The Volpara Health Technologies Ltd (ASX: VHT) share price was trading as much as 4% higher today. For comparison, the S&P/ASX 200 (INDEXASX: XJO) closed the day 1.35% lower. Here’s why Volpara bucked the trend.
About Volpara Health Technologies Ltd
Volpara describes itself as a ‘MedTech Software as a Service’ company that was founded in 2009 on research conducted at Oxford University.
Volpara’s software is used for screening clinics to provide feedback on breast density, compression, dose and quality.
The company’s VolparaEnterprise business provides role-specific dashboards and wide-ranging benchmarking analytics to help clinics manage their business more efficiently.
What’s Happened?
This morning, Volpara released its Q3 FY20 quarterly cash flow report. Highlights include:
- Cash receipts from customers NZ$4.5 million — up 138% compared to Q3 FY19
- NZ$35.4 million cash on hand at the end of Q3 FY20
- Annual recurring revenue (ARR) of $16.8 million at the end of Q3 FY20
In this update, the company stated its Q3 figures reflect another strong quarter in the wake of last year’s acquisition of MRS in the key US market as more customers take advantage of Volpara’s enhanced product suite and adopt a SaaS model.
Operating costs continue to run at budget and the company continues to hold no debt.
Q3 FY20 was Volpara’s second biggest quarter ever for net ARR growth, only exceeded by Q4 FY19.
FY20 Outlook
As a result of the strong Q3 results, Volpara advised it will meet and expects to exceed its midpoint guidance for FY20 ARR guidance of NZ$17.1 million — this target has now been increased to ‘at least’ NZ$17.8 million.
Management Commentary
Commenting on the results, Volpara CEO Dr Ralph Highnam said, “I’m particularly pleased we’re starting now to see the combined SaaS orders coming in and the process underway to encourage MRS’s legacy installed base to move from their old service and maintenance agreements onto SaaS.
Dr Highnam also highlighted the recent publication of the DENSE trial results in the New England Journal of Medicine, saying, “Trials like DENSE, using VolparaDensity, provide the evidence that global screening programs need to change”.
What Now?
According to management, Volpara remains on track to get close to its mid-range forecast of 27% of US women who undergo screening having a Volpara group product applied on their images and data.
The average revenue per unit (ARPU) generated by women under contract across the company within breast cancer operations is currently approximately NZ$1.57, up ~5% from NZ$1.49 at the end of Q2 FY20.
Are Volpara Shares Expensive?
Volpara shares closed the day 2.75% higher, with shares last trading at $1.87.
How do you value an investment? What does your process look like? Do you really understand what you’re investing in and why?
You should know, we’ve just asked our expert analysts to put together a FREE valuation course and make them available to investors like you, for a limited time.
Complete with downloadable Excel models, templates and valuation tools, simply click here to access the course.
It’s completely free!
