Craneware retains M&A focus as sales hit by Covid-19

Craneware, the Edinburgh-headquartered software firm working mainly in the US healthcare market, has said it is still mulling accelerated growth through potential merger and acquisition (M&A) activity after seeing annual sales remain flat on the back of coronavirus.

CEO Keith Neilson said the firm made good progress in the year despite Covid-19-related difficulties. Picture: contributed.
CEO Keith Neilson said the firm made good progress in the year despite Covid-19-related difficulties. Picture: contributed.

The firm said that in the year to 30 June, revenue came in at $71.5 million (£55.6m), from $71.4m in the prior 12 months. Total sales to 31 March were nearly a third up on the year-ago period, with the final quarter hampered by Covid-19.

Adjusted core earnings grew 5 per cent to $25.2m, while pre-tax profit stepped up by 5 per cent to reach $19.3m, with a proposed final dividend of 15p per share, the same as in the previous financial year.

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The firm hailed a “healthy” sales mix, with more than 90 per cent of sales to existing customers or new hospitals within existing healthcare system customers, showing “the successful execution of our land and expand strategy”. The firm also flagged continued investment in research and development as well as innovation to harness growing market opportunity.

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The results announcement comes after the firm in August announced its aim to raise more than £80m, having identified “specific potential acquisitions that offer the opportunity to accelerate the progress of the company”. However, less than 24 hours later it said it had ditched the plan as an intended acquisition target in the US had now agreed takeover terms with a third party.

Craneware chairman Will Whitehorn said yesterday: “Whilst a disappointing outcome, we are very grateful for the support shown by our existing and those new potential investors. The potential for accelerated growth through M&A activity remains in place and continues to be assessed by the board.

"Whilst acquisitions are very much part of our long-term strategy, we are still first and foremost focused on delivering against our considerable organic growth opportunity.”

Chief executive Keith Neilson said: “Craneware made good progress in the year despite the difficulties imposed by the Covid-19 pandemic in the final quarter. We have experienced strong sales momentum in [quarter one] and continue to have sales discussions with hospitals across the US. We are cautiously optimistic we are seeing the first signs of sales cycles slowly normalising; however, we remain cognisant of the ongoing macro uncertainties.

“We continue to benefit from a strong balance sheet and high levels of recurring revenue, entering the new financial year with an annuity revenue base of over $65m, providing us with a strong foundation for future growth.”

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