A lot has been made of the apparent dearth of world class tech stocks in the UK markets. I would argue one can be found located in Edinburgh, and its shares are down nearly 50% from recent all time highs, while the company itself is at an intriguing crossroads.

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Craneware (LON:CRW) was founded in May 1999 by Keith Neilson (who remains group CEO) and Gordon Craig (who retains a 6.6% stake in the company). Chairman Will Whitehorn gives a glimpse of the group’s mission statement in the 2021 Annual Report:

I am proud of the impact Craneware has made in helping our US healthcare customers improve operational efficiency and margins so that they can continue to invest in providing quality care for their communities. Our contribution and continued success are made possible through the efforts of our dedicated and talented employees who work to push Craneware closer towards the long-term ambition of being the pre-eminent company in improving US healthcare.

The group wants to impact healthcare profoundly by delivering data-led insights. Its first software product provided proprietary revenue cycle management and it retains a strong position here, but has also branched out into other areas of this large market.

Our combined suite of applications and industry-leading team of experts help our customers contextualize operational, financial, and clinical data, providing insights that clearly demonstrate what great looks like. These value cycle insights deliver revenue integrity and 340B compliance, as well as margin and operational intelligence - something no other single partner can provide.

The group has steadily grown revenue over the past ten years from $41.1m in FY12 to $75.6m in FY21. This is a profitable, cash generative software-as-a-service (SaaS) company, with multi-year recurring revenue contracts that provide management with the visibility to confidently invest in growth projects and new product development.

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What the above graph doesn’t reflect, however, is the material acquisition of Sentry Data Systems made in FY21. This is a transformational development, significantly increasing the scale of the enterprise and expanding its longer term growth potential. It means now is a particularly interesting time to revisit the investment opportunity.

Craneware generated more revenue in the first half of FY22 ($80.2m) than it did in the entirety of FY21, and three-year revenue visibility has increased from c$200m to some $471m. Switching over to…

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