Market disrupted from investment shift by US healthcare providers
Medical billing software developer Craneware has announced it expects full-year results to come in below market expectations.
The company, which has offices in Edinburgh and Livingston but sells all of its software products to the American healthcare market, announced in February a drop in first-half pre-tax profits, largely as a result of a third party contract loss announced in January.
Craneware saw its share price drop by more than 30 per cent in January following a negative trading update related to the performance of its US subsidiary InSight, which Craneware acquired in February 2011 in a £12 million deal.
A third party contract administrator working for InSight lost a contract with a network of hospitals, which Craneware said in January it would renegotiate through new administrator agents.
Revenues had been hit by US healthcare providers extending sales cycles in the first half, largely from providers focussing on investment in electronic health records software rather than billing softwarem Craneware said, though the board believes sales cycles are now returning to normal lengths.
However, Craneware added the US healthcare market was also being affected by US Government auditors of its Medicare scheme, which is looking to reclaim over payments, which it hopes will lead to a rise in sales of its billing software as providers look to rectify billing mistakes.
Revenues for the full year are expected to be around $41 million (£26.1 million) compared with $38.1 million (£24.3 million) last year.
Craneware announced a new multi-million dollar channel partner in February which will guarantee it minimum payments of $7,500,000 (£4.78 million) between now and the end of June 2014.
Craneware said when the minimum period comes to an end, it will continue to license its products to the facilities which have signed up for them on the same revenue terms until multi-year contracts come to an end.
The company also said in February it was making positive progress in a number of potentially large contracts, though none of those contracts had been finalised by the year end.
Chief executive Keith Neilson said: "This has been a mixed trading year for the group; however we are in a stronger position than we have ever been.
“Our sales and opportunity pipeline continues to build, supported by a market that is refocusing on the problems our products can help solve.”
Shares in Craneware wer down more than three per cent in early tyrading today.