Merge Healthcare Bids Seen on Digital Records: Real M&A

Merge Healthcare Inc., a medical-software provider that put itself up for sale, is betting U.S. government incentives to digitize health records will draw buyers to the industry’s biggest bargain.

Merge Healthcare said last week that it is exploring a possible sale after losing more than half its market value in the past year as it moved to a subscription-based pricing model from one that allowed it to book more revenue up front. The $314 million company traded yesterday at 1.24 times analysts’ projected 2012 revenue, the lowest price-sales ratio among U.S. application-software providers involved in health-care equipment and services, according to data compiled by Bloomberg.