Craneware shares rise amid 119% revenue increase

Craneware CEO Keith Neilson

Shares of Edinburgh-based Craneware, a provider of software for the US healthcare market, rose 7% on Tuesday after it published results for the year ended June 30, 2022, showing its revenue increased 119% to $165.5 million and adjusted EBITDA increased 91% to $51.8 million.

Statutory profit before tax was flat at $13.1 million “reflecting increased operating profit offset by amortisation of acquired intangibles and bank interest payments resulting from the Sentry Data Systems, Inc. acquisition.”

Total dividend for the year will rise 2% to 28p.

Craneware shares rose about 7% to around £19.30 to give the firm a stock market value of about £689 million.

Craneware CEO Keith Neilson said the firm anticipates “accelerated levels of sales moving forward, delivering our next phase of growth.”

Neilson said: “We are pleased to be reporting such positive results, which clearly demonstrate the increased scale of the enlarged Craneware Group and the breadth of our future opportunity.

“The addition of Sentry, which was completed and integrated during the fiscal year, represents a significant milestone for Craneware.

Whilst we remain cognisant of the ongoing challenges faced by our customers and partners, we are proud of the manner in which the group has dealt with the challenging backdrop during the year.

“A focus for the year was to integrate our widened team and this was achieved with great success.

“Now, with our expanded and reorganised team we are confident we will be able to serve the considerable market need within the US healthcare space through the next stage of our evolution.

We anticipate accelerated levels of sales moving forward, delivering our next phase of growth. We have a robust balance sheet, high recurring revenues and with our high levels of customer retention, we look to further increase shareholder value.”

Dan Ridsdale, a managing director at investment research firm Edison Group, said: “FY22 was a year of significant progress for Craneware with the acquisition of Sentry in July establishing the business as one of the leading providers of Value Cycle software in US healthcare and the majority customers moved to the Trisus platform by year end.

“Full year results reflect this, with ARR increasing by 164% to $170.3m.

“Despite staff shortages suppressing professional services revenue, revenues grew by 119% to $165.5m, adjusted EBITDA growing by 91% to $51.8m and adjusted eps by 29% to 89c.

“The acquisition of Sentry has propelled the business from one of the pack to a market leader, with the combined group now providing nearly half of all hospitals within the US.

“As a result of this increased scale and breadth of offering, management is now expecting accelerated levels of sales going forward.

“The company is also considering further acquisitions, although these are likely to be smaller ‘tuck-ins’ rather than the transformative Sentry deal.

“Going forward, the group remains optimistic about the challenges the healthcare sector faces, as well as challenging macroeconomic conditions.

“Although there has yet to be a full recovery in the hospital workforce and operations to pre-pandemic levels, senior management remains confident that the move to value-based care will continue to drive growth and innovation within the healthcare software market.

“In the US for example, the pandemic exposed some of the fatal flaws at the core of America’s private healthcare system. Incurring the highest cost per capita in healthcare spending, it is reasonable to expect increased levels of investment in software and analytics to help both enhance the operational and administrative functions of hospitals.”