3 reasons why the Volpara (ASX:VHT) share price could be a buy

Volpara is a quality business and it could be worth looking into.
The post 3 reasons why the Volpara (ASX:VHT) share price could be a buy appeared first on The Motley Fool Australia. –

The Volpara Health Technologies Ltd (ASX: VHT) share price could be an interesting one to look at with the current price being $1.26.

What is Volpara?

Volpara is a New Zealand technology business that is listed on the ASX.

It operates a software-as-a-service (SaaS) model that utilises AI to improve the early detection of breast cancer by analysing breast images, called mammograms, and associated patient data.

Volpara provides personalised breast care through clinical decision support and proactive management tools. It wants to provide a cost effective reduction of breast cancer deaths, there are around 600,000 deaths globally each year.

Here’s why Volpara could be a good option:

Growing average revenue per user (ARPU)

Volpara has an increasing average revenue per user. ARPU is the average revenue achieved per women screened per year at a site

ARPU has risen to US$1.40. The CRA Health business that Volpara recently acquired is growing strongly and has ARPU of US$1.70. The company said that its ARPU rose by over 30% between the second quarter of FY20 and the second quarter of FY21 despite COVID-19 impacts. 

The business continues to track acquisition opportunities that could increase ARPU further.

A lot of the existing installed base is using a product that was sold as a capital sale with a small service and maintenance contract, not SaaS. Since 1 November 2019, all quotes and proposals are SaaS contracts. These new deals comprise multiple products. In the second quarter of FY21, ARPU on new deals was between US$1.75 to US$4.30.

Volpara has explained that identifying women who should get genetics testing can lead to a significantly increased ARPU.

Increasing market share

The business has significantly increased its market share over the last few years thanks to acquisitions like MRS Systems and CRA Health.

Volpara’s market share increased in FY21 to 32% of US women having a group product applied on their images and data. That compares to approximately 27% at the end of FY20.

The CRA Health acquisition came with a market share of approximately 6%, as well as the integration with electronic health records (EHR).

Strong gross profit margin

The Volpara gross profit margin continues to grow. It is one of the highest on the ASX. In FY20 the gross profit margin was 86% and in FY21 the margin increased another five percentage points to 91%. This could be an important driver for the Volpara share price over time. 

That means a lot of the new revenue can fall to the next profit line in the accounts. Over the longer-term, the gross margin could rise even more and help the net profit improve at a relatively fast rate.

The post 3 reasons why the Volpara (ASX:VHT) share price could be a buy appeared first on The Motley Fool Australia.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Share on facebook
Share on twitter
Share on linkedin

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you indefinitely, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

Important Notice
iOS & Android App - 12 International Markets & Over 70% Global Market Cap. $0 Brokerage On US Trades. Click Here!