Volpara Health Technologies Ltd (ASX: VHT) is in the news today and the share price is up after announcing an exciting acquisition called CRA Health.
Volpara provides software that helps breast screening clinics regarding breast density, compression, dose and quality. It also offers practice management software.
CRA Health acquisition
Volpara is buying CRA Health, which the company called an industry leader in breast cancer risk assessment spun out of Massachusetts General Hospital.
The acquisition price is US$18 million, with a further US$4 million payable on meeting key performance and staff retention targets.
Volpara said that CRA is profitable and has positive operating cashflow, based on financial results to 31 December 2020. It has annual recurring revenue of US$4 million (NZ$6.2 million). CRA’s average revenue per user is US$1.70 and covers around 6% of US breast screenings. CRA has grown significantly over the past year.
CRA’s software is integrated with the major Electronic Health Record (EHR) and genetics companies. CRA receives patient information, including breast density, and returns the risk of breast cancer alongside appropriate recommendations, including whether additional imaging or genetics testing is advised.
After the acquisition, Volpara will have annual recurring revenue of around US$17.5 million (or NZ$26.9 million) and at least one product in use in over 30% of US breast screenings. The company said it will have around NZ$35 million of cash. It will increase the group ARPU to over US$1.40.
Management comments
Volpara CEO Dr Ralph Highnam said: “The acquisition of CRA is very significant for Volpara…CRA has a strong science background, just like Volpara, and provides us with world-class knowledge about risk and genetics. CRA is expected to benefit the Volpara brand and will accelerate us on our mission to save families from cancer by preventing advanced-stage breast cancer.”
Summary thoughts
This seems like a very smart bolt-on acquisition by Volpara. It grows Volpara’s ARR by a sizeable amount, it increases the ARPU, it grows the company’s market share and perhaps most importantly it gives the business more avenues for growth. Volpara could be one to watch.
I think Volpara is among a group of ASX growth shares worth following. There are others in my opinion, like Pushpay Holdings Ltd (ASX: PPH).
