Bernstein Liebhard LLP Announces That A Class Action Has Been Filed Against Merge Healthcare, Inc.

January 23, 2014

Bernstein Liebhard LLP today announced that a class action has been commenced in the United States District Court for the Northern District of Illinois on behalf of purchasers (the “Class”) of common stock of Merge Healthcare, Inc. (“Merge Healthcare” or the “Company”) (NASDAQ: MRGE) during the period of August 1, 2012 and January 7, 2014 (the “Class Period”).

The complaint charges Merge Healthcare and certain of its officers and directors with violations of the Securities Exchange Act of 1934.  Merge Healthcare is a Chicago, Illinois-based company that offers health stations, clinical trial software and other health data and analytics services.

The complaint alleges that during the Class Period, Merge Healthcare issued materially false and misleading statements regarding the Company’s financial performance and future business prospects.  Specifically, the complaint alleges that defendants misrepresented or failed to disclose that both the existence and value of millions of dollars of the Company’s eClinical customer contracts had been falsified, causing the Company’s reported subscription backlog to be overstated during the six quarters ended September 30, 2013.  Defendants also failed to disclose that the Company was experiencing a continued reluctance amongst large health systems to move forward with enterprise imaging purchases.

After a series of Company disclosures starting in May 2013 regarding the sudden resignation of the Company’s General Counsel and later its Chairman and CEO, and the release of “very disappointing” second quarter 2013 earnings results – including a 9% decline year-over-year in revenue to $57.2 million despite reporting an 82% increase in its subscription backlog from the second quarter of 2012 – the price of Merge Healthcare stock plummeted more than $2 per share, or more than 45%.  Then, on January 8, 2014, before the open of trading, Merge Healthcare announced that the existence and/or value of millions of dollars of customer contracts had been falsified for six quarters ending September 30, 2013, in what it characterized as a rogue employee’s attempt to reach sales quotas and garner additional commissions.  On this news, the price of Merge Healthcare stock, which had traded as high as $4.71 per share during the Class Period, fell to a closing price of $2.31 per share on January 8, 2014.

Plaintiffs seek to recover damages on behalf of all Class members who invested in Merge Healthcare common stock during the Class Period.  If you invested in Merge Healthcare common stock as described above, and either lost money on the transaction or still hold the security, you may wish to join in this action to serve as lead plaintiff.  In order to do so, you must meet certain requirements set forth in the applicable law and file appropriate papers no later than March 17, 2014.

A “lead plaintiff” is a representative party that acts on behalf of other class members in directing the litigation.  In order to be appointed lead plaintiff, the court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class. Under certain circumstances, one or more class members may together serve as lead plaintiff.  Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff.  You may retain Bernstein Liebhard LLP, or other counsel of your choice, to serve as your counsel in this action.

If you are interested in discussing your rights as a Merge Healthcare shareholder and/or have information relating to the matter, please contact Joseph R. Seidman, Jr. at (877) 779-1414 or seidman@bernlieb.com.

Bernstein Liebhard LLP has pursued hundreds of securities, consumer and shareholder rights cases and recovered over $3 billion for its clients.  It has been named to The National Law Journal’s “Plaintiffs’ Hot List” in each of the last ten years.

You can obtain a copy of the complaint from the clerk of the court for the United States District Court for the Northern District of Illinois.