According to the law firm press release, 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, and as a result the Company’s reported subscription backlog was overstated during the six quarters ended September 30, 2013, and 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, and earnings per share and revenue that fell well short of what the market had been led to expect, 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.
On May 28, 2014, the plaintiffs filed a consolidated amended complaint.
On March 12, 2015, the Court issued an Order granting Defendants' motions to dismiss.