Shares in Volpara Health Technologies (ASX:VHT) have hit a nine-month high after the Kiwi breast density screening company agreed to acquire a breast cancer risk assessment company spun out of a Harvard Medical School teaching hospital.

Volpara is paying $US18 million ($23 million) upfront for CRA Health, founded by doctors at Massachusetts General Hospital, with another $US4 million ($5 million) payable upon meeting key targets over the next 18 months.

CRA Health is a cancer risk assessment company whose cloud-based software assesses a patient’s risk of breast cancer alongside recommendations on whether additional imaging or genetic testing is advised and reimbursable.

Dave Mezzoprete, vice president of global business development for Volpara, told investors on a Zoom call this morning that the two companies had already been working together for several years.

“I’m thrilled that they’re on board now and I see nothing but great things for both of us.”

Volpara chief executive Dr Ralph Highnam called it a “very significant acquisition” for the company.

“CRA has a strong science background, just like Volpara, and provides us with world-class knowledge about risk and genetics.”

Dr Highnam said on the Zoom call that the acquisition would eventually let Volpara create breast cancer risk models based on not just tens of thousands of women, but millions.

CRA has about six per cent of the US breast-screening market and had $US3.1 million ($4.06 million) in revenue for the 12 months ended December 31.

Volpara said the acquisition will increase its annual recurring revenue to $US17.5 million ($22.9 million) and increase its market share from 27 per cent to over 30 per cent of the US breast-cancer screening market.

Morgans analyst Scott Power called it a “great acquisition” and an “important step forward – market will like”.

“The pricing looks reasonable and will add positively to the EBITDA line,” Morgans said in a research note. “VHT has maintained its discipline in not rushing overpaying for the business.”

Post-acquisition, Volpara will have about $NS35 million ($32.8 million) in cash. Its last acquisition was US medical software company MRS for US$14.59 million ($21.15 million) in June 2019.

At 10.53am, VHT shares were up 5.1 per cent to $1.56. Morgans rates the company a buy with a target price of $1.70.

VHT shares