The Volpara Health Technologies Ltd (ASX: VHT) share price looks good to me after revealing more strong quarterly growth.
Volpara’s strong FY22 quarter
In the three months to 30 June 2021, the business saw record quarterly cash receipts from customers of NZ$6.4 million, an increase of 30% year on year. In constant currency terms, that was a rise of 50%.
Subscription-based receipts in the first quarter were NZ$6.1 million, an increase of 38%. In constant currency, that was a rise of 60%.
Annual recurring revenue (ARR) now stands at US$19.2 million, or NZ$27.8 million, which was an increase of over US$600,000 on the fourth quarter of FY21 (the last reported quarter). This included the win of Sentara Healthcare, an integrated, not for profit system of 12 hospitals in Virginia and North Carolina in the US.
Its market share of US women being screened has increased to around 33%, up from the prior quarter of around 32%.
Volpara’s average revenue per user (ARPU) was US$1.42 at the end of the first quarter, with the average ARPU in the first quarter of US$1.55. This increase was driven by multiple, single product, large volume deals. An ARPU of up to US$5.87 was achieved at some sites in the first quarter.
The software as a service (SaaS) churn continues to remain low, meaning customer retention is high.
Despite the strong revenue growth, there was a net operating cash outflow of NZ$3.2 million, but this was an improvement of 20% year on year.
The company said that the first quarter is typically one of the weaker quarters due to the US summer. It also said the merger with CRA Health is exceeding expectations and continues to go well.
Management comments
Volpara CEO Dr Ralph Highnam said: “Our focus for FY22 is risk and genetics. States moving more strongly in that direction will continue to help drive and accelerate growth in the Volpara business at very little additional cost to the business itself, given our strong positioning in that space through both our patient hub product and our Electronic Health Record integrations.”
The Volpara share price looks attractive
Volpara looks like a very promising business. It has a large market share (which is still growing), a rising ARPU, a very high gross profit margin and a trend within healthcare advice (relating to a focus on risk) that should benefit Volpara over time.
It’s one of the ASX growth shares that I’m watching very closely.
