Merge and ADAC sign distribution deal

Merge Technologies of Milwaukee last month signed an agreement with ADAC Laboratories of Milpitas, CA, in which ADAC will expand its distribution of Merge products. The agreement includes Merge’s DICOM products for ADAC businesses such as nuclear medicine, remanufacturing, radiation treatment planning, and healthcare information systems. The deal is part of Merge’s strategy to grow its distribution channels through partnerships with OEMs and VARs, according to company executives. Both companies expect the agreement to enhance their growth by giving Merge access to ADAC’s markets, and ADAC access to DICOM conversion systems for its products.

In other Merge news, the company this month announced preliminary fourth-quarter financial results that were well below analyst projections. Revenue is expected to be between $2 million and $2.3 million for the quarter, compared with revenue of $2.9 million for the same period last year. Merge believes its net loss will be between 19¢ and 22¢ per share. First Call had expected a profit of 2¢ per share for the quarter.

For the year, Merge expects revenue to be between $9.4 million and $9.7 million, compared with $9.7 million posted in 1997. The firm expects a net loss of 35¢ to 38¢ per share, compared with a net loss of 5¢ recorded last year. Merge’s stock closed at a price of $1.19 on Jan. 13, down 80.2% from its initial public offering price of $6 in January 1998.

Both direct and OEM/VAR sales underperformed during the period, according to the company. The company is reorganizing its sales staff to address its end-user sales difficulties and is redoubling its efforts to improve its OEM/VAR activities, said president and CEO William Mortimore.