In late afternoon trade the Nanosonics Ltd (ASX: NAN) share price is on course to start the week with a solid gain.
At the time of writing the infection control specialist's shares are up almost 4% to $3.47 despite there being no news out of it.
This latest gain means that the Nanosonics share price has carved out an impressive 22% gain since the start of the year.
Why is the Nanosonics share price on fire?
Investors appear to have been fighting to get hold of the company's shares due to the strong growth potential of its trophon2 device. The new and improved trophon product is an automated system that delivers effective, efficient and safe high-level disinfection of ultrasound probes.
It is highly effective in killing bacteria, fungi, and viruses including the highly resistant HPV virus and generally regarded as the best in its class.
It will be no surprise then to learn that the installed base for its trophon products grew by a solid 25% globally in FY 2018 to 17,740 units.
This was driven by a 26% increase in North America to 15,620 units, a 49% lift in EMEA to 730 units and a 9% rise in Asia Pacific to 1,390 units.
While this may sound like a large number of units, it is only scratching at the surface of a global opportunity estimated to be 120,000 globally.
In addition to this, these units require consumables manufactured by Nanosonics to operate. Therefore, the more units out in the world, the more demand there will be for its consumables. This was the case in FY 2018 when revenue associated with consumables and services rose 25% to $35.2 million.
Clearly there is still a significant runway for growth for the trophon product over the next decade.
But it may not be just the trophon product that drives its future growth. Management is busy investing in R&D and building a pipeline of new product opportunities with the goal of introducing a range of new products over time commencing with the first by the end of FY 2020.
Should you invest?
While its shares do trade at a significant premium to the market average and are therefore reasonably high risk, I believe its positive long term growth potential makes it a share to consider buying along with fellow healthcare technology shares Pro Medicus Limited (ASX: PME) and Volpara Health Technologies Ltd (ASX: VHT).
