The Volpara Health Technologies Ltd (ASX: VHT) share price is now up 75% in 2019 and has nearly tripled from 68 cents this time last year to a record high of $1.94 this afternoon to mean it's catching the attention of many small-cap investors.
Volpara is a business I first flagged to readers as having big potential around the time of its initial public offering in April 2016 when it floated at just 50 cents per share.
As a software-as-a-service medical imaging business Volpara measures breast density in woman to aid the detection of breast cancer and for investors ticks all the boxes (except perhaps valuation) as a founder led, scalable, market leader that is straddling two lucrative sectors in tech and healthcare.
The shares have also received a boost recently on the back of news that the U.S. regulator the FDA wants to expand mandatory reporting of breast density in oncology testing procedures.
I have previously compared the business to probably the share market's best performing business over the past 5 years in Pro Medicus Limited (ASX: PME) that also offers cloud-based radiology and medical imaging software platforms to the world's leading health businesses.
However, I'd caution that Volpara's valuation around $340 million looks scarily high given annualised recurring revenue (ARR) (i.e. total expected revenue for the year ahead, not trailing revenue) stands at just NZ$6.63 million, with it posting an operating cash loss of NZ$2.75 million for the quarter ending December 31 2018. The company is likely to report its 4c quarterly cash flow report tomorrow.
