Merge Healthcare Goes Negative

Seth Jayson, The Motley Fool
Updated

Merge Healthcare (NAS: MRGE) reported earnings on Feb. 15. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Merge Healthcare met expectations on revenues and earnings per share.

Compared to the prior-year quarter, revenue improved significantly and GAAP earnings per share dropped to a loss.

Gross margins expanded, operating margins grew, and net margins shrank.

Revenue details
Merge Healthcare booked revenue of $64.1 million. The five analysts polled by S&P Capital IQ foresaw net sales of $64.0 million on the same basis. GAAP reported sales were 39% higher than the prior-year quarter's $46.2 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Non-GAAP EPS came in at $0.04. The five earnings estimates compiled by S&P Capital IQ forecast $0.04 per share on the same basis. GAAP EPS were -$0.01 for Q4 against $0.10 per share for the prior-year quarter.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 66.3%, 730 basis points better than the prior-year quarter. Operating margin was 13.7%, 500 basis points better than the prior-year quarter. Net margin was -2.0%, 2,380 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $66.3 million. On the bottom line, the average EPS estimate is $0.05.

Next year's average estimate for revenue is $289.2 million. The average EPS estimate is $0.29.

Investor sentiment
The stock has a four-star rating (out of five) at Motley Fool CAPS, with 101 members out of 121 rating the stock outperform, and 20 members rating it underperform. Among 34 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 31 give Merge Healthcare a green thumbs-up, and three give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Merge Healthcare is outperform, with an average price target of $8.13.

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At the time thisarticle was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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