The Volpara Health Technologies Ltd (ASX: VHT) share price could rise today after an impressive FY21 third quarter update.
Volpara’s software is used for screening clinics to provide feedback on breast density, compression, dose and quality. Its enterprise-wide practice management software helps with productivity, compliance, reimbursement and patient tracking.
FY21 Q3 update
The healthcare ASX share announced its best ever third quarter sales performance. Annual recurring revenue (ARR) rose by 20% to NZ$20.7 million, driven by an increasing demand for the Volpara breast health platform.
The average revenue per user (ARPU) went up 5% from the FY21 second quarter to US$1.22. ARPU for deals ranged from US$1.43 for a single product to US$5.12 for multi-product bundles, with some smaller volume deals above that range.
Volpara said that its customer churn remains low and US coverage remains at approximately 27%.
Volpara said that it received strong quarterly cash receipts from customers of NZ$4.6 million despite COVID-19 and the weaker US dollar. This was up 2%. Cash receipts for the nine months to December 2020 were up 20%.
The company received its first payment from the partnership with a genetics company.
Management comments
Volpara CEO Dr Ralph Highnam said: “It has been a truly remarkable sales quarter, with a set of outstanding new deals coming over the line and growing our recurring revenue significantly, despite COVID-19. Very encouragingly, our ability to identify women at high cancer risk who should have genetics testing has potential to be a game-changer and significantly increase our ARPU. Over the next few quarters, our focus will be on ramping those genetics relationships and connections as quickly as we can.”
Summary thoughts
Volpara is a really good business with a very high profit margin and steadily rising revenue. That’s a good combination, particularly with its retention rate being so high, growing ARPU and it’s winning more clients.
The ASX healthcare share looks like one to watch. There are other ASX growth shares that I like the look of such as Pushpay Holdings Ltd (ASX: PPH) and Magellan Financial Group Ltd (ASX: MFG).
