The Volpara Health Technologies Ltd (ASX: VHT) share price is up after giving investors a lung update.
Volpara’s lung cancer screening expansion
Volpara said it has cemented its expansion into the lung cancer screening market with a collaboration agreement with a leading US-based lung imaging company called Riverain Technologies.
The ASX healthcare business said that Riverain Technologies is the leader in the application of AI to lung nodule detection. Riverain’s ClearRead tools save radiologists time, provide enhanced image review and improves the ability to detect disease.
This partnership will mean that lung cancer screening programs will have access to expanded, more integrated services for patient reporting and tracking, cancer risk assessment and nodule detection.
Whilst Volpara is known for being a leader in the breast screening market in the US, it entered the lung screening market with the June 2019 acquisition of MRS Systems.
How much market share does Volpara currently have of the lung market? Its patient, reporting, tracking and risk assessment software, Volpara Lung, covers around 8% of US lung cancer screening.
Lung cancer causes around 130,000 deaths each year in the US alone, including around 60,000 women. Lung cancer CT screening programs are expanding and developing globally, with around 15 million people now eligible in the US and reimbursement set at around US$250 per scan.
Management comments
Volpara CEO Ralph Highnam said: “Riverain’s robust AI solution is a tremendous complement to our lung reporting and tracking capabilities. We are pleased to collaborate with them to improve access to accurate and efficient lung nodule detection among our Volpara Lung users, particularly across the Veterans Integrated Service Network (VISN), where we both provide services for a number of its sites. Our mission as a company is saving families from cancer, and this is an important step along the way.”
Why I’m more optimistic on the Volpara share price
Breast screening is the key part of the growth story for Volpara, with a high market share and a very high gross profit margin. It just needs to work on selling multiple products to clients and increasing the average revenue per user (ARPU).
But lung cancer is also a very important issue and Volpara has another earnings stream that it can grow significantly over time. I’d consider looking at Volpara shares today. It’s one the promising ASX growth shares in my opinion.
