THE ELECTION of Donald Trump and his promises of healthcare reform have not stunted the growth of Craneware, the US-focused billing and analytics specialist for the healthcare sector.
The Edinburgh company said the President-elect’s pledge to repeal the ‘Obamacare’ overhaul of the US healthcare system was unlikely to effect the business, with chief executive Keith Neilson saying that “overall we’re feeling pretty confident that we’re going to have a very valid place in [future] US healthcare.”
Craneware said it expects to report 15 per cent growth in revenue and underlying earnings for the six months ended December 31, ahead of expectations, with Mr Neilson saying that it was “looking very good” to maintain that 15 per cent growth rate for full year.
In its last full financial year, to June 30, Craneware returned to double-digit growth, posting revenue of $50m with pre-tax profits increasing 10 per cent to $13.9m.
Mr Neilson added: “What the proposals are for healthcare in the US is still up in the air, however our software is not really tied to any one piece of legislation. There are multiple reasons for using our software and the driver is for hospitals to get value out of all the healthcare they deliver and healthcare dollars they spend, and that is the same regardless of the legislation.”
He said the company was closely monitoring the sales performance around the election, because “an impending change of government always brings with it an element of uncertainty”, with directors preparing for growth to slow. “It has actually accelerated,” said Mr Neilson.
In the wake of the Mr Trump’s election victory, Craneware shares fell from 1,240p to 965p before recovering to 1,340p – helped by yesterday’s 63p lift.
Underlying sales continue to support the growth, with a particularly strong second quarter after the election, and a healthy sales pipeline.
“We’ve been building our sales pipeline for a while and it is starting to convert through,” added Mr Neilson.
With offices in Atlanta, Boston and Phoenix, Craneware products are used by 1,400 of the 6,000 hospitals in the US, and Mr Neilson said the focus remained on driving new sales and offering new and enhanced products to current customers, through the team of 27 sales staff in the US.
Because of the way the company is structured, the vast majority of revenue generated from sales in the period will be recognised over future periods, which Mr Neilson said would add to the group’s long term visibility of revenue under contract.
Craneware has a deal threshold of $3.5m that it denotes as significant, and Mr Neilson said a couple of deals in the period came close to that number, citing a “very positive” performance.
The company has sold into all sizes of hospitals, from large multi-facility training hospitals to standalone rural hospitals, across the country.
Its value cycle management suits helps healthcare providers improve their margin through cost management as the US moves from a purely revenue-based healthcare model to a value-based system that is based on the quality of the patient outcomes.
The company also continues to look at acquisition targets, and in the last year it has been investing in its Craneware healthcare intelligence division, which is a cross-channel analytics division.
New products will launch in this calendar year, with Mr Neilson saying investment would continue in “innovative products and enhancements of existing products.”
Research and development has been one of the big growth areas, with a 75 increase in the number of developers based in Edinburgh.
The development of its analytics software gives the company leverage to expand geographically. The nature of the insurance-based US healthcare market means Craneware’s billing products do not have the same demand in the UK.
“With the cost analytics that we’re bringing out, there will be opportunities in future years to look at new geographies for that,” said Mr Neilson. “The costs per patient episodes are the same wherever you are in the world and that is useful for single payer mechanisms like the NHS or other insurance-based markets around the world.”
The group has also invested about $3m in its newly formed employee benefit trust to ensure it can meet future grants of options for staff.
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