forms3.htm
As filed
with the Securities and Exchange Commission on September 2, 2009
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
__________________
FORM
S-3
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
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Delaware
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MERGE
HEALTHCARE INCORPORATED
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39-1600938
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(State
or other jurisdiction of incorporation or organization
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(Exact
name of registrant as specified in its charter)
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(I.R.S.
Employer Identification Number)
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6737 West
Washington Street
Milwaukee,
Wisconsin 53214-5650
(414)
977-4000
(Address,
including zip code, and telephone number, including area code, of registrant’s
principal executive offices)
__________________
Justin
C. Dearborn
Chief
Executive Officer
Merge
Healthcare Incorporated
6737
West Washington Street
Milwaukee,
WI 53214-5650
(414)
977-4000
(Name,
address, including zip code, and telephone number, including area code, of agent
for service)
____________________________________________
Copies
to:
Mark
A. Harris
McDermott
Will & Emery LLP
227
West Monroe Street
Chicago,
Illinois 60606-5096
(312)
984-2121
Ann
Mayberry-French
Vice
President, General Counsel and Secretary
Merge
Healthcare Incorporated
6737
West Washington Street
Milwaukee,
WI 53214-5650
(414)
977-4000
Approximate date of commencement of
proposed sale to the public: From time to time following the
effectiveness of this registration statement.
____________________________________________
If the
only securities being registered on this Form are being offered pursuant to
dividend or interest reinvestment plans, please check the following box. £
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, other
than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. T
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. £
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act registration
statement number of the earlier effective registration statement for the same
offering. £
If this
Form is a registration statement pursuant to General Instruction I.D. or a
post-effective amendment thereto that shall become effective upon filing with
the Commission pursuant to Rule 462(e) under the Securities Act, check the
following box. £
If this
Form is a post-effective amendment to a registration statement filed pursuant to
General Instruction I.D. filed to register additional securities or additional
classes of securities pursuant to Rule 413(b) under the Securities Act, check
the following box. £
Indicate
by check mark whether the registrant is a large accelerated filer, a
non-accelerated filer, or a smaller reporting company. See the
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
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Large
accelerated filer £
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Accelerated
filer £
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Non-accelerated
filer T
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Smaller
reporting company £
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CALCULATION
OF REGISTRATION FEE
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Title
of Each Class of Securities to be Registered
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Amount
to be Registered(1)
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Proposed
Maximum Offering Price Per Unit (2)
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Proposed
Maximum Aggregate Offering Price (2)
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Amount
of Registration Fee
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Common
Stock
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5,422,104 |
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$ |
3.32 |
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$ |
18,001,428 |
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$ |
1,004 |
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(1)
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The
amount to be registered hereunder consists of an aggregate 5,422,104
shares of common stock to be sold by the selling stockholders named in
this registration statement. In addition, pursuant to Rule 416
under the Securities Act of 1933, this registration statement includes an
indeterminate number of additional shares that may be offered and sold to
prevent dilution resulting from stock splits, stock dividends or similar
transactions.
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(2)
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Estimated
solely for purposes of calculating the registration fee pursuant to Rule
457(c) under the Securities Act of 1933, based upon the average of the
high and low sale prices of the registrant’s common stock on August 31,
2009, as reported on the Nasdaq Global
Market.
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_____________________________
The
registrant hereby amends this registration statement on such date or dates as
may be necessary to delay its effective date until the registrant shall file a
further amendment that specifically states that this registration statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until this registration statement shall become
effective on such date as the Securities and Exchange Commission, acting
pursuant to Section 8(a), may determine.
The
information in this prospectus is not complete and may be changed. We may not
sell these securities or accept an offer to buy these securities until the
registration statement filed with the Securities and Exchange Commission is
effective. This prospectus is not an offer to sell these securities and it is
not soliciting an offer to buy these securities in any state where the offer or
sale is not permitted.
SUBJECT
TO COMPLETION, DATED September 2, 2009
PROSPECTUS
MERGE
HEALTHCARE INCORPORATED
5,422,104
Shares Common Stock
The
selling stockholders identified in this prospectus or an supplement hereto in
the section of this prospectus describing the “Selling Stockholders,” may use
this prospectus or any prospectus supplement to offer and resell from time to
time up to 5,422,104 shares of our common stock. These shares represent shares
of our common stock that we issued to such selling stockholders in connection
with our acquisition of Confirma, Inc. on September 1, 2009.
We will
not receive any of the proceeds from the sale of these shares of our common
stock by the selling stockholders.
The
selling stockholders named in this prospectus, or their donees, pledgees,
transferees or other successors-in-interest, may offer or resell the shares from
time to time through public or private transactions at prevailing market prices,
at prices related to prevailing market prices or at privately negotiated
prices.
The
selling stockholders may resell the common stock to or through underwriters,
broker-dealers or agents, who may receive compensation in the form of discounts,
concessions or commissions. The selling stockholders will bear all commissions
and discounts, if any, attributable to the sale of shares. We will bear all
costs, expenses, and fees in connection with the registration of the shares. For
additional information on the methods of sale that may be used by the selling
stockholders, see “Plan of Distribution.”
This
prospectus describes the general manner in which the shares of our common stock
may be offered and sold by the selling stockholders. If necessary, the specific
manner in which shares of our common stock may be offered and sold will be
described in a supplement to this prospectus.
You
should read this prospectus, the information incorporated by reference in this
prospectus and any prospectus supplement carefully before you
invest.
Investing
in our securities involves a high degree of risk. You should
carefully consider the risk factors described in the applicable prospectus
supplement and certain of our filings with the Securities and Exchange
Commission, as described under “Risk Factors” on page 5.
This
prospectus may not be used to offer or sell any securities unless accompanied by
a prospectus supplement.
Our
common stock is quoted and traded on the Nasdaq Global Market under the symbol
“MRGE.” On August 31, 2009, the last reported sale price of our
common stock on the Nasdaq Global Market was $3.20. The applicable
prospectus supplement will contain information, where applicable, as to any
other listing on the Nasdaq Global Market or any securities market or exchange
of the securities covered by the prospectus supplement.
The
securities may be offered directly by us to investors, to or through
underwriters or dealers or through agents. If any underwriters are involved in
the sale of any securities offered by this prospectus and any prospectus
supplement, their names, and any applicable purchase price, fee, commission or
discount arrangement between or among them, and any applicable over-allotment
options, will be set forth, or will be calculable from the information set
forth, in the applicable prospectus supplement. The price to the public of such
securities and the net proceeds we expect to receive from such sale will also be
set forth in a prospectus supplement.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or determined if this prospectus is
truthful or complete. Any representation to the contrary is a criminal
offense.
The
date of this prospectus
is ,
2009
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This
prospectus is part of a registration statement that we have filed with the SEC,
using a “shelf” registration process. Under this shelf registration process, the
selling stockholders referred to in this prospectus may offer and resell from
time to time up to 5,422,104 shares of our common stock.
This
prospectus does not cover the issuance of any shares of common stock by us to
the selling stockholders, and we will not receive any of the proceeds from any
sale of shares by the selling stockholders. Except for underwriting discounts
and selling commissions, if any, which may be paid by the selling stockholders,
we have agreed to pay the expenses incurred in connection with the registration
of the shares of common stock covered by this prospectus.
Information
about the selling stockholders may change over time. Any changed information
given to us by the selling stockholders will be set forth in a prospectus
supplement if and when necessary. Further, in some cases, the selling
stockholders will also be required to provide a prospectus supplement containing
specific information about the terms pursuant to which they are offering and
selling our common stock. If a prospectus supplement is provided and the
description of the offering in the prospectus supplement varies from the
information in this prospectus, you should rely on the information in the
prospectus supplement.
You
should rely only on the information contained or incorporated by reference in
this prospectus and any applicable prospectus supplement or amendment. We have
not, and the selling stockholders have not, authorized any person to provide you
with different information. This prospectus is not an offer to sell, nor is it
an offer to buy these securities in any state where the offer or sale is not
permitted. The information in this prospectus is complete and accurate as of the
date on the front cover, but the information may have changed since that
date.
The terms
“Merge,” “Merge Healthcare,” the “Company,” “we,” “us,” and “our” refer to Merge
Healthcare Incorporated.
We have
filed or incorporated by reference exhibits to the registration statement of
which this prospectus forms a part. You should read the exhibits carefully for
provisions that may be important to you.
This
summary highlights material information found in greater detail elsewhere in
this prospectus or the documents incorporated by reference herein. Before
deciding to invest in our common stock, you should carefully read this entire
prospectus, including the matters discussed in the section on "Risk Factors" in
this prospectus, as well as in the section captioned "Risk Factors," which we
describe in Item 1A in our most recent Annual Report on Form 10-K, which we
filed with the SEC and in Item 1A in our quarterly reports on Form 10-Q which we
file from time to time with the SEC, as well as in other documents that we
subsequently file with the SEC.
Our
company develops solutions that automate healthcare data and diagnostic workflow
to enable a better electronic record of the patient experience, and to enhance
product development for health IT, device and pharmaceutical companies and
delivers related services. Merge products, ranging from
standards-based development toolkits to sophisticated clinical applications,
have been used by healthcare providers, vendors and researchers worldwide for
over 20 years. Merge Healthcare’s principal executive offices are
located at 6737 West Washington Street, Suite 2250, Milwaukee, Wisconsin
53214–5650, and the telephone number there is (414) 977–4000.
Merge
Healthcare was founded in 1987 and specialized in the transformation of legacy
radiology (film–based) images into filmless digitized images for distribution
and diagnostic interpretation. Merge Healthcare acquired eFilm
Medical Inc. in June 2002 for its diagnostic medical image workstation software
capabilities; RIS Logic, Inc. in July 2003 for its RIS software, which manages
business and clinical workflow for imaging centers; AccuImage Diagnostics Corp.
in January 2005 for its advanced visualization technologies for clinical
specialty medical imaging; and Cedara Software Corp. in June 2005, which
significantly enhanced Merge Healthcare’s medical imaging software
offerings. In 2009, Merge Healthcare has acquired:
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Certain
assets of eko systems, inc. in July for its Surgical Management System
capabilities;
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etrials
Worldwide, Inc in July in order to provide clinical trial sponsors and
contract research organizations (“CROs”) comprehensive and configurable
solutions that include both critical imaging technologies and proven
eClinical capabilities; and
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Confirma,
Inc. in September in order to combine forces in an effort to expand
computer aided detection (“CAD”)
technology.
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Merge
Healthcare’s business is health IT software, which can involve any aspect of
moving medical images and/or information into electronic media. Its
major product categories consist of:
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Software
development toolkits and platforms, which give software developers
resources to accelerate new product
development;
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Diagnostic
workstation software applications, which bring specialized reading and
review tools to the clinician’s
desktop;
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RIS
and related applications, which manage the business workflow of an imaging
enterprise or radiology department;
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PACS
and related applications, which manage the medical image workflow of a
healthcare enterprise;
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Surgical
Management Systems, which automate the monitoring and recording of
anesthesia and perfusion before, during and after a
surgery;
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CAD
products, which automate the analysis and interventional guidance of
studies provided by radiology
practices;
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Software-as-a-service
(“SaaS”), which includes electronic data capture (“EDC”), interactive
voice and Web response (“IVR”/”IWR”) and electronic patient diaries
(“eDiary”) for clinical trial sponsors and
CRO’s.
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Consultative
engineering, which provides customer development teams with added
expertise and technology; and
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Managed
Services, which extends additional image and remote information management
capabilities to Merge Healthcare’s
customers.
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Merge
Healthcare generates revenue through licensing software and/or intellectual
property, upgrading and/or renewing those licenses, ongoing service and support
of the solutions, SaaS delivery of solutions, project or hourly professional
services, consultative engineering fees and pay-per-study managed
services.
Merge
Healthcare’s technologies and expertise span all the major digital imaging
modalities, including computed tomography (“CT”), magnetic resonance imaging
(“MRI”), digital x–ray, mammography, ultrasound, echo-cardiology, angiography,
nuclear medicine, positron emission tomography (“PET”) and
fluoroscopy. Merge Healthcare’s offerings are used in all aspects of
clinical imaging workflow, including: the display of a patient’s digital image;
the archiving communication and manipulation of digital images; clinical
applications to analyze digital images; and the use of imaging in
minimally-invasive surgery. Merge Healthcare has continued to
innovate with its product lines and has extended its business into new areas of
medical imaging.
Merge
Healthcare has its software deployed in hospitals and clinics worldwide through
its partner, direct end-user and eCommerce channels and used by clinical trial
sponsors and CRO’s worldwide. Its software is licensed by many of the
world’s largest medical device and healthcare information technology
companies. With global brand recognition for products such as
eFilm Workstation™, a downloadable diagnostic imaging application, and
MergeCOM-3 DICOM toolkits, Merge Healthcare is able to generate a foothold in
new international markets upon which it can expand into additional product
lines.
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The
Offering
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Issuer
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Merge
Healthcare Incorporated
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Seller
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One
or more selling stockholders; for more information, see “Selling
Stockholders.” We are not selling any of the shares of common
stock offered under this prospectus or any prospectus
supplement.
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Common
Stock Offered
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5,422,104
shares
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Use
of Proceeds
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We
will not receive any proceeds from the sale by any selling stockholder of
the shares of common stock offered under this prospectus or any prospectus
supplement. See “Use of Proceeds.”
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Our
Common Stock
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Our
common stock is quoted on The Nasdaq Global Market under the symbol
“MRGE.”
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Risk
Factors
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Investing
in our common stock involves significant risk. See “Risk
Factors” for a discussion of the risks associated with an investment in
our common stock.
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Before
you invest in our securities, in addition to the other information, documents or
reports incorporated by reference in this prospectus and in any prospectus
supplement, you should carefully consider the risk factors set forth in the
section entitled “Risk Factors” in any prospectus supplement as well as in “Part
I, Item 1A. Risk Factors,” in our most recent annual report on Form 10-K, and in
“Part II, Item 1A. Risk Factors,” in our quarterly reports on Form 10-Q filed
subsequent to such Form 10-K, which are incorporated by reference into this
prospectus and any prospectus supplement in their entirety, as the same may be
updated from time to time by our future filings under the Exchange
Act. Each of the risks described in these sections and documents
could materially and adversely affect our business, financial condition, results
of operations and prospects, and could result in a loss of your
investment.
We
may not be able to realize the anticipated benefits from our acquisitions of
Confirma and etrials.
We may
not be able to realize the anticipated benefits from our acquisitions of
Confirma and etrials. Achieving those benefits depends on the timely, efficient
and successful execution of a number of post-acquisition events, including
integrating the businesses of Confirma and etrials into our company. Factors
that could affect our ability to achieve these benefits include:
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Difficulties
in integrating and managing personnel, financial reporting and other
systems used by the businesses of Confirma and etrials into our
company;
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The
failure of the businesses of Confirma and etrials to perform in accordance
with our expectations;
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Any
future goodwill impairment charges that we may incur with respect to the
assets of Confirma or etrials;
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Failure
to achieve anticipated synergies between our business units and the
business units of Confirma and
etrials;
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The
loss of customers; and
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The
loss of any of the key managers and
employees.
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If the
businesses of Confirma and etrials do not operate as we anticipate, our
business, financial condition and results of operations could be materially
harmed. In addition, the loss of any key managers or employees of Confirma or
etrials could have a material adverse effect on our business.
In
addition, as a result of the acquisitions, we have assumed all of the
liabilities of Confirma and etrials. We may learn additional information about
the businesses of Confirma and etrials that adversely affects us, such as
unknown or contingent liabilities, issues relating to internal controls over
financial reporting and issues relating to compliance with the Sarbanes-Oxley
Act or other applicable laws. As a result, there can be no assurance that the
acquisitions will be successful or will not, in fact, harm our business. Among
other things, if liabilities of Confirma and etrials are greater than projected,
or if there are obligations of which we were not aware at the time of completion
of the acquisition, our business could be materially adversely
affected.
In
addition, etrials has had recurring losses from operations and might never
achieve or maintain profitability, which could materially adversely affect our
business and operating results. At June 30, 2009, etrials had an
accumulated deficit of approximately $49.5 million, including a net loss of
approximately $3.8 million for the six months ended June 30,
2009.
The
successful integration of the businesses of Confirma and etrials into our
company will present significant challenges.
We
anticipate that the acquisitions of Confirma and etrials will place significant
demands on our administrative, operational and financial resources, and we
cannot assure you that we will be able to successfully integrate the businesses
of Confirma and etrials into our company. Our failure to successfully integrate
Confirma and etrials into our company, and to manage the challenges presented by
the integration process successfully, may prevent us from achieving the
anticipated benefits of the acquisitions and could have a material adverse
effect on our business.
Our
acquisition of etrials could trigger certain provisions contained in etrials'
agreements with third parties that could permit such parties to terminate that
agreement.
etrials
may be a party to agreements that permit a counter-party to terminate an
agreement or receive payments because the acquisition would cause a default or
violate an anti-assignment, change of control or similar clause in such
agreements. If this happens, we may have to seek to replace that
agreement with a new agreement or make additional payments under such
agreements. However, we may be unable to replace a terminated
agreement on comparable terms or at all. Depending on the importance
of such agreement to etrials’ business, the failure to replace a terminated
agreement on similar terms or at all, and requirements to pay additional
amounts, may increase our costs of operating etrials' business or prevent us
from operating etrials' business.
We
expect to incur significant costs associated with the acquisition of
etrials.
We
estimate that we or etrials will incur direct transaction costs of approximately
$2.8 million associated with the acquisition of etrials, including direct costs
of the acquisition as well as liabilities to be accrued in connection with the
acquisition (excluding any related severance costs). All such direct
acquisition costs will be expensed as incurred. We believe the
combined entity may incur charges to operations, which are not currently
reasonably estimable, in the quarter in which the acquisition is completed or
the following quarters, to reflect costs associated with integrating the two
companies. We may incur additional material charges in subsequent
quarters to reflect additional costs associated with the
acquisition. We anticipate that the combination will require
significant cash outflows for acquisition and integration related
costs. If the benefits of the acquisition do not exceed the costs of
integrating the businesses, our financial results may be adversely
affected.
The
market price of our common stock may decline as a result of our acquisition of
Confirma.
The
market price of our common stock may decline after our acquisition of
Confirma. Some of the issues that we could face are:
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The
integration of Confirma's business is unsuccessful or takes longer or is
more disruptive than anticipated;
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We
do not achieve the expected synergies or other benefits of the Confirma
acquisition as rapidly or to the extent anticipated, if at
all;
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The
effect of the acquisition of Confirma on our financial results does not
meet our expectations; or
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After
the acquisition, Confirma's business does not perform as
anticipated.
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In
connection with the acquisition of Confirma, we will issue 5,422,104 additional
shares of our common stock. The increase in the number of outstanding
shares of our Common Stock may lead to sales of such shares or the perception
that such sales may occur, either of which may adversely affect the market price
of our common stock.
There
are a limited number of stockholders who have significant control over our
common stock, allowing them to have significant influence over the outcome of
all matters submitted to stockholders for approval, which may conflict with our
interests and the interests of other stockholders.
Our
directors, officers and principal stockholders (stockholders owning 10% or more
of our common stock) beneficially owned approximately 30,403,657, or 50.1%
(which will approximate 46% after shares are issued in conjunction with the
Confirma acquisition), of the outstanding shares of common stock and stock
options that could have been converted to common stock at August 31, 2009, and
such stockholders will have significant influence over the outcome of all
matters submitted to our stockholders for approval, including the election of
directors and other corporate actions. In addition, such influence by these
affiliates could have the effect of discouraging others from attempting us to
take over, thereby increasing the likelihood that the market price of the common
stock will not reflect a premium for control.
Our
business could be harmed by the deteriorating general economic and market
conditions that lead to reduced spending on information technology
products.
Our
business and operating results might be adversely affected by worldwide economic
conditions and, in particular, conditions in the pharmaceutical, biotechnology
and medical device industries we serve. As our business expands
globally, we have become increasingly subject to the risks arising from adverse
changes in domestic and global economic and political conditions. Economic
growth in the U.S. and other countries slowed since the second half of 2008,
which caused our customers to delay or reduce information technology
purchases. As a result of slowing global economic growth, the credit
market crisis, declining consumer and business confidence, shifts in consumer
spending patterns, increased unemployment, reduced levels of capital
expenditures, fluctuating commodity prices, bankruptcies and other challenges
currently affecting the global economy, our clients might experience
deterioration of their businesses, cash flow shortages, and difficulty obtaining
financing. If economic conditions in the U.S. and other countries
continue to deteriorate, customers may continue to delay or further reduce
purchases. This could result in additional reductions in sales of our products,
longer sales cycles, slower adoption of new technologies and increased price
competition. In addition, weakness in the end-user market could negatively
affect the cash flow of our OEM and VAR customers who could, in turn, delay
paying their obligations, which would increase our credit risk exposure and
cause a decrease in operating cash flows. Also, if OEM and VAR customers
experience excessive financial difficulties and/or insolvency, and we are unable
to successfully transition end-users to purchase products from other vendors or
directly from us, sales could decline significantly. Any of these events would
likely harm our business, results of operations and financial
condition.
Continued
disruption in credit markets and world-wide economic changes may adversely
affect our business, financial condition, and results of
operations.
Continued
disruptions in the financial and credit markets may adversely affect our
business and financial results. The tightening of credit markets may reduce the
funds available to our customers to buy our products and services. It may also
result in customers extending the length of time in which they pay and in our
having higher customer receivables with increased default rates. General
concerns about the fundamental soundness of domestic and foreign economies may
also cause customers to reduce their purchases, even if they have cash or if
credit is available to them.
Our
future capital needs are uncertain and our ability to access additional
financing may be negatively impacted by the volatility and disruption of the
capital and credit markets and adverse changes in the global
economy.
Our
capital requirements in the future will depend on many factors,
including:
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Acceptance
of and demand for its products;
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The
extent to which we invest in new technology and product
development;
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The
costs of developing new products, services or
technologies;
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The
number and method of financing of acquisitions and other strategic
transactions; and
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The
costs associated with the growth of its business, if
any.
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We intend
to finance our operations and any growth of our business with existing cash and
cash flows from operations. We believe existing cash and anticipated cash flows
from operations will be sufficient to meet operating and capital requirements
through at least the twelve month period following the filing of this
Prospectus. If adverse global economic conditions persist or worsen, however, we
could experience a decrease in cash flows from operations and may need
additional financing to fund operations. Due to the existing uncertainty in the
capital markets (including debt, private equity, venture capital and traditional
bank lending), access to additional debt or equity may not be available on
acceptable terms or at all. If we cannot raise funds on acceptable terms when
necessary, we may not be able to develop or enhance products and services,
execute our business plan, take advantage of future opportunities or respond to
competitive pressures or unanticipated customer requirements.
We
may experience significant fluctuations in revenue growth rates and operating
results.
We may
not be able to accurately forecast our growth rate. We base expense levels and
investment plans on sales estimates and review all estimates on a quarterly
basis. Many of our expenses and investments are fixed and we may not be able to
adjust spending quickly enough if sales are lower than expected.
Our
revenue growth may not be sustainable and our percentage growth rates may
decrease or fluctuate significantly. Our revenue and operating profit growth
depends on the continued growth of demand for our products and services offered
through us or our OEM and VAR customers, and our business is affected by general
economic and business conditions worldwide. A softening of demand, whether
caused by changes in customer preferences or a weakening of the U.S. or global
economies, may result in decreased revenue or growth.
Our net
sales and operating results will also fluctuate for many other reasons,
including due to risks described elsewhere in this section and the
following:
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Demand
for our software solutions and
services;
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The
level of reimbursements to our end-user customers from government
sponsored healthcare programs (principally, Medicare and
Medicaid);
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Accounting
policy changes mandated by regulating
entities;
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Delays
due to customers’ internal budgets and procedures for approving capital
expenditures, by competing needs for other capital expenditures and the
deployment of new technologies and personnel
resources;
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Our
ability to retain and increase sales to existing customers, attract new
customers and satisfy our customers’
demands;
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Our
ability to fulfill orders;
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The
introduction of competitive products and
services;
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Changes
in the usage of the Internet and eCommerce, including in non-U.S.
markets;
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Timing,
effectiveness and costs of expansion and changes in our systems and
infrastructure;
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The
outcomes of legal proceedings and claims involving us;
and
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Variations
in the mix of products and services offered by
us.
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Delays in
the expected sales or installation of our software may have a significant impact
on our anticipated quarterly revenues and, consequently, our earnings since a
significant percentage of expenses are relatively fixed. Additionally, we
sometimes depend, in part, upon large contracts with a small number of OEM
customers to meet sales goals in any particular quarter. Delays in the expected
sales or installation of solutions under these large contracts may have a
significant impact on our quarterly net sales and consequently our earnings,
particularly because a significant percentage of expenses are
fixed.
The
length of our sales and implementation cycles may adversely affect our operating
results.
We have
experienced long sales and implementation cycles. How and when to implement,
replace, expand or substantially modify medical imaging management software, or
to modify or add business processes, are major decisions for our end-user target
market. The sales cycle for our software ranges from six to 18 months or more
from initial contact to contract execution. Our end-user implementation cycle
has generally ranged from three to nine months from contract execution to
completion of implementation. During the sales and implementation cycles, we
will expend substantial time, effort and resources preparing contract proposals,
negotiating the contract and implementing the software, and may not realize any
revenues to offset these expenditures. Additionally, any decision by our
customers to delay or cancel purchases or the implementation of our software may
adversely affect net sales.
We
have outstanding debt and may incur additional debt in the future.
On June
4, 2008, we closed a financing transaction with Merrick RIS, LLC in which we
received gross proceeds of $20.0 million from Merrick Ventures, LLC in exchange
for a $15.0 million senior secured term note (the “Note”) due June 4, 2010 and
21,085,715 shares of our common stock. Our ability to repay the
principal of the Note and any additional indebtedness that we may incur is
dependent upon our ability to manage business operations and generate sufficient
cash flows to service such debt. There can be no assurance that we will be able
to manage any of these risks successfully.
If
we are unable to successfully identify or effectively integrate acquisitions,
our financial results may be adversely affected.
We have
in the past and may in the future acquire and make investments in companies,
products or technologies that we believe complement or expand our existing
business and assist in quickly bringing new products to market. There
can be no assurance that we will be able to identify suitable candidates for
successful acquisitions at acceptable prices. In addition, our
ability to achieve the expected returns and synergies from past and future
acquisitions and alliances depends in part upon our ability to integrate the
offerings, technology, administrative functions, and personnel of these
businesses into our business in an efficient and effective manner. We
cannot predict whether we will be successful in integrating acquired businesses
or that our acquired businesses will perform at anticipated
levels. In addition, our past and future acquisitions may subject us
to unanticipated risks or liabilities, or disrupt operations and divert
management’s attention from day-to-day operations. In addition, we
may use our capital stock to acquire acquisition targets, which could be
dilutive to existing stockholders and cause a decline in the price of our common
stock.
In making
or attempting to make acquisitions or investments, we face a number of risks,
including risks related to:
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Identifying
suitable candidates, performing appropriate due diligence, identifying
potential liabilities and negotiating acceptable
terms;
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Reducing
our working capital and hindering our ability to expand or maintain our
business, if acquisitions are made using
cash;
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The
potential distraction of our management, diversion of our resources and
disruption to our business;
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Retaining
and motivating key employees of the acquired
companies;
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Managing
operations that are distant from our current headquarters and operational
locations;
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Entering
into industries or geographic markets in which we have little or no prior
experience;
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Competing
for acquisition opportunities with competitors that are larger or have
greater financial and other resources than
us;
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Accurately
forecasting the financial impact of a
transaction;
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Assuming
liabilities of acquired companies, including existing or potential
litigation related to the operation of the business prior to the
acquisition;
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Maintaining
good relations with the customers and suppliers of the acquired company;
and
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Effectively
integrating acquired companies and achieving expected
synergies.
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In
addition, any acquired business, products or technologies may not generate
sufficient revenue and net income to offset the associated costs of such
acquisitions, and such acquisitions could result in other adverse
effects. Moreover, from time to time, we may enter into negotiations
for the acquisition of businesses, products or technologies but be unable or
unwilling to consummate the acquisitions under consideration. This
can be expensive and could cause significant diversion of managerial attention
and resources.
A
portion of our business relies upon a network of independent contractors and
distributors whose actions could have an adverse effect on our
business.
We obtain
some critical information from independent contractors. In addition, we rely on
a network of VAR’s and distributors to sell our offerings in locations where we
do not maintain a sales office or sales team. These independent contractors and
distributors are not our employees. As a result, we have limited ability to
monitor and direct their activities. The loss of a significant number of these
independent contractors or dealers could disrupt our sales, marketing and
distribution efforts. Furthermore, if any actions or business practices of these
individuals or entities violate our policies or procedures or otherwise are
deemed inappropriate or illegal, we could be subject to litigation, regulatory
sanctions or reputation damage, any of which could adversely affect our business
and require us to terminate relationships with them.
Our
investments in technology may not be sufficient and may not result in an
increase in our revenues or decrease in our operating costs.
As the
technological landscape continues to evolve, it may become increasingly
difficult for us to make timely, cost-effective changes to our offerings in a
manner that adequately differentiates them from those of our
competitors. We cannot provide any assurance that our investments
have been or will be sufficient to maintain or improve our competitive position
or that the development of new or improved technologies and products by our
competitors will not have a material adverse effect on our
business.
We
operate in competitive markets, which may adversely affect our market share and
financial results.
Some of
our competitors are focused on sub-markets within targeted industries, while
others have significant financial and information-gathering resources with
recognized brands, technological expertise and market experience. We believe
that competitors are continuously enhancing their products and services,
developing new products and services and investing in technology to better serve
the needs of their existing customers and to attract new
customers.
We face
competition in specific industries and with respect to specific offerings. We
may also face competition from organizations and businesses that have not
traditionally competed with us, but that could adapt their products and services
to meet the demands of our customers. Increased competition may require us to
reduce the prices of our offerings or make additional capital investments that
would adversely affect margins. If we are unable or unwilling to do so, we may
lose market share in target markets and our financial results may be adversely
affected.
We
face aggressive competition in many areas, and our business will be harmed if we
fail to compete effectively.
The
markets for medical imaging solutions are highly competitive and subject to
rapid technological change. We may be unable to maintain our
competitive position against current and potential competitors. Many of our
current and potential competitors have greater financial, technical, product
development, marketing and other resources, and we may not be able to compete
effectively with them. In addition, new competitors may emerge and our system
and software solution offerings may be threatened by new technologies or market
trends that reduce the value of our solutions. Further, our recent challenges
may have weakened our competitive position.
We often
“compete” with our OEM customers’ own internal software engineering groups. The
size and competency of these groups may create additional competition. In the
area of Radiology Information Systems (“RIS”) and Picture Archiving and
Communication Systems (“PACS”) workflow applications, many competitors offer
portions of an integrated radiology solution through their RIS and PACS.
Additionally, certain competitors are integrating RIS and PACS technologies
through development, partnership and acquisition activities.
The
development and acquisition of additional products, services and technologies,
and the improvement of our existing products and services, require significant
investments in research and development. For example, our current product
candidates are in various stages of development and may require significant
further research, development, pre-clinical or clinical testing, regulatory
approval and commercialization. If we fail to successfully sell new products and
update existing products, our operating results may decline as existing products
reach the end of their commercial life cycles.
Our
performance and future success depends on our ability to attract, integrate and
retain qualified technical, managerial and sales personnel.
We are
dependent, in part, upon the services of our senior executives and other key
business and technical personnel. We do not currently maintain key-man life
insurance on our senior executives. The loss of the services of any of our
senior executives or key employees could have a material adverse effect on our
business. Our commercial success will depend upon, among other things, the
successful recruiting and retention of highly skilled technical, managerial and
sales personnel with experience in similar business activities. Competition for
the type of highly skilled individuals that we seek is intense. We
may not be able to retain existing key employees or be able to find, attract and
retain skilled personnel on acceptable terms.
We
may not be able to adequately protect our intellectual property rights or may be
accused of infringing intellectual property rights of third
parties.
We regard
our trademarks, service marks, copyrights, patents, trade secrets, proprietary
technology and similar intellectual property as critical to our
success. We rely on trademark, copyright and patent law, trade secret
protection and confidentiality and/or license agreements with employees,
customers and others to protect our proprietary rights. Effective intellectual
property protection may not be available in every country in which our products
and services are made available. We also may not be able to acquire or maintain
appropriate intellectual property rights in all countries where we do
business.
We may
not be able to discover or determine the extent of any unauthorized use of our
proprietary rights. Third parties that license our proprietary rights also may
take actions that diminish the value of these rights. Such claims, whether or
not meritorious, may result in the expenditure of significant financial and
managerial resources, injunctions against us or the payment of damages. We may
need to obtain licenses from third parties who allege that we have infringed on
their rights, but such licenses may not be available on terms acceptable to us
or at all. In addition, we may not be able to obtain or utilize on favorable
terms, or at all, licenses or other rights with respect to intellectual property
we do not own in providing services under commercial agreements. These risks
have been amplified by the increase in third parties whose sole or primary
business is to assert such claims.
We also
rely on proprietary know how and confidential information and employ various
methods, such as entering into confidentiality and non-compete agreements with
our current employees and with certain third parties to whom we have divulged
proprietary information to protect the processes, concepts, ideas and
documentation associated with our solutions. Such methods may not afford
sufficient protection, and we may not be able to protect trade secrets
adequately or ensure that other companies would not acquire information that we
consider proprietary.
We
may be subject to product liability claims if people or property is harmed by
the products and services that we sell.
Some of
the products we sell or manufacture may expose us to product liability claims
relating to personal injury, death or environmental or property damage and may
require product recalls or other actions. Certain third parties, primarily our
customers, also sell products or services using our products. This may increase
our exposure to product liability claims. Although we maintain liability
insurance, we cannot be certain that coverage will be adequate for liabilities
actually incurred or that insurance will continue to be available on
economically reasonable terms or at all. In addition, some of our agreements
with vendors and sellers do not indemnify us from product
liability.
We
have foreign exchange rate risk.
Our
international operating results are exposed to foreign exchange rate
fluctuations. While the functional currency of most of our international
operations is the U.S. Dollar, certain account balances are maintained in the
local currency. Upon remeasurement of such accounts or through normal
operations, results may differ materially from expectations, and we may record
significant gains or losses on the remeasurement of such balances. As we expand
international operations, our exposure to exchange rate fluctuations may
increase.
We
may not be successful in our efforts to expand into international market
segments.
Our
international activities are significant to our revenues and profits, and we
plan to further expand internationally. We have relatively little experience
operating in these or future market segments and may not benefit from any
first-to-market advantages or otherwise succeed. It is costly to establish,
develop and maintain international operations and websites and promote our brand
internationally. Our international operations may not be profitable
on a sustained basis.
In
addition to risks described elsewhere in this section, our international sales
and operations are subject to a number of risks, including:
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Local
economic and political conditions;
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Foreign
government regulation of healthcare and government reimbursement of health
services;
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Local
restrictions on sales or distribution of certain products or services and
uncertainty regarding liability for products and
services;
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Local
import, export or other business licensing
requirements;
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Local
limitations on the repatriation and investment of funds and foreign
currency exchange restrictions;
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Shorter
payable and longer receivable cycles and the resultant negative impact on
cash flow;
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Local
laws and regulations regarding data protection, privacy, network security
and restrictions on pricing;
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Difficulty
in staffing, developing and managing foreign operations as a result of
distance, language and cultural
differences;
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Different
employee/employer relationships and the existence of workers’ councils and
labor unions;
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Laws
and policies of the U.S. and other jurisdictions affecting trade, foreign
investment, loans and taxes; and
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Geopolitical
events, including war and
terrorism.
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Litigation
or regulatory actions could adversely affect our financial
condition.
On April
27, 2006, we received an informal, non-public inquiry from the SEC requesting
voluntary production of documents and other information. The inquiry
principally related to our announcement, on March 17, 2006, that we would
investigate allegations of improprieties related to financial reporting and
revise our results of operations for the fiscal quarters ended June 30, 2005,
and September 30, 2005. On July 10, 2007, SEC Staff advised us that
the SEC had issued a formal order of investigation in this matter. We
are cooperating fully with the SEC. The SEC Staff has informed us
that the Staff is considering recommending an injunctive or cease and desist
order against us prohibiting violations of the reporting, record-keeping, and
internal control provisions under the Securities Exchange Act of
1934. The Staff did not inform us that it is considering recommending
any monetary sanctions. However, the matter has not yet been finally
resolved, and, until such final resolution, we will continue to incur expenses,
including legal fees and other costs, in connection with the SEC’s
investigation.
On June
1, 2009, we were served with a Summons and Complaint in the Milwaukee County
Circuit Court, State of Wisconsin, captioned William C. Mortimore and
David M. Nosay v. Merge Technologies Inc. n/k/a Merge Healthcare Inc.
[sic], Case Number 09CV008356, Case Code 30301. The Complaint
includes a demand for a jury trial and alleges that the corporation unreasonably
refused Mortimore and Noshay’s request for indemnification; requests the court
order that they are entitled to indemnification under Wisconsin Statute Section
180.0851(2); alleges breaches of certain employment agreements; and a breach of
the covenant of good faith and fair dealing. Monetary damages are
unspecified. We have retained litigation counsel, notified our
appropriate insurers and intend to vigorously defend this action.
As a
result of lawsuits and regulatory matters, including the matters discussed
above, we have incurred and may continue to incur substantial
expenses.
We
depend on licenses from third parties for rights to some technology we use, and
if we are unable to continue these relationships and maintain our rights to this
technology, our business could suffer.
Some of
the technology used in our software depends upon licenses from third party
vendors. These licenses typically expire within one to five years, can be
renewed only by mutual consent and may be terminated if we breach the license
and fail to cure the breach within a specified period of time. We may not be
able to continue using the technology made available to us under these licenses
on commercially reasonable terms or at all. As a result, we may have to
discontinue, delay or reduce software shipments until we obtain equivalent
technology, which could hurt our business. Most of our third party licenses are
nonexclusive. Our competitors may obtain the same right to use any of the
technology covered by these licenses and use the technology to compete directly
with us. In addition, if our vendors choose to discontinue support of the
licensed technology in the future or are unsuccessful in their continued
research and development efforts, particularly with regard to the Microsoft
Windows/Intel platform on which most of our products operate, we may not be able
to modify or adapt our own software.
We
are subject to government regulation, changes to which could negatively impact
our business.
We are
subject to regulation in the U.S. by the Food and Drug Administration (the
“FDA”), including periodic FDA inspections, in Canada under Health Canada’s
Medical Devices Regulations, and in other countries by corresponding regulatory
authorities. We may be required to undertake additional actions in
the U.S. to comply with the Federal Food, Drug and Cosmetic Act (the “Act”),
regulations promulgated under the Act, and any other applicable regulatory
requirements. For example, the FDA has increased its focus on regulating
computer software intended for the use in a healthcare setting. If our software
solutions are deemed to be actively regulated medical devices by the FDA, we
could be subject to more extensive requirements governing pre- and
post-marketing activities. Complying with these regulations could be time
consuming and expensive, and may include:
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Requiring
us to receive FDA clearance of a pre-market notification submission
demonstrating substantial equivalence to a device already legally
marketed, or to obtain FDA approval of a pre-market approval application
establishing the safety and effectiveness of the
software;
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Requiring
us to comply with rigorous regulations governing the pre-clinical and
clinical testing, manufacture, distribution, labeling and promotion of
medical devices; and
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Requiring
us to comply with the Act regarding general controls, including
establishment registration, device listing, compliance with good
manufacturing practices, reporting of specified malfunctions and adverse
device events.
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A
significant portion of our net sales are derived directly or indirectly from
sales to end-users, including hospitals, diagnostic imaging centers and
specialty clinics, many of which generate some or all of their revenues from
government sponsored healthcare programs, principally, Medicare and Medicaid. We
believe that the implementation of the reimbursement reductions contained in the
Deficit Reduction Act has adversely impacted our end-user customers’ revenues
per examination, which has caused some of them to respond by reducing their
investments or postponing investment decisions, including investments in our
software solutions and services, including maintenance. The risk of more
Medicare imaging reimbursement cuts remains.
Similar
obligations may exist in other countries in which we do business, including
Canada. Any failure by us to comply with other applicable regulatory
requirements, both domestic and foreign, could subject us to a number of
enforcement actions, including warning letters, fines, product seizures,
recalls, injunctions, total or partial suspension of production, operating
restrictions or limitations on marketing, refusal of the government to grant new
clearances or approvals, withdrawal of marketing clearances or approvals and
civil and criminal penalties.
Changes
in federal and state regulations relating to patient data could depress the
demand for our software and impose significant software redesign
costs.
Federal
regulations under the Health Insurance Portability and Accountability Act
(“HIPAA”) impose national health data standards on healthcare providers that
conduct electronic health transactions, healthcare clearinghouses that convert
health data between HIPAA compliant and non-compliant formats and health plans.
Collectively, these groups are known as covered entities. The HIPAA regulations
prescribe transaction formats and code sets for electronic health transactions,
protect individual privacy by limiting the uses and disclosures of individually
identifiable health information and require covered entities to implement
administrative, physical and technological safeguards to ensure the
confidentiality, integrity, availability and security of individually
identifiable health information in electronic form. Although we are not a
covered entity, most of our customers are, and they require that our software
and services adhere to HIPAA regulations. Any failure or perceived failure of
our software or services to meet HIPAA regulations could adversely affect demand
for our software and services and potentially require us to expend significant
capital, research and development and other resources to modify our software or
services to address the privacy and security requirements of our
clients.
States
and foreign jurisdictions have adopted, or may adopt, privacy standards that are
similar to or more stringent than the federal HIPAA privacy regulations. This
may lead to different restrictions for handling individually identifiable health
information. As a result, our customers may demand IT solutions and services
that are adaptable to reflect different and changing regulatory requirements,
which could increase our development costs. In the future, federal, state or
foreign governmental authorities may impose new data security regulations or
additional restrictions on the collection, use, transmission and other
disclosures of health information. We cannot predict the potential
impact that these future rules may have on our business; however, the demand for
our software and services may decrease if we are not able to develop and offer
software and services that can address the regulatory challenges and compliance
obligations facing our clients.
Proposed
federal U.S. government reductions in Medicare and Medicaid reimbursement rates
for radiology procedures could negatively affect revenues of our hospital and
imaging clinic customers, which could reduce our customers’ ability to purchase
our software and services.
Medicare
and Medicaid use scanner utilization rates as a factor in determining
reimbursement rates. They currently use a 50% utilization rate factor
in the reimbursement formula. The Medicare Payment Advisory
Commission (MedPAC) recommended increasing this factor to 90% utilization, or an
increase of 80%, as part of the healthcare reform act currently under
consideration in Congress. This change in the utilization rate has
the potential to dramatically decrease reimbursements for radiology procedures,
and could have a particularly devastating impact on patients, hospitals and
imaging clinics in rural regions of the country where utilization rates are
naturally lower. The resulting effect on our business could be a
reduction in software and service procurement of our customers and potentially
the closure of their facilities.
We
provide customers with certain warranties that could result in higher costs than
anticipated.
Software
products such as ours that are used in a wide range of clinical and health
information systems settings are likely to contain a number of errors or “bugs,”
especially early in their product life cycle. Our products include clinical
information systems used in patient care settings where a low tolerance for bugs
exists. Testing of products is difficult due to the wide range of environments
in which systems are installed. The discovery of defects or errors in our
software products may cause delays in product delivery, poor client references,
payment disputes, contract cancellations or additional expenses and payments to
rectify problems. Any of those factors may result in delayed acceptance of, or
the return of, our software products.
Healthcare
industry consolidation could impose pressure on our software prices, reduce our
potential client base and reduce demand for our software.
Many hospitals
and imaging centers have consolidated to create larger healthcare enterprises
with greater market power. If this consolidation trend continues, it could
reduce the size of our target market and give the resulting enterprises greater
bargaining power, which may lead to erosion of the prices for our software. In
addition, when hospitals and imaging centers combine, they often consolidate
infrastructure, and consolidation of our customers could erode our revenue
base.
Shares
of our common stock eligible for public sale may have a negative impact on the
market price of our commons stock, and dilute our stockholders’ percentage
ownership and voting power.
Sales of
a substantial number of shares of our common stock in the public market, or the
perception that these sales may occur, could cause the market price of our
common stock to decline. In addition, the sale of these shares could impair our
ability to raise capital, should we wish to do so, through the sale of
additional common or preferred stock.
As of the
close of business on August 31, 2009, we had 60,705,673 shares of common stock
outstanding, substantially all of which are currently freely tradable. Upon the
filing of the registration statement, of which this prospectus forms a part, the
5,422,104 shares registered for resale under this prospectus will become freely
tradable, subject only to certain contractual restrictions on resale to which
the selling stockholders are subject. These contractual restrictions, which are
automatically released in part, and eventually in their entirety, over time, are
described in further detail in this prospectus under “Plan of
Distribution—Transfer Restrictions.”
As of
August 31, 2009, we had outstanding options to purchase 4,655,613 shares of our
common stock, of which 1,903,617 options were then exercisable. Future sales of
shares of our common stock by existing holders of our common stock or by holders
of outstanding options, upon the exercise thereof, could have a negative impact
on the market price of our common stock. As additional shares of common stock
become available for resale in the public market pursuant to the registration
statement and exercise of options, the market supply of shares of common stock
will increase, which could also decrease its market price.
We are
unable to estimate the number of shares that may be sold because this will
depend on the market price for our common stock, the personal circumstances of
the sellers and other factors. Any sale of substantial amounts of our common
stock or other securities in the open market may adversely affect the market
price of such securities and may adversely affect our ability to obtain future
financing in the capital markets as well as create a potential market
overhang.
Because
we do not intend to pay dividends, stockholders will benefit from an investment
in our stock only if it appreciates in value.
We
currently intend to retain future earnings, if any, to finance further research
and development and do not expect to pay any cash dividends in the foreseeable
future. As a result, the success of an investment in our common stock will
depend upon any future appreciation in its value. There is no guarantee that our
common stock will appreciate in value or even maintain the price at stockholders
have purchased and will purchase shares.
The
trading price of our common stock has been volatile and may fluctuate
substantially in the future.
The price
of our common stock has been, and may continue to be, volatile. The
trading price of our common stock may continue to fluctuate widely as a result
of a number of factors, some of which are not in our control,
including:
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Our
ability to meet or exceed the expectations of analysts or
investors;
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Changes
in our forecasts or earnings estimates by
analysts;
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Quarter-to-quarter
variations in our operating
results;
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Announcements
regarding clinical activities or new products by us or our
competitors;
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General
conditions in the healthcare IT
industry;
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Governmental
regulatory action and healthcare reform measures, including changes in
reimbursement rates for imaging
procedures;
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Rumors
about our performance or software
solutions;
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Uncertainty
regarding our ability to service existing
debt;
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Price
and volume fluctuations in the overall stock market, which have
particularly affected the market prices of many software, healthcare and
technology companies; and
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General
economic conditions.
|
In
addition, the market for our common stock may experience price and volume
fluctuations unrelated or disproportionate to our operating performance. These
fluctuations could have a significant impact on our business due to diminished
incentives for management and diminished currency for
acquisitions.
Certain
provisions of our charter and Delaware law could make a takeover difficult and
may prevent or frustrate attempts by our stockholders to replace or remove our
management team.
We have
an authorized class of 1,000,000 shares of undesignated preferred stock and one
authorized share of Series 3 Special Voting Stock preferred stock. These shares
may be issued by our board of directors, on such terms and with such rights,
preferences and designation as the board of directors may determine. Issuance of
such preferred stock, depending upon the rights, preferences and designations
thereof, may have the effect of delaying, deterring or preventing a change in
control of us. In addition, we are subject to provisions of Delaware corporate
law which, subject to certain exceptions, will prohibit us from engaging in any
“business combination” with a person who, together with affiliates and
associates, owns 15% or more of our common stock for a period of three years
following the date that the person came to own 15% or more of our common stock,
unless the business combination is approved in a prescribed manner.
These
provisions of our certificate of incorporation, and of Delaware law, may have
the effect of delaying, deterring or preventing a change in control, may
discourage bids for our common stock at a premium over market price and may
adversely affect the market price, and the voting and other rights of the
holders, of our common stock. In addition, these provisions make it more
difficult to replace or remove our current management team in the event our
stockholders believe this would be in our best interest and the best interests
our stockholders.
FORWARD-LOOKING STATEMENTS
Information
both included and incorporated by reference in this Prospectus may contain
forward-looking statements, concerning, among other things, our outlook,
financial projections and business strategies, all of which are subject to
risks, uncertainties and assumptions. These forward-looking
statements are identified by their use of terms such as “intend,” “plan,” “may,”
“should,” “will,” “anticipate,” “believe,” “could,” “estimate,” “expect,”
“continue,” “potential,” “opportunity,” “project” and similar
terms. These statements are based on certain assumptions and analyses
that each company believes are appropriate under the
circumstances. Should one or more of these risks or uncertainties
materialize, or should the assumptions prove incorrect, actual results may
differ materially from those expected, estimated or projected. We can
not guarantee that we will achieve these plans, intentions or
expectations. Forward-looking statements speak only as of the date
they are made, and we undertake no obligation to publicly update or
revise any of them in light of new information, future events or
otherwise.
Factors
that may impact forward-looking statements include, among others, our ability to
maintain the technological competitiveness of our current products, develop new
products, successfully market our products, respond to competitive developments,
develop and maintain partnerships with providers of complementary technologies,
manage our costs and the challenges that may come with growth of our business,
and attract and retain qualified sales, technical and management
employees. We are also affected by the growth and regulation of the
medical technology industry, including the acceptance of enterprise-wide
advanced visualization by hospitals, clinics, and universities, product
clearances and approvals by the United Sates Food and Drug Administration and
similar regulatory bodies outside the U.S., and reimbursement and regulatory
practices by Medicare, Medicaid, and private third-party payer
organizations. We are also affected by the recent downturn in the
U.S. and international economies and as such may be further impacted by the lack
of credit available to our customers. We are affected by other
factors identified in our filings with the Securities and Exchange Commission,
some of which are set forth in the section entitled “Item 1A. Risk Factors” in
our most recent Annual Report on Form 10-K and in “Part II, Item 1A. Risk
Factors,” in our quarterly reports on Form 10-Q filed subsequent to such Form
10-K, which are incorporated by reference into this prospectus and any
prospectus supplement in their entirety, as the same may be updated from time to
time by our future filings under the Exchange Act. Although we have attempted to
list comprehensively these important factors, we also wish to caution investors
that other factors may prove to be important in the future in affecting our
operating results. New factors emerge from time to time, and it is
not possible for us to predict all of these factors, nor can we assess the
impact each factor or combination of factors may have on our
business.
These
risks and uncertainties, along with the risk factors discussed under “Risk
Factors” in this Prospectus, should be considered in evaluating any
forward-looking statements contained in this Prospectus. All
forward-looking statements speak only as of the date of this
Prospectus. All subsequent written and oral forward-looking
statements attributable to us or any person acting on its behalf are qualified
by the cautionary statements in this section.
We will
not receive any of the proceeds from the sale of shares by the selling
stockholders under this Prospectus.
This
prospectus relates to the resale of our common stock held by the selling
stockholders listed below. The selling stockholders are the former
stockholders of Confirma, Inc. (“Confirma”). On September 1, 2009, we
acquired Confirma pursuant to a merger in which Confirma became one of our
wholly-owned subsidiaries. In the Merger, shareholders of Confirma
received 5,422,104 shares of our common stock. As a result of the
acquisition, upon completion of the Merger, former shareholders of Confirma
beneficially own approximately 8% of our outstanding common stock. In
connection with the Merger, certain stockholders of Confirma entered into a
voting agreement pursuant to which they agreed to vote in favor of the
Merger.
The
selling stockholders acquired these shares from us in a private offering
pursuant to an exemption from registration provided by Regulation D, Rule 506
under Section 4(2) of the Securities Act of 1933, as amended, in connection with
our acquisition of Confirma. The registration statement of which this
prospectus is a part has been filed pursuant to registration rights granted to
the selling stockholders in connection with the acquisition.
The
shares offered hereby are being registered to permit public secondary trading as
and when the selling stockholders’ contractual resale restrictions are released
over time, as described below. The selling stockholders, including their donees,
pledgees, transferees or other successors-in-interest, may offer all or part of
the shares for resale from time to time. However, the selling stockholders are
under no obligation to resell all or any portion of such shares, nor are the
selling stockholders obligated to resell any shares immediately under this
prospectus.
Under the
terms of the Shareholders agreement between us and the selling stockholders, we
will pay all expenses of the registration of the shares of common stock,
including SEC filing fees, except that the selling stockholders will pay all
discounts and selling commissions, if any. Our expenses for the registration of
the shares of common stock are estimated to be $54,000.
The table
reflected below sets forth certain information known to us, based upon written
representations from the selling stockholders, with respect to the beneficial
ownership of our shares of common stock held by each of the selling stockholders
as of September 1, 2009. Because the selling stockholders may sell, transfer or
otherwise dispose of all, some or none of the shares of our common stock covered
by this prospectus, we cannot determine the number of such shares that will
ultimately be sold, transferred or otherwise disposed of by the selling
stockholders, or the amount or percentage of shares of our common stock that
will continue to be held by the selling stockholders upon termination of this or
any offering hereunder or pursuant to any prospectus supplement in connection
herewith. See “Plan of Distribution.” For purposes of the tables below, however,
we assume that the selling stockholders will sell all their shares of common
stock covered by this prospectus.
In the
table, the percentage of shares beneficially owned is based on 66,127,777 shares
of our common stock outstanding as of September 1, 2009, determined in
accordance with Rule 13d-3 of the Securities Exchange Act of 1934, as amended.
Under such rule, beneficial ownership includes any shares over which the
individual has sole or shared voting power or investment power and also any
shares which the individual has the right to acquire within sixty days of such
date through the exercise of any options or other rights. Unless otherwise
indicated in the footnotes, each person has sole voting and investment power (or
shares such powers with his or her spouse) with respect to the shares of common
stock shown as beneficially owned.
To our
knowledge, none of the selling stockholders are affiliates of any
broker-dealers.
|
|
|
Shares Beneficially Owned Prior to
Offering
|
|
|
Shares Being Offered
|
|
|
Shares to be Beneficially Owned After Offering
(1)
|
|
|
Selling Shareholders
|
|
Number
|
|
|
Percent
|
|
|
|
|
Number
|
|
|
Percent
|
|
|
Raymond
M. Benford
|
|
|
16,219 |
|
|
* |
|
|
|
16,219 |
|
|
|
– |
|
|
0 |
|
|
Thomas
J. Cable
|
|
|
3,326 |
|
|
* |
|
|
|
3,326 |
|
|
|
– |
|
|
0 |
|
|
DRW
Venture Partners LP
|
|
|
29,829 |
|
|
* |
|
|
|
29,829 |
|
|
|
– |
|
|
0 |
|
|
E.
Bruce Merchant Trust
|
|
|
4,052 |
|
|
* |
|
|
|
4,052 |
|
|
|
– |
|
|
0 |
|
|
Fluke
Venture Partners II, L. P.
|
|
|
973,849 |
|
|
1.5% |
|
|
|
973,849 |
|
|
|
– |
|
|
0 |
|
|
William
H. Gates
|
|
|
12,118 |
|
|
* |
|
|
|
12,118 |
|
|
|
– |
|
|
0 |
|
|
Inland
Northwest Investors, L. P.
|
|
|
26,040 |
|
|
* |
|
|
|
26,040 |
|
|
|
– |
|
|
0 |
|
|
Mark
D. Mecham
|
|
|
13,386 |
|
|
* |
|
|
|
13,386 |
|
|
|
– |
|
|
0 |
|
|
David
M. Moore
|
|
|
2,584 |
|
|
* |
|
|
|
2,584 |
|
|
|
– |
|
|
0 |
|
|
Northwest
Venture Partners II, L. P.
|
|
|
344,147 |
|
|
* |
|
|
|
344,147 |
|
|
|
– |
|
|
0 |
|
|
Saemundur
and Olafia Magusdottir Palsson
|
|
|
18,161 |
|
|
* |
|
|
|
18,161 |
|
|
|
– |
|
|
0 |
|
|
Prism
Venture Partners III, L. P.
|
|
|
525,803 |
|
|
* |
|
|
|
525,803 |
|
|
|
– |
|
|
0 |
|
|
Prism
Venture Partners III–A, L. P.
|
|
|
16,157 |
|
|
* |
|
|
|
16,157 |
|
|
|
– |
|
|
0 |
|
|
R.
D. Merrill Associates II
|
|
|
7,290 |
|
|
* |
|
|
|
7,290 |
|
|
|
– |
|
|
0 |
|
|
Jean
K. Rosen Trust Nonexempt Share, Jean K. Rosen, Trustee
|
|
|
1,520 |
|
|
* |
|
|
|
1,520 |
|
|
|
– |
|
|
0 |
|
|
Justin
M. Smith and Megan Ann Smith
|
|
|
1,605 |
|
|
* |
|
|
|
1,605 |
|
|
|
– |
|
|
0 |
|
|
Telegraph
Hill Partners II, LP
|
|
|
2,130,567 |
|
|
3.2% |
|
|
|
2,130,567 |
|
|
|
– |
|
|
0 |
|
|
Telegraph
Hill Partners SBIC, LP
|
|
|
525,312 |
|
|
* |
|
|
|
525,312 |
|
|
|
– |
|
|
0 |
|
|
Tenwall
Investment Co.
|
|
|
1,520 |
|
|
* |
|
|
|
1,520 |
|
|
|
– |
|
|
0 |
|
|
THP
Affiliates Fund, LLC
|
|
|
19,052 |
|
|
* |
|
|
|
19,052 |
|
|
|
– |
|
|
0 |
|
|
THP
II Affiliates Fund, LLC
|
|
|
46,895 |
|
|
* |
|
|
|
46,895 |
|
|
|
– |
|
|
0 |
|
|
Transcosmos,
Inc.
|
|
|
23,232 |
|
|
* |
|
|
|
23,232 |
|
|
|
– |
|
|
0 |
|
|
Versant
Affiliates Fund I–A, L. P.
|
|
|
12,091 |
|
|
* |
|
|
|
12,091 |
|
|
|
– |
|
|
0 |
|
|
Versant
Affiliates Fund I–B, L. P.
|
|
|
25,393 |
|
|
* |
|
|
|
25,393 |
|
|
|
– |
|
|
0 |
|
|
Versant
Side Fund I, L. P.
|
|
|
10,882 |
|
|
* |
|
|
|
10,882 |
|
|
|
– |
|
|
0 |
|
|
Versant
Venture Capital I, L. P.
|
|
|
556,253 |
|
|
* |
|
|
|
556,253 |
|
|
|
– |
|
|
0 |
|
|
Washington
Research Foundation
|
|
|
3,041 |
|
|
* |
|
|
|
3,041 |
|
|
|
– |
|
|
0 |
|
|
Christian
Wedell
|
|
|
42,996 |
|
|
* |
|
|
|
42,996 |
|
|
|
– |
|
|
0 |
|
|
David
V. and Valerie L. Whiting
|
|
|
3,180 |
|
|
* |
|
|
|
3,180 |
|
|
|
– |
|
|
0 |
|
|
David
V. Whiting
|
|
|
22,563 |
|
|
* |
|
|
|
22,563 |
|
|
|
– |
|
|
0 |
|
|
C.
Bagley Wright, Jr.
|
|
|
3,041 |
|
|
* |
|
|
|
3,041 |
|
|
|
– |
|
|
0 |
|
|
|
|
|
5,422,104 |
|
|
|
|
|
|
5,422,104 |
|
|
|
– |
|
|
|
|
|
(1)
|
Assumes
the sale of all Shares offered by this
Prospectus.
|
The
amounts set forth in the above table also include 46,641 shares that are held in
escrow to satisfy potential claims arising under the Merger Agreement whereby
Merge Healthcare acquired Confirma. Any shares remaining after the
satisfaction of these potential claims will be distributed from the escrow to
the stockholders of Confirma on or about September 1, 2010.
Under the
Exchange Act, and the regulations thereunder, any person engaged in a
distribution of the Shares offered by this Prospectus may not simultaneously
engage in market–making activities with respect to the Shares during the
applicable “cooling off” period prior to the commencement of such
distribution. In addition, and without limiting the foregoing, the
Selling Shareholders will be subject to applicable provisions of the Securities
Act and the Exchange Act and the rules and regulations thereunder, including,
without limitation, Regulation M under the Securities Act, in connection with
transactions in the Shares, which provisions may limit the timing of purchases
and sales of Shares.
The
shares of our common stock listed in the foregoing table are being registered to
permit public secondary trading of these shares by the holders of such shares
from time to time after the date of this prospectus, as and when certain
contractual resale restrictions are automatically released, as described under
“Transfer Restrictions.” Registration of the shares of our common stock covered
by this prospectus does not mean, however, that those shares of common stock
necessarily will be offered or sold.
The
selling stockholders and their pledgees, assignees, donees, or other
successors-in-interest who acquire the selling stockholders’ shares after the
date of this prospectus, may sell such shares of common stock from time to time
directly to purchasers or through underwriters, broker-dealers or agents, at
market prices prevailing at the time of sale, at prices related to such market
prices, at a fixed price or prices subject to change or at negotiated prices, by
a variety of methods including the following:
|
|
·
|
Through
the Nasdaq Global Market or on any national securities exchange or
quotation service on which the shares of our common stock may be listed or
quoted at the time of sale;
|
|
|
·
|
In
the over-the-counter market;
|
|
|
·
|
In
transactions otherwise than on such exchanges or services or in the
over-the-counter market;
|
|
|
·
|
Through
the exercise of purchased or written options, if and to the extent
permitted under the Shareholders Agreement (as defined
below);
|
|
|
·
|
Through
a combination of any such methods;
or
|
|
|
·
|
Through
any other method permitted under applicable law and our insider trading
policy.
|
In
connection with sales of our common stock or otherwise, a selling stockholder
who is neither an employee of Merge Healthcare nor otherwise subject to our
insider trading policy may enter into hedging transactions with broker-dealers,
which may in turn engage in short sales of the shares of our common stock in the
course of hedging the positions they assume, and such selling stockholders may
also sell short the shares of our common stock and deliver such shares to close
out such short positions, or loan or pledge shares of our common stock to
broker-dealers that in turn may sell such securities.
The
selling stockholders have advised us that, to date, they have not entered into
any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares. Upon our notification by a
selling stockholders that any material arrangement has been entered into with an
underwriter or broker-dealer for the sale of shares through a block trade,
special offering, exchange distribution, secondary distribution or a purchase by
an underwriter or broker-dealer, we will file a supplement to this prospectus,
if required, pursuant to Rule 424(b) under the Securities Act, disclosing
certain material information, including:
|
|
·
|
The
name of the selling stockholders;
|
|
|
·
|
The
number of shares being offered;
|
|
|
·
|
The
terms of the offering;
|
|
|
·
|
The
names of the participating underwriters, broker-dealers or
agents;
|
|
|
·
|
Any
discounts, commissions or other compensation paid to underwriters or
broker-dealers and any discounts, commissions or concessions allowed or
reallowed or paid by any underwriters to
dealers;
|
|
|
·
|
The
public offering price; and
|
|
|
·
|
Other
material terms of the offering.
|
If
underwriters are used in a firm commitment underwriting, the Selling
Shareholders will execute an underwriting agreement with those underwriters
relating to the shares of our common stock that the Selling Shareholders will
offer. Unless otherwise set forth in a prospectus supplement, the obligations of
the underwriters to purchase the shares of our common stock will be subject to
conditions. The underwriters, if any, will purchase such shares on a firm
commitment basis and will be obligated to purchase all of such
shares.
If any
shares of our common stock are subject to a firm commitment underwriting
agreement, the shares will be acquired by the underwriters for their own account
and may be resold by them from time to time in one or more transactions,
including negotiated transactions, at a fixed public offering price or at
varying prices determined at the time of sale. Such underwriters may be deemed
to have received compensation from the Selling Shareholders in the form of
underwriting discounts or commissions and may also receive commissions from the
purchasers of these shares of our common stock for whom they may act as agent.
Underwriters may sell these shares to or through dealers. These dealers may
receive compensation in the form of discounts, concessions or commissions from
the underwriters and/or commissions from the purchasers for whom they may act as
agent. Any public offering price and any discounts or concessions allowed or
reallowed or paid to dealers may be changed from time to time.
The
selling stockholders may authorize underwriters to solicit offers from
institutions to purchase shares of our common stock subject to the underwriting
agreement from the selling stockholders, at the public offering price stated in
a prospectus supplement pursuant to delayed delivery contracts providing for
payment and delivery on a specified date in the future. If the selling
stockholders sell shares of our common stock pursuant to these delayed delivery
contracts, a prospectus supplement will state that as well as the conditions to
which these delayed delivery contracts will be subject and the commission
payable for that solicitation.
The
applicable prospectus supplement, if any, will set forth whether or not
underwriters may over-allot or effect transactions that stabilize, maintain or
otherwise affect the market price of the shares of our common stock at levels
above those that might otherwise prevail in the open market, including, for
example, by entering stabilizing bids, effecting syndicate covering transactions
or imposing penalty bids. Underwriters are not required to engage in any of
these activities, or to continue such activities if commenced.
In
effecting sales, brokers or dealers engaged by the selling stockholders may
arrange for other brokers or dealers to participate. Broker-dealers may receive
commissions or discounts from the selling stockholders (or, if any broker-dealer
acts as agent for the purchaser of shares, from the purchaser) in amounts to be
negotiated. The selling stockholders do not expect these commissions and
discounts to exceed what is customary in the types of transactions involved.
Broker-dealer transactions may include:
|
|
·
|
Purchases
of the shares of our common stock by a broker-dealer as principal and
resales of the shares of our common stock by the broker-dealer for its
account pursuant to this
prospectus;
|
|
|
·
|
Ordinary
brokerage transactions; or
|
|
|
·
|
Transactions
in which the broker-dealer solicits purchasers on a best efforts
basis.
|
If
dealers are utilized in the sale of shares of our common stock, the names of the
dealers and the terms of the transaction will be set forth in a prospectus
supplement, if required.
The
selling stockholders may sell shares of our common stock through agents
designated by them from time to time. We will name any agent involved in the
offer or sale of such shares and will list commissions payable by the selling
stockholders to these agents in a prospectus supplement, if required. These
agents will be acting on a best efforts basis to solicit purchases for the
period of its appointment, unless we state otherwise in any required prospectus
supplement.
The
selling stockholders may also sell any of the shares of our common stock
directly to purchasers. In this case, the selling stockholders may not engage
underwriters or agents in the offer and sale of such shares. In addition, we do
not assure you that the selling stockholders will not transfer, devise or gift
the shares of our common stock by other means not described in this prospectus.
Moreover, any securities covered by this prospectus that qualify for sale
pursuant to Rule 144 under the Securities Act may be sold under Rule 144 rather
than pursuant to this prospectus.
The
selling stockholders may indemnify underwriters, dealers or agents who
participate in the distribution of the shares of our common stock against
certain liabilities, including liabilities under the Securities Act, and agree
to contribute to payments which these underwriters, dealers or agents may be
required to make.
The
aggregate proceeds to the selling stockholders from the sale of the shares of
our common stock offered by the selling stockholders hereby will be the purchase
price of such shares, less discounts and commissions, if any. The selling
stockholders reserve the right to accept and, together with their agents from
time to time, to reject, in whole or in part, any proposed purchase of shares of
our common stock to be made directly or through agents.
In order
to comply with the securities laws of some states, if applicable, the shares of
our common stock may be sold in these jurisdictions only through registered or
licensed brokers or dealers. In addition, in some states such shares may not be
sold unless they have been registered or qualified for sale or an exemption from
registration or qualification requirements is available and is complied
with.
The
selling stockholders and any underwriters, broker-dealers or agents that
participate in the sale of the shares of our common stock may be “underwriters”
within the meaning of Section 2(11) of the Securities Act. Any discounts,
commissions, concessions or profit they earn on any resale of such shares may be
underwriting discounts and commissions under the Securities Act. Any selling
stockholder who is an “underwriter” within the meaning of Section 2(11) of the
Securities Act will be subject to the prospectus delivery requirements of the
Securities Act.
Selling
shareholders are subject to the applicable provisions of the Securities Exchange
Act of 1934, as amended, or Exchange Act, and the rules and regulations under
the Exchange Act, including Regulation M. This regulation may limit the timing
of purchases and sales of any of the shares of common stock offered in this
prospectus by Selling Shareholders. The anti-manipulation rules under the
Exchange Act may apply to sales of shares in the market and to the activities of
Selling Shareholders and their affiliates. Furthermore, Regulation M may
restrict the ability of any person engaged in the distribution of the shares to
engage in market-making activities for the particular securities being
distributed for a period of up to five business days before the distribution.
The restrictions may affect the marketability of the shares and the ability of
any person or entity to engage in market-making activities for the
shares.
Transfer
Restrictions
We
entered into a Shareholders Agreement, dated August 31, 2009 with the selling
stockholders (a copy of which we filed as an exhibit to our Current Report on
Form 8-K filed with the SEC on August 7, 2009). Among other things,
the Shareholders Agreement imposes certain time-based restrictions on the
transfer of the shares covered by this prospectus. Under these
transfer restrictions, no more than 33% of the shares covered by this prospectus
may be issued prior to December 1, 2009 and no more than 66% of the shares
covered by this prospectus may be sold prior to March 1, 2010. After
March 1, 2009, the transfer restrictions pursuant to the Shareholders Agreement
terminate.
Any
shares that may be transferred free of the contractual transfer restrictions are
deemed unrestricted shares thereafter, on a cumulative basis, and may be
transferred free of any of the contractual restrictions.
Unless
otherwise indicated in the applicable prospectus supplements, certain legal
matters in connection with the securities will be passed upon for us by
McDermott Will & Emery LLP, Chicago, Illinois.
The
financial statements of Merge Healthcare as of December 31, 2008 and for the
year then ended incorporated by reference in this Prospectus have been so
incorporated in reliance on the report of BDO Seidman, LLP, an independent
registered public accounting firm, incorporated herein by reference, given on
the authority of said firm as experts in auditing and accounting.
The
consolidated financial statements of Merge Healthcare as of December 31, 2007,
and for each of the years in the two-year period ended December 31, 2007, have
been incorporated by reference herein in reliance upon the report, dated March
31, 2008, of KPMG LLP, an independent registered public accounting firm,
incorporated by reference herein, and upon the authority of KPMG LLP as experts
in accounting and auditing. KPMG LLP’s report covering the December 31, 2007
consolidated financial statements contains an explanatory paragraph that states
that Merge Healthcare’s recurring losses from operations and negative cash flows
raise substantial doubt about its ability to continue as a going
concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of this
uncertainty. KPMG LLP’s report covering the December 31, 2007
consolidated financial statements also contains an explanatory paragraph
relating to the adoption of Financial Accounting Standards Board Interpretation
No. 48, Accounting for Uncertainty in Income Taxes, as of January 1, 2007, and
the adoption of Statement of Financial Accounting Standards No. 123 (revised
2004), Share-Based Payment, as of January 1, 2006.
The
consolidated financial statements of etrials Worldwide, Inc. appearing in
etrials Worldwide Inc.’s Annual Report (Form 10-K) for the year ended December
31, 2008 have been audited by Ernst & Young LLP, independent registered
public accounting firm, as set forth in their report thereon, included therein,
and incorporated herein by reference. Such consolidated financial statements are
incorporated herein by reference in reliance upon such report given on the
authority of such firm as experts in accounting and auditing.
Merge
Healthcare files annual, quarterly and current reports, proxy statements and
other information with the SEC. The public may read and copy any
reports, statements or other information that Merge Healthcare files with the
SEC at the SEC’s public reference room at 100 F Street, N.E., Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information
regarding the public reference room. Merge Healthcare’s public
filings also are available to the public from commercial document retrieval
services and may be obtained without charge at the SEC’s website at
www.sec.gov. Merge Healthcare’s filings with the SEC are also
available on its website at www.merge.com. The contents of this
website are not incorporated by reference into this Prospectus.
Merge
Healthcare has filed with the SEC a Registration Statement on Form S-3 to
register the offer and sale of shares of Merge Healthcare Common Stock (the
“Registration Statement”). This Prospectus is a part of that
registration statement. Merge Healthcare may also file amendments to
such registration statement. As allowed by SEC rules, this Prospectus
does not contain all of the information in the Registration Statement or the
exhibits to the Registration Statement. You may obtain copies of the
Form S-3 (and any amendments to those documents) by contacting the information
agent as directed on the back cover of this Prospectus.
INCORPORATION OF INFORMATION BY REFERENCE
The SEC
allows Merge Healthcare to incorporate information into this Prospectus “by
reference,” which means that Merge Healthcare can disclose important information
by referring to another document or information filed separately with the
SEC. The information incorporated by reference is deemed to be part
of this Prospectus, except for any information amended or superseded by
information contained in, or incorporated by reference into, this
Prospectus. This Prospectus incorporates by reference the documents
and information set forth below that Merge Healthcare (File No. 29486) has
previously filed (but not furnished) with the SEC. These documents
contain important information about Merge Healthcare and its financial
condition.
Merge
Healthcare Filings (File No. 29486)
|
Merge Healthcare Information Incorporated by
Reference
|
|
Period Covered or Date of
Filing
|
|
Quarterly
Report on Form 10-Q for fiscal quarter ended June 30, 2009, as filed with
the SEC on July 31, 2009
|
|
Fiscal
quarter ended June 30, 2009
|
|
|
|
|
|
Quarterly
Report on Form 10-Q for fiscal quarter ended March 31, 2009, as filed with
the SEC on May 8, 2009
|
|
Fiscal
quarter ended March 31, 2009
|
|
|
|
|
|
Annual
Report on Form 10-K for fiscal year ended December 31, 2008, as filed with
the SEC on March 11, 2009
|
|
Fiscal
year ended December 31, 2008
|
|
|
|
|
|
Proxy
Statement on Schedule 14A as filed with the SEC on April 24, 2009 (other
than such information that is included in the proxy statement but not
deemed to be filed with the SEC).
|
|
|
|
|
|
|
|
The
description of Merge Healthcare Common Stock set forth in Merge
Healthcare’s Registration Statement on Form 8-A, filed with the SEC on
January 9, 1998, including all amendments and reports filed for the
purpose of updating such description.
|
|
|
|
|
|
|
|
Current
Reports on Form 8-K
|
|
Filed
with the SEC on:
• June
2, 2009
• April
16, 2009
• April
6, 2009
• March
5, 2009
• February
17, 2009
• January
7, 2009
• June
16, 2009
• July
15, 2009
• July
20, 2009
• August
10, 2009
• September
2, 2009
|
|
|
|
|
|
The
consolidated financial statements of etrials Worldwide, Inc. for the
fiscal years ended December 31, 2008 and 2007, as set forth on pages F-15
to F-36 in the Prospectus filed with the SEC pursuant to Rule 424(b)(3) on
July 16, 2009
|
|
|
Merge
Healthcare does not incorporate portions of any document that is either (a)
described in paragraphs (d)(1) through (3) and (e)(5) of Item 407 of Regulation
S-K promulgated by the SEC or (b) furnished under Item 2.02 or Item 7.01 of any
Current Report on Form 8-K. Merge Healthcare hereby incorporates by
reference all future filings by Merge Healthcare made pursuant to Sections
13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of 1934, as amended,
after the date of this prospectus. Nothing in this Prospectus shall
be deemed to incorporate information furnished but not filed with the
SEC.
Merge
Healthcare will provide without charge upon written or oral request, a copy of
any or all of the documents which are incorporated by reference to this
prospectus, other than exhibits which are specifically incorporated by reference
into those documents. Requests should be directed to Corporate Secretary, Merge
Healthcare Incorporated, 6737 West Washington Street, Milwaukee, WI 53214-5650,
telephone: (414) 977-4000.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
14. Other Expenses of Issuance and Distribution
Our
estimated expenses in connection with the distribution of the securities being
registered are as set forth in the following table:
|
SEC
Registration Fee
|
|
$ |
1,000
|
* |
|
Printing
and Engraving Expenses
|
|
|
-
|
* |
|
Legal
Fees and Expenses
|
|
|
25,000
|
* |
|
Accounting
Fees and Expenses
|
|
|
20,000
|
* |
|
Miscellaneous
|
|
|
8,000
|
* |
|
Total
|
|
$ |
54,000 |
|
*Estimated
to nearest thousand U.S. dollars.
Item
15. Indemnification of Directors and Officers
Merge
Healthcare is a Delaware corporation. Reference is made to Section 102(b)(7) of
the General Corporation Law of the State of Delaware (the “DGCL”), which enables
a corporation in its original certificate of incorporation or an amendment to
eliminate or limit the personal liability of a director for violations of the
director’s fiduciary duty, except:
|
|
·
|
For
any breach of the director’s duty of loyalty to the corporation or its
stockholders;
|
|
|
·
|
For
acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of
law;
|
|
|
·
|
Pursuant
to Section 174 of the DGCL (providing for liability of directors for
unlawful payment of dividends or unlawful stock purchases or redemptions);
or
|
|
|
·
|
For
any transaction from which a director derived an improper personal
benefit.
|
Reference
is also made to Section 145 of the DGCL, which provides that a corporation may
indemnify any persons, including officers and directors, who are, or are
threatened to be made, parties to any threatened, pending or completed legal
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of such corporation), by
reason of the fact that such person is or was a director, officer, employee or
agent of such corporation or is or was serving at the request of such
corporation as a director, officer, employee or agent of another corporation or
enterprise. The indemnity may include expenses (including attorneys’
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by such person in connection with such action, suit or proceeding,
provided such director, officer, employee or agent acted in good faith and in a
manner the person reasonably believed to be in or not opposed to the best
interests of the corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe that the person’s conduct was
unlawful. A Delaware corporation may indemnify officers and directors
in an action by or in the right of the corporation under the same conditions,
except that no indemnification is permitted without judicial approval if the
officer or director is adjudged to be liable to the
corporation. Where an officer or director is successful on the merits
or otherwise in the defense of any action referred to above, the corporation
must indemnify him against the expenses that such officer or director actually
and reasonably incurred. The indemnification permitted under the DGCL
is not exclusive, and a corporation is empowered to purchase and maintain
insurance against liabilities, whether or not indemnification would be permitted
by statute.
Article
XI of Merge’s Bylaws provides in effect that, subject to certain limited
exceptions, Merge Healthcare shall indemnify its directors and officers to the
extent not prohibited by the DGCL. Merge’s directors and officers are
insured under policies of insurance maintained by Merge Healthcare, subject to
the limits of the policies, against certain losses arising from any claims made
against them by reason of being or having been such directors or
officers. In addition, Merge Healthcare has entered into contracts
with certain of its directors providing for indemnification of such persons by
Merge Healthcare to the full extent authorized or permitted by law, subject to
certain limited exceptions.
Item
16. Exhibits and Financial Statement Schedules
Exhibits
|
2.1
|
Merger
Agreement, dated August 7, 2009, between Registrant and Confirma,
Inc. (incorporated herein by reference to Exhibit 99.1 to Merge
Healthcare’s Current Report on Form 8-K filed with the SEC on August 7,
2009).
|
|
|
|
|
2.2
|
Merger
Agreement, dated May 30, 2009, between Registrant and etrials Worldwide,
Inc. (incorporated herein by reference to Exhibit 99.2 to Merge
Healthcare’s Current Report on Form 8-K filed with the SEC on May 30,
2009).
|
|
|
|
|
3.1
|
Certificate
of Incorporation of Merge Healthcare Incorporated (incorporated herein by
reference to Exhibit 3.1 to Merge Healthcare’s Annual Report on Form 10-K
for the fiscal year ended December 31, 2008)
|
|
|
|
|
3.2
|
Bylaws,
(incorporated herein by reference to Exhibit 3.3 to Merge Healthcare’s
Annual Report on Form 10-K for the fiscal year ended December 31,
2008)
|
|
|
|
|
4.1
|
Term
Note, dated June 4, 2008, between Registrant and Merrick RIC, LLC
(incorporated by reference to Exhibit 4.1 to Merge Healthcare’s Current
Report on Form 8-K dated June 6, 2008).
|
|
|
|
|
5.1*
|
Opinion
of McDermott Will & Emery LLP
|
|
|
|
|
|
Consent
of BDO Seidman, LLP
|
|
|
|
|
|
Consent
of KPMG LLP
|
|
|
|
|
|
Consent
of Ernst & Young LLP
|
|
|
|
|
23.4*
|
Consent
of McDermott Will & Emery LLP (included in the opinion filed as
Exhibit 5.1)
|
|
|
|
|
24
|
Powers
of Attorney (included on the signature pages
hereto)
|
__________
* To be filed by amendment or as
an exhibit to a Current Report on Form 8-K.
Item
17. Undertakings
|
(a)
|
The
undersigned registrant hereby
undertakes:
|
|
|
(1)
|
To
file, during any period in which offers or sales are being made, a
post−effective amendment to this registration
statement:
|
|
|
(i)
|
to
include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933, as amended, or the Securities
Act;
|
|
|
(ii)
|
to
reflect in the prospectus any facts or events arising after the effective
date of this registration statement (or the most recent post−effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities
offered would not exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the SEC pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no
more than a 20% change in the maximum aggregate offering price set forth
in the “Calculation of Registration Fee” table in the effective
registration statement; and
|
|
|
(iii)
|
to
include any material information with respect to the plan of distribution
not previously disclosed in the registration statement or any material
change to such information in the registration
statement;
|
provided,
however, that paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) do not apply if
the information required to be included in a post−effective amendment by those
paragraphs is contained in reports filed with or furnished to the SEC by the
registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange
Act of 1934, as amended, that are incorporated by reference in the registration
statement, or is contained is a form of prospectus filed pursuant to Rule 424(b)
that is part of the registration statement.
|
|
(2)
|
That,
for purposes of determining any liability under the Securities Act, each
such post−effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.
|
|
|
(3)
|
To
remove from registration by means of a post−effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
|
|
|
(4)
|
That,
for the purpose of determining liability under the Securities Act to any
purchaser,
|
|
|
(i)
|
each
prospectus filed by the registrant pursuant to Rule 424(b)(3) shall be
deemed to be part of the registration statement as of the date the filed
prospectus was deemed part of and included in the registration statement;
and
|
|
|
(ii)
|
each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or
(b)(7) as part of a registration statement in reliance on Rule 430B
relating to an offering made pursuant to Rule 415(a)(1)(i)(x) for the
purpose of providing the information required by section 10(a) of the
Securities Act shall be deemed to be part of and included in the
registration statement as of the earlier of the date such form of
prospectus is first used after effectiveness or the date of the first
contract of sale of securities in the offering described in the
prospectus. As provided in Rule 430B, for liability purposes of the issuer
and any person that is at that date an underwriter, such date shall be
deemed to be a new effective date of the registration statement relating
to the securities in the registration statement to which that prospectus
relates, and the offering of such securities at that time shall be deemed
to be the initial bona fide offering thereof. Provided, however, that
no statement made in a registration statement or prospectus that is part
of the registration statement or made in a document incorporated or deemed
incorporated by reference into the registration statement or prospectus
that is part of the registration statement will, as to a purchaser with a
time of contract of sale prior to such effective date, supersede or modify
any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document
immediately prior to such effective
date.
|
|
|
(5)
|
That,
for the purpose of determining liability of the registrant under the
Securities Act to any purchaser in the initial distribution of the
securities, in a primary offering of securities of the undersigned
registrant pursuant to this registration statement, regardless of the
underwriting method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of any of the
following communications, the undersigned registrant will be a seller to
the purchaser and will be considered to offer or sell such securities to
such purchaser,
|
|
|
(i)
|
Any
preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule
424;
|
|
|
(ii)
|
Any
free writing prospectus relating to the offering prepared by or on behalf
of the undersigned registrant or used or referred to by the undersigned
registrant;
|
|
|
(iii)
|
The
portion of any other free writing prospectus relating to the offering
containing material information about the undersigned registrant or its
securities provided by or on behalf of the undersigned registrant;
and;
|
|
|
(iv)
|
Any
other communication that is an offer in the offering made by the
undersigned registrant to the
purchaser.
|
|
(b)
|
The
undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the registrant’s
annual report pursuant to Section 13(a) or Section 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee
benefit plan’s annual report pursuant to Section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in this
registration statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
|
|
(c)
|
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has
been advised that in the opinion of the SEC such indemnification is
against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the registrant of
expenses incurred or paid by a director, officer or controlling person of
the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will,
unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
|
|
(d)
|
(1) For
purposes of determining any liability under the Securities Act, the
information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act will be deemed to be part of this
registration statement as of the time it was declared
effective.
|
|
|
(2)
|
For
the purpose of determining any liability under the Securities Act, each
post−effective amendment that contains a form of prospectus will be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time will be deemed
to be the initial bona fide offering
thereof.
|
|
(e)
|
The
undersigned registrant hereby undertakes to file an application for the
purpose of determining the eligibility of the trustee to act under
subsection (a) of Section 310 of the Trust Indenture Act in accordance
with the rules and regulations prescribed by the SEC under Section
305(b)(2) of the Trust Indenture
Act.
|
SIGNATURES
Pursuant
to the requirements of the Securities Act of 1933, the Registrant certifies that
it has reasonable grounds to believe that it meets all of the requirements for
filing on Form S-3 and has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the City of
Milwaukee, State of Wisconsin on September 2, 2009.
|
|
MERGE
HEALTHCARE INCORPORATED
|
|
|
|
|
|
|
By
|
/s/
Justin C. Dearborn
|
|
|
Name:
|
Justin
C. Dearborn
|
|
|
Title:
|
Chief
Executive Officer
|
KNOW ALL
PERSONS BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Justin C. Dearborn and Steven M. Oreskovich, and each
of them (each with full power to act alone), his or her true and lawful
attorneys-in-fact and agents, with full power of substitution and
resubstitution, for him or her and in his or her name, place and stead, in any
and all capacities, to sign any and all amendments to this Registration
Statement and any related registration statement filed pursuant to Rule 462(b)
under the Securities Act of 1933 (in each case including, without limitation,
any post-effective amendments), and to file the same, with all exhibits thereto,
and other documents in connection therewith with the Securities and Exchange
Commission, granting unto said attorneys-in-fact and agents, and each of them
full power and authority to do and to perform each and every act and thing
requisite and necessary to be done in and about the premises, as full and to all
intents and purposes as he or she might or would do in person, hereby ratifying
and confirming all that said attorneys-in-fact and agents or any of them, or
their or his or her substitute or substitutes, may lawfully do or cause to be
done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities indicated on
September 2, 2009.
|
Signature
|
|
Title
|
|
|
|
|
|
/s/
Michael W. Ferro, Jr.
|
|
Chairman
|
|
Michael
W. Ferro, Jr.
|
|
|
|
|
|
|
|
/s/
Justin C. Dearborn
|
|
Director
and Chief Executive Officer
|
|
Justin
C. Dearborn
|
|
|
|
|
|
|
|
/s/
Dennis Brown
|
|
Director
|
|
Dennis
Brown
|
|
|
|
|
|
|
|
/s/
Gregg G. Hartemayer
|
|
Director
|
|
Gregg
G. Hartemayer
|
|
|
|
|
|
|
|
/s/
Richard A. Reck
|
|
Director
|
|
Richard
A. Reck
|
|
|
|
|
|
|
|
/s/
Neele E. Stearns, Jr.
|
|
Director
|
|
Neele
E. Stearns, Jr.
|
|
|
|
|
|
|
|
/s/
Steven M. Oreskovich
|
|
Chief
Financial Officer
|
|
Steven
M. Oreskovich
|
|
(principal
accounting officer)
|
- 1 -