Craneware orders hit high

Deputy Business Editor

Wednesday 5 September 2012

SHARES in US-focused medical software supplier Craneware surged almost 10% as it reported a "historically high" forward order book.

PLEASED: Craneware boss Keith Neilson pointed out that sales had slowed in the first half of the year. Picture: Julie Howden

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Greig Cameron Deputy Business Editor

Its share price ended the day up 32.5p, or 9.94%, at 360p with the Edinburgh company's market capitalisation rising £8.7 million to £97m.

In annual results Craneware revealed an 8% increase in revenues to $41.1 million (£25.9m) and a 29% jump in pre-tax profits to $11.2m in the 12 months to June 30 this year.

Revenue of $108.7m is already in place for the next three years.Analysts had previously revised down forecasts after Craneware warned of a large contract loss in its ClaimTrust business and generally slow sales in the first six months of its financial year as US hospitals rushed to meet deadlines to transfer their records to electronic formats in order to receive incentive payments.However, sales volumes accelerated in 2012 and have been growing month on month.In a note Peel Hunt said: "Results to June were in line to ahead on most operating metrics and crucially, visibility on the new year is back at a more normal 80%, from 68% at this time last year."Underlying demand in US healthcare remains firm and Craneware has the right products to address market needs."Keith Neilson, Craneware chief executive, said: "It was a robust second half. A big part of it was really just sales had slowed down in the first half primarily because of the Electronic Medical Record and the drive to grab some of the stimulus money by the hospital. "We started to see that tap coming back on in January and we have had month-on-month sales increases through to the end of the year. "That gave us the financial position. On top of that and more pleasingly for me we have activity increases as well, which point to future sales, so we think we are strong going forward as well."US President Barack Obama has made several changes to the healthcare system in his term in office. However, Mr Neilson is not overly concerned whether there is a change in the White House at the US election in November this year.He said: "Both [Republicans and Democrats] are desperate to find out exactly where healthcare is being spent, when and by whom. "In this turbulent, demanding environment, hospitals need financial accuracy, visibility and shared accountability to survive. Fiscal and regulatory drivers are expected to increase in the year ahead as they push for greater transparency and accuracy, and although this creates a challenging ever-evolving marketplace, it ultimately increases the opportunities for Craneware's solutions."We have strong foundations in place and revenue visibility shows we can deliver on the financial side."Craneware's results benefited from a full-year contribution from the ClaimTrust business acquired in February 2011.Mr Neilson said: "The financial results have been a little bit slower than we expected but the pipeline and future indications on activity are such that we are confident of its performance in the future."It has given us good people, good domain knowledge and some good products we have been able to sell."Craneware has a cash balance of $28.8m and is considering further takeover deals.Mr Neilson added: "If you look at the cash position we are back at pre-acquisition levels despite paying out $9m for the acquisition and $4.1m out in dividends. "We have been able to show we can fund these acquisitions ourself and we continue to look for them."

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Craneware orders hit high

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