Edinburgh healthcare software firm Craneware fighting fit as revenues double

Craneware, the Edinburgh-headquartered software firm focused on the US healthcare market, has hailed a “strong financial foundation from which to accelerate growth” after doubling up on revenues.

Releasing results for the six months to the end of December, the group reported a 111 per cent hike in revenues to $80.2 million (£61.5m), from $38m a year earlier. Adjusted underlying earnings increased 78 per cent to $23.7m.

It is the first interim update for the Scottish group since last year’s “transformational” acquisition of US-based Sentry Data Systems.

The latest results showed that adjusted profit before tax rose by 68 per cent to $17.1m. At the top line, profit before tax fell to $6.2m, from $9.9m a year earlier, after $8.9m of amortisation of acquired intangible assets and exceptional costs of $1.9m.

Keith Neilson is the chief executive of Craneware, which is headquartered in Edinburgh. Picture: Neil Hanna

The interim dividend has been increased by 4 per cent to 12.5p per share.

Chief executive Keith Neilson told investors: “The combined scale and expertise of the enlarged Craneware Group provides the potential for acceleration in annual recurring revenue (ARR) growth over the medium term, as we unlock the considerable cross and upsell opportunities within our enlarged customer base.

“Through our increased sales and marketing operations and unique breadth of offering we are also well placed to secure increased market share as the US healthcare industry continues its drive towards achieving greater value in healthcare.

“Whilst remaining cognisant of the challenges our customers continue to face; the group remains on course to deliver results for the current year in line with management’s expectations.

“With a strong balance sheet, high levels of recurring revenues, high customer retention rates and an ARR of $165m as at December 31, 2021, we have a strong financial foundation from which to accelerate growth and investment to fulfil our potential, thereby increasing shareholder value.”

Last June, the group sealed the $400m takeover of Sentry Data Systems and raised millions from investors to help fund the “strategically important” deal.

At the time, the firm noted that Sentry, headquartered in Deerfield Beach, Florida, had a customer base of some 10,000 hospitals, pharmacies and clinics, including more than 600 US hospitals - of which only about a third overlap as existing Craneware customers.

The Scots firm pointed to a number of benefits arising from the deal, including the enhancement of its focus on pharmacy operations within healthcare providers and “significant cross-selling opportunities”.

Founded in 1999, Craneware is headquartered in Edinburgh, with offices in the US, and employs hundreds of staff.

Neilson added: “We are delighted to see our first cross-sales within the enlarged group, which we expect to accelerate once the Covid-19 headwinds fully dissipate. With an expanded opportunity we look to the future with considerable excitement and confidence as we work as one team to transform the business of US healthcare.”

The interim results also revealed that investment in research and development (R&D) and innovation totalled $21.6m, up from $11.6m in the same period a year earlier.

Annual recurring revenue includes the annual value of licence and transaction revenues as at December 31 that are subject to underlying contracts.

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