Teri Thomas, an American transplanted to Tauranga, took over the reins at Volpara in April. Photo / Supplied
Volpara Health's restructure will lighten its headcount by 29 staff, or a third more than the recently reported number, once a sinking lid policy is factored in - but its new CEO says it's now on a path to profit.
"At the time of Volpara's FY2022 results [for the year to March], Volpara's had a total staff number of 189 roles across the US, New Zealand, Australia, and the UK, but that number has since reduced via natural attrition. Volpara expects a total staff number of around 160 once all the restructuring changes have taken effect," new chief executive Teri Thomas told the Herald.
The Wellington-founded, ASX-listed maker of software for breast screening software, is aiming to cut $10 million to $11m in costs during its current financial year.
Volpara reported its FY022 full-year result on May 26. Its net loss widened by 6 per cent to $16.4 million on revenue that increased by 32 per cent to $26.1m (its accounts are in New Zealand dollars).
Its shares fell to a 12-month low of 40c - below its 2016 list price of 50c.
The stock has recovered some ground after Thomas outlined the restructure plan earlier this week. In midday Friday trading, it was at 66c for a A$166m market cap.
"No one likes to see staff go, and we are doing our best to support those staff in finding new jobs," Thomas told the Herald.
"But this strategy review is about positioning the company to continue our strong growth in revenue and customer base and create more products and jobs in the future.
"From a business perspective, the staff reductions will have no material negative impact on top-line revenue growth."
Beyond axing a number of staff, the restructure will see a new focus on what Thomas calls "elephants" - large organisations or large commercial opportunities, such as its recent contract with RadNet, the largest provider of outpatient imaging services in the US.
At the same time, the firm will pull out of under-performing markets.
A Volpara investor presentation said:
"The United States and Australia remain Volpara's key regions for driving strategic growth, representing 98.4 per cent of revenue.
"Regions such as Japan, Korea and Singapore deliver sub-optimal revenue relative to the resources and investment required for efficient growth.
"By exciting these regions, Volpara will save money on regulatory filing fees and ongoing operational support efforts."
Thomas, who grew up in Wisconsin and is now based in Tauranga (where her husband Jay has hospitality interests), worked for a number of healthcare firms in the US before becoming global head of sales for Auckland-based Orion Health in mid-2017. She left shortly before Orion delisted, and did a Masters of Nursing Science at Wintec before joining Volpara as a strategic advisor in 2022.
She replaced Volpara's founding CEO Ralph Highnam in April this year. A review followed, resulting in a new business strategy with a focus on growth and getting to profitability.
"Part of the strategy is a reduction in operating costs, and one of those reductions in costs includes a reduction in staff numbers, Thomas said.
"Some roles have been disestablished, but others are being created.
"Volpara has acquired two companies in the last three years. We've determined that we can operate more efficiently in some areas by pulling functions from multiple business units into one company-wide unit, while expanding other areas."
The US salesforce has remained the same size, with growth in customer success and engagement, Thomas said.
"Other parts of the company will have a reduction in roles and greater collaboration in cross-functional, cross-trained teams. We are reducing our focus on non-profitable markets and a few low-revenue products, and expanding our efforts in our biggest, most profitable markets, the US and Australia, and products - Volpara Risk Pathways, Analytics and Hub."
The cloud-based Risk Pathways, Analytics and Hub software expand Volpara from its original focus on analysing breast density (a key cancer indicator) to helping to run a radiography clinic and manage patient relationships.
As well as duplicated roles not being replaced as people left, 24 staff will be laid off across the US, Australia and New Zealand.
The restructure had also created six new roles, Thomas said.
The aim is to position Volpara to breakeven in the final quarter of 2024, then hit profit in 2025.