Diagnostic image and information systems and application developer Merge Healthcare reported that it will delay the filing of its quarterly report on Form 10-Q for the quarter ended June 30 this year and will be filing a Form 12b-25 with the U.S. Securities and Exchange Commission to report the delay. Merge said it is unable to file the Form 10-Q because it is examining whether it has been properly recognizing revenue from certain software contracts dating back to 2004 and earlier periods.
The Milwaukee-based company said it is reviewing, in consultation with its public accountants, whether it should have recognized the entire value of the bundled contract as revenue over the period for which maintenance and support may be provided to the customer.
According to Merge, the issue involves the application of very specific accounting literature and does not affect the total amount of revenue that will ultimately be recognized from these contracts, but rather the timing of the recognition of the revenues.
As a result, Merge said it may be required to restate prior financial results. Merge said it is not yet in a position to determine what, if any, restatements will be required or to quantify any impact on prior reported results. It did note that it does not expect such restatement would have any impact on the total amount of revenue recognized from the contracts at issue.
Merge said it is diligently working with its professional advisors to resolve this issue and intends to file its Form 10-Q for the quarter ended June 30 as soon as possible.