Craneware benefits from sustained hospital demand

Management at Craneware (CRW), the Aim-traded healthcare software group, attributed its first-half growth to hospitals' renewed focus on their strategic priorities. Though it’s headquartered in Scotland, the company makes all of its sales in the US, where it says customers are “consistently being asked to do more, with less, while improving patient care”.

There are a number of financial and operational challenges currently facing the sector, including the increased costs of both prescription medications and staff wages, as well as an ongoing shortage of healthcare professionals. However, these are ultimately beneficial for Craneware, which makes software that helps hospitals keep track of their finances.

In addition to its improving sales performance, the company saw its adjusted Ebitda increase by 8 per cent to $27.5mn (£21.7mn) in the first half of FY 24. Customer retention also remained above 90 per cent in the period, while bank debt reduced by nearly half compared to the same time last year. 

Perhaps the most encouraging piece of news is that Craneware’s partner programme – which allows third-party applications to sit on its Trisus platform – contributed 6 per cent of revenue, or roughly $6mn. This is a significant increase on the $1mn it yielded in the second half of FY 23 and shows that momentum is building behind the new business model.

Though shares now trade at more than 30 times projected full-year earnings, we’d argue that there’s scope for continued share price growth as the company’s footprint expands. We’ll stick with our buy rating.

Last IC view: Buy, 1,452p, 5 September 2023