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Volpara (ASX:VHT) share price goes bananas on Radnet deal, here’s why

Today, the Volpara Health Technologies Ltd (ASX: VHT) share price leapt 21% higher after announcing it secured a roll-out of Volpara Risk Pathways and Volpara Analytics to the 350+ sites owned or operated by Radnet Inc (NASDAQ: RDNT).

Volpara (VHT) share price

Volpara Health Technologies Ltd is a ‘MedTech Software as a Service’ company that was founded in 2009 on research conducted at Oxford University. Its software is used by screening clinics to provide feedback on breast density, compression, dose and quality. Its platform provides role-specific dashboards and analytics to help technicians, radiologists, hospitals and clinics manage their operations more efficiently.

Radnet is the largest outpatient imaging service in the United States but has a market capitalisation of around $1 billion (down from $2 billion in late 2021).

“Volpara is pleased to partner with such a large and well-respected organisation as RadNet. Together we will save even more families from cancer,” Volpara CEO Teri Thomas said.

“This is a broader partnership than a simple software purchase. We look forward to a deep engagement with RadNet as part of our focus on industry impacts and customer success of ‘elephant-sized’ industry leaders.”

Radnet competes against smaller or regional providers of radiology, such as Akumin-owned Alliance Healthcare Services (which also includes Oncology). For context, Akumin has 200 company-owned or operated imaging locations.

Radnet specialises in providing traditional radiology services for doctors, hospitals and radiologists. However, the company’s software division, known as eRAD Inc, is probably one of the more interesting parts. This is where it invests in artificial intelligence and novel applications for radiology.

Radnet made a big acquisition for the software division in 2022, buying Aidence Holding and Quantib, which are specialists in AI, for $95 million.

This video explains Volpara Risk Pathways very well.

What it means to the Volpara share price

Volpara is estimating the deal will go-live l in 2023, which we might assume is the calendar year 2023.

In healthcare, big deals like this are great but they take time to implement. Pro Medicus Ltd (ASX: PME) has given ASX investors an unfair use case for how to sign and execute on big deals flawlessly. But given this is the single biggest deal in Volpara’s history, it should be worth the wait as it’ll deeply embed Volpara’s most powerful software inside eRAD.

In summary, while the deal should be material, investors don’t yet have a way to understand its probable impact on the bottom line. Radnet says it undertakes 8 million scans/imaging procedures per year, but we don’t yet know the overlap with Volpara or MRS’s market share. So time will tell how effective this deal truly is. I’m sure analysts will have plenty of questions for management during the next webinar.

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