Despite Drop in Sales, Merge Healthcare Posts Profits in Q1

By decreasing expenses, imaging-sharing solutions vendor Merge Healthcare was able to post a small profit in the first quarter of 2014 despite a decline in sales.

Merge Healthcare reported sales of $50.9 million in Q1, down from $63.6 million during the same period last year. However, net income was $300,000, which resulted in a negligible per-share gain but is an improvement over a net loss of $6.5 million last quarter.

The gain was made possible by refinancing the company's debt and reducing other expenses.

"In Q1, Merge continued to see positive momentum in our operations," said Merge CEO Justin Dearborn. "We've demonstrated strong cash flow by keeping our expenses under control, achieved positive net income and increased our adjusted EBITDA [$10.2 million in Q1]."

The improved outlook for Merge Healthcare follows a turbulent past few quarters. In August 2013, a leadership reconfiguration led to the resignations of board chairman Michael Ferro Jr., and board member Jeffrey Surges, according to a Crain's Chicago Business report.

In January, Merge Healthcare announced a now-former employee in its eClinical division had falsified millions of dollars in customer contracts in order to increase his commissions, which caused the company's stocks to slide 10 percent in the next day's trading.

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