There are some little known ASX growth shares that could be worth a spot in a portfolio, one is Volpara Health Technologies Ltd (ASX:VHT).
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There are some little known ASX growth shares that some investors may be interested in.
Smaller businesses may have more growth potential than larger businesses.
Here are two contenders:
Volpara Health Technologies Ltd (ASX: VHT)
Volpara is an ASX healthcare software business involved in screening for breast cancer.
The company recently announced its quarterly update for the three months to 31 December 2020.
It said that its annual recurring revenue rose by 20% to NZ$20.7 million (US$13.5 million), driven by increasing demand for the Volpara breast health platform. It received quarterly cash receipts of NZ$4.6 million despite COVID-19 and the weak US dollar.
Average revenue per user (ARPU) increased by 5% to US$1.22. Client retention remains high and its coverage of US women is approximately 27%.
That quarter was the first time that the ASX growth share received a payment from the partnership with a genetics company. Volpara said that its ability to identify women at high cancer risk who should have genetics testing has the potential to be a potential game-changer and significantly increase the ARPU. Volpara said at the time of this quarterly announcement that its focus will be on ramping up those genetics relationships and connections as quickly as possible.
It didn’t waste any time. Today, the company announced an acquisition that would give it more access to those genetics companies.
Volpara is acquiring CRA Health, which is based in Boston, for US$18 million. CRA’s software is integrated with the major electronic health record (EHR) and genetics companies.
CRA receives patient information, including breast density, and returns the risk of breast cancer alongside appropriate recommendations, including whether additional imaging or genetics testing is advised and reimbursed according to established guidelines. CRA also has electronic interfaces built with all the major genetics companies.
Volpara said that CRA is profitable, with annual recurring revenue (ARR) of over US$4 million, average revenue per user (ARPU) of US$1.70 and coverage of around 6% of US breast screenings.
After this acquisition, Volpara will have ARR of around $US$17.5 million and at least one product in use in over 30% of US breast screenings. Group ARPU will increase to over US$1.40.
City Chic Collective Ltd (ASX: CCX)
City Chic is an ASX growth share in the retail space. Its niche is plus-size apparel, accessories and footwear.
The company is growing swiftly, through a mix of both organic growth and acquisitions. In FY20 sales rose 31%, with year on year sales growth for ANZ online of 20%. Online sales made up 65% of total sales for the year. At 31 October 2020, it had risen to 70%.
The company is steadily growing its percentage of sales coming from the northern hemisphere, which has a much bigger total addressable market. At 30 June 2020, the northern hemisphere represented 42% of sales, up from 20% in FY19, with the US comprising the majority of sales. The company expects this trend of northern hemisphere sales growth to continue.
The ASX growth share recently announced the acquisition of Evans in the UK for US$41 million.
City Chic has bought Evans’ e-commerce and wholesale businesses, not the physical store portfolio. Those purchased assets made £26 million of combined sales for the year to August 2020. The Evans business made £60 million of annual sales prior to COVID-19.
Fund manager Clime Capital Ltd (ASX: CAM) said that the Evans purchase was made for around 5x the earnings before interest and tax (EBIT) that it was buying.
Clime thinks that the ASX growth share can command superior margins due to its vertically integrated structure. The fund manager said it’s well positioned to execute on its strategy and, despite the recent share price rally, it still sees an opportunity in the stock.
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Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends VOLPARA FPO NZ. The Motley Fool Australia owns shares of and has recommended VOLPARA FPO NZ. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.