Medical software provider Craneware is predicting a further acceleration in sales in the coming year after revenues more than doubled following the largest-ever acquisition in the company’s history.

The Scottish company, which makes billing software used by healthcare providers in the United States, said it has seen “pleasing initial cross-sales” following the July 2021 purchase of Florida-based Sentry Data Systems. The £283 million deal added a large roster of pharmacies to Craneware’s existing US customer base, which was predominantly comprised of hospitals.

In 11 months under Craneware’s ownership, Sentry contributed $94.7m (£83m) to the enlarged group’s revenues which rose by 119 per cent to $165.5m during the year to June 30. Earnings almost doubled to $51.8m, but pre-tax profits were flat at $13.1m after taking account of costs related to the Sentry acquisition.

Craneware co-founder and chief executive Keith Neilson said the company anticipates “accelerated levels of sales” as it moves into its next phase of growth.

“We are pleased to be reporting such positive results, which clearly demonstrate the increased scale of the enlarged Craneware group and the breadth of our future opportunity,” he said. “The addition of Sentry, which was completed and integrated during the fiscal year, represents a significant milestone for Craneware.”

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Analysts at house broker Peel Hunt expect revenues to grow 22% to $202m in 2024, and reiterated their “buy” rating on the London-listed stock.

“While the results across revenue and cash generation are in line with the trading update, they do act as a reminder of how much of a transformation Craneware has undergone in the year,” they said in a note to investors. “Despite good and improving execution, we think the market is not valuing the company appropriately.”

Annual recurring revenue rose by 164% at $170.3m, with 80% of this coming from the delivery of cloud-based solutions. Craneware said it is on course to transfer all its offerings to the cloud by the end of December.

As for further acquisitions, Edinburgh-based Craneware said it remains open to opportunities.

“While organic growth remains a priority, we continue to evaluate the market for M&A opportunities and will continue to pursue strategically aligned companies that will accelerate our growth strategy, although it is unlikely that any acquisitions in the short-term will be of the relative scale of Sentry,” the company said.

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It added that its criteria for acquisitions remain the same: the addition of relevant data sets; the extension of the customer base; the expansion of expertise; and the addition of applications suitable for the US hospital market.

About 40% of all registered US hospitals are now customers of Craneware, including more than 12,000 hospitals, health systems and affiliated retail pharmacies and clinics. The company said it has data sets covering more than 150 million unique patient encounters.

It took $2.1m in direct exceptional costs on the acquisition, plus a further $20.2m in amortisation costs as it wrote down the book value on some of Sentry’s intangible assets.

Revenues during the year included $138m from software licencing, up from $61.1m previously, and $13.7m in transactional sales from Sentry operations. Revenues from professional services fell from $14.5m to £13.9m because of fewer staff in hospitals during the pandemic, but the company expects this to “normalise” and has retained capacity in this area.

“Whilst we remain cognisant of the ongoing challenges faced by our customers and partners, we are proud of the manner in which the group has dealt with the challenging backdrop during the year,” Mr Neilson added.

Shares in AIM-listed Craneware closed yesterday’s trading nearly 8% higher, up 140p at 1,950p.