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Media Contact:
Beth Frost-Johnson
Senior Vice President, Marketing
414.977.4254
bfrost@mergehealthcare.com |
NEWS RELEASE:
FOR IMMEDIATE RELEASE:
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MERGE HEALTHCARE ANNOUNCES THE EXECUTION OF AN AGREEMENT IN PRINCIPLE REGARDING THE SETTLEMENT OF ITS DERIVATIVE ACTION
$1,050,000 Received from Primary Insurance Carrier
Milwaukee , WI , March 6, 2008 - Merge Healthcare Incorporated (NASDAQ: MRGE; TSX: MRG), today announced the execution of an agreement in principle with the plaintiff and other defendants in the derivative action against Merge Healthcare. The agreement provides for the settlement and release and dismissal of all claims asserted by plaintiff in the complaint, but the Company has not released any claims against its former officers. In exchange, Merge Healthcare has agreed to a one time cash payment of $250,000 for legal costs incurred by the plaintiff. In addition, the settlement documentation will reflect that Merge Healthcare and the other defendants continue to deny that they have committed or attempted to commit any violations of law or breached any duty owed to Merge Healthcare or its shareholders. The settlement is subject to, among other things, the drafting and execution of the settlement documents and the approval of the settlement by the court.
Additionally, Merge Healthcare announced the receipt of $1,050,000 in cash from its primary directors and officers' liability insurance carrier for reimbursement of legal expenses in connection with the class action and derivative action against Merge Healthcare and some of its current and former directors and officers. The collection of cash is only a partial reimbursement of the millions of dollars of costs incurred to date in connection with the defense of the class action, derivative action and SEC investigation. Although the amount reimbursed is only a portion of the actual insurance coverage maintained by the Company, it is not possible at this time to estimate how much, if any, additional funds will be collected from the insurance carriers related to these defense costs or the magnitude of the additional costs to be incurred by the Company in connection with the outstanding litigation and SEC investigation.
Ken Rardin, President and Chief Executive Officer of Merge Healthcare, stated "The agreement in principle to settle the derivative action is a significant step forward for Merge Healthcare. We are very glad that we can now focus on the go forward strategy of Merge Healthcare discussed in our last conference call. In addition, we are extremely happy that our insurance carrier has advanced the initial funds to Merge Healthcare in connection with the defense of the outstanding litigation."
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Merge Healthcare is a developer of medical imaging and clinical software applications and developmental tools that are on the forefront of medicine. We develop medical imaging software solutions that support end-to-end business and clinical workflow for radiology department and specialty practices, imaging centers and hospitals. Our software technologies accelerate market delivery for our OEM customers, while our end-user solutions improve our customers’ productivity and enhance the quality of the patient experience. For additional information, visit our website at www.mergehealthcare.com.
Cautionary Notice Regarding Forward-Looking Statements
This announcement may include forward-looking statements within the meaning and subject to the protections of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. When used in this announcement, the words "will," "anticipates," "expects" and similar expressions of the future are intended to assist you in identifying such forward-looking statements. Such forward-looking statements include, among others, statements regarding the agreement in principle to settle the derivative action. Any number of factors could cause the actual results to differ from the results contemplated by such forward-looking statements, including, but not limited to: the court in the derivative action failing to approve the proposed settlement; the Company’s insurance carriers successfully rescinding the insurance contracts which would require repayment of the advancement of defense costs; the Company’s ability to generate sufficient cash from operations to meet future operating, financing and capital requirements; the Company’s inability to timely file reports with the Securities and Exchange Commission; risks associated with the Company’s inability to meet the requirements of The NASDAQ Stock Market for continued listing, including possible delisting; risks related to the ongoing class action lawsuit and formal SEC investigation; and other risk factors detailed in the Company’s filings with the Securities and Exchange Commission. You should not place undue reliance on forward-looking statements, since the statements speak only as of the date that they are made. We do not have, or undertake any obligation to, publicly update, revise or correct any of the forward-looking statements after the date of this announcement, or after the respective dates on which such statements otherwise are made, whether as a result of new information, future events or otherwise. This announcement should be read in conjunction with the risk factors, financial information and other information contained in the filings that the Company makes and previously has made with the Securities and Exchange Commission.
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Attn: Beth Frost-Johnson
Merge Healthcare
6737 West Washington St.
Suite 2250
Milwaukee, WI 53214
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