As highlighted in our results preview comment at the end of June, Craneware, the provider of revenue integrity solutions for US healthcare, is under the cosh as it has not been able to sign a big deal with a US healthcare major. Nevertheless, due to increasing sales to smaller units and a continued high rate of contract renewals, revenue did increase, albeit by 1% to $41.5m and EBITDA was up 4% to $12.4m.
The US healthcare market is beset by additional financial scrutiny and the need for better cash and cost management. This is good for Craneware, but the formation of larger buying groups and a host of regulatory changes are extending buying cycles and placing even more importance on success with big and complex purchasers. This is where Craneware is concentrating its efforts and re-organising its sales approach. The addition of two new senior management roles, (CMO and an Operations Head), a non-Exec with clout in the sector and another foray into M&A are also intended to address the problems.
With SaaS revenues accounting for over 75% of the Group total, Craneware’s measure of forward recurring revenue shows a few percentage points of growth, but the group’s fortunes are largely dependent on success with the big customers. The timing of this will remain difficult to predict.