This All Ords share is booming 9% after turning cash flow positive

This medtech stock has defied its own management's expectations to post positive free cash flow last quarter.

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Key points

  • The Volpara share price is soaring 11% to trade at 78 cents right now
  • Its gains come on news the company achieved its maiden positive free cash flow in the December quarter
  • Volpara's management now believes it can make it to maintainable cash flow break-even without needing to raise extra cash

The share price of All Ordinaries Index (ASX: XAO) medical-technology company Volpara Health Technologies Ltd (ASX: VHT) is soaring on news of its maiden positive cash flow.

It comes just one week after the company announced five new contract wins with a combined value of NZ$12.3 million, or around $11.35 million.

The Volpara share price soared 9% on open this morning to reach 77 cents before continuing on its upwards trajectory, hitting a high of 81 cents – marking a 15% increase.

It has since slipped slightly to trade at 78 cents. Though, that's still 10.6% higher than its previous close.

All Ords share Volpara rockets 11% on record cash receipts

Here are the highlights from the provider of breast cancer screening software's December quarter.

All results have been converted from New Zealand Dollars to Australian Dollars at today's exchange rate (NZ$1 to 92 Australian cents):

  • $10.3 million of quarterly cash receipts – a new record and a 60% year-on-year improvement
  • Maiden $1.2 million cash flow – up from a $3.5 million outflow in the September quarter
  • Added around US$1.5 million of contracted annual recurring revenue (CARR)
  • Average revenue per account increased to US$35,900 at the end of the quarter – up from US$31,900 at the end of the September quarter
  • Ended December with $11 million of cash and no debt

At the end of the December quarter, the company's unaudited financial year to date cash receipts came to $26.38 million – a 39% year-on-year increase, or a 23% increase on a constant currency basis.

Its CARR is now around $37.1 million while its annual reoccurring revenue is approximately $28.8 million.

What else happened in the quarter?

The company reached its maiden cash flow well ahead of guidance. The milestone was previously tipped to be achieved in the final quarter of financial year 2024.

An increase in cash receipts due to improved debtors days, costs reductions, government grants, and around $830,000 of research and development tax credit all helped the company hit positive cash flow.

Meanwhile, the final bonus plan payment to CRA employees – worth around $461,230 – was more than offset.

What did management say?

Volpara Group CEO Teri Thomas commented on the news driving the All Ords share higher today, saying:

We are happy to show successful execution of our strategy focused on profitable growth. As planned, our top line continues to increase while our cost base has declined.

We continue to emphasise sales and positive engagements with our customers alongside settling into our streamlined operations.

What's next?

The All Ords company didn't provide any new guidance today. However, it did note it doesn't expect the current quarter's receipts to match those of last quarter. Though, they are expected to show consistent growth.

It also said its improved cash flow position has led management to believe it's holding enough cash to fund it through to maintainable cash flow break-even.

It previously expected to post between $30.9 million and $31.8 million of revenue in financial year 2023 – up from around $15.6 million in financial year 2022.

Volpara share price underpeforms All Ords

The Volpara share price has underperformed the All Ords over the last 12 months.

The stock has tumbled nearly 18% since this time last year. Meanwhile, the index has slipped 1.6%.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Volpara Health Technologies. The Motley Fool Australia has positions in and has recommended Volpara Health Technologies. 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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