Software of Excellence reaps UK dividends

By ADAM GIFFORD

Listed dental practice management software developer Software of Excellence International says its £783,500 ($2.25 million) purchase of British competitor Advanced Healthcare Group is paying already through strong maintenance revenue flows.

Chief executive Paul Weatherley said the company spent about $700,000 to restructure Advanced Healthcare and integrate it into Software of Excellence's British operations.

It was now bringing in $650,000 a quarter in maintenance revenues for a modest increase in operating expenses.

The news caused an immediate boost in the company's share price from a 52-week low of 75c to trade at about $1.22 yesterday.

The strengthening of the New Zealand dollar between the time the purchase was announced in October and settlement in February meant Software of Excellence paid just $736,067 in cash for Advanced Healthcare, with the rest in shares and notes.

Advanced Healthcare was bought because of its strength in practices which are part of the National Health System. Software of Excellence's Exact software is more popular among independent dental practices.

"Sales of Advance Healthcare's software have gone up a bit because of the consolidation of the market, and we have also stopped discounting, which they were doing because they were fourth in the market, so when renewals come back we are charging more," Weatherley said.

The company's recurring revenue was now close to $2 million a quarter, meaning it should be close to half of total revenues. It made a $192,000 loss last year on revenues of $13.7 million. Revenue for the year to March should be about $16 million.

Weatherley said it was also meeting its targets in the United States, with more than 1250 end-user licences either sold or in the process of being installed.

The dental school at the University of California, Los Angeles, was now live, and another key customer, HealthPartners, had committed to rolling out the system to its 16 offices and 350 dentists.