Edinburgh tech firm Craneware has reported a double-digit earnings rise despite slowing sales growth, as it targets a “huge” opportunity in the US healthcare market.
The hospital billing software provider, which currently serves around one third of US hospitals, posted an 11 per cent increase in adjusted underlying earnings to $24 million (£20m) for the year to June.
Pre-tax profits dipped to $18.3m, from $18.9m in 2018, as a result of $1.2m one-off costs related to a “significant” proposed acquisition that it later called off during the year.
Revenues were up by 6 per cent to $71.4m, a slow-down from a string of double-digit annual increases but in line with guidance issued in June. The group, quoted on the Alternative Investment Market, said new business flows had disappointed in the last six months of its financial year.
Chief executive Keith Neilson told The Scotsman this was predominantly down to “sales indigestion” caused by the launch of three new products on its flagship Trisus platform in close succession.
He said: “The inadvertent result of that was that people were busy looking at the products rather than signing up for them, which slowed things down a little bit.
“With the benefit of hindsight we’re able to put that more into context with the bigger opportunity that lies ahead of us. We’re looking at a more staged approach for future roll-outs.”
Neilson added that sales momentum has since returned, with the company experiencing its best July figures to date. Trisus sales soared in the final months of the financial year to account for 14 per cent of new sales, up from 6 per cent previously.
Craneware pointed to a “healthy sales mix”, with 45 per cent of sales relating to new customers, as the trend for US healthcare providers to switch to value-based care benefits the business.
Visible future revenues now stand at more than $200m for the three-year period to June 2022, while renewal levels continue to be “comfortably within historic norms”, at 101 per cent.
Neilson added: “The underlying metrics are very good in the business. Cash generation and renewals are very positive, as are growth opportunities going forward.”
Craneware reported cash reserves of $47.6m at the year-end, having returned $8.5m to shareholders in the year.
The board proposed a final dividend of 15p per share, 1p higher than the previous year, giving a total dividend for the year of 26p per share.
Analysts at Investec said the firm was “back on track after a bump in the road”, adding: “The signs are that this was a case of ‘indigestion’, and the outlook for growth from here should be bright, with an array of new product released in the full-year 2019.”