CRANEWARE, the revenue management software specialist, has declared there are early signs of inflationary pressures easing for its target US healthcare market, as it reported a fall in first-half profits.

Chief executive Keith Nielson said the company was “confident” about its prospects for the second half, noting that the challenges facing US hospitals “strengthens our commitment to providing the tools to more accurately manage their operations and finances”.

Shares in the company closed the day up 2.7 per cent at 1,540p.

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Craneware, which employs around one-third of its 750-strong workforce in Edinburgh, made a pre-tax profit of $5.2 million for the six months ended December 31, down from $6.2m the year before. First-half revenues increased by 6% to $84.7m.

The results came against the backdrop of continuing inflationary pressure in the US. Mr Nielson said while the cost backdrop means there is a “greater need for its software”, which has driven sales, Craneware has been seeing lower growth in sales of services offered over and above those products.

He said: “We shouldn’t lose sight of the fact we actually had growth in what was quite a challenging period.

“Overall, we also saw the roll-out of some new products developed here in Scotland with the roll-out of our Trisus (cloud) platform to our customer base. That has been really good to see. It has gone straight to number one in the Class Report, which is an independent study of healthcare software.”

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Asked whether customers in US were delaying investment decisions because of costs, Mr Nielson told The Herald clients were continuing to buy software but “pushing back a wee bit” on additional, standalone engagement services for specific projects.

“They haven’t gone anywhere, they’re just not moving as quickly on those projects,” he said. “The software is still going in. We had a good uptake on that. We saw a 30% lift in sales to brand new customers. We saw significant movement in expansion sales as well. That is really the big building block for us as an organisation.”

Craneware said hospitals in the US are dealing with staff shortages which Mr Nielson said followed an exodus because of factors related to the pandemic, with some retiring early and others deciding to pursue new careers. This has resulted in higher costs as pay rates for “bank staff” or contractors has been driven up. “Hospitals are trying to control that,” he said.

“They are trying to balance increasing salaries to employed members of staff with tempering the acceleration of the number of contract staff.”

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Mr Nielson added, however, that there is “early-stage evidence” of inflation beginning to ease, as highlighted by hospitals that report results publicly in the US.

He said: “We are starting to see growth in margins again. It is starting to come back in line. We thought it would have happened by now... [but] it is taking a little bit longer.”

Mr Nielson noted: “Hopefully we are seeing some green shoots coming through on that.”

Asked to comment on the outlook for the second half, he said: “We are feeling confident. That is definitely the word that we would use. We feel we are in a good place. We have had some hard yards in the last year or so migrating our customers across to the cloud. Now that they are there, we can build on that and continue to see accelerating growth.”

The Craneware board proposed an interim dividend of 12.5p per ordinary share, in line with last year.