The Volpara Health Technologies Ltd (ASX: VHT) share price is up in reaction to the healthcare tech share’s FY21 second quarter update.
Volpara’s strong quarter
The company reported that quarterly cash receipts from customers remained strong despite COVID-19, dropping by 4% due to the shift to a software as a service (SaaS) model. Subscription receipts rose by 16% to NZ$4.7 million. Cash receipts were up 33% for the half.
Volpara said that it generated NZ$9.5 million of revenue for the first half of FY21, this was up 38% compared to the first half of FY20. Subscription revenue was up 71%.
Annual recurring revenue (ARR) reached NZ$19.9 million with average revenue per user (ARPU) reaching US$1.16.
Management said that customer churn is negligible and its US coverage remains approximately around 27%.
The FDA update on breast density reporting requirements remains pending.
Volpara CEO Dr Ralph Highnam said: “We see little material changes in our overall cash receipts due to COVID-19, which shows the resilience of our industry and business model. Recurring business is a strong indicator not only of an industry responsive to change but of innovative products continuing to meet the needs of customers during a challenging time.”
Volpara is a quality business that I think is definitely worth watching. The shift to a SaaS model should help it grow further in the coming years with better margins and more reliable cashflow.
I’d be happy to buy some shares for the long term today, but the company has to keep growing towards good profitability to justify the expectations built into the current Volpara share price. There are other ASX growth shares I’d also be interested in such as Pushpay Holdings Ltd (ASX: PPH).