Merge Healthcare Announces Employee Falsified Contracts, Shares Drop 10%

Imaging-sharing solutions vendor Merge Healthcare has announced a now-former employee in its eClinical division had falsified millions of dollars in customer contracts in order to increase his commissions.

The contracts, totaling $5.8 million in 2012 and $9.4 million in 2013, had been included in Merge's previously reported subscription backlog total, but the company had not recognized any of the revenue, and the announcement did not have an affect on the company's reported revenue results.

However, the announcement caused Merge stock prices to slide 10 percent during Wednesday's trading, according to a Reuters report.

Some analysts said investors were overreacting to the news, as the eClinical division accounts for only 15 percent of Merge's total revenue. "Despite the backlog adjustments, they're still forecasting good growth in the business," B Riley & Co analyst Gene Mannheimer told Reuters.

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