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3 small cap healthcare shares that could be destined for big things

On Thursday I picked out three blue chip healthcare shares that I believe are amongst the best on the share market.

Today I thought I would look at up and coming healthcare shares to watch. Three that I have my eye on are listed below:

Nanosonics Ltd (ASX: NAN)

A strong gain over the last four months means Nanosonics is probably classed as a mid cap share now, but I’ve included it in this list because I believe it is still a company which could grow significantly over the long term. It is an infection control specialist behind the increasingly popular trophon EPR product. This product has been growing its installed base at a strong rate over the last few years due to being environmentally friendly and regarded as the best in its class. At the end of FY 2018 the total global installed base had grown 25% to 17,740 units. Whilst this is a large footprint, it is just 15% of the overall market opportunity estimated to be 120,000 units globally. In addition to this, management has its eyes on other areas of the market which have unmet needs.

Paragon Care Ltd (ASX: PGC)

Paragon Care is an integrated services provider to both the healthcare and aged care markets. Over the last few years the company has been growing its earnings at a solid rate thanks to a combination of organic growth and a series of earnings accretive acquisitions. The latter looks set to continue in the near term thanks to a recent $45.2 million placement of shares with China Pioneer. Management has advised that these funds are to be used for near term acquisitions of complementary healthcare businesses in Australia and New Zealand.

Volpara Health Technologies Ltd (ASX: VHT)

My favourite small cap healthcare share would have to be Volpara Health Technologies. It is a fast-growing breast imaging analytics and analysis software specialist. Last month the company confirmed the receipt of a new FDA 510(k) clearance for technologies used in Volpara Enterprise software and the Volpara Density clinical application. This clearance means the company can now introduce its Volpara Live! System. I believe the introduction of this system will be a big boost and should put it in a position to achieve its U.S. breast screening market share target of 9% this year. At the end of FY 2018 Volpara’s market share stood at 3.7%.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Nanosonics Limited and VOLPARA FPO NZ. The Motley Fool Australia has recommended Paragon Care Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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