VHT.AX - Early detection of breast cancer, a big data company



  • VHT provides breast imaging analytics and analysis products for the early detection of breast cancer in the medical device software industry.

  • A recent Dutch study using Volpara Density software has shown that increased breast density has a direct impact on mammography performance measures. The study determined that Volpara Density software was a powerful predictor of screening performance and thus might be used to help get the best out of breast cancer screening programs. With the high reproducibility of the automatic Volpara Density software, this could help with evaluating risk, and better inform clinical decisions about screening options based on women’s specific density and other risk factors. The inclusion of Volpara Density in this large scale study further validates the company’s core technology, and adds to the growing amount of data linking breast density with cancer, and the need for improved screening.


  • Stock Screened on 6 Oct 2017

  • VHT insiders hold a significant stake of 58.91% in the company.

  • Management: Non-Executive Director is Professor Sir John Michael Brady (Brady was knighted in the 2004 New Year Honours for services to engineering. He delivered the Turing Lecture in 2009.[8] He was also awarded the Faraday Medal from the Institution of Electrical Engineers (IEE) in 2000,[1] the Millennium Medal from the Institute of Electrical and Electronics Engineers (IEEE) in 2000.[1] He is also an elected Fellow of the Academy of Medical Sciences (FMedSci)[7] and the Royal Academy of Engineering (FREng).

  • Excellent potential growth in breast imaging analytics and analysis products for the early detection of breast cancer in the medical device software industry. With early detection having a +95% survival rate, women are encouraged to go in for breast cancer screening (also called mammograms). This is where Volpara Health Technologies comes into play with a software solution called VolparaDensity, the first automated breast density assessment software with clinically proven performance (40 peer-reviewed clinical studies). VolparaDensity is just one component of VolparaEnterprise which is the entire cloud-based platform on offer which integrates with all the popular screening machines and also includes a cloud-based “big data” component called VolparaAnalytics. With over 10 million women screened to date, there are loads of insights that can be gleaned from all this data

  • This is a high-margin SaaS product that is seeing strong rates of adoption, and as investors we love nothing more than a company that tells you exactly how they plan to make money. Check out this “anatomy of an enterprise deal” noting:

  • Recurring Revenues: At the time of the IPO, they had just $145,000 a year in run rate (run rate refers to the recurring revenues of Software-as-a–Service (SaaS) companies). Fast forward to today (less than a year later) and we see a run rate of $1.53 million, a number they expect to double before the end of this fiscal year

  • ARR stands for “Annual Recurring Revenue” which is just another way of saying “run rate”. The information seen above shows us just how profitable it is to sell enterprise cloud-based software or SaaS.


  • In developed countries, one in eight women will be diagnosed with breast cancer with the annual global loss due to breast cancer estimated at around US$86 billion.

  • Cloud Computing, Big Data and Artificial Intelligence in Health. The biggest issue for the healthcare sector right now is how AI and machine learning can be used to make a meaningful application within the constraints applied by regulators and the clinical trust required by clinicians. Harnessing the capabilities of these technological innovations within the healthcare sector should be a prime consideration for innovative health businesses: as the technology continues to evolve the industry will need to adapt or get left behind. AI’s ability to analyse vast amounts of complex data gives it the potential to solve some of today’s most enduring healthcare problems. To date, Volpara has not taken a machine-learning approach to delivery of these analytics. However, with the large amount of data being acquired, we are looking forward to delivering new insights for our customers using AI approaches.

  • Have a market penetration of 1.5% in leading market, the United States (expected to exceed 3% by end of fiscal year). There are no competing solutions that have the clinical validation they do (yet) and their leading competitor is “visual assessment”

  • An important point to make here is that the United States has certain regulatory requirements for test providers to measure breast density and report that to patients. 32 states mandate that test providers report breast density, and there’s actually something called the “Mammography Quality Standards Act” or MQSA which mandates that sites adhere to certain quality standards by January 1st, 2018, otherwise they will be fined or even closed down. Again, this thing is practically selling itself.

  • The group’s primary target market for sales of its software is the huge number of U.S. mammography centres, with it now having 40 full-time staff (many in sales functions) across the U.S. and its Wellington headquarters.

  • Rather than a one-off product fee, Volpara’s revenue model involves an annual licence charge and a fee for each breast screened. Typical of cloud subscription models, revenue is recognised over the life of the contract which means short-term revenues are more constrained. But as subscriptions grow, more annuity income is generated.

  • Driven by the exceptional 391.31% sales growth over the next few years, VHT is expected to deliver an excellent earnings growth of 65.52%.

  • Profit growth, coupled with top-line expansion, is a positive indication. This is because net income isn’t artificially inflated by unsustainable activities such as one-off cost-reductions expected in the future. We see this bottom-line expansion directly benefiting shareholders, with expected return on equity coming in at a notable 157.94%.

FINANCIAL (updated)

Q2 FY20 Quarterly Cash Flow Report

  • Cash receipts from customers NZ$4.9M up 190% compared to corresponding Q2 FY19

  • NZ$40.2M cash on hand at end Q2

  • Annual Recurring Revenue (ARR) at end Q2 of NZ$15.7M, tracking forecast

  • At least one of Volpara’s software products now contracted to ~25.8% of US market, tracking forecast


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