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While its best to DYOR and read the investor presentations, here are a few notes I have:
VHT is in the centre of an exciting and booming sector (HealthTech). They have a digital solution to assist in a large health problem for women, Breast Cancer.
The Volpara management team has a large amount of their own capital invested into the company with circa $80m worth of shares held by senior staff including the CEO, Ralph. The management have had personal experiences with Breast Cancer providing additional motivation for VHT to succeed.
The scalability of the business is excellent given it’s a digital solution that can work with medical clinics and hospital globally. Most importantly VHT’s digital solution provides high margins especially the gross profits.
The Average Revenue Per User (ARPU) has been discussed by Ralph and leading brokers, Morgans. ARPU currently sits around $1 but is expected to increase closer to $10 over the coming years (3-5yrs) via the roll out of additional software features for women and the clinics. For me this ARPU increase is key, if management can show they are heading towards this 10x increase in revenue potential the share price will race even higher. VHT currently expects around $17m revenue. The maths are simple if they can go 10x on revenue.
We are awaiting an expected announcement from the FDA where its anticipated they will require/enforce breast density screening for women during their screening process. VHT has a leading solution in this area and therefore are positioned well to capitalise on this change in regulatory requirements.
The results of the DENSE 10 year clinical trials are expected to be published in a peer review journal any day now. This is expected to assist VHT in selling their breast density solutions as many public hospitals and clinics will use this study as guidance for introducing breast density reporting.
VHT only have 25% of the market in the USA leaving plenty of room for growth.
The expansion globally is only just starting, so plenty of growth in revenue expected.
Imo we could see another USA acquisition in H1 2020. VHT have plenty of cash on hand, circa $40m.
There are more opportunities for VHT in preventive care and lung screening too.
It’s a high margin business in the right sector at the right time. It reminds me of an early investment in RMD, the share price could run like PME, NAN too.
