The Volpara Health Technologies Ltd (ASX: VHT) share price rose over 4% after giving a business update.
Volpara describes itself as a ‘MedTech Software as a Service’ company that was founded in 2009 on research conducted at Oxford University. Its software is used for screening clinics to provide feedback on breast density, compression, dose and quality. Its VolparaEnterprise business provides role-specific dashboards and wide-ranging benchmarking analytics to help clinics manage their business more efficiently.
Volpara’s Pleasing Business Update
After a solid fourth quarter the medical technology business has continued its pleasing progress in the first quarter of FY20.
It has annual recurring revenue of NZ$14.6 million and it’s on track for NZ$17.1 million. Every added revenue dollar is very useful because the company reported its gross margin is above 80%. The company’s potential total addressable market is apparently US$750 million – which suggests plenty of potential growth left.
Volpara also said that its churn negligible, meaning that it has a very high retention rate and is hardly losing any customers.
Management think the average revenue per user (ARPU) could go as high as US$10, with a range of deals in the first quarter of US$1 to US$7.23.
Shorter term growth is expected with cross-selling between Volpara and its new acquisition. On 1 December it is going to launch an integrated product set with new features to drive sales and increase ARPU. FDA mandatory density reporting is expected soon, which should drive interest in VolparaDensity.
Volpara ended the quarter with NZ$39.9 million in the bank. It has plenty of cash for its growth plans.
This company has all of the attractive features of a good growth shares – recurring revenue, high margins, scalability, product add-on potential and so on. Volpara revealed that over 16 million images have been added to the cloud for product development.
I think Volpara is worth watching and could be worth thinking about with its share price lower than most of where it has been in 2019. But the growth shares in the free report below could be even better ideas.
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