One area of the market which I think is home to a lot of exciting shares is the healthcare sector.
Two that I feel are standouts at the small end of the sector are listed below. Here's why I think they are worth watching very closely:
Mach7 Technologies Ltd (ASX: M7T)
The first small cap healthcare share to look at is Mach7. It is a medical imaging data management solutions provider which uses software to create a clear and complete view of the patient. This software helps to inform diagnosis, reduce care delivery delays and costs, and, importantly, improve patient outcomes.
While this product alone has a sizeable market opportunity, the company has recently expanded its offering via the acquisition of Client Outlook. The acquisition of this leading provider of an enterprise image viewing technology has increased Mach7's total addressable market from US$0.75 billion to a sizeable US$2.75 billion. Given that Mach7 generated revenue of $9.1 million in the first half, it clearly has a long runway for growth over the next decade. This could make Mach7 shares a great long term option.
Volpara Health Technologies Ltd (ASX: VHT)
Volpara is a healthcare technology company which uses artificial intelligence imaging algorithms to assist with the early detection of breast cancer. It has been growing its market share in the United States at a rapid rate in recent years and currently has an installed software base covering over 27% of U.S. women screened for breast cancer. The sizeable increase in its installed base has led to very strong revenue growth, with the company more than doubling its subscription revenues in FY 2020.
The good news is that Volpara still has a very long runway for growth and is aiming to increase its average revenue per user (ARPU) materially in the future. Management is looking to grow its ARPU to upwards of US$10 per user, up from US$1.04 per user at present. It feels it can achieve this by having radiologists utilise its full product suite during screening sessions. If it delivers on this, then I suspect the Volpara share price will be materially higher at the end of the decade.
