Craneware sees sales cycle ‘normalising’
Keith Neilson: ‘good progress’
Craneware, the healthcare financial solutions company, is seeing the sales cycle “normalising”, according to chief executive Keith Neilson.
Strong sales momentum in the first quarter of the new financial year and a robust balance sheet is underpinning the Edinburgh-based company’s outlook.
Its business is focused on the US healthcare sector and government pressure to move towards “value-based care” presents a “large, growing opportunity for the group”, it said in a statement.
Mr Neilson’s comments accompanied figures for the year to the end of June showing profit before tax increased 5% to $19.3m (FY19: $18.3m) on a standstill revenue of $71.5m (FY19: $71.4m).
The company is proposing a final dividend of 15p per share (18.45 cents) (FY19: 15.0p, 19.05 cents) giving a total dividend for the year of 26.5p per share (32.60 cents) (FY19: 26.0p, 33.02 cents).
Mr 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 Q1 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.”
In his first comments as chairman, Will Whitehorn reflected on the aborted placing and acquisition post-period.
A placing to take advantage of a small number of identified acquisition opportunities was over-subscribed from both new and existing investors, but the board ultimately took the “difficult decision”, not to proceed with the fundraise following the news that the principal acquisition target had agreed terms with a third party.
“Whilst a disappointing outcome, we are very grateful for the support shown by our existing and those new potential investors” said Mr Whitehorn.
“The potential for accelerated growth through M&A activity remains in place and continues to be assessed by the board.
“The group’s strong balance sheet and undrawn debt facilities provide the company with the ability to continue its investment strategy whilst executing on any market opportunities that arise.
“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.”
Mr Neilson, speaking to Daily Business after the results announcement, said the board had looked at a “range of targets” and had focused on one and “unfortunately this time it didn’t come off”.
He said the market moved “very quickly” in the US where there is a lot of competition for value businesses, not least from the private equity sector.
“We did the right thing [cancelling the placing] and we proved we were able to raise funds,” he said.