TIDMCRW
RNS Number : 4559B
Craneware plc
18 February 2011
Craneware plc
("Craneware" or the "Company")
Acquisition of ClaimTrust
18 February 2011 - Craneware (AIM: CRW.L; OTC: CRWRY), the
market leader in automated revenue integrity solutions for the US
healthcare market, today announces the acquisition of ClaimTrust,
Inc., a Software-as-a-Service ("SaaS") revenue cycle technology
solutions provider for an initial consideration of $15 million and
a maximum total consideration of $19.5 million, subject to certain
performance criteria and working capital adjustments. Craneware
believes the acquisition, which is its first, will broaden and
strengthen its product offering and be earnings enhancing in the
first full financial year of ownership.
Overview of ClaimTrust:
-- ClaimTrust is a SaaS provider with 100 percent of revenues
from healthcare providers in the US & Puerto Rico.
-- Software delivered via multi-tenant platform hosted in
ClaimTrust's own, scalable data centre in Nashville.
-- Over 275 customers with an approximate overlap of 10% with
Craneware customer base.
-- ClaimTrust reported audited revenues of $8.5 million for
financial year ended December 2010 and adjusted EBITDA of $0.9
million.
-- Approximately 70 percent of ClaimTrust total revenues for the
financial year ended December 2010 are contractually recurring from
monthly subscriptions.
The Acquisition:
-- Provides complementary software and services which will be
integrated with the Craneware product suite.
-- Expected to be earnings enhancing in the first full financial
year of ownership by Craneware.
-- ClaimTrust's management team and employees integrating into
Craneware structure.
-- Opportunity to move new customers of ClaimTrust solutions to
Craneware multi-year annuity SaaS revenue model.
-- Initial consideration of $9 million in cash and $6 million in
Craneware shares.
-- Deferred, contingent consideration up to a maximum of $4.5
million payable in cash and shares if ClaimTrust achieves
significant revenue and EBITDA growth in the 12 month period ending
30 June 2012.
Information on ClaimTrust
Founded in 1998 with offices in Nashville and Boston, ClaimTrust
has developed the InSight Revenue Cycle Solution(TM), a suite of
five software solutions and services targeting the revenue cycle.
Complementary to Craneware's Revenue Integrity Solutions(TM),
ClaimTrust's offerings improve accuracy of billing and claims in
order to ensure that hospitals efficiently collect all of the
revenue to which they are entitled. Craneware will continue to
invest in and support all ClaimTrust's product lines and create new
products based upon the joint technology of the two companies.
Delivered via ClaimTrust's data centre in Nashville, the InSight
Revenue Cycle Solution software suite is a multi-tenant platform
accessed via a web browser and has been developed by ClaimTrust
with standard Microsoft development tools, using Microsoft SQL
Server. Craneware believes that the technology architecture is
robust and scalable for significant organic growth.
Acquisition Rationale
Increased product offering
All of ClaimTrust's products are applicable to the Craneware
customer base and target audience. ClaimTrust's five core products
will be integrated within the Craneware product suite,
complementing existing Craneware product families, enhancing the
user experience and broadening the revenue integrity offering.
The acquisition will provide a new product family for Craneware
- Audit and Revenue Recovery. The first product to be rolled out by
Craneware to its customer base from this new product family will be
Insight Audit(TM) a tool used by hospitals to manage their Recovery
Audit Contractor (RAC) process and appeals for medical claim
audits. ClaimTrust developed this tool following its instrumental
support of hospitals involved in the demonstration stage of the
Medicare Recovery Audit programme, helping these customers win more
than twice as many appeals than their peers nationally and avoiding
millions of dollars in unnecessary Medicare RAC denials.
With scalability from the rapidly deployed ASP (Application
Service Provider) software and limited sales resource currently
utilised within ClaimTrust, Craneware believes that by introducing
its sales and distribution channels there is an opportunity for
growth of sales of the ClaimTrust offerings and the ability to
introduce new customers of the ClaimTrust solutions to the more
familiar Craneware business model.
Increased market share
Adding 275 hospital clients to the Craneware group, with an
approximate overlap of 10% with Craneware's existing 1000+
hospitals, the acquisition will provide Craneware with further
expansion capability for its Revenue Integrity Solutions. With
customers that have purchased both companies' solution sets already
benefiting from the use of the products in terms of net patient
revenue, efficiency and compliance, it is expected that significant
incremental benefits will be found by customers that own a greater
percentage of the expanded revenue integrity offering.
Specialist knowledge
The experienced management team and employees of ClaimTrust will
be actively involved in the operations of Craneware going forward.
Craneware sees this very much as a growth opportunity for both
organisations and has structured the terms of the acquisition to
encourage active participation in the enlarged company.
Consideration
The acquisition, via a merger agreement, provides for the
purchase of the entire issued and to be issued share capital of
ClaimTrust from the vendors for a total consideration (included a
deferred compensation component) of up to $19.5 million (subject to
working capital adjustments). ClaimTrust, Inc. will be merged into
a wholly owned subsidiary of Craneware, Craneware(R) InSight, Inc.
The initial consideration of $9 million in cash and $6 million in
shares of the Company (being 641,917 new ordinary shares of 1p each
in the capital of the Company ("Ordinary Shares")) will be payable
on completion on the basis of net assets of $1.8 million.
A deferred, contingent consideration of up to $4.5 million in
cash and shares is payable if ClaimTrust achieves significant
revenue and EBITDA growth in the 12 month period ending 30 June
2012.
The calculations and payment of the deferred, contingent
consideration will be made following completion of the audit of
ClaimTrust in August 2012.
Application for the 641,917 new Ordinary Shares to be admitted
to AIM will be made, in weekly aggregate instalments, following
satisfaction by each of the vendors of the necessary regulatory
documentation. Upon admission, the Ordinary Shares will rank pari
passu in all respects with the existing Ordinary Shares in issue.
Following admission of the 641,917 Ordinary Shares, the total
number of Ordinary Shares in the Company with voting rights in
issue will be 26,606,867.
Joe Ferro, President and CEO of ClaimTrust, commented:"This
acquisition allows our two companies to offer the market a broader
product range and outstanding customer support. We are looking
forward to the increased opportunities this represents for both
ClaimTrust and our clients."
Keith Neilson, CEO of Craneware, added: "The acquisition of
ClaimTrust represents an exciting step forward for Craneware by
enhancing our product set, increasing our market share and adding
to the profitability of the group.
"With the fiscal and regulatory pressures on US hospitals
continuing to increase, the addition of ClaimTrust's powerful set
of revenue cycle software tools means we can provide our customers
with further means of improving the collection of the revenue to
which they are entitled.
"We are delighted to welcome the ClaimTrust team and their
customers into the Craneware group and look forward to continuing
to deliver a high level of service to our growing customer
base."
For further information, please contact:
Craneware plc Peel Hunt Threadneedle Communications
+44 (0)131 550 +44 (0)20 7418
3100 8900 +44 (0)20 7653 9850
Keith Neilson, Dan Webster Caroline Evans-Jones
CEO
Craig Preston, Richard Kauffer Fiona Conroy
CFO
About Craneware
Founded in 1999, Craneware has headquarters in Edinburgh,
Scotland with offices in Atlanta and Arizona, employing over 150
staff. Craneware is the leader in automated revenue integrity
solutions that improve financial performance and mitigate risk for
healthcare organisations. Craneware's market-driven, annuity SaaS
solutions help hospitals and other healthcare providers more
effectively price, charge and code for services and supplies
associated with patient care. These optimise reimbursement,
increase operational efficiency and minimise compliance risk. By
partnering with Craneware, clients achieve the visibility required
to identify, address and prevent revenue leakage. To learn more,
visit craneware.com & www.stoptheleakage.com.
About ClaimTrust
Founded in 1998 with offices in Nashville and Boston, ClaimTrust
has developed InSight Revenue Cycle Solution(TM), a suite of five
software solutions and services targeting the revenue cycle.
ClaimTrust employs over 50 people, providing services to over 275
hospitals in the US and Puerto Rico. For further information please
visit www,claimtrust.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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