The Volpara Health Technologies Ltd (ASX: VHT) share price is on watch this morning after the company announced changes to its business strategy. Volpara says it is clear that many of the ways it has operated in the past (trade shows, site visits etc.) must change to facilitate continued growth.
What does Volpara Health Technologies do?
Volpara Health Technologies is a med tech software-as-a-service (SaaS) company founded in 2009. The company provides breast cancer screening software that assists with the delivery of personalised patient care. Volpara’s clinical functions include providing feedback on breast density, compression, dose and quality. Its practice management software helps with productivity, compliance, reimbursement, and patient tracking.
What did Volpara Health Technologies announce?
Volpara announced that it was shifting its business strategy, accelerating a move towards digital marketing over conventional medical marketing. This is expected to drive increased demand from clinical sites as well as increase the number of women that take advantage of Volpara’s products. The shift has resulted in a reorganisation of the executive ranks, with the Chief Commercial Officer leaving the company and a new CEO of Volpara’s United States subsidiary brought on board.
How has Volpara been performing?
Volpara recently posted its quarterly cash flow report, which showed cash receipts from customers increased 112% to NZ$5 million for the quarter. This was the fourth straight quarter with receipts greater than NZ$4.5 million, and the highest cash receipts in any quarter since listing in 2016. Nonetheless, Volpara continues to monitor the pandemic closely, noting its resurgence across large parts of the US, its primary market.
Annual recurring revenue at the end of Q1 FY21 was NZ$19.1 million, an increase of $1.1 million. This was achieved through a combination of new customers and upsells, as well as foreign exchange movements. Churn remained negligible but new sales gains were offset by some maintenance contracts for legacy capital sale systems which were not renewed. CEO Ralph Highnam said in a July update, “…we’re very heartened by the strong cash receipts, negligible churn, and the fact that we got a significant number of new deals over the line.”
What’s next for the Volpara share price?
The Volpara share price is up 65% from its March low but remains 26% down from its February high. The company is carefully plotting strategies to ensure it can emerge from the pandemic stronger. Volpara remains cognisant of the challenges posed by COVID-19, but believes while the pandemic will eventually subside, cancer will not. At the time of writing, the Volpara share price is trading at $1.34 which is a 3.1% increase so far today.
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Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of VOLPARA FPO NZ. The Motley Fool Australia has recommended VOLPARA FPO NZ. 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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