News | June 04, 2008

Merge Healthcare Cuts Workforce, Names New CEO

June 5, 2008 - Merge Healthcare Inc. is reorganizing its business operations and making changes in executive management, according to the company.

The company is reorganizing and renaming its operating divisions. Merge Healthcare North America (MHNA) has been renamed Merge Fusion. Cedara, its operating division located in Toronto, Ontario, will be renamed Merge OEM.

Four top company executives, including Merge CEO Kenneth Rardin, CFO Steven Norton, Merge North American division President Gary Bowers and Cedara/Merge OEM division President Loris Sartor all have resigned. According to Merge, these officers are entitled to full severance benefits under their pre-existing employment agreements.

Justin C. Dearborn was named the company's new CEO. Since September 2006, Dearborn has served as managing director and general counsel of Merrick Ventures LLC ("Merrick"), an affiliate of Merrick RIS LLC.

Steven M. Oreskovich was tapped as the new CFO. Nancy J. Koenig was named president of the renamed Merge Fusion Division, while Antonia Wells was named president of the renamed Merge OEM Division.

Merge plans to cut approximately 60 people, reducing the total of employees down to approximately 300. The company anticipates that these reductions will result in a charge of at least $6 million in its financial statements for the second quarter ending June 30, 2008. The charge is expected to include at least $5 million in employee severance costs and at least $1 million in costs related to the early termination of office leases. Most of the severance costs will be payments to executives over the next 12 months pursuant to the terms of pre-existing employment agreements.

The company anticipates incurring additional non-cash charges during the second quarter ending June 30, 2008 associated with the reorganization. These non-cash charges include approximately $1 million of trade name impairment costs and approximately $2 million of stock-based compensation costs associated with the accelerated vesting of certain restricted stock and stock options of terminated employees.

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