Medical technology firm Volpara seeks A$10M in ASX listing, can't predict future profitability

Wednesday 30th March 2016

Wellington-based Volpara Health Technologies can’t say when it’s likely to become profitable but still aims to raise A$10 million in an initial public offering on the Australian stock exchange.

The medical technology start-up is selling 20 million shares at 50 Australian cents each, which will give it a market capitalisation post-offer of A$61 million. The capital raising, underwritten by Morgans, is due to open on April 4 and close on April 15 with an ASX listing on April 27.

Volpara is still in the early stages of commercialising its software for analysing mammograms which measure the breast density, a key indicator in early breast cancer detection.

The offer’s prospectus says the seven-year-old company has garnered $5 million in sales since launch, with more than 90 percent coming from the US. Revenue for the 2015 financial year was $2.4 million and resulted in a net loss of $3 million. It had a loss of $3.7 million in the nine months to Dec.31 and an investigating accountant’s report in the prospectus points out auditor Deloitte had flagged that loss in the reviewed historical financial statements, along with the fact its total liabilities exceeded total assets by $13.7 million, casting doubt on Volpara’s ability to continue as a going concern.

The prospectus doesn’t include any prospective financial information because the board concluded there was too broad a range of potential outcomes.

About 75 million women each year are screened for breast cancer globally, including 40 million in the US. Volpara’s proprietary software has been used to analyse the mammograms of over 9 million women to date.

Working in Volpara’s favour is the fact it's operating in a large, high growth market with the incidence of breast cancer expected to double by 2030. It also holds extensive, clinically validated, intellectual property patents on its core VolparaDensity software and there are high barriers to entry for any newcomers into the market.

The A$10 million raised in the offer will go towards expanding its lean sales and marketing team to grow its direct and channel-based sales of its product range, expand marketing to both health insurers and directly to women, to smooth the transition to a subscription-based revenue model for its cloud-based software, and to fast track developing cloud-based products that open up the opportunity of providing big data predictive healthcare and industry-wide analytics that will help save more lives.

“We are committed to ongoing commercial success with 127 paying clinical customers across the US, Europe, Australia, New Zealand, and Asia as well as interest from several of the major x-ray machine manufacturers as testament to our commercial traction,” said chairman Roger Allen in the prospectus. “In fact, VHT recently signed global distribution deals with GE Healthcare and Siemens Medical Solutions.”

Currently Volpara’s major shareholders are Allen who holds 20 percent through Patagorang Pty Ltd and chief executive and director Ralph Highnam who has 15 percent. Post offer directors and managers will own 43 percent of the company, other investors 41 percent, and new investors 16 percent though legacy and new employment share options will account for 12 percent of total equity once exercised.

(BusinessDesk)

BusinessDesk.co.nz

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