Craneware says future is bright after posting record sales

Craneware continues to benefit by the ongoing move towards value-based care in the US healthcare sector, as deals with individual hospitals and small hospital groups powered an 11 per cent rise in revenue to $49.8m. And it is confidently forecasting further rapid growth down to 2018, as the benefits of major deals secured during the last financial year come to fruition.

Craneware, which grew its headcount across operations in the US and Edinburgh by 25 per cent to 250 last year, won two five-year contracts worth a combined $15.5m in its last financial year.

A 50-hospital deal signed in January will be worth $7.5m over five years, while a multi-site deal secured in June will be worth more than $8m over the course of the contract.

Hailing the current “momentum and trajectory” of the business, chief executive Keith Neilson said the impact of those deals had been “minimal” in Craneware’s last financial year, pointing to the continuing growth prospects for the business in the years ahead. Total visible revenue grew by 23 per cent during the year to $149.1m.

Mr Neilson said: “The good thing is the revenue [last year] was driven by individual hospitals and small hospital groups, which is great. We had a complete range of different sizes of hospitals and hospital groups purchasing from us, which is a very positive thing.

“Even if you strip out those large deals we still had a record sales performance on these sales.”

Mr Neilson said Craneware had started to see the benefits of “economies of scale”. He said it had reached a “critical mass” thanks to existing customers referring it to other clients and purchasing more from the business themselves.

“The reason they are buying more is that they understand this move to go to value-based care, and we’re able to provide solutions for them that work and take them along that route,” Mr Neilson said. “A combination of those two things are definitely working from a sales perspective.

“From a revenue perspective, that’s been driven by the great results we had three years ago. That’s why we can be very confident about ’18 and ’19 because of the strong performance then, as that flows through from a revenue perspective.”

Along with new and improving repeat orders, Mr Neilson noted that sales opportunities had been “multiplied” two to three times by the development of new products.

During the last financial year it launched Craneware Healthcare Intelligence, a healthcare cost analytics solution. Trisus Patient Payment Module, described as a patient engagement and access gateway product, is on track to be launched this calendar year.

“There’s been a lot of growth in our total addressable market from adding those extra products in,” said Mr Neilson.

Mr Neilson, who anticipates taking on further staff in Edinburgh and the US to meet growing demand, expressed concern prior to the EU referendum that a Brexit vote could hamper the ability of Scottish companies to recruit skilled staff. Asked whether Craneware had been affected by the UK’s decision to leave the EU, he said the ramifications were “still up in the air” in terms of staff mobility.

But he noted it was benefiting by the depreciation of sterling since June 23. “There’s a benefit to any exporter of a weak pound just now,” he said. “On top of that, we have taken the opportunity to lock in these historically low pound rates for the foreseeable future.”

Mr Neilson added that the prospect of change in policy direction in the US following the Presidential election was not a concern for the company. “Both parties have stated their commitment to driving more value from healthcare spend," he said. "We therefore see the drivers for our software increasing no matter what the outcome of the election.

Shares in Craneware closed up 15p at 1,045p.