As we head into Tuesday afternoon trading, the Volpara Health Technologies Ltd (ASX: VHT) share price is running to the upside.
Buoyed by a business update released this morning, the healthcare technology company’s shares are tracking 7% above their previous close at 82 cents apiece. In contrast, the S&P/ASX 200 Health Care Index (ASX: XHJ) is down 0.4% today.
The move adds to what has already been a triumphant year for the Volpara share price. Before today, shares were up 40% since ticking over into 2023. This latest update has nudged the year-to-date returns up to 50%.
A positive sign for financial health
Since listing, Volpara Health has been cash flow negative — paying out more in expenses than generating in revenue. For this reason, the company has relied upon capital raises and credit facilities to help fund its operations.
A revolving credit facility was obtained in May last year, providing Volpara with NZ$10 million of cash as required. Today, the company has informed the market that it has decided to reduce this form of credit as it ‘is no longer considered necessary’.
The decision was made following staffing changes last year, allowing the business to operate on a roughly free cash flow breakeven basis.
Furthermore, management stated that ‘repeatable operating cash flow positivity [is] in sight’, a statement that is possibly helping give the Volpara share price a bump today.
For context, the company posted $6.42 million in negative free cash flow for the 12 months ending 31 March 2023. Likewise, operating cash came to $3.85 million in net outflow. Hence, investors are excited by the prospects of positive flows in the future.
Reducing its revolving credit facility will strip out NZ$112,500 in finance expenses annually. According to the announcement, management will review its cash position over the next six months to determine whether further reductions to the facility can be made.
What else is driving the Volpara share price higher?
Sweetening the day for Volpara investors, the company also announced it had won the award for Microsoft’s global Healthcare & Life Sciences partner of the year. The award considered more than 4,200 nominations from across the world.
Commenting on the achievement, Volpara CEO and managing director Teri Thomas said:
From a business perspective we are proud to be named Microsoft Partner of the Year in the global Healthcare & Life Sciences category. Microsoft is a great partner with an aligned philosophy that technology should be a force for global good, driving ongoing collaboration to develop new methods of disease detection, enhance our security stance, and reach new markets, which in the end are all meant to improve people’s lives.
The next milestone for Volpara shareholders will be the company’s first-quarter results for FY2024. These are expected to be posted on Friday 21 July 2023.
