Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

What’s Happening With Merge Healthcare Inc. (MRGE)

Although we don’t believe in timing the market or panicking over market movements, we do like to keep an eye on big changes — just in case they’re material to our investing thesis.

What: Shares of Merge Healthcare Inc. (NASDAQ:MRGE), a cloud-based software developer for the health care industry, jumped as much as 10% after issuing a press release that Michael Ferro Jr. has decided to step down as chairman and director.

Merge Healthcare Inc. (NASDAQ:MRGE)

So what: Merge Healthcare Inc. (NASDAQ:MRGE) announced that, with Ferro putting in his resignation, the company has appointed Dennis Brown as the company’s new chairman, effective immediately. As Merge’s largest shareholder, Ferro made sure to note in the press release that his interests are aligned with management and that he believes the current share price of Merge Healthcare Inc. (NASDAQ:MRGE) isn’t indicative of the company’s strengths and future prospects. More interestingly though, and possibly a big reason for today’s move, is Ferro’s comment that (emphasis mine), “I intend to explore a variety of ways to increase shareholder value, including, possibly, a going-private transaction.” That heavy emphasis I added on the end of that sentence could imply a possible private takeover offer.

Now what: There’s really been a lot for Merge Healthcare Inc. (NASDAQ:MRGE) shareholders to absorb here over the past month. Its CEO has stepped down and been replaced by former CEO Justin Dearborn; its chairman has now stepped down; and it reported significantly worse earnings than expected. While I do share Ferro’s optimism, it’s a bit troubling to see a cloud company in the health care space struggling to grow when it shouldn’t be having any issues whatsoever with an ongoing shift to electronic medical records and hospitals’ emphasis on streamlining costs. Furthermore, with so much change at the top, I’d have to think it could be a few quarters before Merge gets back on track. For now, I’m a happy camper staying on the sidelines.

The article Why Merge Healthcare Shares Popped originally appeared on and is written by Sean Williams.

Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.