Edinburgh software firm Craneware seals bumper £280m takeover to ramp up US presence

Craneware, the Edinburgh-headquartered software firm focused on the US healthcare market, has sealed a $400 million (£283m) takeover and raised millions from investors to help fund the “strategically important” deal.

Chief executive Keith Neilson said the acquisition of Sentry Data Systems would provide “immediate additional scale” to its operations.

The US company, headquartered in Deerfield Beach, Florida, has a customer base of some 10,000 hospitals, pharmacies and clinics, including more than 600 US hospitals – of which only about a third overlap as existing Craneware customers.

The Scots firm pointed to a number of benefits arising from the deal, including the enhancement of its focus on pharmacy operations within healthcare providers and “significant cross-selling opportunities”.

Keith Neilson is the chief executive of Craneware, which is headquartered in Edinburgh. Picture: Neil Hanna

Neilson said: “The acquisition of Sentry will provide immediate additional scale to our operations, expanding our coverage of US hospitals, enhancing our pharmacy offering and cementing Craneware’s position as a leading provider of value cycle solutions to the US healthcare market.

“Sentry’s focus on the hospital link to community pharmacies adds breadth and depth to our healthcare data, providing extra insight into margin improvement opportunities within hospital operations and pharmacy costs in particular. As the second largest cost centre for hospitals after the workforce, this is an important area of focus for hospital management teams, as they seek to deliver greater value in healthcare.

“Sentry’s high levels of recurring revenues, customer retention rates, and strong financial metrics, speak to the quality of the business and the people that deliver their offering and we are excited by the scope of the opportunity ahead.”

The deal is being funded by $312.5m in cash and $87.5m through the issue of shares in the company to the vendor of Sentry.

The cash consideration will be funded from the group’s existing cash resources, a new debt facility of up to $140m and the net proceeds of an equity placing. That placing has successfully raised gross proceeds of about £136.2m.

Founded in 1999, Craneware is headquartered in Edinburgh, with offices in Atlanta and Pittsburgh, employing more than 350 staff.

At the start of March, the firm said it was emerging from the depths of the pandemic with a “strong” sales pipeline for the current financial year and beyond.

The firm reported increased first-half sales and profits and said more than 500 hospitals were now using its Trisus platform. Its core Chargemaster Toolkit and Pharmacy ChargeLink systems are on track to be migrated to Trisus within the next 12 months.

The results for the six months to the end of December showed that revenue was up 6 per cent year-on-year to $38m. Adjusted underlying earnings increased 5 per cent to $13.3m while profit before tax lifted 3 per cent to $9.9m.

Neilson said at the time: “Managing the impact of the Covid-19 pandemic has clearly been the top priority for all healthcare-related organisations over the past year and will continue to be the case for many months to come, providing front-line care while adjusting to new methods of healthcare delivery and ensuring their financial operations can respond.”

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