Merge Healthcare Provides Update on the Restatement of Its Financial Statements

    MILWAUKEE, Oct. 29 /CNW/ -- Merge Technologies Incorporated, doing
business as "Merge Healthcare" (Nasdaq:   MRGE; TSX: MRG) (the "Company"), a
leading medical imaging software and services provider, announced that, in
connection with the previously announced restatement of its financial
statements, the Company currently expects to file, on or before December 31,
2007: (i) its restated audited financial statements for the years ended
December 31, 2004, 2005, and 2006, as well as other restated financial
information previously included in the Company's Annual Report on Form 10-K
for the year ended December 31, 2006, (ii) its restated unaudited financial
statements included in its Quarterly Report on Form 10-Q for the quarter ended
March 31, 2007, and (iii) its unaudited Quarterly Reports on Form 10-Q for the
quarters ended June 30, 2007 and September 30, 2007.  The Company currently
expects to restate revenue associated with approximately 15 software contracts
valued at approximately $2 million and to recognize the associated revenue
with the majority of these contracts over a 20 quarter period following
completion of software installation at each respective customer site.  All
such contracts were signed prior to January 1, 2006. As a result of the
restatement, the Company expects to report a decrease in previously reported
revenues for the years ended December 31, 2004, 2005 and 2006 by an aggregate
of approximately $1 million and an increase in revenue of less than $100,000
per quarter thereafter, through the expiration of the respective contract
    "Merge Healthcare continues to weather the storm caused by the Deficit
Reduction Act ("DRA"), the 2006 restatement and the current restatement
process that we are going through. With a better understanding of the DRA,
visibility into the impact of the restatement, and our expectation to be
current with our securities filings by the end of 2007, I am very encouraged
about the Company's prospects for 2008 and beyond," said Ken Rardin, Merge
Healthcare Chief Executive Officer.
    The Company further announced that it expects to report restated revenues
for the quarter ended March 31, 2007 of $15 to $16 million, and revenues for
the quarter ended June 30, 2007 of $13 to $14 million. Bookings for the
quarters ended December 31, 2006, March 31, 2007, June 30, 2007 and September
30, 2007, totaled approximately $13 million, $20 million, $10 million, and $9
million, respectively. Bookings is defined by the Company as the total value
of all contracts signed during a quarter and excludes any value attributed to
related maintenance other than the first year of post-contract customer
support (PCS). The previous definition of bookings used by the Company in its
press release and earnings conference call for the first quarter of 2007
included maintenance for years two through five where the pricing for those
years was agreed to by the customer in the contract. However, due to the
current restatement process, the Company believes that it is more appropriate
to exclude those additional years of maintenance from the definition of
bookings because the additional years of maintenance are not typically
contractual obligations of the customer. The expected results reported above
should not be considered indicative of the Company's other financial results
for such periods or for any future periods, including operating income and net
income, which the Company will be able to report upon the completion of the
restatement process.
    Cash and cash equivalents on hand at September 30, 2007 was approximately
$22 million.  The Company currently anticipates that its earnings before
interest, taxes, depreciation, and amortization (EBITDA) after adjusting for
stock-based compensation costs and legal fees associated with the class action
and other prior restatement related lawsuits will not be positive until the
latter half of calendar 2008, at the earliest.
    The Company currently plans to hold its next earnings conference call
shortly following the filing of its financial results for the quarter ended
September 30, 2007, which is expected to be on or before December 31, 2007.
    Merge Healthcare is a market leader in the development and delivery of
medical imaging and information management software and services. Our
innovative software solutions use leading-edge imaging software technologies
that accelerate market delivery for our OEM customers, while our end-user
solutions improve our customers' productivity and enhance the quality of
patient care they provide. For additional information, visit our website at
    Cautionary Notice Regarding Forward-Looking Statements
    This announcement may include forward-looking statements within the
meaning and subject to the protections of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934, as amended.  When
used in this announcement, the words "will," "believes," "intends,"
"anticipates," "expects" and similar expressions of the future are intended to
assist you in identifying such forward-looking statements.  Such
forward-looking statements include, among others, statements regarding: our
future business prospects, our ability to execute on our strategies to grow
our business, increased use of digital modalities and the adoption of RIS-PACS
and workflow technologies, the timing of our completion of our restatements
and filings of related SEC reports, the expected impact of the restatement on
our financial results, our expected revenues for our first and second quarters
of 2007, our bookings for periods noted above and our expectation relating to
our ability to (and the potential timing of) generate positive earnings before
interest, taxes, depreciation, and amortization (EBITDA) after adjusting for
Financial Accounting Standards Board No.123R costs and legal fees associated
with the class action and other prior restatement related lawsuits.  Although
the Company presently believes that the expectations reflected in such
forward-looking statements are based on reasonable assumptions, the Company
does not give, and cannot give, any assurance that those expectations will be
    Any number of factors could cause the actual results to differ from the
results contemplated by such forward-looking statements, including, but not
limited to:  risks and effects of the past and current restatement of
financial statements of the Company and other actions that may be taken or
required as a result of such restatement; the expected financial impact of the
restatement and the financial results included herein are preliminary and are
subject to change following further internal review and review by the
Company's independent accountants; the restatement may take longer to complete
than expected; the Company's inability to timely file reports with the
Securities and Exchange Commission; risks associated with the Company's
inability to meet the requirements of The NASDAQ Stock Market for continued
listing, including possible delisting; costs, risks and effects of legal
proceedings and investigations, including the formal investigation being
conducted by the Securities and Exchange Commission (formerly an informal
inquiry) and class action, derivative, and other lawsuits; the uncertainty
created by and the adverse impact on relationships with customers, potential
customers, suppliers and investors potentially resulting from, and other risks
associated with, the changes in the Company's senior management; risks in
product and technology development, market acceptance of new products and
continuing product demand; the impact of competitive products and pricing;
continued negative effects of the DRA; limited acceptance of digital
modalities and RIS-PACS and workflow technologies; the Company's ability to
integrate acquisitions; changing economic conditions; credit and payment risks
associated with end-user sales; the Company's dependence on major customers;
the Company's dependence on key personnel; and other risk factors detailed in
the Company's filings with the Securities and Exchange Commission.
    You should not place undue reliance on forward-looking statements, since
the statements speak only as of the date that they are made. We do not have,
or undertake any obligation to, publicly update, revise or correct any of the
forward-looking statements after the date of this announcement, or after the
respective dates on which such statements otherwise are made, whether as a
result of new information, future events or otherwise. This announcement
should be read in conjunction with the risk factors, financial information and
other information contained in the filings that the Company makes and
previously has made with the Securities and Exchange Commission.

For further information:

For further information: Merge Healthcare, +1-414-977-4000,, or Media, Beth Frost-Johnson, Senior Vice President 
of Marketing of Merge Healthcare, +1-414-977-4254, Web Site:

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