Investor Contact: Steven M. Oreskovich Chief Financial Officer 414.977.4000 ir@mergehealthcare.com	NEWS RELEASE: FOR IMMEDIATE RELEASE:

MERGE HEALTHCARE ANNOUNCES SECOND QUARTER
2008 FINANCIAL RESULTS

Milwaukee, WI, August 11, 2008 – Merge Healthcare Incorporated (NASDAQ: MRGE; TSX: MRG), today announced financial results for the second quarter ended June 30, 2008. In addition, the Company announced that it has filed its quarterly report on Form 10-Q with the Securities and Exchange Commission.

Second Quarter Results:
For the second quarter ended June 30, 2008, net sales totaled $13.3 million, compared to $14.0 million in the second quarter ended June 30, 2007 and $13.7 million in the first quarter ended March 31, 2008.

Operating loss for the second quarter ended June 30, 2008 was $18.3 million, compared to an operating loss of $10.7 million in the second quarter ended June 30, 2007 and $8.4 million in the first quarter March 31, 2008. Contributing to the operating loss for the second quarter of 2008 were charges of:

• $7.5 million related to our restructuring initiative announced in June 2008 consisting of $4.6 million in severance and related employee termination costs, $2.0 million of share-based compensation expense associated with the accelerated vesting of stock options and restricted stock for certain former officers and $0.8 million of contract exit costs;
• $1.1 million tradename impairment associated with renaming our Cedara Software business unit;
• $1.7 million related to the disposal of our French subsidiary; and
• $3.0 million related to the settlement of the shareholder lawsuit against the Company.

Contributing to the operating loss for the second quarter of 2007 was a restructuring charge of $0.2 million in connection with the rightsizing initiative announced in November of 2006. Contributing to the operating loss for the first quarter of 2008 was a restructuring charge of $1.4 million, primarily severance costs, incurred in connection with a rightsizing initiative announced February of 2008, partially offset by a $1.1 million reimbursement from our primary insurance carrier for legal fees incurred with the shareholder lawsuit.

Our net loss for the second quarter of 2008 was $18.2 million, or $0.45 per basic and diluted share, compared to a net loss of $10.7 million, or $0.32 per basic and diluted share, in the second quarter of 2007 and a net loss of $7.8 million, or $0.23 per basic and diluted share, in the first quarter of 2008.

During the second quarter of 2008, the cash balance increased by approximately $12.2 million from $8.5 million at March 31, 2008 to approximately $20.7 million at June 30, 2008. The increased cash balance is primarily attributable to a private placement transaction completed on June 4, 2008 from which the Company received net proceeds of $16.6 million.

Six Month Results:
For the six months ended June 30, 2008, our net sales totaled $27.1 million, compared to $29.9 million for the six months ended June 30, 2007. The operating loss for the six months ended June 30, 2008 was $26.7 million compared to an operating loss of $20.9 million for the six months ended June 30, 2007. Net loss for the six months ended June 30, 2008 totaled $26.0 million, or $0.70 per basic and diluted share, compared to $20.5 million, or $0.60 per basic and diluted share, for the six months ended June 30, 2007.

Bookings:
Bookings and contract information, for the second quarter ended June 30, 2008, the second quarter ended June 30, 2007 and the first quarter ended March 31, 2008 are as follows:

Bookings are defined by the Company as the value of all contracts signed or orders received during a period that were not previously included in contracted bookings or that exceeded the original amount of the contract. Bookings specifically exclude all value attributed to maintenance contracts other than the first year of customer support in a contract that includes the purchase of software.

Financial Results, Business Operations and Strategy Conference Call

A conference call has been scheduled for Tuesday, August 12, 2008 at 8:30 a.m. (Eastern Daylight Time) to review second quarter 2008 results and to provide an update of the Company’s business operations and strategy.

Investors will have the opportunity to listen to the conference call via telephone or over the Internet. To listen to the call, investors should go to the web site at least fifteen minutes early to register, download, and install any necessary audio software. For those who cannot listen to the broadcast, a replay via the Internet or phone will also be available shortly after the call. Detailed call and web cast information is listed below.

To access the call, dial 1.800.221.2015 or 706.634.2159. Please reference the updated Conference ID Number: 59928196 . The call may also be accessed via web cast at http://audioevent.mshow.com/346279/ . For additional details, along with replay information, please visit our website at: http://www.merge.com/CORP/investorrelations/confcalllist.asp .

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GAAP versus Non- GAAP Presentation
Merge Healthcare provides in this press release adjusted operating income (loss) as additional information regarding the Company’s operating results. This measure is not in accordance with, or an alternative for, GAAP and may be different from non-GAAP operating income (loss) used by other companies. The Company believes that this presentation of adjusted operating income (loss) provides useful information to investors regarding additional financial and business trends relating to the Company’s financial condition and results of operations. This release should be read in conjunction with our Quarterly Report on Form 10-Q for the period ended June 30, 2008.

The non-GAAP adjusted operating income (loss) excludes the impact of tradename impairment, restructuring and other expenses, share-based compensation expense under SFAS 123(R), depreciation, amortization and related impairment expense and legal and accounting costs associated with prior restatements, various lawsuits and the pursuit of alternate strategic options. Results prepared in accordance with U.S. GAAP are reconciled with non-GAAP results excluding the impact of these adjustments. A full reconciliation of our GAAP operating income (loss) to non-GAAP adjusted operating income (loss) is included in the supplemental attachment to this release.

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Merge Healthcare is a leading medical imaging software and services company. Our innovative software solutions use leading-edge imaging software technologies that accelerate market delivery for our OEM customers, while our end-user solutions improve our customers' productivity and enhance the quality of patient care they provide. For additional information, visit our website at www.merge.com.

Except for the historical information herein, the matters discussed in this news release include forward-looking statements that may involve a number of risks and uncertainties. When used in this press release, the words “will,” “believes,” “intends,” “anticipates,” “expects” and similar expressions are intended to identify forward-looking statements. Actual results could differ materially from those expressed in, or implied by, the forward-looking statements based on a number of factors, including, but not limited to, market acceptance and performance of the Company’s products and services, including the Company’s teleradiology product and services; delay in the offering of the Company’s teleradiology product and services; the Company’s ability to attract and retain qualified radiologist consultants; risks and effects of the past restatement of financial statements of the Company and other actions that may be taken or required as a result of such restatement; the Company’s ability to generate sufficient cash from operations to meet future operating, financing and capital requirements; risks associated with the Company's failing to make timely filings with the SEC or its inability to meet the requirements of The NASDAQ Stock Market for continued listing, including possible delisting; costs, risks and effects of legal proceedings and investigations, including the formal investigation being conducted by the Securities and Exchange Commission and class action and derivative lawsuits; the impact of competitive products and pricing; and other risk factors detailed in the Company’s filings with the Securities and Exchange Commission. Except as expressly required by the federal securities laws, the Company undertakes no obligation to update such factors or to publicly announce the results of any of the forward-looking statements contained herein to reflect future events, developments, or changed circumstances, or for any other reason.

Press Contact
Attn: Melanie Gretzon Merge Healthcare 6737 West Washington St. Suite 2250 Milwaukee, WI 53214		Phone: 1-(414) 977-4000
Email Address: marketing@merge.com