Shares in Craneware, the Edinburgh-based software company serving the US healthcare market, were pushed higher after the business said yesterday that it is on track to report annual revenues at the top end of market expectations.
The positive performance during the 12 months to the end of June continued into the new financial year amid what chief executive Keith Neilson described as "improving prospects across the US healthcare landscape". Customers were said to be looking beyond the macroeconomic difficulties of the recent past which have included high inflation, labour shortages and snarled supply chains.
As a result revenues are expected to be towards the upper end of current market forecasts at about $174 million (£133m), a 5% increase on the year before. Adjusted earnings are also expected to be roughly 5% higher at $54m.
READ MORE: Craneware benefits from brighter US economic prognosis
Craneware provides software solutions for the healthcare billing and auditing market, one of the biggest cost components in the expensive US medical system. About 40% of all registered US hospitals are customers of Craneware, including more than 12,000 hospitals, health systems and affiliated retail pharmacies and clinics.
“Against the backdrop of the challenges impacting the US healthcare market over recent years, it is pleasing to report a robust financial performance, which is testament to the value of Craneware's offering and the hard work of our team," Mr Neilson said.
"It is particularly encouraging to see the improving prospects across the US healthcare landscape in recent months. We are seeing an increasing number of opportunities enter our sales pipeline, which has been reflected in a positive start to the current financial year."
He added: "We are confident in the demonstrable value our solutions can bring to the US healthcare market. Supported by a strong balance sheet, high levels of revenue visibility and improving market backdrop, we are well positioned to steadily build on the healthy performance delivered this year.”
The AIM-listed company, which will report its year-end results on September 5, said it will extend its share buyback programme for a further three months as total bank debt fell to $83m from $111.6m a year earlier. Operating cash balances stood at $46.9m at the end of June, down marginally on the same the year before.
READ MORE: Scottish software specialist Craneware hopeful over US outlook
Hospitals in the US have been dealing with staff shortages following an exodus in the wake of the pandemic, with some people retiring early and others deciding to pursue new careers. This resulted in higher costs as pay rates for contracted staff were pushed higher.
However, recent data suggests that broader infationary pressures in the US are easing, with last week's Producer Price Index up just 0.1% on the same period a year earlier. Meanwhile, the Consumer Price Index report showed inflation cooling to 3% last month.
Furthermore, there are early signs that labour constraints are also easing.
Revenues at Craneware more than doubled last year following the largest-ever acquisition in the company’s history of Florida-based Sentry Data Systems in July 2021. The £283m deal added a large roster of pharmacies to Craneware’s existing US customer base, which was predominantly comprised of hospitals.
READ MORE: Craneware sales surge on US deal
In the first 11 months under Craneware’s ownership, Sentry contributed $94.7m to the enlarged group’s revenues which rose by 119% to $165.5m during the year to June 2022. 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.
Mr Neilson set up the business in 1999 with co-founder Gordon Craig. The company employs about one-third of its 750 members of staff in Edinburgh, with the rest based in the US.
Shares in Craneware closed yesterday trading in London 50p higher at 1,510p, an increase of 3.4%.
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