Volpara Health Technologies Limited
US Society of Breast Imagingacknowledges VolparaDensity: Health Care sector company Volpara Health Technologies Limited (ASX: VHT) is engaged into development and sale of VolparaEnterpriseTM software which is a comprehensive cloud-based breast imaging analytics platform that delivers quality assurance and performance monitoring. With dynamic, role-specific dashboards, and wide-raging benchmarking analytics to help clinics manage their business more efficiently, VolparaEnterpriseTM software is supported by the company’s suite of market-leading clinical applications i.e. VolparaDensityTM, VolparaDoseTM, VolparaPressureTM, VolparaPositioningTM and VolparaServerTM.
The company recently made an announcement about the publication of a new paper, “A case-control study to add volumetric or clinical mammographic density into the Tyrer-Cuzick breast cancer risk model”.
VolparaDensity measures breast density automatically and objectively from a mammogram to generate a “volumetric breast density” score, which is a physical measurement of the breast tissue. The paper used visual BI-RADS assessments from breast imaging specialists at the University of Virginia (UVA) and included 474 women who were diagnosed with invasive breast cancer and 2,243 controls. The publication of the substantial validation paper is a key link that will assist in further accelerating uptake. VolparaDensity does not suffer from subjectivity and there are practical advantages to an automated system. As per the America Society of Breast Surgeons (ASBrS), Tyrer-Cuzick has been identified as a suitable model for use in risk assessment.
Q4FY19 Financial Performance: Annual Recurring Revenue (ARR) increased by 86% pcp to NZ$6.63 Mn. Cash receipts from customers increased by 27% pcp to NZ$1.04 Mn. Total cash received in FY19 increased by 83% to NZ$5.6 Mn. It signed 15 new customers to the VolparaEnterprise platform, bringing the total number of customers to 128.
During the quarter, Volpara also added NZ$1.05 Mn of ARR and NZ$5 Mn of Total Contract Value (TCV). Net quarterly cash outflows for Q4 were NZ$2.57 Mn. The company continues to hold no debt and held NZ$14.4 Mn in cash on March 31, 2019.
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Cash-Flow from Operating Activities (Source: Company Reports)
What To Expect: Annual Recurring Revenue at the end of FY19 is reported at $6.63 Mn and the company is targeting 50–80% ARR growth in FY20.The company expects that the percentage of US women screened using a Volpara service to exceed 10%, and a strong gross margin to remain above 80% moving forward.
Stock Recommendation: VHT is trading close to its 52 weeks high level. Its gross margin H1FY19 stood at 71.1%, lower than the industry median of 74.7%. Its debt/equity ratio for H1FY19 stood at 0.02x lower than the industry median of 0.15x, which implies that company is virtually debt-free. On valuation front, its EV/Sales for TTM stands at 46x higher than the industry median of 6.9x.
Coming to the stock performance, the company’s stock has delivered the return of 51.63% in the span of three months, while in the period of last one month, the return stood at -13.76% which reflects the volatility in the stock.
Hence, considering the aforesaid facts and current trading level, we suggest to have a close watch on the stock at the current market price of $1.685 per share (up 3.374% on May 13, 2019).
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