Craneware: AI and US healthcare spending trends fuel growth

As we recently filtered through our earnings season winners and losers, it quickly became clear that one of our long-term positions has sprung back to life.

With earnings momentum starting to build again, we believe Craneware is set to bounce back in a big way in 2024.

Optimal pricing, streamlined pharmacy, and expert administration

Craneware specialises in healthcare software solutions, aiding organisations in managing finances and operations efficiently. Their product suite includes:

• Pricing and revenue solutions:

Products such as Trisus Pricing Transparency helps organisations meet regulatory requirements and provides valuable analytics to monitor market dynamics. And Trisus Pricing Analyzer simplifies and automates the price-modelling process, allowing organisations to assess the potential impact of pricing changes.

• Pharmacy solutions:

Craneware’s pharmacy solutions collectively streamline pharmacy operations, ensure regulatory compliance, and optimise benefits from the 340B program – a pricing which allows US hospitals and clinics that treat low-income and uninsured patients.

• Other solutions:

Craneware’s other solutions include; Professional Services which offer expertise in value cycle solutions, Appeal Services which provide experienced staff to review and overturn denials, and InSight Audit a powerful application facilitating streamlined audit reporting.

Confluence of two crucial trends

Craneware finds itself uniquely positioned at the intersection of two pivotal trends: the unrelenting rise of AI and the escalating spending within the US healthcare sector.

Craneware strategically applies AI to the intricate administrative challenges which occur in the US healthcare system. In the context of the surging spending within the US healthcare sector, Craneware’s role becomes even more crucial. The company specialises in providing tools and solutions that allow healthcare providers to make cost-effective decisions, directly addressing the need for financial efficiency.

As the Centers for Medicare and Medicaid Services predict a continuous increase in health spending as a share of GDP, Craneware is a key player. The company’s focus on reducing operational strains, wage inflation, and personnel shortages aligns seamlessly with the challenges contributing to the mounting healthcare spending in the US.

Craneware’s relevance is further emphasised as discussions often gravitate towards clinical “digital transformation” and the potential applications of AI in healthcare. Amidst these conversations, Craneware remains uniquely positioned to address the often-overlooked aspect of reducing the $1 trillion overall administrative burden on the US healthcare system.

By bridging the gap between AI advancements and the pressing need to control and manage healthcare spending, Craneware plays a pivotal role in shaping the future of efficient and financially sustainable healthcare administration.

Bullish momentum backed by strong trading update

Craneware’s share valuation reflects a forward Price-to-Earnings (PE) ratio of 28.4, indicating a premium in the market. However, this valuation appears well-justified by the company’s strong fundamentals…

Craneware’s trading update reinforced its financial strength, revealing a reduction in total bank debt to $59.2 million and substantial cash reserves of $63.9 million. The decision to extend the share buyback program until April 17^th 2024, indicates confidence from the Board in the company’s financial health and growth prospects.

Craneware anticipates a return to double-digit growth rates in the near term, driven by its solid ARR foundation, diverse solutions in the Trisus platform, and substantial data flow. Overall, the combination of robust financials, positive trading results, and strategic positioning aligns with the upward momentum in Craneware’s share price.