Acquisition of ClaimTrust
Overview of ClaimTrust:
- ClaimTrust is a SaaS provider with 100 percent of revenues from healthcare providers in the US & Puerto Rico.
- Software delivered via multi-tenant platform hosted in ClaimTrust’s own, scalable data centre in Nashville.
- Over 275 customers with an approximate overlap of 10% with Craneware customer base.
- ClaimTrust reported audited revenues of $8.5 million for financial year ended December 2010 and adjusted EBITDA of $0.9 million.
- Approximately 70 percent of ClaimTrust total revenues for the financial year ended December 2010 are contractually recurring from monthly subscriptions.
- Provides complementary software and services which will be integrated with the Craneware product suite.
- Expected to be earnings enhancing in the first full financial year of ownership by Craneware.
- ClaimTrust’s management team and employees integrating into Craneware structure.
- Opportunity to move new customers of ClaimTrust solutions to Craneware multi-year annuity SaaS revenue model.
- Initial consideration of $9 million in cash and $6 million in Craneware shares.
- Deferred, contingent consideration up to a maximum of $4.5 million payable in cash and shares if ClaimTrust achieves significant revenue and EBITDA growth in the 12 month period ending 30 June 2012.
Information on ClaimTrust
Founded in 1998 with offices in Nashville and Boston, ClaimTrust has developed the InSight Revenue Cycle Solution™, a suite of five software solutions and services targeting the revenue cycle. Complementary to Craneware’s Revenue Integrity Solutions™, ClaimTrust’s offerings improve accuracy of billing and claims in order to ensure that hospitals efficiently collect all of the revenue to which they are entitled. Craneware will continue to invest in and support all ClaimTrust’s product lines and create new products based upon the joint technology of the two companies.
Delivered via ClaimTrust’s data centre in Nashville, the InSight Revenue Cycle Solution software suite is a multi-tenant platform accessed via a web browser and has been developed by ClaimTrust with standard Microsoft development tools, using Microsoft SQL Server. Craneware believes that the technology architecture is robust and scalable for significant organic growth.
Increased product offering
All of ClaimTrust’s products are applicable to the Craneware customer base and target audience. ClaimTrust’s five core products will be integrated within the Craneware product suite, complementing existing Craneware product families, enhancing the user experience and broadening the revenue integrity offering.
The acquisition will provide a new product family for Craneware – Audit and Revenue Recovery. The first product to be rolled out by Craneware to its customer base from this new product family will be Insight Audit™ a tool used by hospitals to manage their Recovery Audit Contractor (RAC) process and appeals for medical claim audits. ClaimTrust developed this tool following its instrumental support of hospitals involved in the demonstration stage of the Medicare Recovery Audit programme, helping these customers win more than twice as many appeals than their peers nationally and avoiding millions of dollars in unnecessary Medicare RAC denials.
With scalability from the rapidly deployed ASP (Application Service Provider) software and limited sales resource currently utilised within ClaimTrust, Craneware believes that by introducing its sales and distribution channels there is an opportunity for growth of sales of the ClaimTrust offerings and the ability to introduce new customers of the ClaimTrust solutions to the more familiar Craneware business model.
Increased market share
Adding 275 hospital clients to the Craneware group, with an approximate overlap of 10% with Craneware’s existing 1000+ hospitals, the acquisition will provide Craneware with further expansion capability for its Revenue Integrity Solutions. With customers that have purchased both companies’ solution sets already benefiting from the use of the products in terms of net patient revenue, efficiency and compliance, it is expected that significant incremental benefits will be found by customers that own a greater percentage of the expanded revenue integrity offering.
The experienced management team and employees of ClaimTrust will be actively involved in the operations of Craneware going forward. Craneware sees this very much as a growth opportunity for both organisations and has structured the terms of the acquisition to encourage active participation in the enlarged company.
The acquisition, via a merger agreement, provides for the purchase of the entire issued and to be issued share capital of ClaimTrust from the vendors for a total consideration (included a deferred compensation component) of up to $19.5 million (subject to working capital adjustments). ClaimTrust, Inc. will be merged into a wholly owned subsidiary of Craneware, Craneware® InSight, Inc. The initial consideration of $9 million in cash and $6 million in shares of the Company (being 641,917 new ordinary shares of 1p each in the capital of the Company (“Ordinary Shares”)) will be payable on completion on the basis of net assets of $1.8 million.
A deferred, contingent consideration of up to $4.5 million in cash and shares is payable if ClaimTrust achieves significant revenue and EBITDA growth in the 12 month period ending 30 June 2012.
The calculations and payment of the deferred, contingent consideration will be made following completion of the audit of ClaimTrust in August 2012.
Application for the 641,917 new Ordinary Shares to be admitted to AIM will be made, in weekly aggregate instalments, following satisfaction by each of the vendors of the necessary regulatory documentation. Upon admission, the Ordinary Shares will rank pari passu in all respects with the existing Ordinary Shares in issue. Following admission of the 641,917 Ordinary Shares, the total number of Ordinary Shares in the Company with voting rights in issue will be 26,606,867.
Joe Ferro, President and CEO of ClaimTrust, commented:”This acquisition allows our two companies to offer the market a broader product range and outstanding customer support. We are looking forward to the increased opportunities this represents for both ClaimTrust and our clients.”
Keith Neilson, CEO of Craneware, added: “The acquisition of ClaimTrust represents an exciting step forward for Craneware by enhancing our product set, increasing our market share and adding to the profitability of the group.
“With the fiscal and regulatory pressures on US hospitals continuing to increase, the addition of ClaimTrust’s powerful set of revenue cycle software tools means we can provide our customers with further means of improving the collection of the revenue to which they are entitled.
“We are delighted to welcome the ClaimTrust team and their customers into the Craneware group and look forward to continuing to deliver a high level of service to our growing customer base.”
For further information, please contact:
- +44 (0) 131 550 3100
- Keith Neilson, CEO
- Craig Preston, CFO
- +44 (0) 20 7418 8900
- Dan Webster
- Richard Kauffer
- +44 (0) 20 7653 9850
- Caroline Evans-Jones
- Fiona Conroy
Founded in 1999, Craneware has headquarters in Edinburgh, Scotland with offices in Atlanta and Arizona, employing over 200 staff. Craneware is the leader in automated revenue integrity solutions that improve financial performance and mitigate risk for healthcare organisations. Craneware’s market-driven, annuity SaaS solutions help hospitals and other healthcare providers more effectively price, charge and code for services and supplies associated with patient care. These optimise reimbursement, increase operational efficiency and minimise compliance risk. By partnering with Craneware.
Founded in 1998 with offices in Nashville and Boston, ClaimTrust has developed InSight Revenue Cycle Solution™, a suite of five software solutions and services targeting the revenue cycle. ClaimTrust employs over 50 people, providing services to over 275 hospitals in the US and Puerto Rico. For further information please visit www.claimtrust.com\.
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