Volpara Health wins bundle of US contracts worth $11.3m

Volpara Health (ASX:VHT) shareholders are enjoying a green Monday on the ASX as the company announces its execution of five different contracts worth an aggregate $11.3m (US$7.8m).

Volpara specialises in AI-powered software used in the detection and treatment of cancer and already enjoys the benefit of FDA registration and approval. 

Various forms of medical imaging are analysed by Volpara tech which is advertised as facilitating a greater diagnosis accuracy over human eyes alone. 

The company also says its software is increasingly desirable in a US healthcare system still constrained by ongoing labour shortages. 

Morning gains have been retained into the second hour of afternoon trade, even as the healthcare sector has entered the red after a strong morning.

The healthcare sector is down -0.58% as of 1:15pm AEST.

A look at the US partners 

The company highlights leading US-based healthcare providers are included in the new contracts. 

Broken down, here’s what that list looks like: 

• Bon Secours Mercy Health: USA’s fifth-largest Catholic health care ministry (contract value A$2.24m) 

• Adventist Health: Church-aligned NFP operating in Hawaii and the West Coast (contract value A$2.45m) 

• Northside Hospital: Among the state of Georgia’s largest health providers reportedly serving 5,000,00 patients annually (contract value A$2.79m)

• Duty Health and Care: Largest independent medical group in the US Midwest (contract value A$2.10m) 

• Onsite Women’s Health: US-based breast cancer services provider (contract value A$1.72m)

Further, a sixth entity called Centura Health with 19 hospitals on its books has renewed a five year contract with Volpara. 

Volpara’s software will be installed into the first five new partners’ systems within the next “six to twelve months.” 

Breast cancer as a growth point 

Under the management of company chief Teri Thomas, Volpara continues to grow its operational footprint in the breast cancer space. 

“The growing demand for Volpara’s breast [cancer] software, which brings together cancer risk assessment, density scoring, image quality optimisation, and patient tracking and reporting, reflects an industry transformation,” Thomas said. 

““These new contracts are also representative of the ‘elephant’ commercial opportunities Volpara is prioritising to drive recurring revenue growth,” she added, pointing towards recurring subscription models. 

Most software providers in the modern world have pivoted to Software-as-a-Service (SaaS) contracts which turn away from perpetual licences (in other words, one time purchases.) 

Brief overview of company performance 

Market Index’s broker consensus scan reveals the NZ-based and Australian-listed healthcare smallcap ($158.8m) is ranked a “buy” by five brokers, with one broker recommending “hold.” 

One year returns for Volpara shareholders are down -37.9% after a shocking 2022 offered no overwhelming sympathy to healthcare stocks. 

The company has a market cap of $158.8m and had $11.6m in cash at the end of the September quarter. 

It spent $3.1m during the same period. 

A look at Volpara's three month charts