Why the Volpara Health Technologies Ltd share price is rocketing today

The Volpara Health Technologies Ltd (ASX: VHT) share price is on the move again today after the developer of sophisticated breast cancer screening software technology had an 87 cents price target slapped on it by capital markets work seeker and investment research house Morgans.

In response the Volpara share price has climbed 10% or 5 cents to 55 cents this afternoon, although it has previously struck highs of 87 cents back in November 2016.

The New Zealand-headquartered group is attempting to sell its software-as-service (SaaS) technology to oncology departments worldwide and as a result of recent investments in the technology and additional sales staff its net loss ballooned to NZ$4.675 million for the half-year period ending December 31 2016, compared to NZ$2.06 million in the prior corresponding half.

The bright side of the recent result is that sales revenues grew to NZ$1.19 million, with a cash balance of NZ$6.795 million. As at March 3 2017 total contract value for deals signed so far in FY 2017 stood at NZ$3.44 million, with the company’s SaaS model meaning revenue is delivered over the life of a contract, with revenue even delivered for every woman screened using the Volpara technology.

In this sense Volpara is quite similar to ASX small-cap medical imaging and SaaS wonder stock Pro Medicus Limtied (ASX: PME). Thanks to its recent success in U.S. hospital and healthcare provider markets Pro Medicus has grown into a market value around $462 million in recent years.

Volpara then appears to have a lot of potential, but as a loss maker with minimum sales it remains speculative and the kind of business suitable only for experienced investors prepared to stomach volatile share prices.


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Motley Fool contributor Tom Richardson has no position in any stocks mentioned.

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