The Volpara Health Technologies Ltd (ASX: VHT) share price will be one to watch on Tuesday after the release of its quarterly update.
How did Volpara perform in the third quarter?
This morning the SaaS medical technology company whose AI imaging algorithms assist the early detection of breast cancer revealed further strong cash receipts growth.
According to the release, cash receipts from customers came in at NZ$4.5 million during the third quarter. This was a massive 138% increase compared to the prior corresponding period.
This took its Annual Recurring Revenue (ARR) to NZ$16.8 million at the end of the period. This was ahead of its midrange forecasts.
One key driver of its strong quarter was last year's acquisition of the MRS business in the key United States market. Management notes that more customers are taking advantage of Volpara's enhanced product suite and are adopting a SaaS model.
Supporting its growth was further market share gains. At the end of the quarter, approximately 25.94% women being screened (approx. 10.2 million women) were covered by at least one Volpara product.
Pleasingly, also growing was its average revenue per unit (ARPU). The release advised that the ARPU generated by women under contract across the group within breast cancer operations is currently approximately NZ$1.57 (US$1.02). This is up ~5% from NZ$1.49 (US$0.97) at the end of the second quarter.
As a result of this strong quarter, management is confident it will exceed its midpoint guidance for FY 2020 ARR of NZ$17.1 million (US$11.5 million).
Cash outflows.
Operating cash outflow for the period was NZ$4.5 million. This was largely a result of increased outgoings related to the Radiology Society of North America (RSNA) show in Chicago in early December. Pleasingly, its operating costs continue to run at budget.
Volpara's cash on hand was NZ$35.4 million at the end of the period. This compares to NZ$40.2 million at the end of the second quarter.
Another quarter of strong growth.
Volpara's CEO, Dr Ralph Highnam, was pleased with the third quarter.
He said: "Following a stronger-than-expected Q2, we've now followed up with another quarter of strong growth which has helped us to expect an increase in our ARR forecast for the year. I'm particularly pleased we're starting now to see the combined SaaS orders coming in and the process underway to encourage MRS's legacy installed base to move from their old service & maintenance agreements onto SaaS."
Dr Highnam also notes that the publication of the DENSE trial results in the New England Journal of Medicine were a major highlight during the period. This trial showed a significant drop in interval cancers.
He said: "Trials like DENSE, using Volpara Density, provide the evidence that global screening programs need to change."
