The Volpara Health Technologies Ltd (ASX: VHT) share price went up 6% after announcing a record contract win.
What contract did Volpara win?
Volpara, which is a healthcare software company offering a platform for personalised breast care and patient care, announced it has won its highest value contract to date through its recently acquired CRA Health business.
This new contract is worth of US$400,000 per year of annual recurring revenue (ARR). The contract is to provide breast cancer risk scores to a large Indiana-based organisation that has sites across more than 20 states and runs a major electronic health record (EHR) system, which makes the deployment and implementation very cost effective.
The Volpara Group CEO Dr Ralph Highnam spoke of the multiple benefits of this contract win:
“We are very pleased to announce that CRA Health has signed up a major US health system with significant ARR associated with it. Whilst we would not normally announce individual deals, this is the Volpara Group’s highest value contract signed to date. Not only does it enable us to help many more women across the United States benefit from early cancer detection, but it also sets us up for future sales of additional products to this organization. Further, the contract is validation of the decision to purchase the CRA Health and validation that the world is rapidly moving towards personalised breast care, which includes analysis of risk and genetics.”
Is this a great deal?
Management clearly think so, as does the market – that’s why the share price went up so much today.
Whilst $400,000 a year doesn’t seem like much compared to Volpara’s current market cap, the company has a very high gross profit margin – so most of this new revenue will fall to the the profit lines of Volpara’s financials. Plus, it’s just the start – Volpara has other products that it can sell to this Indiana organisation.
I also think that Volpara will be a bit more likely to win over other large organisations because it can now show that it has been entrusted by a sizable client already. We’ve seen other ASX healthcare shares like Pro Medicus Ltd (ASX: PME) go on a contract-winning streak and gain momentum. I actually covered Volpara’s presentation earlier this week that outlined a number of positive factors for Volpara’s future.
