The Volpara Health Technologies Ltd (ASX: VHT) share price is rising after the healthcare business released its HY22 result.
Volpara is a medical technology business which specialises in breast screening for cancer. The business also has a growing exposure to lung cancer screening.
Volpara’s FY22 result
The company reported growth in almost all of its metrics for the first six months of the 2022 financial year.
Total revenue jumped 30% to NZ$12.3 million, which was an increase of 38% if foreign exchange rates hadn’t changed.
Annual recurring revenue (ARR) increased by 59% year on year to US$20.4 million. Its market share continues to grow too. Around 34% of US women have a Volpara product used on their images and data, up from 27% a year ago.
The normalised net loss improved by 4% to NZ$6.4 million and the actual net loss after tax increased 4% to NZ$8.5 million. But the cashflow outflow improved much quicker, rising 30% to NZ$5.5 million.
One of the only metrics that didn’t go up was the gross profit margin, which slightly declined from 91.7% to 91.4%. However, that’s still exceptionally high and not much of a change.
Outlook for Volpara and the share price
Volpara outlined to investors that it has a number of key strategic initiatives at various stages of development.
One is called ‘Analytics in Action’, which is a service designed to help breast imaging facilities develop a culture of continuous performance improvement. This could help grow customer retention and the average revenue per user (ARPU).
It’s also working on ‘Volpara Club’, a digital experience aimed to help customer long-term success, resulting in “retainment, expansion and advocacy”. The goal here is to keep customer retention high, generate upsell and expansion opportunities, and nurture advocates to support new customer acquisition.
The company is looking to expand its electronic health record sales channel. Volpara also wants to build out its data platform, to change the focus from detection to prevention.
Volpara is also waiting for the FDA’s breast density legislation.
Summary thoughts
I think the Volpara share price looks attractive for a long-term investment. The economics and ARPU are heading in the right direction. The partnerships in lung screening could also be a very good long-term move.
In my opinion, it’s one of the ASX growth shares keeping a close eye on.
