CEO hails outstanding year
Craneware on target for $1 billion unicorn status
Keith Neilson: ‘outstanding year’
Health care billing company Craneware is on target to become the next Scottish unicorn – a $1 billion company – after unveiling a record sales pipeline and an acquisitions plan backed by a $50 million warchest.
Chief executive Keith Neilson said the opportunities for growth are “substantial” and it has the capacity to hire “as many engineers as we can find”.
Speaking to Daily Business after announcing its year end figures, the CEO of the Edinburgh-based company said the company was hiring across its offices in Edinburgh, Glasgow and in the US. He admitted that Brexit concerns had seen the firm lose more than half a dozen key staff.
“We tried our best [to persuade them to stay] but they are worried,” he said. The Brexit implications for immigration add to a worldwide problem of hiring skilled software engineers, he added.
Mr Neilson said the company was on a fast growth track, noting that the current $820m market capitalisation puts it within touching distance of unicorn status.
The company, which operates almost exclusively in the US hospitals sector, reported a 12% rise in pre-tax profits on a 16% uplift in revenue for the year to the end of June.
However, the company measures its success by sales signed with hospital customers. It has seen an increase of more than 100% in new sales contracts to $71.3m with new and existing customers.
Renewals contributed an additional $27.3m to sales in the period. As a result it has reported the total value of contracts signed in the year of $98.6m (FY17: $54.0m).
The board said it continues to assess acquisition opportunities to complement the group’s organic growth strategy.
In addition to cash reserves it has a $50 million funding facility to fund strategic acquisitions and will consider competitors who bring market share; businesses with complementary data sources; or international companies with complementary product suites of benefit to our customers, who do not have a foothold in the US.
Chairman George Elliott said: “As we enter the new financial year, we remain positive that the business environment in the US will continue to be supportive of Craneware.
“Our expanded market opportunity, double digit growth rates, record sales pipeline and increasing long-term revenue visibility provide the board with confidence in achieving a successful outcome to the current year and beyond.
“Twenty years ago, Craneware was a small group of people with a big vision – a notion that they could deliver a solution that would positively influence the United States healthcare market.
“Today, there are more than 320 of us serving a third of US hospitals and health systems, with a financial impact of over a quarter of a trillion dollars. Each year, approximately 200 million encounters are provided by Craneware customers to their patients. These customers chose Craneware to help them grow and protect their future vision, their legacy.”
Mr Neilson added: “While the past year has been outstanding in terms of financial results and operational progress, this is by no means the end of the journey and we are excited by the far greater opportunity that lies ahead.
“It is clear that the investments we have made into the organisation’s design, people and products are delivering excellent results, and we will continue to invest in our people and business to ensure we have the capabilities to succeed.
“We believe that the breadth of our customer base and the quantity of data within our solutions means we have the opportunity to sit at the heart of the move to value-based economics; collating and analysing the information that will support hospital-wide decision making and ultimately have a positive impact on the quality of healthcare.
“With an ongoing, growing market opportunity, a record sales pipeline and increasing long-term revenue visibility, we enter the new financial year with great confidence for the future and the ongoing success of the business.”
Financial Highlights (US dollars)
- Revenue increased 16% to $67.1m (FY17: $57.8m)
- Adjusted EBITDA1. increased 20% to $21.6m (FY17: $18.0m)
- Profit before tax increased 12% to $18.9m (FY17: $16.9m)
- Basic adjusted EPS2. increased 17% to $0.602 (FY17: $0.514) and adjusted diluted EPS increased to $0.591 (FY17: $0.503)
- Total visible revenue increased 20% to $192.9m (FY17 same 3 year period: $160.7m)
- Continued operating cash conversion above 100% of Adjusted EBITDA
- Renewal rate remains above 100% by dollar value
- Cash at year-end of $52.8m (FY17: $53.2m) after having returned $23.2m to shareholders via a share buyback and dividends, while also investing $4.2m in the Employee Benefit Trust
- Proposed final dividend of 14.0p (18.48 cents) (FY17: 11.3p, 14.71 cents) per share giving a total dividend for the year of 24.0p (36.68 cents) (FY17: 20.0p, 26.04 cents) per share