Demand rising

Craneware boosted by ‘good sales momentum’

Keith Neilson: ‘confident’ (pic: Terry Murden / DB Media Services)

Hospital software company Craneware has seen a significant increase in sales to both existing and new customers which helped boost profit and revenue at the half-way stage.

The Edinburgh-based company, which has all of its operating activities in the US healthcare market, said customer retention had been strong at above 90%.

It has seen the market backdrop strengthening with US healthcare and hospital customers re-focusing on their future. There has been continuing and and growing levels of contracted recurring revenue.

Profit before tax for the six months to the end of December rose 13% to $5,.9million fro $5.2m in the corresponding period last time. Revenue was up 8% to $91.2m from $84.7m.

An interim dividend rise to 13p from 12.5p has been declared and a share buyback programme continues.

Keith Neilson, who marks 25 years as chief executive this year, commented, “Our growth in the first half of the year is tangible evidence of the return of healthcare providers’ focus to their strategic priorities and their increasing investment in technology to provide the insights to achieve them.”

“We have entered the second half of the year with good sales momentum and focus. We remain confident in the delivery of results for the year in line with current consensus, further growth acceleration over the near term, and our ability to create further long-term value for all stakeholders.” 

Speaking later to Daily Business, Mr Neilson said one of the few things holding the company back was the difficulty in hiring skilled staff.

“We are struggling to fill vacancies,” he said. “Attracting talent is a global challenge but in Scotland we have a small population with good quality startups in the market. We are seen by outside investors as being a source of talent.”

He said the company, like many others, attracts some interest from potential buyers largely because of the relatively low values of UK firms.

He said there has been an increase in liquidity in the market. Together with the improved performance this has seen its value rise. The market cap is up from about £540m last autumn to £750m, though the shares still trade well below their peak of 3600p.

Looking ahead to the Budget on Wednesday he said one issues that the Chancellor could tackle would be to help with research and development, particularly the R&D tax credit system.

Market reaction

Craneware shares initially rose but closed 30p (1.42%) lower at 2080p.

Alasdair Young at Panmure Gordon was encouraged by the company’s guidance and repeated earlier comments from the broker that Craneware could be a target for predators.:

“Whilst the outlook suggests that management is comfortable with current consensus, it also points to potential for an acceleration of growth in the near term,” he said. “We currently forecast 6% growth in FY24E (implying 5% yoy growth in H2), followed by 7% in FY25E.

“We also believe that Craneware’s leading position in US hospitals combined with its annuity revenue and high margins make it a likely bid candidate.”

See also:

Interview: Keith Neilson

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