The Volpara Health Technologies Ltd (ASX: VHT) share price has gone up after the ASX healthcare share revealed a solid business update.
Volpara’s software is used to “better understand cancer risk, empower patients in personal care decisions, and guide recommendations about additional imaging, genetic testing, and other interventions.”
Cashflow, credit and Microsoft
Volpara told investors a little about its quarterly cashflow.
It said that since its revised strategy that was implemented in July 2022, with staffing changes completed in late August 2022, the business has “operated on an approximately free cash flow break-even basis” with the FY24 first quarter delivering “another strong quarter of cash inflows”.
The company revealed it had over NZ$12 million of cash on hand at the end of the FY24 first quarter and that there is “repeatable operating cash flow positivity in sight.”
Credit facility reduction
Last year the company obtained a NZ$10 million revolving credit facility. But, due to its growing cashflow, it has decided to reduce the facility as it’s no longer considered necessary. The facility will now be NZ$2.5 million.
It was paying a line fee of 1.5% per year for the available facility, so it’s going to save NZ$112,500 per year. It will evaluate the cash position over the next six months, with the possibility of reducing the facility further.
Microsoft
The global tech giant chose Volpara as the winner for the healthcare and life sciences partner of the year award, chosen from over 4,200 submitted nominations from more than 100 countries.
This award “recognises a partner organisation that excels at providing innovative healthcare and life sciences solutions based on Microsoft cloud technologies.”
Last year, Microsoft provided guidance on using Microsoft’s Azure machine learning platform to improve Volpara’s breast arterial calcifications (BAC) model and data progressing. The project marked the beginning of a new application anticipated to enter Volpara into a new area of care.
Management comments
The Volpara CEO and Managing Director Teri Thomas said:
We are double delighted about this announcement. From a financial perspective, Volpara’s strategy continues to play out ahead of guidance, giving us the confidence to reduce reliance on banking facilities while simultaneously reducing costs.
Final thoughts on the Volpara share price
I think Volpara is a great business and that its improving cashflow position shows it can continue to do well if it keeps growing revenue, which it is.
Earnings can significantly improve from here, in my eyes, because of all of the new risk-related services it can encourage its existing client base to use.
It’s one of the most promising businesses around in my opinion.
