Craneware : Interim Report H1 2023

Craneware plc

("Craneware" or the "Company" or the "Group")

Interim Results

06 March 2023 - Craneware (AIM: CRW.L), the market leader in Value Cycle solutions for the US healthcare market, is pleased to announce its unaudited results for the six months ended 31 December 2022 (H1 FY23).

Financial Highlights (US dollars)

• Revenues for the six months increased 6% to $84.7m (H1 FY22: $80.2m)
• Adjusted EBITDA1 increased 8% to $25.5m (H1 FY22: $23.7m)
• Adjusted profit before tax2 of $15.7m (H1 FY22: $17.1m)
• Profit before tax of $5.2m (H1 FY22: $6.2m)
• Adjusted Basic EPS of 41.0 cents per share (H1 FY22: 43.5 cents per share), reflecting the impact of increased interest rates
• Annual Recurring Revenue3 of $166.4m, demonstrating the Group's continued high levels of contracted revenue visibility
• Cash reserves of $38.6m (H1 FY22: $41.7m)
• Total Bank Debt of $107.9m (H1 FY22: $114.6m)
• Interim dividend of 12.5p (15.13 cents) per ordinary share (FY22 Interim dividend 12.5p)

1. Adjusted EBITDA refers to earnings before interest, tax, depreciation, amortisation, share based payments and acquisition and share transaction related costs
2. Adjusted profit before tax refers to profit before tax, amortisation of acquired intangibles and acquisition and share transaction related costs
3. Annual Recurring Revenue includes the annual value of licence and related recurring revenues including transaction revenues as at

1. December 2022 that are subject to underlying contracts and where revenue is being recognised at the reporting date

Operational Highlights

• Trisus Chargemaster ranked first in the "2023 Best In KLAS Awards: Software & Services" for the 13th year, underlining Craneware's long-standing position as industry leaders
• The migration of customers onto cloud based Trisus platform has been a primary focus in the period and is now largely complete
• Customer retention strong, at above 90% in the period
• Continued expansion and cross-sales, including to both small rural facilities and multi-site medical systems
• Continued investment in R&D and innovation to capitalise on growing market opportunity
• Appointment of Group CTO and an additional Non-executive Director, bringing further US healthcare market insight
• Craneware customers have seen in excess of $0.5 billion benefit from utilising our solutions in the period, helping to stretch scarce healthcare resources as far as possible

Outlook

• Building blocks in place for growth acceleration as the current pressures within the US healthcare market abate
• We are confident in delivering results for the year in line with current consensus and look to the future with confidence

Keith Neilson, CEO of Craneware plc, commented,

"We remain acutely conscious of the ongoing challenges faced by our customers and partners, in particular the impact of inflationary pressures and staffing shortages. The pressures they are experiencing strengthens our

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commitment to providing the tools to more accurately manage their operations and finances, as we seek to transform the business of US healthcare together.

"We are financially strong, with healthy cash reserves and a solid foundation of Annual Recurring Revenue. This, combined with our market leading solutions, breadth of customer base, the scale of data flowing through our platform and the industry drive to achieve better value in healthcare, means we remain confident in our ability to deliver acceleration in our growth rates as the current pressures within the US healthcare market abate."

For further information, please contact:

About Craneware

We at The Craneware Group of companies, including our latest additions Sentry Data Systems and Agilum Healthcare Intelligence, passionately believe we can impact healthcare profoundly by delivering the insights healthcare organisations need to also transform the business of healthcare. Our shared vision is to be the operational and financial partner for US healthcare providers.

Our combined suite of applications and industry-leading team of experts help our customers contextualise 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.

Together, approximately 40% of registered US hospitals are now our customers, including more than 12,000 US hospitals, health systems and affiliated retail pharmacies and clinics. Our customers are operating with a financial impact of nearly half a trillion dollars. We have data sets from customers covering more than 165 million unique patients encounters.

Learn more atwww.thecranewaregroup.com

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Chair's Statement

I am pleased to report on a period of continued progress, against continuing difficult market conditions for our customers. The Group has delivered a solid financial performance in line with the Board's expectations for the period, although these results have yet to highlight our true potential as we deliver on the considerable market opportunity for the Group.

US hospitals continue to face a range of macro pressures as they build back post pandemic, primarily salary and supplies cost inflation. These factors are combining to put pressure on hospital margins, impacting their delivery of care. Against this backdrop, the underlying need for our software solutions only continues to grow, as our focus on transforming the business of healthcare will be key to our customers navigating these external market pressures.

Steady, profitable growth

Group Revenues in H1 FY23 increased by 6% to $84.7m (H1 FY22: $80.2m) and adjusted EBITDA by 8% to

$25.5m (H1 FY22: $23.7m). Software revenue and customer retention continues to be healthy across the Group's offerings, resulting in Annual Recurring Revenue ("ARR") at H1 FY23 of $166.4m, demonstrating the Group's continued high levels of contracted revenue visibility.

Importantly, customer retention rates remain high, at above 90% across the Group, reflecting the central role our software plays in the optimised financial and operational performance of our customers.

The Group closed the period with cash reserves of $38.6m (H1 FY22: $41.7m), and total Bank Debt of $107.9m

(H1 FY22: $114.6m), providing a solid basis for the continued execution of our growth strategy. These amounts

are after the return of $6.6m (H1 FY22: $7.2m) to shareholders through dividends, the investment in R&D of

$22.7m (H1 FY22: $21.6m), debt repayment and interest of $6.8m (H1 FY22: $5.3m).

A valuable position from which to build

With approximately 40% of registered US hospitals as Craneware customers, including more than 12,000 US hospitals, health systems, affiliated retail pharmacies and clinics, and data sets covering more than 165 million unique patients encounters, we hold an enviable central position within the US healthcare industry. Looking ahead, we will continue to seek ways to extend our Trisus platform, through product development, partnerships and M&A.

We were delighted to welcome a new Non-executive Director to the Board in November, Anne McCune. Anne is a recognised leader in the US Healthcare industry, having served as a senior executive for several leading academic hospital and physician centres and as a managing director in consulting firms. Anne is currently a Community Board member of the Strategy and Transformation committee at Salinas Valley Memorial Healthcare System in California.

While healthcare providers, both globally and in the US, continue to face many challenges, building back post pandemic and coping with inflationary pressures, the long-term drivers for the need of Craneware's software continue to strengthen. Through the increased financial and operational insight our offerings provide to our customers, we are well placed to support them through these difficult times and ultimately deliver on our growth ambitions.

The Group remains financially strong, benefitting from high operating margins, a strong balance sheet, and with a robust base of recurring revenue. We are confident in delivering results for the year in line with current market consensus and look to the future with confidence.

Will Whitehorn

Chair

6 March 2023

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Strategic Report

We are pleased to report on a solid performance during the first half, in which we have navigated a challenging macroeconomic environment, delivering growth in both revenue and EBITDA. Software revenues remain healthy, and we have seen almost universal adoption of Trisus, our cloud-based platform, within our customer base, despite our end market suffering the ongoing effects of inflationary pressures.

In the near term we expect the percentage of revenue that is derived from software to increase from its historical norm of 80-85% (approximately 92% in the period). We do not expect the uptake of the Group's professional services to return, as a percentage of revenue, to previous levels in the short-term as healthcare providers attempt to control inflation through reduction in contracted labour. While, we do expect that levels of professional services revenue will increase in the mid to long term, the stronger software revenue growth, will continue to positively impact the overall revenue mix, resulting in ARR growth and further predictable revenue visibility.

While professional services revenue not returning to pre-pandemic levels has impacted the full year revenue expectations of the Group, as previously announced, we see a growing market opportunity, with the need for Craneware products greater than ever.

Our products continue to deliver outstanding levels of return on investment (ROI) for our customers, and we were delighted to announce in February that Trisus Chargemaster, one of our core offerings, has once again ranked first in its category of the "2023 Best In KLAS Awards: Software & Services". These awards highlight the top-performing healthcare IT solutions, as determined by extensive evaluations and conversations with thousands of healthcare providers. This marks the 13th year our solution has achieved the top ranking, more than any other vendor in our space, underlining our long-standing position as industry leaders.

We continue to enhance our product set, transition customers to the cloud and find new ways to provide our customers with means to protect their margins, so that they can deliver on their healthcare missions. The migration of our customers onto Trisus has been a primary focus in the period and is now effectively complete. With almost all customers on the platform, we are well-placedto identify further areas in which our Trisus applications can help hospitals protect their margins, to ensure they have the financial strength to continue to deliver on their healthcare mission.

We would like to take this opportunity to thank all our employees and customers for their continued hard work amidst a difficult trading environment. We continue to see a significant market opportunity for Craneware and the Board is confident of ongoing future success.

A complex and evolving market

The same financial pressures being felt around the world have likewise hindered the recovery of the US healthcare market post the COVID pandemic; reduced patient volumes; shortage of staff; wage, medications and supplies inflation have all weighed heavily on hospital margins.

While this backdrop means that our customers are currently reducing their use of contracted labour and therefore are not currently in position to fully benefit from our consultancy support, the need for accurate financial data, supporting analytics and the insights those analytics can bring, along with the efficiency of our technology solutions, has never been more important.

Our products and systems, which are built on the insights of our data, enhance efficiency and help ensure that both operational and administrative functions of a hospital are working optimally, enabling the existing teams to be more effective and efficient in their roles. Through these insights our solutions deliver real financial returns and free up resource with a more targeted approach, that can be re-invested and re-deployed by healthcare providers to support the clinical care for their communities.

As an example, in a recent sample of hospitals ranging in size from 200 - 3,000 patient beds, it was found that Trisus Supply, one of our applications which assists hospitals in the efficient purchasing of supplies, saved a lifetime potential gross total impact of over $8m per hospital, representing a lifetime ROI over 9:1. In just 12 months, 75% of these hospitals had each identified over $1m of potential gross total impact - funds which could be reinvested back into the delivery of care.

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