23 Nov 2021

Half-year Results Investor Presentation

Half-Year Results 2022 Investor Presentation Ralph Highnam, Group CEO Craig Hadfield, CFO & Company Secretary Important Notice & Disclaimer This presentation, dated 23 rd November 2021, has been prepared solely for the purpose of providing potential investors with information about Volpara Health Technologies Limited ( “Volpara,” “VHT,” or the “Company” ). The information contained in this presentation is of a general background nature, is in summary form, and does not purport to contain all the information that a potential investor may need or desire. Potential investors should conduct their own investigation and analysis of Volpara and of the information contained in this presentation and should rely solely on their own judgement, review, and analysis in deciding whether to invest in Volpara. The information in this presentation has been prepared in conjunction with an oral presentation and should not be taken out of context. The content of this presentation is provided as at the date of this presentation (unless otherwise stated) and the information in this presentation is subject to change without notice. Forward-looking statements This presentation may include forward-looking statements. Such statements can generally be identified by the use of words such as "may," "will," "expect," "intend," "plan," "estimate," "anticipate," "believe," "continue," "objectives," "outlook," "guidance," "forecast," and similar expressions. Indications of plans, strategies, management objectives, sales, and financial performance are also forward-looking statements. Such statements are based on assumptions and contingencies which are subject to change without notice and are not guarantees of future performance. Such statements involve known and unknown risks, uncertainties, assumptions, contingencies, and other factors, many of which are outside the control of Volpara. No representation is made or will be made that any forward-looking statement will be achieved or will prove to be correct. Actual results, performance, operations, or achievements may vary materially from any forward-looking statements. Circumstances may change and the content of this presentation may become outdated as a result. Readers are cautioned not to place undue reliance on forward-looking statements, and Volpara assumes no obligation to update such statements except as required by law. No representation or warranty, expressed or implied, is made as to the accuracy, reliability, adequacy, or completeness of the information contained in this presentation. Past performance Past performance information given in this presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance. Information is not financial or product advice or offer of securities This presentation is not, and is not intended to constitute, financial or product advice, or an offer, invitation, solicitation, or recommendation to acquire or sell Volpara shares or any other financial products in any jurisdiction, and is not a prospectus, product disclosure statement, disclosure document, or other offering document under Australian law or any other law. This presentation also does not form the basis of any contract or commitment to sell or apply for securities in Volpara or any of its subsidiaries. It is for information purposes only. Volpara does not warrant or represent that the information in this presentation is free from errors, omissions, or misrepresentations or is suitable for any intended use. The information contained in this presentation has been prepared without taking account of any person’s investment objectives, financial situation, or particular needs and nothing contained in this presentation constitutes investment, legal, tax, or other advice. The information provided in this presentation may not be suitable for a potential investor’s specific needs and should not be relied upon in substitution obtaining independent advice. Subject to any terms implied by law and which cannot be excluded, Volpara accepts no responsibility for any loss, damage, cost, or expense (whether direct, or indirect, consequential, exceptional, or special damages including but not limited to loss of revenue, profits, time, goodwill, data, anticipated savings, opportunity, business reputation, future reputation, production or profit, any delay costs, economic loss, or damage) incurred by any person as a result of any error, omission, or misrepresentation in this presentation. Preparation of information All financial information has been prepared and reviewed in accordance with Generally Accepted Accounting Practice in New Zealand, New Zealand Equivalents to International Financial Reporting Standards, and International Financial Reporting Standards. Certain financial data included in this presentation is "non-IFRS financial information". The Company believes that this non-IFRS financial information provides useful insight in measuring the financial performance and condition of Volpara. Readers are cautioned not to place undue reliance on any non-IFRS financial information, including ratios, included in this presentation. Third-party information and market data The views expressed in this presentation contain information that has been derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness, or reliability of the information. This presentation should not be relied upon as a recommendation or forecast by Volpara. Market share information is based on management estimates except where explicitly identified. No liability or responsibility The information in this presentation is general in nature and is provided in summary form and therefore does not purport to be complete. No other party than Volpara has authorised, permitted, or caused the issue or lodgement, submission, dispatch, or provision of this presentation, and there is no statement in this presentation which is based on any statement made by any of them or by any party other than Volpara. To the maximum extent permitted by law, Volpara and each of its affiliates, directors, employees, officers, partners, agents, and advisers expressly disclaim all liabilities in respect of, and make no representations regarding, and take no responsibility for, any part of this presentation and make no representation or warranty as to the currency, accuracy, reliability, or completeness of this presentation. To the maximum extent permitted by law, Volpara and each of its affiliates, directors, employees, officers, partners, agents, and advisers and any other person involved in the preparation of this presentation disclaim all liability and responsibility (including without limitation, any liability arising from fault or negligence) for any direct or indirect loss or damage which may arise or be suffered through use or reliance on anything contained in, or omitted from, this presentation. Volpara accepts no responsibility or obligation to provide an update in respect of any matter arising or coming to their attention after the date of this presentation which may affect any matter referred to in this presentation. Each recipient of this presentation represents and warrants to Volpara that it is able to receive this presentation without contravention of any applicable law or legal restriction in the jurisdiction in which the recipient resides, conducts business, or receives this document. This presentation should be read in conjunction with Volpara’s other periodic and continuous disclosure announcements lodged with ASX. 2 Saving Families from Cancer Our Mission 3 Half-year 2022: Volpara's growing impact While noting an incredibly busy commercial HY, we recognise that for many of our employees and investors, an important outcome is impact . We are getting closer to not just early detection but prevention of breast cancer. With over 13.4 million US women now using at least one Volpara product, and many women across Australia and New Zealand, it’s clear we are helping more women get safer, more comfortable, and more accurate breast cancer screenings. 4 Results from studies like the 10-year DENSE trial show that density- based screenings lead to significant increases in the numbers of cancers caught early. Our work with researchers in countries around the world—and an unprecedented 200 peer- reviewed papers—helps countries understand what optimal breast cancer screening might look like for their populations. To reach and educate women directly, we have launched a consumer-facing breast density website and customised patient density notification letters. Finally, our strategic commercial partnerships set the stage for greater reach in not only genetic testing for breast cancer but expansion into the US lung cancer market where, again, AI and software offer the prospect of saving many more lives. Half-year 2022 highlights 1 NZ$12.3M Up 30% (up 38% in constant currency) NZ$11.8M Up 35% (up 42% in constant currency) US$20.4M (NZ$29.0M) Up from US$12.8M ( NZ$19.9M) 34% (approx.) of women having a Group product applied on their images and data, up from approx. 27% NZ$8.5M 4% improvement NZ$25.0M at end HY21, down from NZ$32.2M at end FY21, due to normal operating activities 5 TOTAL REVENUE SUBCRIPTION REVENUE ANNUAL RECURRING REVENUES NET LOSS AFTER TAX CASH AND CASH EQUIVALENTS NZ$5.5M 30% improvement from NZ$7.8M NET OPERATING CASH OUTFLOW NZ$6.4M 4% improvement NORMALISED NON-GAAP LOSS 2 1 Comparatives are Half-year 2021 results unless otherwise stated. 2 Normalised non-GAAP adjusted loss is net loss before interest, tax, depreciation, amortisation, impairment, one-off items, and non-cash items. 91.4% Last year was 91.7% GROSS PROFIT MARGIN Company overview Volpara (ASX:VHT) is an ASX-listed health technology software company whose integrated platform assists in the delivery of personalised breast care. The platform—the most clinically validated in the industry—features Volpara ® Scorecard™, Volpara ® Analytics™, Volpara ® Live™, Volpara ® Patient Hub™, Volpara ® Risk, and Volpara ® Lung™. These are sold both direct and through leading distribution partners, such as GE Healthcare, Fuji Medical, and Electronic Health Record companies. Based in Wellington, Volpara’s staff number 188 across New Zealand, Australia, the United States, the United Kingdom, and France. 6 Key Corporate Data (as of 22 November) Share price A$1.04 52 week low/high A$1.04-A$1.67 Shares on issue 251,353,081 Market cap. A$261.4M Cash 1 (30 Sept. 2021) NZ$25.0M/A$24.1M Debt 1 (30 Sept. 2021) Nil Enterprise value A$237.3M - 0.20 0.40 0.60 0.80 1.00 1.20 1.40 1.60 1.80 - 50 100 150 200 250 300 350 400 HY17 HY18 HY19 HY20 HY21 HY22 $M Share Price vs Market Capitalisation Market Cap (A$M) Share price (A$) 7 9 20 40 64 25 - 10 20 30 40 50 60 70 HY17 HY18 HY19 HY20 HY21 HY22 Cash on hand (NZ$M) 1,263 2,308 6,844 9,465 12,323 13,021 - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 HY18 HY19 HY20 HY21 HY22 Revenue (NZ$'000's) CC 2 1 NZ$:A$ rate used of 1.04 2 Constant currency values are calculated using the prior period average exchange rate Company highlights and new initiatives 7 200th peer-reviewed article. This outstanding achievement sets the Company apart from the competition and demonstrates its commitment to providing the most clinically validated software available and the continual investment in research and development of core IP. Significant partnerships. Volpara made an initial investment into RevealDx, a lung AI company based in Seattle, and signed a collaboration agreement with Riverain Technologies, also US based, positioning Volpara for lung expansion. Volpara entered into collaboration agreements with Natera and Invitae, both leaders in the genetic testing market. This adds to the Company’s existing agreements with Ambry and Myriad and allows Volpara customers a choice of service provider. MDSAP and ISO 27001 certification. Volpara passed these key audits validating the Company’s commitment to regulatory and security standards. New SOC 2 certification for CRA. The Company received confirmation that its control set meets the SOC 2 Security Criteria standard for the six- month period evaluated. Volpara Scorecard in South Australia. BreastScreen South Australia, after almost two years of COVID-related delays, have announced the research pilot of Volpara Scorecard for the public screening programme in that state, set to launch in early February 2022. - 5.0 10.0 15.0 20.0 25.0 30.0 35.0 HY17 HY18 HY19 HY20 HY21 HY22 ARR in NZ$ and US$ 92% 3% 4% 1% HY22 Revenue Mix Revenue Half-year total revenue up 30% to NZ$12.3M Subscription revenue up 35% to NZ$11.8M 8 Subscription products Volpara Scorecard, Volpara Analytics, Volpara Live, Volpara Patient Hub, Volpara Lung, Volpara Risk Legacy capital Volpara Scorecard, Volpara Patient Hub Capital Subscription Lung Breast subscription Breast Capital 93% 7% HY21 96% 4% HY22 - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 HY17 HY18 HY19 HY20 HY21 HY22 Revenue (NZ$'000's) Acquisition of CRA Acquisition of MRS Other - 2,000 4,000 6,000 8,000 10,000 12,000 14,000 HY17 HY18 HY19 HY20 HY21 HY22 Revenue vs Cash receipts (NZ$’000’s) Cash receipts Revenue NZ$12.3M Capital Subscription ARR (US$) ARR (NZ$) - 5,000 10,000 15,000 20,000 25,000 HY19 HY20 HY21 HY22 Expense breakdown (NZ$'000's) 9 Operating Costs Although operating costs have increased year on year, they are largely a result of the acquisition and therefore inclusion of CRA costs and a number on non-cash costs that result from acquisitions (e.g., amortisation). After accounting for CRA’s addition to the Group’s costs base, Volpara’s costs, on a constant currency basis, have reduced slightly (approx. 4%) 2 when compared with the prior period, showing the underlying scalability of the existing cost base. This is evidenced by the slow but steady improvement in Normalised non-GAAP EBITDA and Net cash used in operating activities. Traditional face-to-face contact and trade shows are gradually returning with Volpara choosing to support the industry by having stands at the major industry trade shows, including RSNA in late November 2021. These interactions together with various operational changes (e.g., a digital marketing focus) and new initiatives (e.g., Analytics in Action and Project Thumb) either already launched or to be launched over the remainder of FY22 should stand us in good stead both in expanding with existing customers and acquiring new ones. 30 35 68 164 160 188 0 20 40 60 80 100 120 140 160 180 200 HY17 HY18 HY19 HY20 HY21 HY22 Headcount 3,763 3,399 5,307 7,862 7,785 5,481 - 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 HY17 HY18 HY19 HY20 HY21 HY22 Net cash used in operating activities (NZ$'000's) Sales & marketing General & administration Product research, development & engineering HY22 CC 2 4% CRA expenses (constant currency) Volpara expenses excluding CRA (constant currency) -5,247 -7,166 -6,644 -6,350 -8,000 -6,000 -4,000 -2,000 - HY19 HY20 HY21 HY22 Normalised non-GAAP EBITDA 1 (NZ$'000’s) 1 Refer to the following slide regarding Normalised non-GAAP EBITDA. 2 Expenses have been shown on a constant currency basis (compared to HY21) with CRA split out to show the decrease in expenses when excluding CRA. Profit or loss summary Revenue of NZ$12.3M, up 30% year on year (38% constant currency), with subscription revenues up 35%. Gross profit of NZ$11.3M, also up 30%, reflecting a Gross margin of 91.4%. Gross margin has remained consistent with HY21 and in line with expectations noted in the FY21 results. Sales and marketing and product research, development, and engineering have remained largely unchanged, increasing only 2% and 7% respectively despite the introduction of CRA Health’s costs into the cost base for the first time in HY22. General and administration costs have increased, largely as a result of the accrual of NZ$2.5M for the one-off earn-out payable to CRA upon reaching certain milestones; and increased non-cash amortisation and depreciation as a result of the acquisition of CRA, totalling NZ$0.8M. Net loss for the period after tax has decreased 4% year on year. Normalised non-GAAP EBITDA 12 decreased 4% from NZ$6.6M in HY21 to NZ$6.4M in HY21. Strictly confidential. Internal use only. Highlights 10 1 Non-GAAP measures are not prepared in accordance with NZ GAAP, do not comply with International Financial Reporting Standards and therefore are not uniformly defined. The non-GAAP measures reported in this document may not be comparable with those that other companies report and should not be viewed in isolation. Non-GAAP measures have been included as we believe they provide useful information for users of the financial statements that assist in understanding Volpara’s financial performance. 2 Refer to the Director’s Report in the Half-Year Financial Report for a detailed reconciliation of Normalised non-GAAP EBITDA. P&L SUMMARY (NZ$'000's) HY21 HY22 Change Revenue from contracts with customers 9,465 12,323 30% Cost of revenue (783) (1,059) 35% Gross profit 8,682 11,264 30% Government grants and other operating income 1,001 2,506 150% Sales and marketing (6,518) (6,652) 2% Product research, development, and engineering (7,218) (7,702) 7% General and administration (5,523) (8,808) 59% Foreign exchange gains/(losses) (261) 423 -262% Net loss for the period before interest and tax (9,837) (8,969) -9% Finance income 389 87 -78% Finance expense (92) (76) -17% Net loss for the period before tax (9,540) (8,958) -6% Income tax benefit 675 448 -34% Net loss for the period after tax (8,865) (8,510) -4% Other comprehensive income/(expense) (1,885) 108 -106% Total comprehensive loss for the period, net of tax (10,750) (8,402) -22% Normalised non-GAAP EBITDA 12 (6,644) (6,350) -4% 0.50 0.70 0.90 1.10 1.30 1.50 1.70 HY20 HY21 HY22 US$ Group APRU (US$) 11 The number of images in the cloud has increased from 29.7M to 49.2M in the last 12 months ?, a run rate of over 1.6M images per month. Approx. 34% of North American market.* Gross Margin remains at over 90%. Group ARPU has increased from US$1.16 to US$1.46 in the past 12 months. Other Metrics 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% HY18 HY19 HY20 HY21 HY22 Gross Margin 0% 5% 10% 15% 20% 25% 30% 35% HY18 HY19 HY20 HY21 HY22 Cost of revenue as a % of revenue (pre- revenue adjustment) 8.6% 0 50 100 150 200 250 $0 - $1 $1 - $2 $2 - $3 $3 - $4 $4 - $5 $5 - $6 $6 - $7 $7+ Number of customers ARPU range Customer ARPU (US$) Subscription model Legacy MRS 91% US$1.46 0 5 10 15 20 25 30 35 40 45 50 HY18 HY19 HY20 HY21 HY22 Number of Images (Millions) 0% 5% 10% 15% 20% 25% 30% 35% 40% HY20 HY21 HY22 Percentage of North America market 34% * Percentage of market using at least one Volpara product. This provides the Group with the opportunity to cross-sell Volpara's expanded suite of products. Business outlook FY2022 • Accelerating out of COVID-19 • Making an ever-greater impact 12 Volpara has a number of key strategic initiatives at various stages of development: Analytics in Action™. A client-centred service designed to help breast imaging facilities develop a culture of continuous performance improvement. It provides personalised positioning, further differentiating Vopara Analytics while potentially increasing staff engagement, customer retention, and ARPU. Volpara Club™. An integrated, relevant, and engaging digital experience aimed at leading to customers' long-term success and resulting in retainment, expansion, and advocacy. Goal: keep churn low, generate upsell and expansion opportunities, and nurture advocates to support new customer acquisition. Expanding the Electronic Health Record (EHR) sales channel. Volpara Strategic Advisor Teri Thomas, previously an Epic executive, is leading the effort to strengthen this channel and leverage CRA Health's expertise in EHR. Building out our data platform. With over 49M images in the cloud, we have one of the world’s biggest data sets of breast x-rays—the key to our efforts to change the paradigm of screening from detection to prevention. We also await the release of the FDA’s breast density legislation, delayed due to COVID, US elections, and the subsequent change of administration. The latest news we have (25 October 2021) is that the FDA is working diligently in this area. We also note that a new FDA Commissioner has now been nominated. Continuing our digital-first sales and marketing strategy, we are on track to meet the revenue guidance for the financial year. THANK YOU FOR HELPING US MAKE AN IMPACT QUESTIONS? 13
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