Merge Healthcare to cut almost 30% of workforce

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Merge cuts current workforce. Source: e-Commerce Times  

Merge Technologies, d.b.a. Merge Healthcare, said Thursday it plans to eliminate 28 percent of its current workforce by March 31, in an effort to save $11 million to $12 million in expenses.

The Milwaukee, Wis.-based company, with approximately 600 employees worldwide, said 160 employees will lose their jobs by March 31. Of the 160, approximately 45 layoffs will be in the United States and Canada, while 115 will be offshore in India.

The company said another 20 employees are expected to leave the company through attrition during the year, for a total reduction of 180 employees for 2008.

In December 2007, Merge announced that the U.S. Securities and Exchange Commission (SEC) launched a formal investigation into the company’s accounting.

Merge said it will recognize a charge in its financial statements for the first quarter of 2008, which ends March 31, of approximately $2 million, consisting of approximately $1.3 million in severance costs and approximately $700,000 in other costs including, primarily, legal fees and future lease payments on its Burlington, Mass. office, which it has completely vacated.

The layoff will save approximately $7 million a year, said the company.

The company said that since Sept. 30, 2007, it has cut enough jobs to see an annual cost savings of approximately $3 million. Additional voluntary terminations during 2008 are expected to bring a cost savings of approximately $1million to $2 million annually, said Merge.

"As we addressed earlier, the impacts of the Deficit Reduction Act, the two financial statement restatements, and ongoing legal expenses associated with litigation and the SEC investigation have been quite significant and have necessitated the recent rightsizing initiative,” said Ken Rardin, president and CEO, Merge. “In this effort, we have been particularly cautious to ensure that we continue to deliver timely products and appropriate service and support to our customers. We are making changes to our cost structure with the intention of enabling our company to focus on our core business and return to positive operating results.”