3 exciting small cap healthcare shares to watch

Volpara Health Technologies Ltd (ASX:VHT) shares are one of three in the healthcare sector that I think have strong long-term growth prospects…

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Because of positive tailwinds such as ageing populations, increased chronic disease burden, and better technologies, I believe demand for healthcare services will grow strongly over the next decade.

In light of this, I think the healthcare sector could be a great place to look for small cap shares to buy and hold.

Three growing healthcare shares that I think are worth looking closely at are listed below. Here's why I like them:

Ellex Medical Lasers Ltd (ASX: ELX)

Ellex Medical Lasers is a medical device company focused on the development, manufacture, and sale of lasers and diagnostic equipment for the treatment of eye diseases. Its performance has been a little up and down over the last couple of years, but there are signs that the company may finally be on the right track again. At the end of last year Ellex provided a sales update which revealed that group sales increased by 27% to $24.7 million during the first four months of FY 2019. This was driven by a 38% lift in the sales of its key iTrack product in the United States.

Telix Pharmaceuticals Ltd (ASX: TLX)

Telix Pharmaceuticals is a clinical-stage biopharmaceutical company focused on the development of diagnostic and therapeutic products based on targeted radiopharmaceuticals or molecularly-targeted radiation. It is developing a portfolio of clinical-stage oncology products that address significant unmet medical need in renal, prostate, and brain cancer. While it is early days, I believe the company has a lot of potential and could prove to be a great long term investment. It is a reasonably high risk one, though.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara Health Technologies is a New Zealand-based medical technology company whose AI imaging algorithms assist the early detection of breast cancer. Last week Volpara released its quarterly update which revealed that annual recurring revenue (ARR) had grown 56% since the end of FY 2018 to NZ$5.6 million. Management is confident this growth will continue and advised that its expects at least 85% growth in ARR by the end of March and a 7% share of the US breast screening market. Due to the quality of its product, I believe there is still a significant runway of growth ahead of the company, making it one to watch over the next decade.

Motley Fool contributor James Mickleboro owns shares of TELIXPHARM DEF SET. The Motley Fool Australia owns shares of and has recommended VOLPARA FPO NZ. The Motley Fool Australia owns shares of Ellex Medical Lasers 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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