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Volpara share price lower after raising $50 million from institutional investors

In morning trade the Volpara Health Technologies Ltd (ASX: VHT) share price has returned from its trading halt and dropped lower.

At the time of writing the medical technology company’s shares are down 12% to $1.62.

Why was Volpara in a trading halt?

Volpara’s shares were placed in a trading halt on Monday following the launch of a fully underwritten $55 million equity capital raising to fund the acquisition of US-based MRS Systems and further organic growth.

The equity capital raising comprised an institutional placement to raise $45 million and a pro rata accelerated non-renounceable entitlement offer to raise a further $10 million.

This morning the company announced the successful completion of the institutional placement and the institutional component of its entitlement offer.

According to the release, the oversubscribed placement raised $45 million and the institutional component of the entitlement offer raised the maximum amount of approximately $5 million, both at $1.50 per share. This was a discount of approximately 19% to its last close price.

Volpara will now seek to raise the remaining $5 million through the retail component of the entitlement offer at the same price.

Ralph Highnam, CEO of Volpara, said: “The institutional portion of Volpara’s capital raising was well supported by our existing institutional shareholders, and also saw Volpara welcome a number of new domestic and international institutional investors onto the register. With the support of the market, we are very much looking forward to completing the acquisition of MRS and moving forward with the integration of the business into the Volpara group of companies.”

What is MRS Systems?

MRS is a medical software company that provides comprehensive patient tracking, communication, and a radiology reporting platform for sub-specialty radiology applications including breast and lung imaging. Volpara is paying US$14.59 million (A$21.15 million) to acquire the company.

It has an estimated ~20% market share of breast clinics in the US, with its software used in more than 1,700 breast clinics. MRS has forecast Annual Recurring Revenue (ARR) of ~US$4.5 million for FY 2019, and along with capital sales, expects ~US$7.5 million in total revenue for the period.

Elsewhere in the healthcare sector today, the CSL Limited (ASX: CSL) share price has pushed 0.5% higher after UBS retained its buy rating and $223.00 price target on its shares and the ResMed Inc. (ASX: RMD) share price has risen 1.2% on no news.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of CSL Ltd. The Motley Fool Australia owns shares of and has recommended VOLPARA FPO NZ. The Motley Fool Australia has recommended ResMed Inc. 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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