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Volpara share price surges higher following trading update

The Volpara Health Technologies Ltd (ASX: VHT) share price has started the week on a positive note.

In morning trade the breast screening-focused medical technology company’s shares have climbed 6% to $1.55 following the release of a business update.

What did Volpara announce?

Ahead of its appearance at the ASX Small and Mid-Cap Conference taking place in Sydney on Thursday, the company released its presentation which included a trading update.

According to the release, Volpara is currently on course to achieve the midpoint of its guidance range for FY 2020. This means annual recurring revenue (ARR) of NZ$17.1 million and a 27% footprint in the United States. The former will be a 158% increase on FY 2019’s ARR.

Furthermore, the company provided an update on the integration of Volpara and MRS Systems, which is proceeding according to plan. Management believes the two businesses combined have the potential to command upwards of US$10 average revenue per user (ARPU) per screen. This is a significant increase on the US$2.20 ARPU achieved for VolparaEnterprise in FY 2019.

Pleasingly, the company has made a lot of progress in getting to this target ARPU. In the first quarter it has signed contracts with ARPUs of up to US$7 per screen.

Growth potential.

In addition to this trading update, the company reminded investors of its overall opportunity.

The release explains that with ~75 million women screened per annum globally, the breast cancer screening market is a ~US$750 million ARR opportunity for Volpara. The good news is that management believes it has a real chance of capturing a significant slice of this market due to its genuine first mover advantage and usage in 38 countries.

Overall, this update and presentation appears to have gone down well with the market. So much so, it has sent its share price charging higher despite general market weakness on Monday.

Also on the move this morning at the small end of the market have been the Bubs Australia Ltd (ASX: BUB) share price and the LiveTiles Ltd (ASX: LVT) share price. Bubs shares are down 4% following the release of its full year results and LiveTiles shares are up 11% following an update on its partnership with Microsoft.

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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 VOLPARA FPO NZ. The Motley Fool Australia has recommended BUBS AUST FPO and LIVETILES FPO. 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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