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Software specialist is in good health

HEALTHCARE software provider Craneware indicated its sales strategy was bearing fruit after posting a 7% increase in first-half revenues from $18.8 million (£12.4m) to $20.1m.

COMMITMENT: Keith Neilson confirmed the firm was continuing to invest in R&D. Picture: Julie Howden
COMMITMENT: Keith Neilson confirmed the firm was continuing to invest in R&D. Picture: Julie Howden

The Edinburgh company, which sells its audit and revenue checking products to hospitals in the United States, signalled full-year turnover would be at least $39.7m – up from $33.4m – but it is hopeful of meeting market expectations of $45m.

Yesterday, Craneware also booked a rise in pre-tax profit from £3.8m to $4.5m in the six months to December 31, 2012.

Its order book of visible revenue over the next three years has now grown from $108.7m to $111.9m.

Analysts from Peel Hunt said the improvements in long-term visibility show the importance of detailed revenue monitoring in the US healthcare market.

They added: "This adds to the evidence that the fiscal and regulatory pressures on US hospitals have not gone away and they continue to drive demand for Craneware's suite of software solutions."

Chief executive Keith Neilson refused to be drawn on whether the business was in active talks about spending some of its $28.6m cash balance on acquisitions.

He said: "We continue to look and keep our eyes open and our ears to the ground."

Mr Neilson, co-founder of the business, confirmed Craneware was continuing to invest in research and development of new products with much of that activity centred in Scotland.

He insisted the long-term market opportunity in the US, where Craneware has a growing salesforce and products in a hospital in every state, remained strong.

He said: "There is a growing demographic looking for more healthcare and [President Barack Obama's reforms] bring in another 40 million people as of 2014.

"Then there is a fiscal landscape trying to slow the growth of healthcare costs with hospitals being squeezed in the middle.

"We are trying to help those hospitals so they can continue to provide the best levels of care possible."

Analysts were reassured by the update but said further work would be needed in the second half of the year in order to hit sales forecasts.

Investec said: "Interim results are further evidence of stability in the business and the end market.

"The coming six months should show a further acceleration in revenue growth which would reassure the market and imply ongoing growth in recurring revenues."

N+1 Singer said: "We continue to like the market opportunity, supportive demand drivers and strategic positioning of Craneware and note the on-going [merger and acquisition] activity in the US Healthcare IT space."

Mr Neilson is confident of meeting expectations. He said: "We have got momentum which is going in the right direction. We still have to get up out of our bed in the morning and sell some stuff.

"We have some work to do but are on the right track."

An interim dividend of 5.2p per share was proposed, up from 4.8p.

The shares closed the day unchanged at 395p.

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