
 
     Merge Technologies Incorporated is a global leader in the drive toward an
 integrated healthcare enterprise.  The Company's unique, phased solutions
 represent a customer friendly blend of innovative technologies, professional
 consulting services and an intimate knowledge of the healthcare and diagnostic
 imaging enterprise.  With approximately 400 clinical networks and products in
 thousands of healthcare facilities worldwide, Merge partners with its
 customers to offer customized solutions that improve radiology workflow
 efficiencies, reduce operational costs and improve decision making.
 
     Except for the historical information herein, the matters discussed in
 this news release include forward-looking statements that may involve a number
 of risks and uncertainties.  Actual results may vary significantly based on a
 number of factors, including, but not limited to, risks in product and
 technology development, market acceptance of new products and continuing
 product demand, the impact of competitive products.
 
 
                MERGE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
                 (Dollars in thousands, except per share date)
                                  (unaudited)
 
                                                         Three Months Ended
                                                              March 31,
                                                        2001           2000
 
     Net sales                                         $3,344         $3,269
 
     Cost of goods sold:
      Purchased components                                940            803
      Amortization of purchased and developed software    224            356
     Total cost of goods sold                           1,164          1,159
     Gross profit                                       2,180          2,110
 
     Operating costs and expenses:
      Sales and marketing                                 990          1,352
      Product research and development                    504            524
      General and administrative                          579            644
      Depreciation and amortization                       194            220
      Restructuring and related items                      35             --
     Total operating costs and expenses                 2,302          2,740
     Operating loss                                      (122)          (630)
 
      Interest expense, net                               (30)             2
      Other, net                                           85              6
     Loss before income taxes                             (67)          (622)
     Income taxes                                         (15)           (12)
     Net loss                                             (82)          (634)
 
     Accretion of put options                              35             35
 
     Loss available to common shareholders              $(117)          (669)
 
     Basic and diluted net loss per share              $(0.02)         (0.12)
 
     Shares used to compute basic and diluted
      net loss per share                            5,850,389      5,782,341
 
     These consolidated statements of operations should be read in conjunction
 with the Company's 10-QSB for the three months ended March 31, 2001.
 
 
                 MERGE TECHNOLOGIES INCORPORATED AND SUBSIDIARIES
                            SUMMARY BALANCE SHEET DATA
                     (In thousands, except for current ratio)
 
                                     March 31,     December 31,
                                       2001            2000          Change
 
     Cash                              $ 881           $ 812            8%
     Accounts receivable              $2,505          $2,049           22%
     Inventory                         $ 820          $1,159          -29%
     Accounts payable                 $1,707          $1,975          -14%
     Bank line of credit payable      $1,350          $1,350            0%
 
     Total current assets             $4,606          $4,490            3%
     Total current liabilities        $4,333          $4,229            2%
     Current ratio                      1.06            1.06            0%
 
     Long term assets                 $4,903          $5,035           -3%
     Long term liabilities            $1,563          $1,544            1%
 
     The above summary balance sheet data should be read in conjunction with
 the Company's 10-QSB for the three months ended March 31, 2001.
 
     Contact:  Colleen M. Doan, Chief Financial Officer
               Richard A. Linden, President and CEO
               414-977-4000
 
                     MAKE YOUR OPINION COUNT -  Click Here
                http://tbutton.prnewswire.com/prn/11690X68083555
 
 SOURCE  Merge Technologies Incorporated