First-half revenue up 7% to £13.2m and profits up 18% to £2.96m
Medical billing software developer Craneware is reporting a seven per cent rise in revenue and 18 per cent rise in pre-tax profits for the first half of the financial year.
The company, which has offices in Edinburgh and Livingston but sells all of its software products to the American healthcare market, said sales for the six months to December 31 were $20.1 million (£13.2 million), up from $18.8 million (£12.4 million) the previous year.
Revenues matched those forecast by Craneware in January, though pre-tax profits exceeded the 15 per cent rise forecast at £2.9 million.
Pre-tax profits rose to $4.5 million (£2.96 million) against $3.8 million (£2.5 million) reported for the first half of 2012.
Adjusted earnings were up 15 per cent year on year to $5.4 million (£3.55 million).
Closing cash balance at the end of the first half was up $5 million on the previous year to $28.6 million (£18.8 million).
Earnings per share rose 18 per cent in the first half to 13.2 cents (8.6 pence), and the company is proposing an interim dividend of 5.2 pence (7.8 cents).
Craneware chief executive Keith Neilson said: “This has been a positive trading period for Craneware.
“Sales activity is ahead of the same period last year and is now starting to translate into revenue growth.
“The relevance of our product set continues to strengthen in the evolving healthcare landscape with the developments within the US healthcare market supportive of the group’s long-term strategy and growth.”
Craneware said cost savings and efficiencies introduced to curb US Medicare spending to the government's cap of one per cent of GDP has led to the US healthcare market “beginning to embrace the changes forced upon it, seeking means to control costs while maintaining high levels of patient care”.
A possible extension from 2014 onwards of the look-back for the Recovery Audit Contractors from three to five years for hospital audits is expected to have “a direct positive impact on Craneware’s market”.
Craneware chairman George Elliott added: “We believe the disruption to our market caused by the focus on Electronic Health Records incentive payments has largely dissipated, freeing up hospital resource to focus on other areas of technology investment.
“This, combined with the ongoing focus of our sales operation, has had a positive effect on sales activity and execution.”
Craneware said its InSight Audit subsidiary, which it acquired in February 2011 in a £12 million deal, “has the potential to be a gatekeeper product similar to Chargemaster Toolkit and Pharmacy ChargeLink, providing an additional entry point to new customers”.
In January of 2012, Craneware saw its share price drop by more than 30 per cent following a negative trading update related to the InSight subisdiary.
This related to a third party contract administrator working for InSight losing a contract with a network of hospitals, which Craneware went on to renegotiate through new administrator agents.
Last year Craneware reported strong sales and profit growth for the year to June 2012, with turnover up eight per cent to £25.8 million and adjusted pre-tax profits up 29 per cent to £7.05million.
Craneware also announced in last year's year-end results it had extended its market reach in the US healthcare market through two “significant” deals, one providing entry into the federal and state healthcare market and the other taking Craneware’s software into a non-competitive parallel market.
In August 2012 Craneware secured US federal agency certification for its software to allow electronic submission of medical records to auditors.
Craneware was founded in 1999 and currently employs around 220 people across its two Scottish offices and in four in the US.