Shares fall after update from Edinburgh’s Craneware

Shares of Edinburgh-based Craneware, a software firm that specializes in US healthcare, fell about 12% on Thursday after it issued a trading update saying it expects its first-half revenue to be at similar levels to the comparator period in the previous year.

In a trading update for the six months ended December 31, 2019, Craneware said: “The group has delivered a strong new sales performance in the first half of the financial year, with new sales over 30% ahead of H1 FY19, driven by an increased number of contracts being secured, as the company worked through the backlog of contracts delayed from H2 FY19 …

“The actual number of hospitals renewing their contracts in the period is significantly above the prior year.

“However, our KPI ‘customer renewals by dollar value’ when analysed for the six month period is 73%, which, while lower than our historic annual range of 85% – 115%, reflects the disproportionate impact the loss of a large customer has when measuring this statistic over a six month period.

“In accordance with the company’s revenue recognition policy, the majority of the revenue resulting from both new and existing contract renewal sales will be recognised over future periods, providing the group with long term visibility of revenue under contract.

“The group expects to report revenue for H1 FY20 at similar levels to the comparator period (H1 FY19: $35.8m), in line with management expectations together with approximately 10% growth in adjusted EBITDA (H1 FY19: $11.6m) …

“The strong sales performance in the period, positive market environment, continued sales momentum and high levels of revenue visibility mean the board expects to meet market expectations for the full year ending 30 June 2020.”

Craneware CEO Keith Neilson: “We have been pleased by the strong new sales performance and have seen an indication that sales cycles are shortening, which bodes well for continued sales momentum in the second half of the year.

“This trading performance and progress with the Trisus platform demonstrate the renewed momentum we are experiencing in the business.

“The ongoing transition to value-based care is a powerful underlying driver for our existing solutions and Trisus platform.

“We are committed to providing our customers with the tools they require to continue to deliver outstanding care to their communities and are passionate about the central role we will play in the ongoing evolution of the US healthcare market. 

“The positive sales performance in the first half, combined with our extensive customer base, innovative product offering, high recurring revenues and financial strength, mean the board expects to meet market expectations for the year and is confident in our ability to deliver long-term, sustainable growth.”