Kiwi company Volpara (ASX:VHT) expects to benefit from breast screening outlets playing catch up after COVID-19 shutdowns.

The company said today in its annual results that customers expect screening to restart soon with a backlog.

It expects the June and September quarters this year to see new deals closed and an increase in annual revenue per user from its existing customer base.

Volpara sells subscription breast density imaging services and while it has a widening global footprint, is focused on the lucrative US market where it now covers about 27 per cent of women being screened for breast cancer.

Its first takeover was in the US last year, of medical software company MRS Systems for $NZ21m ($19.6m) following a $55m capital raise.


Step change

The financial results released today showed a step change in both revenue and costs from the year prior.

Revenue rose 53 per cent to $NZ12.6m, partly due to the acquisition but mainly due to organic growth.

Gross margins were up to 86 per cent from 83 per cent the year before, thanks to the US acquisition.

The annual loss blew out by 61 per cent to $NZ18.8m as operating costs more than doubled.

Volpara said this was due to organic growth and the US acquisition; while revenue was growing faster than costs, it still planned to cut up to 15 per cent from those costs.

It has $NZ31m in cash.

The stock gained 3.5 per cent in early trade to hit an intra-day high of $1.47 before reversing its daily gains to sit nearly 1 per cent lower at $1.41.



More M&A

Volpara is positioning itself for more acquisitions and has “identified several M&A opportunities that are at various stages”, but says it’s open to partnering as well. In April it did a deal with Ambry Genetics in the US to co-market each other’s products.

The company makes money in three different ways: software-as-a-service (SaaS), software maintenance contracts, and by selling software outright.

The SaaS division in the US is where Volpara makes most of its money and it’s converting MRS from software sales to the same five-year rolling SaaS contracts the rest of the business works on. This is followed by software sales and then maintenance contracts.

Contracts are priced on products chosen, seat-licences and volumes of screens.