Craneware shares get respite as revenue tops $71m

Shares of Edinburgh-based Craneware, a software firm that specializes in US healthcare, rose 4% on Tuesday to recover some lost ground after the firm said its revenue rose 6% to $71.4 million for the year ended June 30, 2019.

Craneware said profit before tax slipped to $18.3 million from $18.9 million, “the reduction being as a result of $1.2m one-off costs related to a significant proposed acquisition that the board decided not to enter into during the year.”

On June 28, shares of Craneware plummeted about 35% after it said in a trading update that its sales in the second half of the year “have been lower than anticipated.”

But on Tuesday, Craneware said it continues to sign contracts with hospitals of all sizes and has had a strong start to the year, reporting a “confident outlook, supported by strong sales pipeline.”

Craneware has proposed a final dividend of 15p (19.05 cents) per share, giving a total dividend for the year of 26p (33.02 cents) per share, up from 24p (31.68 cents) last year.

Craneware CEO Keith Neilson said: “While growth in the year was lower than originally anticipated, renewal levels remained strong and our Trisus related sales and revenues continued to increase, providing us with a strong platform for the future.

“We have entered the new financial year with an uptick in sales momentum. 

“We are focused on the delivery of our growing opportunity and have the correct strategy to succeed.

“With growing levels of contracted future revenue, strong operating margins, healthy cash balances and a growing sales pipeline, we look to the coming years with confidence and high levels of excitement for the opportunity ahead.”

Analysts at Peel Hunt wrote: “As we indicated in our June note, the relatively rapid launch of new Trisus modules has, according to the management, resulted in what they call a temporary ‘indigestion’ among the sales team and the customers.

“The expanded options presented at the time of renewals results in additional product, pricing and legal reviews, which in turn extends the procurement cycle.

“The company has taken some mitigating actions to circumvent such issues going forward.

“In our conversations with management, there was candid admission of what could have been done differently.

“We laud this, and expect the mitigating actions taken to slowly take effect and growth to return to double-digit territory …”