Merge Technologies, a medical imaging software and services company that has struggled with financial and regulatory issues for more than a year, has announced cuts and other moves to stem financial losses.
The company announced a "rightsizing" initiative designed to save $11 million to $12 million a year, primarily through reductions in staff.
The company plans to release financial results for the third quarter of 2007, which ended Sept. 30, 2007.
Merge Technologies, which does business under the name of Merge Healthcare, has been in trouble over delays in releasing financial results, and Nasdaq has threatened to delist its stock because of company delays in filing forms with the Securities and Exchange Commission.
In the announcement Thursday, Merge officials said they expect to reduce the workforce to 440 by March 31, down nearly 27 percent from the 600 employed on Sept. 30, 2007. That total includes reductions in the number of consultants.
Forty-five of those jobs are in the United States and Canada, while the rest are overseas. The company will record a charge of about $2 million in its results for the first quarter of 2008, which ends March 31, to cover costs for severance, legal fees and future lease payments for a Massachusetts office it has closed. Annual savings from the newly announced cuts will total $7 million, Merge officials estimate.
The company had been reducing staff before the announcement, and previous reductions will save about $3 million, officials estimated. They anticipate saving $1 million to $2 million a year as current staff leave the company but whose positions won't be filled.
Merge has struggled after facing requirements to twice restate financial results related to the valuation of intangible assets.
"The two financial statement restatements, and ongoing legal expenses associated with litigation and the SEC investigation have been quite significant and have necessitated the recent rightsizing initiative," said Ken Rardin, the company's president and CEO. "We are making changes to our cost structure with the intention of enabling our company to focus on our core business and return to positive operating results."