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Trading Update

8 July 2020 – Craneware (AIM: CRW.L), the market leader in Value Cycle solutions for the US healthcare market, provides an update on trading to date for the year ended 30 June 2020.

Our customers have experienced unparalleled challenges since COVID-19 began. The Company would like to pay tribute to the bravery and dedication we have seen from our customers, who have been at the forefront of dealing with this pandemic, selflessly serving their communities.

Trading for the year ended 30 June 2020

In spite of the disruption caused by COVID-19, the Board expects to report Total Revenue for the year of approximately $71.4m (FY19: $71.4m) and adj. EBITDA of approximately $24.5m (FY19: $24.0m). Trading in the first 9 months of the year, prior to the outbreak, had been strong, with Total Sales tracking over 30% above the prior year. The travel restrictions and lockdowns imposed as a result of the outbreak impacted both sales, professional services, project delivery, the completion of renewals and the associated up-sales in the final quarter, resulting in Total Sales for the year being only marginally ahead of the prior year at approximately $65m (FY19: $63.1m). Customer churn in the year remained below 10%, in line with our historic norms.

Throughout the year we have retained our focus on cost control, whilst making sensible investments to deliver on the long-term opportunities available to us. Since the outbreak, the Company has utilised no material support from either the UK or US governments, instead retaining and re-enforcing this rigour on cost-control.

With 40% of the Company’s workforce normally being home-based, the successful transition to homeworking of the remainder of the teams in the US and UK prior to lockdown was achieved swiftly and with no material disruption to either customer service or employee productivity.

Liquidity – Well positioned for future opportunities

We maintain a strong balance sheet with no debt and cash reserves of approx. $47.6m (30 June 2019: $47.6m). In addition, we have undrawn debt facilities of $50m. The Company is well positioned to continue its investment strategy whilst executing on any market opportunities that arise. The Board’s current expectation is to pay a dividend for the year to 30 June 2020, to be announced in September, in line with the Board’s usual practice, and will take into account market conditions at that time.

Outlook

The Company has continued to make progress on its long-term strategic aim to become ubiquitous in US Hospitals, as the intelligence layer sitting across all other systems, delivering the information required to improve financial and operational performance.  The financial challenges hospitals are currently facing, combined with the ongoing transition to value-based reimbursement, means the impact and insights the Trisus platform delivers to our customers are increasingly relevant.  The global pandemic has highlighted the importance of usable financial and operational data and we believe this realisation will drive further investment by hospitals in the future.

While the situation has eased in some areas, many healthcare providers continue to be under considerable pressure and this situation is likely to continue. Our customers continue to take steps to create further resilience across their financial operations and we are committed to partnering with them by providing the tools, regulatory information and data to enable them to do so. The Craneware data team is continuously monitoring guidance regarding billing and coding for COVID-19 testing and treatment and publishing in-depth regulatory bulletins, available to both customers and non-customers. Our free-to-attend COVID-19 webinars have had record levels of attendees, demonstrating the need across the market for this insight and guidance.

The Company continues to benefit from high levels of recurring revenue, accounting for approximately 85% of revenues in any year. We enter the new financial year with an annuity revenue base of over $65m. We continue to have sales discussions with hospitals across the US and are cautiously optimistic we are seeing the first signs of sales cycles slowly normalising; however, we remain cognisant of the ongoing macro uncertainties.

We believe both the Company and our customer base are strongly placed to deal with the future impacts of this pandemic and for our products to be part of the solution in terms of helping hospital preparedness.

Keith Neilson, CEO of Craneware plc, commented,

Many areas of the US through the last three months have faced a rising death toll. Our customers have had their business operations repurposed and completely disrupted to maximise capacity to deal with anticipated demand for emergency services. In addition to the clinical challenges, they have had to meet the reality of declining hospital revenues due to the deferral of elective procedures through the period which is only now starting to show signs of recovery towards normal run rates.

“This pandemic has had a personal toll on many within the healthcare industry and the wider community, however we have been inspired during this period as we have seen the best of human nature and are proud of our team’s effort to support our customers; strengthening the relationship between hospital provider organisations and Craneware on both an individual and corporate level.

“We believe the Trisus platform differentiates us from other healthcare solutions vendors, providing substantial benefits for our customers with the ability to meaningfully impact their healthcare operations. This, as we have demonstrated, can deliver substantial improvements to the financial effectiveness of US hospitals and provides an opportunity for significant future growth for Craneware.

“As we close our financial year, we continue to look to the future with high levels of optimism in the resilience of the Company, our team and that of our customer base.”

For further information, please contact:

Craneware plc
Keith Neilson, CEO / Craig Preston, CFO
+44 (0)131 550 3100
Peel Hunt (NOMAD and Joint Broker)
Dan Webster / George Sellar / Andrew Clark
+44 (0)20 7418 8900
Investec Bank (Joint Broker)
Patrick Robb / Sebastian Lawrence / Henry Reast
+44 (0)20 7597 5970
Alma (Financial PR)
Caroline Forde / Robyn Fisher / Helena Bogle
+44 (0)203 405 0205

About Craneware

Craneware (AIM: CRW.L), the leader in automated value cycle solutions, collaborates with U.S. healthcare providers to plan, execute and monitor value-based economic performance. Founded in 1999, Craneware is headquartered in Edinburgh, Scotland with offices in Atlanta and Pittsburgh employing over 350 staff. Craneware’s value cycle management suite includes charge capture, strategic pricing, patient engagement, claims analytics, revenue recovery and retention, and cost and margin intelligence solutions.

Learn more at www.craneware.com