2 little known small cap ASX shares to buy

These 2 small cap ASX shares are not well known, but they could make big returns and be a buy. One is healthcare stock Healthia (ASX:HLA).

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There are a few little known small cap ASX shares that could be worth looking into and may be able to generate long-term returns.

Smaller shares have the potential to generate larger returns because they're starting from a smaller base. Those large cap ASX blue chips have already done a lot of their growing.

These two small cap ASX shares may be worth considering:

Healthia Ltd (ASX: HLA)

This business is a rapidly growing healthcare company that is now operating with three different divisions.

It has a market share of around 1.5% in Australia, with a market share of more than 2.5% in 'feet and ankles', more than 1.5% in 'bodies and minds' and more than 1.5% in 'eyes and ears'. Healthia believes each segment has a total addressable market of a few billion dollars.

The company is successfully employing an acquisition strategy to growing its networks of businesses.

During the first half of FY21 alone, the small cap ASX share acquired 55 allied businesses, including The Optical Company (41 optical stores and eyewear frame distributors), seven feet and ankle businesses and six bodies and minds businesses.

The business is rapidly growing both its revenue and profitability. In the HY21 result, revenue increased by 38.9% to $61.5 million, the underlying earnings before interest, tax, depreciation and amortisation (EBITDA) margin improved by 486 basis points, underlying EBITDA surged 90.7% to $11 million, the underlying net profit after tax (NPATA) margin improved 194 basis points to 7.72% and underlying earnings per share (EPS) grew 78.2% to 6.86 cents.

Healthia also declared a dividend of 2 cents per share, showing the confidence of the board.

The business is going to try to acquire a minimum of $20 million of new businesses each year through a combination of bank debt, free cash flow and clinic class shares.

Volpara Health Technologies Ltd (ASX: VHT)

Volpara is a small cap ASX share that specialises in breast screening technology and administration. It utilises AI to improve the early detection of breast cancer by analysing images and associated patient data to provide

The company is making progress on several fronts. It now has a market share of around 30% of US screenings, meaning that around 12.5 million US screenings are using at least one of its products. There is the potential for Volpara to cross-sell and up-sell more of its offerings to its US clients over time.

Volpara is seeing low levels of churn with its annual recurring revenue (ARR) and an increasing average revenue per user (ARPU) – now around US1.40.

The gross margins are particularly strong – one of the highest on the ASX – at more than 86% and rising.

CRA Health is an important acquisition for the small cap ASX share because it increases the ARPU, it's integrated with large electronic health record systems and it can analyse the images and data even better. Indeed, Volpara just won its biggest contract thanks to CRA Health.

There is the potential for growth into other countries and regions, such as Europe, which would significantly increase the total addressable market. Volpara has signed up key luminaries across both Europe and Asia.

Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends VOLPARA FPO NZ. The Motley Fool Australia has recommended HEALTHIA FPO and VOLPARA FPO NZ. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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