In late morning trade the S&P/ASX 200 Index (ASX: XJO) is on course to continue its recovery with another solid gain. The benchmark index is currently up 0.9% to 6,723.7 points.

Four ASX shares that have failed to follow the market higher today are listed below. Here’s why they are dropping lower:

Bubs Australia Ltd (ASX: BUB)

The Bubs share price has continued its slide and is down a further 5.5% to 67 cents. Investors have been selling the goat milk infant formula company’s shares after its second quarter update fell short of expectations last week. While Bubs’ performance has improved since the first quarter, its latest update was still weaker than the market was forecasting. Its sales came in softer and its costs were higher than expected.

Huon Aquaculture Group Ltd (ASX: HUO)

The Huon share price has crashed 9% lower to $2.79 following the release of a trading update. That update revealed that challenging market conditions as a result of COVID-19 have persisted throughout the first half in both the domestic and international markets for salmon. While its sales volumes were on target for the period, the price of salmon has softened notably. Management also warned that prices are unlikely to recover over the coming months.

Temple & Webster Group Ltd (ASX: TPW)

The Temple & Webster share price has sunk 5% lower to $10.51. This follows the release of the online furniture and homewares retailer’s half year update this morning. For the six months ended December 31, Temple & Webster delivered a 118% increase in revenue over the prior corresponding period to $161.6 million. Thanks to operating leverage, EBITDA jumped a massive 556% to $14.8 million. While this was undoubtedly strong, it still fell short of Goldman Sachs’ estimate of revenue of $171.1 million and EBITDA of $17.6 million for the half.

Unibail-Rodamco-Westfield CDI (ASX: URW)

The Unibail-Rodamco-Westfield share price is down almost 7% to $5.14. This decline appears to have been driven by profit taking after a strong rise in recent trading sessions. That rise was driven by a short squeeze initiated by traders from Reddit.

More reading

• Why the Temple & Webster (ASX:TPW) share price is sinking 5% lower today
• 2 small cap ASX shares that are growing quickly
• Why Afterpay, ResMed, Temple & Webster, & Worley shares are dropping lower
• Top ASX shares to buy in February 2021
• ASX 200 Weekly Wrap: Reality (and GameStop) finally hits ASX

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia owns shares of and has recommended BUBS AUST FPO. The Motley Fool Australia has recommended Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Centuria Industrial Reit (ASX: CIP) share price has lifted in morning trade, up 1.14% to $3.10 at the time of writing.

This follows the release of the real estate investment trust’s (REIT) first half of the 2021 financial year results.

What did Centuria report?

In the first half of FY2021, Centuria acquired 9 industrial properties worth $694 million. The REIT now holds 59 industrial properties across key capital cities in Australia.

The 9 properties all were acquired with 100% occupancy with a weighted average lease expiry (WALE) of 19 years. This helped bring Centuria’s total portfolio WALE up to 9.8 years and total occupancy at 97.7%.

The acquisitions, alongside $104 million in revaluation gains, saw Centuria’s portfolio value reach $2.4 billion, an increase of almost 50% during the half year.

Statutory net profit for the half year came in at $99.6 million, with funds from operations (FFO) of $42.8 million. With 29.6% gearing, the trust has $146 million of undrawn debt available.

Centuria became part of the S&P/ASX 200 Index (ASX: XJO) on 22 June.

What did management say?

Commenting on the first half results, Centuria fund manager Jesse Curtis said:

During this first half of FY21 we strategically targeted acquisitions within tightly held industrial sub-sectors with favourable supply demand dynamics to create a diversified pure-play industrial portfolio. In particular, we expanded into the data centre and cold storage sectors…

During the COVID period we observed a rapid increase in demand for data warehousing with a shift to cloud based data storage coupled with an increase in online shopping, particularly for non-discretionary items such as groceries and pharmaceuticals. We believe these trends are here to stay and investing in the undersupplied industrial sub-sectors of data centre and cold storage is a sound strategy.

Many of the REIT’s 117 tenants, spread across its 59 properties, are involved in producing, packaging and distributing consumer staples, pharmaceuticals and telecommunications.

And Curtis sees further growth in this sector, notably for online retailing space:

Industrial tenant demand remains robust, particularly for e-commerce and online retailing occupiers. While having grown quickly during the pandemic period, online retail penetration in Australia still lags the global average, providing the potential for significant take up of industrial space.

Centuria share price snapshot

This morning’s gain sees the Centuria share price squeak back into the green for 2021, up just 0.32%.

While shares are up 39% from the 2020 March lows, the share price remains down 12.8% over the past 12 months.

More reading

• These 2 ASX stocks jumped after a broker upgrade to “buy” today
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 rises, Worley dumped, Mesoblast rises
• On fire! 2 reasons why the Afterpay (ASX:APT) share price rocketed 12% in January
• ASX 200 down 0.2%: Zip Chair steps down, Worley crashes, Blackmores & InvoCare jump

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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Our share market jumped higher at the open but two ASX stocks are outperforming after UBS upgraded them to “buy”.

The S&P/ASX 200 Index (Index:^AXJO) gained 0.9% at the time of writing on positive overnight leads from Wall Street.

But that pales in comparison to the 4.9% surge in the Healius Ltd (ASX: HLS) share price to $4.11.

Big “buy” upgrade lifts the HLS share price

The big increase the share price of the medical facilities operator coincided with UBS’ big upgrade of the stock today.

The broker lifted its recommendation on the HLS share price by two full notches to “buy” from “sell”. It also pumped up its 12-month price target to $4.40 from $2.70 a share.

“In our view, HLS is now far better placed to benefit from favourable underlying demand for diagnostic services and a more benign reimbursement environment,” said UBS.

“In addition, sale of the GP component within the Medical Centre division has significantly improved the company’s capital structure.”

Good dividend prognosis

Not having the general practice (GP) businesses means is that Healius can lift its dividend payout and fund an on-market share buyback.

UBS is forecasting the group to pay a dividend of 12 cents a share in total for FY21. That’s up from the 3 cents a share it paid the year before.

Getting more bullish on iron ore

Another stock outperforming on the back of an upgrade is the Deterra Royalties Ltd (ASX: DRR) share price.

Shares in the iron ore royalties entity jumped 2.3% at the time of writing to $4.44 after UBS upgraded it to “buy” from “neutral”.

“We forecast a 5% lift in world crude steel production in 2021 with China +2% and RoW [rest of world] +8%,” said the broker.

“The forecast growth in steel production in 2021 drives a 3% or 50Mt y/y lift in seaborne iron ore demand to 1,496Mt.”

Supply deficit to keep prices high

With low-cost iron ore supply only increasing by 25 million tonnes (Mt), this leaves the market with a supply deficit of 27Mt.

This will keep the high-cost producers in business – driving up the marginal cost of production for the industry.

The broker upgraded its iron ore forecast for this calendar year to US$125 per dry metric tonne, up from US$110/dmt. Its longer term price forecast also increased by US$5 to US$65/dmt.

Deterra royalty revenue explained

Deterra owns collects a 1.232% royalty from BHP Group Ltd’s (ASX: BHP) Mining Area C operation in the Pilbara.

The mine is expected to lift production from 60 million tonnes per year (Mtpa) to 140Mtpa over three years, starting this year.

UBS’s 12-month price target on the DRR share price rises to $5.15 from $5 a share.

More reading

• Why the Centuria (ASX:CIP) share price is gaining today
• 5 things to watch on the ASX 200 on Tuesday
• ASX 200 rises, Worley dumped, Mesoblast rises
• On fire! 2 reasons why the Afterpay (ASX:APT) share price rocketed 12% in January
• ASX 200 down 0.2%: Zip Chair steps down, Worley crashes, Blackmores & InvoCare jump

Motley Fool contributor Brendon Lau owns shares of BHP Billiton Limited and Deterra Royalties Limited. Connect with me on Twitter @brenlau.

The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Credit Corp Group Limited (ASX: CCP) share price is surging higher today. This comes after the company released its half-year results for the 2021 period.

In early morning trade, shares in the debt collector are swapping hands for $32.68, up 10.93%.

Let’s take a look and see the company’s latest announcement and what that means for the Credit Corp share price.

How did Credit Corp perform for H1 FY21?

Sending the Credit Corp share price higher, the company highlighted robust trading conditions which either met or exceeded key targets.

For the period ending 31 December, 2020, Credit Corp delivered total group revenue of $188 million, reflecting a 2% decline on the prior corresponding period (pcp).

In its largest market, Australia/New Zealand debt buying stayed relatively steady with $113.3 million recorded. The 1% increase remained in line with the previous year. Credit Corp noted that its collections reduced over the December quarter due to reduced COVID-19 stimulus packages from the Commonwealth government.

The United States debt buying segment recorded the strongest gains, rising to $37.3 million, up 33%. This was attributed to improvements in operations and elevated purchases of debt ledgers in the last few years.

In addition, Australia/New Zealand lending dropped to $37.4 million, down 26%. This is because new customer approval rates and loan amounts were affected by the economic downturn. However, the company noted that in the last quarter, applications have exceeded the prior year. Thus, it expects lending revenue to return to growth in the second-half of FY21.

Overall, net profit after tax (NPAT) came to $42.3 million, a 10% jump over the comparable period.

Credit Corp revealed that it has a healthy cash balance of $400 million and remains debt free to capture any potential opportunities that may accelerate growth.

The board declared a fully-franked dividend of 36 cents per share to be paid to eligible shareholders on 12 March, 2021.

What did management say?

Credit Corp CEO, Mr. Thomas Beregi, commented on the purchase of the debt ledger from Collection House, saying:

The Collection House purchase will enable us to maintain our operational scale and grow collections while ongoing purchasing volumes recover.

Furthermore, Mr. Beregi went on to talk about the resilience of its United States market, adding:

While COVID-19 has produced tight purchasing conditions, our US business is very competitive and can grow NPAT rapidly when conditions ease.

Outlook and guidance for Credit Corp

Looking ahead, Credit Corp believes that its continued performance will run into the remaining second-half of the 2021 financial year. It noted that the recent investment in Collections House will drive strong revenue generation more than the recovery to pre-COVID levels.

In light of the above, the company upgraded its guidance for the FY21 period.

Credit Corp anticipates purchase debt ledger (PDL) acquisitions to come around $310 million to $330 million. Previously, its forecasts estimated PDL to fall between $270 million to $330 million.

NPAT is also looking to surge with the company predicting guidance of $85 million to $90 million. Last month, Credit Corp projected NPAT to be between $70 million and $85 million.

More reading

• 5 things to watch on the ASX 200 on Tuesday
• 5 things to watch on the ASX 200 next week
• ASX 200 rises 1.5%
• Credit Corp (ASX:CCP) share price up 1% but Collection House (ASX:CLH) crashes 66% lower

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Moderna Inc (NASDAQ: MRNA) stock is down 9% on Monday after Bank of America analyst Geoff Meacham downgraded his opinion on the stock from neutral to underperform and kept his $150 target on the shares. Moderna, which traded hands at $185 on Friday, opened at $173 and dropped down to $154 in early trading.

The biotech stock skyrocketed in 2020 because of the COVID-19 pandemic, running up from $19 a share to $111. Moderna’s messenger RNA (mRNA) platform allows it to find vaccines quickly and get them into clinical trials before its rivals.

Meanwhile, Pfizer signed a collaboration agreement with another biotech, BioNTech, another mRNA specialist, to develop its COVID-19 vaccine. Moderna and Pfizer were neck-and-neck all year in the race to get COVID-19 vaccines to the public. The Food and Drug Administration (FDA) granted emergency-use authorisation to both companies in December.

Moderna has a wide-ranging platform with 27 molecules in its pipeline, so long-term investors could be rewarded if it finds success in any major programs including vaccines for cytomegalovirus and certain cancers.

While the market was already bullish about Moderna prior to the pandemic, the huge run-up in valuation is undoubtedly due to its ability to produce (and get clearance) for a highly effective COVID-19 vaccine in under a year. Moderna’s phase 3 data and the FDA’s resulting decision is seen as a proof-of-concept for Moderna’s mRNA platform. Moderna expects to bring in $11 billion in revenue from its vaccine this year.

However, there is a serious downside to Moderna’s vaccine and the class of mRNA vaccines in general: distribution issues. Pfizer’s drug has to be frozen, and Moderna’s vaccine has a 30-day window before it starts to go bad. As a consequence, other vaccine makers like Johnson & Johnson and Novavax might end up taking a larger market share if and when they cross the regulatory finish line, and that could put downward pressure on Moderna’s stock.

Investors should probably wait for a cheaper price to buy Moderna.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

More reading

• Moderna says vaccine protects against all known variants
• Pfizer COVID-19 vaccine given green light for use in Australia
• Will the ASX see a share market bubble in 2021?
• Moderna coronavirus vaccine approved in Europe
• How MRNA stock performed in 2020

Taylor Carmichael owns shares of Novavax. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Johnson & Johnson and Moderna Inc. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The Vulcan Energy Resources Ltd (ASX: VUL) share price won’t be going anywhere on Tuesday after the clean lithium focused mineral exploration company requested a trading halt.

Why is the Vulcan share price in a trading halt?

Less than one week after advising that it was not conducting a capital raise at this point in time, Vulcan requested a trading halt this morning to launch one.

According to the release, Vulcan Energy is seeking to raise approximately $100 million via the placement of approximately 15.4 million new fully paid ordinary shares to sophisticated and professional investors. The placement is not underwritten.

It is aiming to raise the funds at a fixed offer price of $6.50 per new share, which represents a 17.1% discount to its last closing price of $7.84.

Management notes that the placement will provide the funding to support it through to the final investment decision at its Zero Carbon Lithium Project in Germany.

Where will it spend the funds?

It intends to use $50 million of the funds for project development, permitting, feasibility study costs and overheads.

This includes the definitive feasibility study (DFS), which is due mid-2022 and includes the acquisition of exploration data, the permitting of the Zero Carbon Lithium Project, and completion of studies towards permitting and development.

The company also intends to put $30 million towards drill site acquisition and preparation and $20 million will be used for strategic opportunities to accelerate project development. In respect to the latter, management advised that Vulcan is assessing options to acquire existing infrastructure in Germany to accelerate development.

What is the Zero Carbon Lithium Project?

The Zero Carbon Lithium Project is expected to be Europe’s largest lithium operation and run 100% on clean geothermal energy.

Management plans to use its unique Zero Carbon Lithium process to produce both renewable geothermal energy, and lithium hydroxide, from the same deep brine source.

By doing so, it believes it will be addressing EU market requirements for lithium by reducing the high carbon and water footprint of production, and total reliance on imports, mostly from China.

Overall, it believes its resource will be able to satisfy Europe’s needs for the electric vehicle transition, from a zero-carbon source, for many years to come.

More reading

• Why the Vulcan Energy (ASX:VUL) share price stormed 186% higher in January
• Bright day for Sun Cable after inking giant solar farm development deal
• What’s with the Vulcan (ASX:VUL) share price today?
• The Piedmont Lithium (ASX:PLL) share price just rocketed 32% to a record high
• Zip and Vulcan were among the most traded ASX shares last week

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Pro Medicus Limited (ASX: PME) share price is dropping lower on Tuesday despite the release of a positive announcement this morning.

At the time of writing, the leading health imaging company’s shares are down 1% to $42.39.

What did Pro Medicus announce?

This morning the company announced that it has received clearance by the U.S. Food and Drug Administration (FDA) for its Breast Density artificial intelligence (AI) algorithm.

This means the company now has clearance in the US, Europe, and Australia markets, which paves the way for management to begin marketing the algorithm across all three jurisdictions.

What does this algorithm do?

According to the release, the Breast Density algorithm is intended for use with compatible full field digital and digital breast tomosynthesis systems.

It assesses breast density from a mammography study and provides an ACR BI-RADS Atlas 5th Edition breast density category to aid radiologists in the assessment of breast tissue composition.

In December 2019, CEO Dr Sam Hupert spoke about the algorithm.

He explained: “Working with the breast imaging team at Yale, which is one of the most highly regarded in the US, we were able, using Visage Research Server, to anonymise over 30,000 cases. This data was then fed into our machine learning model which was used to produce the Breast Density algorithm.”

“As an extra validation, we had a team of five breast imaging specialists at Yale each curate over 500 cases using our curation tools and then tested the algorithm against these curated cases. The results were so promising we decided to commercialise the product and have applied for FDA approval,” he added.

Dr Hupert also pointed out that the product differs from its competition due to its software being GPU based.

He commented: “Because Visage is GPU based, we are able to run our algorithm on our client’s existing hardware which takes around a second to provide the analysis, so it is pretty much on demand. This is unlike others that either require a fair amount of additional onsite hardware to run their algorithm or they have to do it in the cloud [..] This can be costly and because the files are so large, time consuming.”

What now?

Dr Hupert believes today’s approval could pave the way for similar developments in the future.

“We developed this algorithm using our own AI Accelerator platform which enabled us to significantly speed up every stage of the process from concept to FDA approval. This not only provides us with a fast-track mechanism to develop our own algorithms in future, it paves the way for further collaborations with the growing number of our research oriented clients,” he concluded.

More reading

• The Pro Medicus (ASX:PME) share price zoomed 25% higher in January
• These were the best performing ASX 200 shares in January
• These ASX 200 shares are on fire in 2021
• Why Vulcan (ASX:VUL) and these ASX shares are smashing the market in 2021
• ASX 200 down 0.5%: JB Hi-Fi guidance impresses, Super Retail update, Ramsay surges

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Catapult Group International Ltd (ASX: CAT) share price has been a positive performer on Tuesday in morning.

At the time of writing, the sports analytics and wearables company’s shares are up 2% to $1.79.

Why is the Catapult share price pushing higher?

Investors have been buying Catapult’s shares on Tuesday after the release of an update in relation to its Media & Engagement vertical.

According to the release, for the 2020-21 US college sports year, Catapult Licensing has renewed agreements with NFL Productions and Bleacher Report, a sports media subsidiary of Turner Broadcasting System (TBS).

The Bleacher Report production team uses Catapult to create original content on a daily basis, while NFL Productions relies on Catapult Licensing for research, rights clearances, and content fulfilment services. This is for a multitude of projects, which include original programming on NFL Network and documentary projects produced by NFL Films.

Management notes that Catapult content is often featured in popular NFL programming, such as “A Football Life”, “Path to the Draft”, and coverage of the NFL Draft, with audiences in the several millions for each program.

It also advised that over the past two months, Catapult Licensing has supported global brands such as Samsung, Guinness, Nissan, and Adidas in creating commercial campaigns for the 2021 football season.

Furthermore, the company has signed a multi-year partnership with the College Football Playoff (CFP), which is the annual post-season invitational tournament to determine the NCAA college football national champion. With this addition, management notes that Catapult Licensing will represent one of the most prestigious libraries in American sports.

Content licensing potential

Management believes that Catapult’s innovative content licensing business has a lot of potential.

It explained: “Video content licensing remains an important component of the pro sports ecosystem, and Catapult continues innovating within a lucrative vertical for the Company. Catapult’s leadership in SaaS sports technology has positioned it to manage the video content assets (i.e. footage) of its customers.”

“Content licensing is a major revenue-generating activity for Catapult’s core North American customers. Catapult adds significant value to these customers through the use of its technology and market knowledge, thereby cementing the Company’s relationships with these leagues and teams.”

“For the 2021 college football season, Catapult Licensing launched a new live clipping solution, which allows teams to schedule live game feeds, make live clip edits, add custom pre and post rolls, and publish to multiple social media channels. The solution is already being used by many NCAA teams for social media coverage of football games,” it concluded.

More reading

• Why the Temple & Webster (ASX:TPW) share price is sinking 5% lower today
• Here’s why the Volpara (ASX:VHT) share price is surging 5% higher
• Why the GR Engineering (ASX:GNG) share price will be on watch today
• Forget gold. I’d follow these 3 steps to capitalise on a stock market rally
• The WiseTech (ASX:WTC) share price is trading near 52-week highs

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Catapult Group International Ltd. The Motley Fool Australia owns shares of and has recommended Catapult Group International Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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In morning trade on Tuesday, the Temple & Webster Group Ltd (ASX: TPW) share price is sinking lower.

At the time writing, the online furniture and homewares retailer’s shares are down 5% to $10.44.

Why is the Temple & Webster share price sinking lower?

Investors have been buying Temple & Webster shares following the release of its half year results this morning.

According to the release, the company delivered a 118% increase in revenue over the prior corresponding period to $161.6 million.

This was driven by the doubling of its active customers from 335,000 to 678,000 and a 6% increase in the average spend per active customer to $401.

And thanks to operating leverage, Temple & Webster’s earnings grew even quicker. Management notes that its fixed cost as a percentage of sales decreased from 11.6% to 7.5% over the last 12 months.

This led to its earnings before interest, tax, depreciation and amortisation (EBITDA) jumping a massive 556% to $14.8 million.

Also heading in the right direction was its contribution margin, which increased from 15.3% at the end of FY 2020 to 17%. This margin growth was driven partly by an increase in private label sales, which is now 25% of revenue. Management has a mid term target of 30%

No figures were provided for its net profit (or loss) after tax. However, management advised that it was cash flow positive for the half and ended the period with a cash balance of $85.7 million. This includes the proceeds of a $40 million placement during the period.

Temple & Webster’s CEO, Mark Coulter, was very pleased with the half.

He commented: “I am pleased to present a great set of results for the first half of FY21. While 2020 remained a challenge for the country, we are proud that many Australians continued to turn to Temple & Webster for their furniture and homewares needs. It is great to see our revenue growth translating into operating leverage and significant profit growth. This allows us to accelerate our investment into areas such as data, technology, private label and brand awareness to further differentiate our proposition.”

How does this compare to expectations?

Temple & Webster’s result has fallen short of Goldman Sachs’ expectations for the half.

According to a recent note, its analysts were forecasting revenue of $171.1 million and EBITDA of $17.6 million for the half.

This compares to its actual result of $161.6 million and $14.8 million, respectively.

Outlook

Management advised that the second half has started strongly, with January’s revenue growth tracking in excess of 100%.

It also revealed that it continues to experience strong tailwinds. These include the ongoing adoption of online shopping due to structural and demographic shifts, an acceleration of these trends due to COVID-19, an increase in discretionary income due to travel restrictions, and the continued recovery of the housing market and unemployment levels.

The company intends to continue its reinvestment strategy by investing into growth areas of the business to cement its online market leadership and drive market share.

More reading

• Why Afterpay, ResMed, Temple & Webster, & Worley shares are dropping lower
• Top ASX shares to buy in February 2021
• 2 ASX shares that are growing rapidly
• Why the Temple & Webster (ASX:TPW) share price hit new highs last year
• Why Beach, Fortescue, Iluka, & Temple & Webster shares are dropping lower

James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Temple & Webster Group Ltd. The Motley Fool Australia has recommended Temple & Webster Group Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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The Volpara Health Technologies Ltd (ASX: VHT) share price has returned from its trading halt and is pushing higher on Tuesday.

In morning trade, the health technology software company’s shares are up 5% to $1.56.

Why is the Volpara share price surging higher?

Investors have been buying Volpara’s shares this morning following the announcement of a new acquisition.

According to the release, the company has acquired CRA Health for US$18 million upfront, with an additional US$4 million payable upon it meeting recurring revenue and staff retention targets over the next 18 months. Post-acquisition, Volpara will have ~NZ$35 million cash.

CRA Health is a breast cancer risk assessment company that was spun out from Massachusetts General Hospital, a Harvard Medical School teaching hospital.

The release explains that CRA Health’s cloud based CRA software is tightly integrated into major electronic health record (EHR) systems. It receives patient information, including breast density, and returns the risk of breast cancer alongside appropriate recommendations.

This includes whether additional imaging or genetics testing is advised and reimbursed according to established guidelines. CRA also has electronic interfaces built with all the major genetics companies.

CRA is a profitable, operating cash-flow-positive software-as-a-service (SaaS) company with low customer acquisition costs due to its relationships with the major EHR companies. It now has annualised recurring revenues (ARR) of over US$4 million (NZ$6.2 million) after experiencing strong growth over the last year despite the COVID-19 pandemic.

Its software covers around 2.4 million women, or approximately 6% of US screenings, with an average revenue per user (ARPU) of approximately US$1.70. Unaudited revenue for its last financial year ended 31 December 2020 was US$3.1 million.

A very significant acquisition

Volpara’s CEO, Dr Ralph Highnam, believes the acquisition of CRA is significant.

He said: “The acquisition of CRA is very significant for Volpara. CRA is a leading provider of risk assessment tools within major EHR systems and has integrations already built with the main genetics companies. CRA has a strong science background, just like Volpara, and provides us with world-class knowledge about risk and genetics. CRA is expected to benefit the Volpara brand and will accelerate us on our mission to save families from cancer by preventing advanced-stage breast cancer.”

The acquisition will increase group ARR to ~US$17.5 million (NZ$26.9 million) and group ARPU to over US$1.40.

Volpara’s Chair, Paul Reid, added: “We have known CRA for a long time, and they share our values, mission, and scientific background. We can’t wait to see the results of combining these two global leaders and the positive effect these will have on women’s healthcare.”

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends VOLPARA FPO NZ. The Motley Fool Australia owns shares of and has recommended VOLPARA FPO NZ. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

The post Here’s why the Volpara (ASX:VHT) share price is surging 5% higher appeared first on The Motley Fool Australia.

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