The US healthcare market is a key area for technology company Craneware (CRW), which sells payment processing and risk assessment programmes to hospitals. So it's reassuring that the company's half-year results showed signs that the indirect disruption caused by the US debate over healthcare reform has started to dissipate, with revenue growth returning towards the end of the half, as hospitals change their IT priorities towards updating their payment software.
Chief executive Keith Neilson notes a "more settled" trading environment and sees visible revenues for the full year of $39.7m (£26m), compared with $33.4m last time. Up to 90 per cent of Craneware's revenues are subscription-based and have low levels of customer churn, giving the company very high sales visibility up until 2015. Higher renewal rates and additional product sales have started to flow through and projected revenues in the three years to 30 June 2015 have grown by 3 per cent to $112m.
The improvement in first half profitability resulted mainly from tight cost control, which helped cash profit margins improve by two percentage points to 26.8 per cent. Mr Neilson said there has been a clear change in the hospital market now that the debate over the future of the "Obamacare" reforms had been ended by the president's victory in the November elections.
Broker Peel Hunt forecasts full-year adjusted EPS of 34.8¢ (from 31.9¢ in 2012), rising to 42.2¢ in 2013-14.
CRANEWARE (CRW) | ||||
|---|---|---|---|---|
| ORD PRICE: | 395p | MARKET VALUE: | £104m | |
| TOUCH: | 390-400p | 12-MONTH HIGH: | 485p | LOW: 255p |
| DIVIDEND YIELD: | 2.8% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 142¢* | NET CASH: | $28.6m | |
| Half-year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 18.7 | 3.82 | 10.2 | 4.8 |
| 2012 | 20.1 | 4.51 | 12.1 | 5.2 |
| % change | +7 | +18 | +19 | +8 |
Ex-div: 13 Mar Payment: 12 Apr *Includes intangible assets of $15.5m, or 57¢ a share £1=$1.52 | ||||
