Merge introduces Merge OrthoPACS - Analyst Blog
March 22 2013 - 8:40AM
Zacks
After a disappointing quarter,
Merge Healthcare Incorporated (MRGE) has witnessed
events that favor the company. This series of good news has been
encouraging for investors. Recently, this imaging and
interoperability solutions provider revealed encouraging data
showing that its OrthoPACS have been used or is being used by more
than 650 orthopedic surgeons in over 50 practices. Additionally, in
2013, several practices using other solutions of Merge intend to
shift to OrthoPACS, a digital templating solution useful for
detailed image management, launched last year.
Viewing the upward demand for
imaging and interoperability solutions in the growing orthopedic
market, Merge is quite confident about the success of OrthoPACS in
this niche. The company encouragingly noted that many practices are
ready to upgrade and adopt this new technology.
Technology released by Merge is
also trusted by companies like OrthoVirginia, which decided to
adopt OrthoPACS. These companies believe in Merge’s commitment
toward the market. Prior to Merge OrthoPACS, OrthoVirginia used
Styker’s (SYK) Office PACS 4.1. OrthoVirginia is
also impressed with the intrinsic technology and user-friendly
upgrades.
Advantages for Merge OrthoPACS
include the ability to diagnose irrespective of place and time,
planning operation with digital template, and archiving studies
safely. Additionally, it allows access to images taken at more than
one location in a single viewer to orthopedic surgeons.
On the negative side, currently,
Merge is facing major difficulties in the form of increasing costs
leading to pressure on margin, decrease in medicare reimbursement
owing to the budgetary cuts starting Apr 1, as well as dependency
on capital investments by hospitals. Amid these headwinds, we are
encouraged by Merge’s all-out effort for product expansion and
business development. We believe that OrthoPACS, as a part of
Merge’s expanding portfolio, will help the company to revert back
to its original revenue trajectory in the coming quarters.
Innovation has been an aggressive
strategy for Merge Healthcare to drive growth. The company’s
efforts to expand its portfolio to meet the growing needs of a
multi-billion dollar market are encouraging. Merge is also well
placed to benefit from the strong demand for EMR (Electronic
Medical Records)-related software in the near future on the back of
the Stimulus bill. As more healthcare providers adopt EMR, the
demand for Merge Healthcare’s solutions is expected to
increase.
With a consentient upward revision
in earnings estimate, the stock carries a Zacks Rank #3 (Hold).
While we remain on the sidelines for Merge, other medical devices
stocks such as Edwards Lifesciences (EW) and
Becton, Dickinson and Company (BDX), carrying a
Zacks Rank #2 (Buy), appear impressive.
BECTON DICKINSO (BDX): Free Stock Analysis Report
EDWARDS LIFESCI (EW): Free Stock Analysis Report
MERGE HEALTHCAR (MRGE): Free Stock Analysis Report
STRYKER CORP (SYK): Free Stock Analysis Report
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