Merge Healthcare is off the market.The Chicago-based medical imaging software maker didn't like the offers that have rolled in since September, when Merge hired an investment banking firm to shop the company around.
“After careful evaluation, we have determined that the alternatives evaluated did not offer more value that our own strategic plan,” CEO Jeff Surges said in a statement Tuesday.
In an earnings call Tuesday, he said the board unanimously determined that the price range from interested parties “did not appropriately value the company,” according to a transcript.
The news came as the company reported an $8.4 million operating loss for the fourth quarter ending Dec. 31, from an $8.3 million operating profit during the same time period last year. The operating income dropped 77.9 percent, to $6.6 million in 2012, from $29.1 million in 2011.
But Merge also had a slight bump in net sales, to $64.7 million in the fourth quarter, from $64.1 million during the same period in 2011, which beat analysts' expectations, noted Deepak Chaulagai, a senior research analyst in health care at Minneapolis-based Dougherty & Company LLC.
Total net sales for the year ended Dec. 31 were $248.9 million, a 7.1 percent increase, from 2011, when net sales totaled $232.4 million.
“I clearly think they have the resources to continue to operate as an independent entity,” Mr. Chaulagai said in an interview.
“But the key is execution,” he added.
Dougherty & Company upgraded Merge's stock from to a Buy rating, from Neutral.
In a research note, Mr. Chaulagai said Merge had a strong pipeline with several large potential deals.
With physicians having to exchange health records electronically to avoid penalties from the federal government, there's a market for Merge. But the company also faces threats from a competitive industry and a customer base that's in the midst of consolidation, potentially shrinking the client pool.
Among quarterly highlights, Merge said it signed more than 190 contracts in the fourth quarter for a platform that manages and runs clinical studies, driving a 79 percent year-over-year bookings growth, according to the company statement.
A spokesman for Merge did not immediately comment. The company's chairman and largest shareholder is Michael Ferro, who also heads Chicago-based venture capital firm Merrick Ventures LLC and is chairman of the parent company of the Chicago Sun-Times.