HEALTHCARE software company Craneware saw more than £46 million wiped off its value yesterday after warning that its first-half profits had stalled.

The company's share price plunged by almost one-third from 522.5p to 352p as investors deserted what has been one of Scotland's most consistent stock market performers in recent years.

Brokers Investec and Brewin Dolphin downgraded Craneware from buy to hold as the company closed the day with a market capitalisation of around £95m.

A trading update for the six months to December 31, 2011 said revenue, reported in dollars as all of Craneware's sales are in the US, would increase by more than 12% from the $16.6m reported the previous year.

However earnings before interest, tax, depreciation and amortisation (EBITDA) were likely to be flat at around $4.6m.

EBITDA had been on course for a 15% increase but the Insight arm, which was acquired in February last year for an initial $15m, dragged the figure down by $700,000 after a third party using Craneware software lost a major contract.

Sales cycles for all products lengthened, which the company believes is due to American healthcare providers rushing to meet a December 31 deadline to switch to electronic record keeping.

Despite the developments, Craneware chief executive Keith Neilson was bullish on the future prospects for the Edinburgh business and expects big growth in the second half.

He said: "We have the strongest pipeline we have ever had.

"We expect to see sales cycles settling down into a more normal pattern and we fully expect earnings and EBITDA to accelerate in the second half of the year.

"To achieve that, we are planning to grow our customer base, our product base and do more cross-selling of products to our existing clients."

The integration of Insight is "well advanced", with new products being developed.

Mr Neilson told The Herald that the issue relating to the contract loss at Insight should be resolved in the second half of the year.

He said: "This was a situation no one could have foreseen. A third party we supply software to lost a large contract with a hospital group for a number of reasons.

"A new supplier is now in place and we are working with them to find a software solution."

A three-year contract to license Craneware technology and data for an unnamed customer to re-sell was signed in the period but the first payment is not due until later this year. Similar agreements are expected to be announced in 2012.

IT healthcare industry research group KLAS named Craneware's Bill Analyzer as a category leader while its Chargemaster Toolkit took the number one spot in its listing for the sixth consecutive year.

The company employs around a third of its 200 staff in Scotland, with the rest working at American offices in Atlanta, Arizona, Massachusetts and Tennessee.