diff --git a/tools/overlay_images/overlay_images.xml b/tools/overlay_images/overlay_images.xml
index d58bdb6f..053d1b13 100644
--- a/tools/overlay_images/overlay_images.xml
+++ b/tools/overlay_images/overlay_images.xml
@@ -1,4 +1,4 @@
-<tool id="ip_overlay_images" name="Overlay images" version="0.0.3-2" profile="20.05">
+<tool id="ip_overlay_images" name="Overlay images" version="0.0.3-3" profile="20.05">
     <description></description>
     <edam_operations>
         <edam_operation>operation_3443</edam_operation>
@@ -15,7 +15,12 @@
     <command detect_errors="aggressive">
     <![CDATA[
         python '$__tool_directory__/overlay_images.py'
-        '$method_option.im1' '$method_option.im2' ./output.tif
+        '$method_option.im1' '$method_option.im2'
+        #if $method_option.method == "seg_contour"
+            ./output.png
+        #else
+            ./output.tif
+        #end if
         --method $method_option.method
         #if $method_option.method == "blending"
             --alpha $method_option.alpha
@@ -54,38 +59,43 @@
         </conditional>
     </inputs>
     <outputs>
-        <data format="tiff" name="out" from_work_dir="output.tif" />
+        <data format="tiff" name="out_tiff" from_work_dir="output.tif" label="${tool.name} on ${on_string} output:tiff">
+            <filter>method_option['method'] != 'seg_contour'</filter>
+        </data>
+        <data format="png" name="out_png" from_work_dir="output.png" label="${tool.name} on ${on_string} output:png">
+            <filter>method_option['method'] == 'seg_contour'</filter>
+        </data>
     </outputs>
     <tests>
-        <test>
+        <test expect_num_outputs="1">
             <param name="im1" value="mask1.tif"/>
             <param name="im2" value="mask1r.tif"/>
             <param name="method" value="coloc_vis"/>
-            <output name="out" value="test1.tif" ftype="tiff" compare="sim_size" delta_frac="0.1"/>
+            <output name="out_tiff" value="test1.tif" ftype="tiff" compare="sim_size" delta_frac="0.1"/>
         </test>
-        <test>
+        <test expect_num_outputs="1">
             <param name="im1" value="mask1.tif"/>
             <param name="im2" value="mask1r.tif"/>
             <param name="method" value="blending"/>
             <param name="alpha" value="0.3"/>
-            <output name="out" value="test2.tif" ftype="tiff" compare="sim_size" delta_frac="0.1"/>
+            <output name="out_tiff" value="test2.tif" ftype="tiff" compare="sim_size" delta_frac="0.1"/>
         </test>
-        <test>
+        <test expect_num_outputs="1">
             <param name="im1" value="sample1.tif"/>
             <param name="im2" value="mask1.tif"/>
             <param name="method" value="seg_contour"/>
             <param name="thickness" value="2"/>
             <param name="color" value="#ff0000"/>
             <param name="show_label" value="--show_label"/>
-            <output name="out" value="test3.tif" ftype="tiff" compare="sim_size" delta_frac="0.1"/>
+            <output name="out_png" value="test3.png" ftype="png" compare="sim_size" delta_frac="0.1"/>
         </test>
-        <test>
+        <test expect_num_outputs="1">
             <param name="im1" value="sample1.tif"/>
             <param name="im2" value="mask2.tif"/>
             <param name="method" value="seg_contour"/>
             <param name="thickness" value="2"/>
             <param name="color" value="#ff0000"/>
-            <output name="out" value="test4.tif" ftype="tiff" compare="sim_size" delta_frac="0.1"/>
+            <output name="out_png" value="test4.png" ftype="png" compare="sim_size" delta_frac="0.1"/>
         </test>
     </tests>
     <help>
diff --git a/tools/overlay_images/test-data/test3.tif b/tools/overlay_images/test-data/test3.png
similarity index 100%
rename from tools/overlay_images/test-data/test3.tif
rename to tools/overlay_images/test-data/test3.png
diff --git a/tools/overlay_images/test-data/test4.png b/tools/overlay_images/test-data/test4.png
new file mode 100644
index 00000000..983170d1
Binary files /dev/null and b/tools/overlay_images/test-data/test4.png differ
diff --git a/tools/overlay_images/test-data/test4.tif b/tools/overlay_images/test-data/test4.tif
deleted file mode 100644
index 43254e38..00000000
Binary files a/tools/overlay_images/test-data/test4.tif and /dev/null differ