News Release

FOR IMMEDIATE RELEASE

Revenue grew to $55.6 million ($57.0 million on a pro forma basis) in the quarter, compared to $29 million ($41.5 million on a pro forma basis) in the second quarter of 2010 - an increase of 92%.

Adjusted EBITDA was $17.1 million, representing 30% of revenue in the quarter compared to $6.7 million and 23% in the second quarter of 2010 - an increase of 155%.

Executed 12 new iConnect agreements extending Merge Healthcare’s leadership position in image interoperability market.

Announced over 30 signed contracts for the Merge Meaningful Use platform within its Orthopaedics and Radiology client base.

Net sales

Operating income (loss)

Net loss available to common shareholders

Net loss per diluted share

Cash balance at period end

Cash from core business operations*

Pro forma results

Net sales

Adjusted net income

Adjusted EBITDA

Adjusted net income per diluted share

Adjusted EBITDA per diluted share

Non-GAAP and other measures

Recurring revenue as % of net sales

Non-recurring backlog at period end

Days sales outstanding

Pro forma revenue consists of GAAP revenue as reported, adjusted to reflect the acquisition of AMICAS as if it had occurred at the beginning of the respective periods presented and to add back the acquisition related sales adjustment (for all significant acquisitions) booked for GAAP purposes.

Recurring revenue is generated from agreements that generally contain a stated annual amount and which we have a high likelihood of renewing each year. More specifically, this includes revenue generated from our DICOM toolkit and eFilm Workstation^® product lines, long-term contracts associated with our Sales as a Service (SaaS) related offerings, and EDI and maintenance contracts across the entire business.

Non-recurring revenue backlog represents revenue that we anticipate recognizing in future periods from signed customer contracts as of the end of the period presented. Non-recurring revenue is comprised of all other sources of revenue not included as recurring revenue, primarily from perpetual software licenses, hardware and professional services (including installation, training and consultative engineering services).

Adjusted net income consists of GAAP net income available to common stockholders, adjusted to reflect the acquisition of AMICAS as if it had occurred at the beginning of the respective period presented and, to the extent such items occurred in the periods presented, excludes (a) one-time preferred stock deemed dividend at issuance date, (b) acquisition-related costs, (c) restructuring and other costs, (d) stock-based compensation expense, (e) acquisition-related amortization, and (f) acquisition-related cost of sales adjustments and adds back (g) the acquisition-related sales adjustments.

Adjusted EBITDA adjusts GAAP net income available to common stockholders for the items considered in adjusted net income as well as (a) remaining depreciation and amortization, (b) net interest expense, (c) non-cash preferred stock dividends and (d) income tax expense (benefit).

Cash from core business operations reconciles the cash generated from such operations to the change in GAAP cash balance for the period by reflecting payments of liabilities associated with our acquisitions, payments of acquisition related fees, interest payments and other payments and receipts of cash not generated by the business operations.

Acquisition-related amortization expense is a non-cash expense arising from the acquisition of intangible assets in connection with significant acquisitions. Management excludes acquisition-related amortization expense from non-GAAP net income because it believes such expenses can vary significantly between periods as a result of new acquisitions and full amortization of previously acquired intangible assets.

Stock-based compensation expense is a non-cash expense arising from the grant of stock awards to employees and is excluded from non-GAAP net income because management believes such expenses can vary significantly between periods as a result of the timing of grants of new stock-based awards, including grants to new employees resulting from acquisitions.

Acquisition related sales and costs of sales adjustments reflect the fair value adjustment to deferred revenues acquired in connection with significant acquisitions. The fair value of deferred revenue represents an amount equivalent to the estimated cost plus an

appropriate profit margin to perform services-related software and product support, which assumes a legal obligation to do so, based on the deferred revenue balances as of the date the acquisition of a significant company was completed. Management adds back this deferred revenue adjustment, net of related costs, for non-GAAP revenue and non-GAAP net income because it believes the inclusion of this amount directly correlates to the underlying performance of operations and facilitates comparisons of pre-acquisition to post-acquisition results.

Current assets:

Cash (including restricted cash)

Accounts receivable, net

Inventory

Prepaid expenses

Deferred income taxes

Other current assets

Total current assets

Property and equipment, net

Purchased and developed software, net

Other intangible assets, net

Goodwill

Deferred tax assets

Other

Total assets

Current liabilities:

Accounts payable

Interest payable

Accrued wages

Restructuring accrual

Other accrued liabilities

Deferred revenue

Total current liabilities

Notes payable

Deferred revenue

Income taxes payable

Other

Total liabilities

Total shareholders’ equity

Total liabilities and shareholders’ equity

$

396,388

Net sales

Software and other

Professional services

Maintenance and EDI

Total net sales

Cost of sales

Software and other

Professional services

Maintenance and EDI

Depreciation, amortization and impairment

Total cost of sales

Gross margin

Operating costs and expenses:

Sales and marketing

Product research and development

General and administrative

Acquisition-related expenses

Restructuring and other expenses

Depreciation, amortization and impairment

Total operating costs and expenses

Operating income (loss)

Other expense, net

Income (loss) before income taxes

Income tax expense

Net loss

Less: preferred stock dividends

Net loss available to common shareholders

Net loss per share - basic

Weighted average number of common shares outstanding - basic

Net loss per share - diluted

Weighted average number of common shares outstanding - diluted

Cash flows from operating activities:

Net loss

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation, amortization and impairment

Share-based compensation

Change in contingent consideration for acquisitions

Amortization of notes payable issuance costs & discount

Provision for doubtful accounts receivable and sales returns, net of recoveries

Deferred income taxes

Gain on sale of equity investment

Net change in assets and liabilities (net of effects of acquisitions)

Net cash provided by operating activities

Cash flows from investing activities:

Cash paid for acquisitions, net of cash acquired

Purchases of property, equipment and leasehold improvements

Change in restricted cash

Distribution from equity investment

Net cash used in investing activities

Cash flows from financing activities:

Proceeds from issuance of notes

Proceeds from issuance of stock

Note and stock issuance costs paid

Proceeds from exercise of stock options and employee stock purchase plan

Principal payments on capital leases

Redemption and retirement of preferred stock

Preferred stock dividends

Net cash provided by financing activities

Effect of exchange rate changes on cash

Net increase in cash

Cash and cash equivalents, beginning of period (net of restricted cash)

Cash and cash equivalents, end of period (net of restricted cash)

Net loss available to common shareholders

One-time preferred stock deemed dividend at issuance date

Acquisition related costs

Restructuring and other

Stock-based compensation expense

Amortization of significant acquisition intangibles

Acquisition-related sales adjustments

Acquisition-related cost of sales adjustments

Adjusted net income (loss)

Depreciation, amortization and impairment

Net interest expense

Preferred stock dividends

Income tax expense

Adjusted EBITDA

Adjusted net income per share - diluted

Adjusted EBITDA per share - diluted

Fully diluted shares (if net income)

Net loss available to common shareholders

One-time preferred stock deemed dividend at issuance date

Acquisition related costs

Restructuring and other

Stock-based compensation expense

Amortization of significant acquisition intangibles

Adjusted net income (loss)

Depreciation, amortization and impairment

Net interest expense

Non-cash preferred stock dividend

Income tax expense

Adjusted EBITDA

Adjusted net income (loss) per share - diluted

Adjusted EBITDA per share - diluted

Fully diluted shares (if net income)

Cash received from (paid for):

Issuance of debt and equity

Debt and equity issuance costs

Redemption of preferred stock

Payment of preferred stock dividends

Interest paid

Acquisitions

Restructuring initiatives

Acquisition related costs

Property and equipment purchases

Settlements with former officers

Other non-operating cash flows

Core business operations

Increase (decrease) in cash