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Merge Healthcare Tanking 44 Percent – Here’s Why (MRGE)

It’s earnings season and that means some stock are going to get punished and others will rocket higher. Unfortunately, Merge Healthcare (NASDAQ: MRGE) is in the “punished” category Friday. The stock is down more than 44 percent after reporting management shakeups and alarmingly bad earnings.

The company reported second quarter EPS of $0.01 versus an estimated gain of $0.05. EPS were down 1.6 percent year over year. Revenue was reported at $57.20 million–a 9 percent decrease year over year.

Not only were the results a giant disappointment, investors don’t generally bid up a stock that announces a CEO change in conjunction with such bad earnings. As part of the release, the company said that it accepted the resignation of Jeffery A. Surges as CEO along with other upper management changes.

“Speaking on behalf of all of Merge’s Directors, I want to apologize for the company’s very disappointing second quarter results,” said Michael W. Ferro, Jr., Merge’s Chairman of the Board and largest shareholder. “We all strongly believe in the company, its products and its employees. Our new leaders, Justin Dearborn and Nancy Koenig, resurrected Merge five years ago, and they are the right team to get the company back on track. I, personally, plan to continue to invest in Merge, whether in response to opportunities in the market or otherwise.”

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Company Profile

Merge Healthcare Incorporated develops software solutions that facilitate the sharing of images to create an electronic healthcare experience for patients and physicians worldwide. It operates in two segments, Merge Healthcare and Merge DNA.

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Disclosure: At the time of this writing, the author had no position in the company mentioned.

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