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Merge Healthcare Incorporated (MRGE - Analyst Report) recently disclosed that St. Mary’s Healthcare System will deploy its iConnect Access and iConnect Enterprise Archive. This marks yet another customer win for this imaging and interoperability solutions provider’s iConnect platform.

Merge’s iConnect is an interoperability and connectivity platform. iConnect offers hospitals and imaging centers the ability to create information exchanges within their environments and with other entities. It also provides access to imaging and diagnostic data across disparate sites, geographies, specialties and providers.

It is commendable that hospitals continue to implement the industry leading offerings from Merge despite the general slowdown in hospital spending. At present, the company has a client base of over 1,500 hospitals even amid a tough reimbursement environment for advanced medical imaging.

St. Mary’s currently uses other Merge offerings such as Merge PACS, Merge Cardio and Merge Hemo. The installation of iConnect Enterprise Archive and iConnect Access should improve physician workflow and standards of care. Further, it will improve the workflow of the hospital’s IT resources and decrease costs.

The implementation of iConnect Access will also support the hospital’s efforts to meet the Stage 2 criteria of the Meaningful Use incentive program including image-enabling the Electronic Health Record (EHR). Implementation of the final Stage 2 ruling will begin in 2014.

According to InMedica’s recent findings, iConnect Enterprise Archive is the leading vendor-neutral archive (VNA) across the globe. The innovative interoperability solution stores over 15 billion images worldwide.

Our View

While the demand for Merge’s solution is highly dependent on the macroeconomic environment in the U.S., it serves a lucrative market with multi-million dollar opportunities for its offerings. Besides, management is banking on ICD10 and Meaningful Use Phase 2 to accelerate growth in the future.

Going forward, we are bullish on Merge as it has immense potential in the diagnostic imaging market. As a result, the stock carries a Zacks Rank #2 (Buy). We are also positive about other Zacks Rank #2 stocks like Omnicell Inc. (OMCL - Analyst Report) doing well.

Other medical sector stocks such a Myriad Genetics Inc. (MYGN - Analyst Report) and Haemonetics Corporation (HAE - Analyst Report) also warrant a look. These stocks carry a Zacks Rank #1 (Strong Buy).

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