Edinburgh tech firm Craneware eyes healthy rise in earnings

Craneware, the Edinburgh-based software company, today said it was on track to deliver a 15 per cent rise in revenues and underlying earnings for the first six months of its financial year.

Craneware chief Keith Neilson said the Edinburgh software firm has built up a 'healthy' sales pipeline. Picture: Neil Hanna

The firm, which specialises in billing software for the US healthcare market, said the growth builds on the 10 per cent profit increase it reported for the year to the end of June and is set to come in “slightly ahead of expectations”.

Read More

Read More
Craneware '˜stronger than ever' as profits rise 10%

Sign up to our daily newsletter

The i newsletter cut through the noise

Chief executive Keith Neilson pointed to a “healthy” pipeline of sales and “particularly strong” trading during its second quarter in the wake of Donald Trump’s surprise victory in the US presidential election.

Donald Trump has vowed to replace Obamacare when he gets the keys to the White House. Picture: Dominick Reuter/AFP/Getty Images

Trump has pledged to replace outgoing president Barack Obama’s affordable care act (ACA) – dubbed Obamacare – with a plan that would encompass “insurance for everybody”. Obama’s signature healthcare plan is expected to see premiums jump by an average of 22 per cent this year, according to recent White House figures.

Neilson said today: “There is continued consensus in the US of the need to drive value in healthcare with ongoing support for the move to value-based care and increasing consumerism.

“An impending change of government always brings with it an element of uncertainty; it was therefore particularly pleasing to see the acceleration in sales of our Value Cycle solutions post the result of the US presidential election. Our Value Cycle software continues to help US healthcare providers meet the challenges they will face as they navigate the ongoing re-imbursement model changes.”

Analysts at Investec, which has a “buy” rating on Craneware’s shares, said: “The ‘ACA repeal’ headlines have little substantive detail behind them so far, but removal of mandatory enrolment seems very likely. We do not see demand for Craneware products as tied to any one legislation, and the business model is highly defensive. We remain long-term supporters.”

Donald Trump has vowed to replace Obamacare when he gets the keys to the White House. Picture: Dominick Reuter/AFP/Getty Images

Craneware employs about 250 people, of whom 120 are based at its Tanfield headquarters in Edinburgh. This year will mark the tenth anniversary of its flotation on Aim.

Neilson added that the company “continues to invest for the future”, pumping about $3 million (£2.5m) into its newly formed employee benefit trust and more than $1m in future product development.

Despite these investments, the company ended the first half on 31 December with a cash balance of $45m, unchanged from a year earlier, and said it retains access to a Bank of Scotland funding facility of up to $50m “as it continues to investigate strategic opportunities to further expand its Value Cycle solution”.

Craneware added: “With the growth in the period, continued cash generation and a healthy sales pipeline, the board is confident in meeting market expectations for the full year.”

The firm is due to announce its first-half results on 7 March.