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Valuation of $124.00
Added 3 weeks ago

18-Aug-2021: $77 is my 12 month target price (TP) rather than a fundamental intrinsic valuation. My $77 TP is based on momentum and continued tailwinds combined with a very high calibre management team that continue to deliver. It's actually not such a stretch when you consider they've risen +164.8% from $24.68 one year ago to close at $65.35 today.

03-Oct-2022: Yeah, nah! That did not happen. After building nicely thru to early Jan, PME have had a falling share price through to mid-June, and while it did build back up to almost $60 in September, the last couple of weeks has been negative for the SP. This is not one I hold in real life - it's just in my SM portfolio. I like the company, but wouldn't want to pay over $40/share for it. I think this one could pull back towards $45, maybe even get back down to $40 if the market keeps having big down days, but I'm setting a $65 2-year price target (PT) for PME today, so $65/share by early October 2024. They are a quality company, but I don't know enough about the competitive landscape within their industry to be confident to invest in them IRL, unless they looked really cheap, and the don't up here, not to me anyway.

So, my PT is not to be taken too seriously, because PME is not within my circle of competence, so I don't really have any strong conviction about what the company is worth, or what their realistic upside potential is from here. I know they've done very well thus far, but past performance can not be relied upon to accurately predict future performance. And that's all I've really got to work with in PME's case, due to a knowledge deficit on my part. Just not my area.

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04-March-2024: Update: Raising PT to $124. Not much you can say about PME - about to be added to the ASX100 Index (on March 18th) - wish I held them IRL instead of just here on SM...

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#PME in the ASX100 Index
Added 3 weeks ago

From Monday 18-March-2024, Pro Medicus (PME) will be in the S&P/ASX100 Index.

SP-DJI-Announces-March-2024-Quarterly-Rebalance.PDF

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Valuation of $70.00
Added a month ago

Update 15/02/2024

PME out with another stellar profit result. 33% NPAT increase (may have missed market expectations but still strong IMO).

Current share price is still expecting 30% NPAT increase for 5 years with a terminal PE of 70x. So is still priced for perfection in my eyes. I will give it a terminal PE of 50 to value it at around $70.

Disc: Not held... Read below to see some regrets...

Update 18/03/2023

1H FY23 impressed once again. 30% increase to NPAT which was as I expected given my valuation below.

The current share price over $60 assumes continued 30% CAGR until FY27 with a terminal PE of over 70x. Still a bit rich for me.

Will likely look to scale back in if shares pull back to under $50.

Arguably the highest quality business on the ASX with still a massive runway for growth.

Disc: Not held. Sold out IRL and on Strawman when shares hit $60+ (maybe will live to regret this again...)

Update 18/08/2022

Updating based on their FY22 results.

FY22 NPAT = $44.4m representing a 44% increase from FY21

If we assume NPAT growth of 30% pa up to FY27 and discount it back 10% per year, then at the current share price in order to achieve 10% pa, shares would have to be trading at a PE of over 60x in FY27.

However, if PME can achieve 30% pa NPAT growth for the next 5 years, then it wouldn't be outrageous for the market to value this at 60x.

I'm going to value it based on a terminal PE of 55x for now whilst we watch how they execute which represents a valuation of $46.90 per share.

Disc: Held IRL and on Strawman.

EDIT 19/01/2022

PME has reached my Strawman valuation so I have decided to take a very small entry parcel IRL.

Will update my Strawman Portfolio to reflect this.

Original Valuation

Jeez this one hurts to cover.. I remember buying this in March 2020 lows for around $18 and selling at around $20 before I knew what I was doing...

Promedicus is a world leader in radiology software and is continuing to gain market share in this area. It has been growing NPAT between 20-50% in the last 5 years.

  • FY21 NPAT = $30.8m
  • EPS = $0.295 (104.4m shares on issue)

If we assume a NPAT growth rate of 30% per annum for the next 5 years:

  • FY26 NPAT = $114.36m
  • FY26 EPS = $0.95 (assuming 120m shares on issue)

In order to justify a valuation of $45.46 we have to assume that the FY26 PE will be 70x after discounting back 10% per annum.

A PE of 55x would give a price target of $35.80 after discounting

A PE of 85x would give a price target of $55.33 after discounting (close to today's prices)

Therefore in order to justify the current price ($55.67) you'd have to assume 30% growth to NPAT for the next 5 years and a FY26 PE of 85x in order to achieve a 10% return per annum.

Disc: Not held :'( but if there is a sharp pullback in the coming weeks/months would definitely look to buy this high quality company.


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#Bull Case
Added a month ago

PME off about 11% on the back of a pretty strong result, market expecting more. Might have a nibble as I don't own with a bit bit of profit from ALU (owned since January 2015)

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#ASX Announcements
Last edited 2 months ago

This is uber cool, Pro Medicus + Apple Vision Pro. I can imagine the Pro Medicus stand at the next trade show with Marques Brownlee giving a demo in person :-)

I would like my doctor to take a virtual tour of my body before he cut me open! I'm not sure it means anything for business in the short term but the market gave it a nice bounce today.

https://visageimaging.com/platform/visage-on-apple/


Visage Launches Visage Ease VP™ for Apple Vision Pro

Highlights

  • Visage has launched the groundbreaking Visage Ease VP for Apple Vision Pro
  • Visage Ease VP supports immersive, spatial experiences for diagnostic imaging and multimedia
  • Visage’s cinematic rendering engine is natively available in Visage Ease VP providing stunning volume-rendered images in immersive space
  • Visage Ease VP provides an end-user imaging experience that’s unlike any other application

Leading health imaging company Pro Medicus Limited [ASX: PME] today announced its wholly-owned U.S. subsidiary, Visage Imaging, Inc., has announced the launch of the groundbreaking Visage Ease VP for Apple Vision Pro, Apple’s highly anticipated spatial computing platform.

Designed to take advantage of the unique capabilities of Apple Vision Pro, Visage Ease VP supports immersive, spatial experiences for diagnostic imaging and multimedia. Visage Ease VP includes all the proven functionality of Visage Ease™, plus the exciting addition of Visage’s powerful cinematic rendering engine for stunning volume-rendered images in immersive space. Anywhere, on-the-go access with Visage Ease VP has additional flexibility with virtual screens at more than 4K resolution for each eye, independence from environmental lighting restrictions, and the ability to interact with imaging seamlessly in your physical space. Visage Ease VP uses the natural and intuitive input of eyes, hands, and voice navigation to provide an end-user imaging experience that’s unlike any other application.

UC San Diego Health, a Tier 1 academic medical center and Visage customer, is the first health system to pilot the technology.

“The visualization of three-dimensional medical imaging in immersive space creates exciting opportunities to improve patient care,” said Dr. Paul Murphy, associate clinical professor at UC San Diego School of Medicine and radiologist at UC San Diego Health. “Technology that allows for sophisticated eye motion and gesture controls for reviewing 2D and 3D medical imaging could potentially help in efficient tumor board reviews and create collaborative spaces in healthcare.”

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#Contract Win Summary 2
Added 2 months ago

·       November 2023 Oregon Health & Science University A$20m 8 year contract - OHSU includes OHSU Hospital and OHSU Doernbecher Children’s Hospital, comprising a total of 576 licensed beds. OHSU also includes a system of clinics across Oregon and southwest Washington state, employing nearly 20,000 staff. Based on a transactional licensing model, the contract will see the company’s cloud-engineered Visage 7, including Visage 7 Open Archive and Visage 7 Workflow modules, implemented throughout OHSU providing a unified diagnostic imaging platform. Visage 7 will also provide enterprise distribution of images integrated to OHSU’s electronic health record (EHR). Transaction-based model with potential upside. https://announcements.asx.com.au/asxpdf/20231113/pdf/05x802m6cs2mh7.pdf

·       October 2023 South Shore Health A$16m 8 year contract - the largest independent health system in Southeastern Massachusetts. South Shore Health includes the 393-bed South Shore Hospital (Weymouth, Massachusetts), has more than 5,600 employees, and has renowned clinical affiliations at academic and cancer centers across Massachusetts that also use the Visage 7 Enterprise Imaging Platform (‘Visage 7’). https://announcements.asx.com.au/asxpdf/20231023/pdf/05wc3cr3mykrb9.pdf

·       September 2023 Baylor Scott & White Health A$140m 10 year contract - the largest not-for-profit healthcare system in Texas and one of the largest in the United States. Contract is for “full stack” - Visage 7 Viewer, Visage 7 Open Archive and Visage 7 Workflow. https://announcements.asx.com.au/asxpdf/20230926/pdf/05v8z70389tnpj.pdf

·       July 2023 Memorial Sloan Kettering Cancer Center A$24m 7 year contract - one of the world’s most respected comprehensive cancer centers devoted exclusively to cancer, recognized as one of the top two cancer hospitals in the US for more than 30 years. MSKCC operates a total of 24 inpatient and outpatient locations across the New York City metropolitan region and attracts patients from across the globe seeking premier comprehensive cancer care. Contract is for “full stack” - Visage 7 Viewer, Visage 7 Open Archive and Visage 7 Workflow. https://announcements.asx.com.au/asxpdf/20230727/pdf/05s0ctw055spbk.pdf

·       May 2023 Gundersen Health System A$20m 7 year contract – a not for profit integrated delivery network (IDN), comprising 7 hospitals and 65 clinics across Wisconsin, Minnesota and Iowa. https://announcements.asx.com.au/asxpdf/20230516/pdf/05pqzwn2073wvg.pdf

Please refer to my previous Straw Contract Win Summary for contract history before May 2023

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Valuation of $95.93
Edited 2 months ago

Assuming 3 Growth Scenarios ranging from 35% down to 20%.

Assuming Net Margin 45% as currently and share count in FY28 of 106.7m.

Blending the 3 scenarios with PE as high 120 for 35% growth and lower of PE50 20% growth, I come up with valuation $95.93.

Previously sold in $40 range. Would love build position if there was a strong pull back.

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#Founder Sell Down
Added 4 months ago

In todays AFR

Pro Medicus duo in $176m selldown; UCP nabs trade


Listed healthcare imaging software business Pro Medicus’ two founders began selling down $176 million worth of stock on-market just before midday yesterday, after a strong run in the company’s share price.

Fund manager sources said Anthony Hall and Sam Hupert had stockbroker Unified Capital Partners seeking buyers for 2 million shares at $88 apiece. That’s the same price as Pro Medicus’ close yesterday.

The trade was worth just under 2 per cent of the company and went to existing long-term shareholders.

Prior to the trade, Hall and Hupert had owned 25 per cent each of Pro Medicus’ total shares on issue. They are trimming their positions after a 62 per cent rally in the share price so far this year.

The duo floated the company in 2000, when it was making just $9 million revenue and had been around for 17 years. They held on to 40 per cent of the business each after the IPO and have been judicious with selling down in the 23 years since.

For the 2023 financial year, Pro Medicus posted $124.9 million revenue (up 33 per cent) and $60.5 million aftertax profit, which was 36.5 per cent higher. It had a $9.2 billion market capitalisation and has benefited from contract wins.

In the 2023 financial year, it won or renewed multiyear contracts with University of Florida and University of Washington; US non-profit healthcare providers Gundersen Health System, Samaritan Health and Luminis Health; and Montage Health Children’s Hospital of Philadelphia and Bay Imaging Consultants.

Hall and Hupert’s leftover shares – about 24 per cent each – are worth $2.2 billion for each co-founder with the way the stock is trading.

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#ASX Announcements
stale
Last edited 6 months ago

Imaging company Pro Medicus leapt 9.3 per cent this morning after winning a $140 million contract with US-based Baylor Scott & White Health.

HIGHLIGHTS

• PME signs AUD $140M, 10-year deal with Baylor Scott & White Health (“BSWH”)

• Visage to replace legacy PACS and vendor neutral archive throughout the BSWH enterprise

• Contract is for “full stack” - Visage 7 Viewer, Visage 7 Open Archive and Visage 7 Workflow

• Visage 7 platform to be implemented in the cloud

• Continues PME’s rapid expansion into North American integrated delivery networks (IDN) and academic medical centers

• Transaction-based model with potential upside

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#FY23 results
stale
Added 8 months ago

Yet another spectacular set of numbers from one of the best businesses on the ASX.

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I know you shouldn't be fussy with price when it comes to great companies, but Pro Medicus is on a PE of 127..

That could represent value, but you'd need to see at least something like 25% average annual compound growth in NPAT for 10 years, and for shares to then trade at a PE of 35 in 2033. If that happened, you get a 10% average annual capital gain.

Over the last 5 years, the CAGR in EPS has been about 35%. So if you extrapolate that forward and apply a terminal PE of 35 (about what CSL trades on), then your average annual capital gain is something like 18%pa over 10 years. On these assumptions, the company would have a NPAT of $1.2b in 10 years -- and that's perhaps not too much of a stretch, especially with expansion into other areas.

So I'm not saying shares are definitely too expensive, just that a lot of optimism is built in..

(An I'm just bitter having sold down so much over the years. Idiot!)

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#Cracking Result!
stale
Added 9 months ago

Happy New Year,


If you had bought 250,000 PME on 4/7/2013 you would have lost $92,500.00 today -0.57%.

In the last 12 months & 10 days it's only gone up a measly 78.13%

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#Contract win
stale
Added 11 months ago

Another day, another sizeable multi-year contract.

ASX announcement here: https://announcements.asx.com.au/asxpdf/20230516/pdf/05pqzwn2073wvg.pdf

Essentially, US$20m over 7 years (with usual upside due to transaction volumes)

This is the 4th major contract win in the last 5 months.

I still hold a small number of shares, but as much as I love the company, I still struggle with the price tag -- something like 50x forward sales.

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##prayforapullback
stale
Added one year ago

One of the best run companies on the ASX. i use visage imaging everyday- its superb. It has helped revolutionise radiology reporting outside of normal business hours whereby imgaes can be taken and sent to someone anywhere in the world for reporting. Its such an effecient system that i often get CT scan images reported more quickly at midnight than at midday.

huge addressable market- most hospitals will use this or a similar system within the next decade. Of course the biggest issue is its just so damn expensive at current share price and is priced for perfection and more.

given the current price im an admirer from afar currently but a good pullback and i will be jumojng aboard. Something in the $30s would be nice. Might be wishful thinking but i need meat on the bones

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#Management
stale
Added one year ago

Such a well run business - if only all my portfolio companies had these business metrics. I am the same, I just cannot stomach that PE though!

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#H1 FY23 Results
stale
Added one year ago

Yet another record half.

All the details are here, but some highlights include:

  • Revenue up 28% to $56.9m
  • NPAT up 30% to $27.2m
  • Cash up 4.4% to $94.5m
  • 3 major contract wins for the half.


This is the strongest half year in the company's (already impressive) history.

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The company has grown its top line from $14m in 2014 to well over >$100m for FY23 (pro-rata basis). But what's truly amazing is that they have done this:

  • Without raising capital, and an essentially flat share count
  • Sustaining insane NET margins (now at around 50%!!)
  • Paying out dividends! (divs per share are up 10x since 2014)
  • Gushing cash
  • Sustaining growth investments


It's a masterclass in capital management, and how structural disruption and network effects can combine to deliver incredible and long-last growth.

The only problem? My estimate for the PE on a forward basis is somewhere around 120x. I've said many times before you shouldn't overthink valuation for high quality, fast growing businesses, but still...

I retain a very small position.

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#Financials
stale
Added one year ago

Always loved this comp. Anyone know forw eps for fy24?

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#Contract Win Summary
stale
Added one year ago

The complete summary of Pro Medicus contract wins:

·      January 2023 Samaritan Health Services A$12m 8 year contract - Oregon- based Health Services, a community-based, integrated delivery network (IDN) based in OregonSamaritan has five hospitals in the mid-Willamette Valley and central Oregon Coast. https://www.asx.com.au/asxpdf/20230130/pdf/45l1r8pdrpk7h5.pdf

·      January 2023 University of Washington’s UW Medicine A$25m & year contract - a Tier 1 academic health system based in Seattle, Washingtonhttps://www.asx.com.au/asxpdf/20230120/pdf/45kt596dxphfmr.pdf

·      December 2022 Luminis Health A$15m 7 year contract - Annapolis, Maryland-based not-for-profit integrated delivery network (IDN), serves communities in central Maryland from Washington, DC to Delaware. https://www.asx.com.au/asxpdf/20221222/pdf/45k36zmfthpk09.pdf

·      August 2022 Three new customers Monterey California, Children’s Hospital of Philadelphia (CHOP) and Bay Imaging Consultants A$16.5m. Renewal University of Florida A$15.5m 7 year contract – negotiated at an increased fee per transaction refer April 2015 for initial announcement. https://www.asx.com.au/asxpdf/20220829/pdf/45ddptxq7rrxxs.pdf

·      June 2022 Renewal combine A$47m Sutter Health 7 year contract and Wellspan Health 5 year contract https://www.asx.com.au/asxpdf/20220614/pdf/459wn389m1f411.pdf

·      June 2022 Allina Health A$28m 7 year contract - a not-for-profit health care system based in Minneapolis, Minnesota, has 28,000 employees and 6,000 associated and employed physicians and operates 11 hospitals and more than 90 clinics throughout Minnesota and Wisconsin. https://www.asx.com.au/asxpdf/20220602/pdf/459kj0108p69jd.pdf

·      April 2022 Inova Health System A$32m 8 year contract - leading non-profit healthcare provider in Northern Virginia https://www.asx.com.au/asxpdf/20220408/pdf/457v6p4dj0trvw.pdf

·      October 2021 Novant Health $40m 7 year contract - is a community-based integrated delivery network (IDN) that spans three U.S. states, including 15 medical centres and hundreds of outpatient facilities and physician clinics. Novant Health serves more than 6 million patients annually.https://www.asx.com.au/asxpdf/20211001/pdf/45157s0ql8q7p2.pdf

·      May 2021 University of Vermont Health Network A$14m 8 year deal – teaching hospital for The Larner College of Medicine. https://www.asx.com.au/asxpdf/20210513/pdf/44wg9pzt06r1q2.pdf

·      February 2021 Major University Health System in the US A$31m 7 year contract - which comprises five academic health systems: UC Los Angeles (UCLA), UC San Francisco (UCSF), UC San Diego (UCSD), UC Davis (UCD) and UC Irvine (UCI). https://www.asx.com.au/asxpdf/20210216/pdf/44spr8bkc4ctnx.pdf

·      January 2021 Intermountain Healthcare A$40m 7 year contract – largest healthcare provider in the Intermountain West (Utah, Idaho, Nevada) https://www.asx.com.au/asxpdf/20210114/pdf/44rqjfzhsdf78y.pdf

·      December 2020 MedStar Health A$18m 5 year contract – largest health system in the Maryland and Washington DC metropolitan region. Comprises of 10 hospitals. https://www.asx.com.au/asxpdf/20201217/pdf/44r1y8k6sjft7t.pdf

·      November 2020 Zwanger Pesiri A$8.5m 5 year renewal contract. Refer January 2015 for initial contract. https://www.asx.com.au/asxpdf/20201119/pdf/44q19hxzx5gtwj.pdf

·      October 2020 Ludwig-Maximilians-Universitat (LMU Klinikum) A$10m 7 year contract – one of the largest university hospitals in Germany (Munich). https://www.asx.com.au/asxpdf/20201015/pdf/44npwzydng7gkt.pdf

·      September 2020 NYU Langone Health A$25m 7 year contract – one of the largest health systems in the state of New York and one of the most respected and innovative healthcare institutions in North America. Implementation will span 6 hospitals and numerous locations across the NYU Langone healthcare network. https://www.asx.com.au/asxpdf/20200911/pdf/44mk2fr0wtfb3x.pdf

·      June 2020 Northwestern Memorial Healthcare A$22m 5 year contract – Chicago based for Visage 7. https://www.asx.com.au/asxpdf/20200601/pdf/44j8j53r1rtqbh.pdf

·      December 2019 Nines A$6m 5 year contract – Palo Alto based. https://www.asx.com.au/asxpdf/20191230/pdf/44cym7k2lt4xgs.pdf

·      November 2019 Ohio State University Wexler Medical Centre A$9m 5 year contract – large multi-disciplinary academic medical centre located in Columbus, Ohio. https://www.asx.com.au/asxpdf/20191104/pdf/44b7tj1d8b9hw3.pdf

·      April 2019 Duke Health $14m 7 year contract – the largest health system in the state of North Carolina and one of the most respected health providers in North America. Span three hospitals and dozens of additional locations across Duke Health. https://www.asx.com.au/asxpdf/20190424/pdf/444hx8z62dgfkf.pdf

·      December 2018 German Government Hospital A$3m plus extension to the contract is has with a large German Government Hospital network. The deal, which includes additional licenses for the existing site, will also see Visage 7 and Visage Open Archive serve as the central component of a next generation imaging infrastructure at two additional hospitals within the network. https://www.asx.com.au/asxpdf/20181210/pdf/44131c5n9c1wcb.pdf

·      November 2018 Partners Health A$27m 7 year contract – the largest health system in the state of Massachusetts and one of the largest and most respected health providers in North America. https://www.asx.com.au/asxpdf/20181120/pdf/440fzw4zf4z33y.pdf

·      June 2018 Mercy A$15m over 7 years – for Visage 7 Open Archive contract based on transaction licensing model, implement across the Mercy healthcare enterprise, which is the fifth largest Catholic health system in the US spanning 4 states. https://www.asx.com.au/asxpdf/20180501/pdf/43tp8w0t82rlj4.pdf

·      May 2018 I-MED Radiology A$7m 5 year contract – Visage RIS across all of its practices. Australia’s largest diagnostic imaging provider. https://www.asx.com.au/asxpdf/20180501/pdf/43tp8w0t82rlj4.pdf

·      November 2017 Yale New Haven Health A$18m 7 year contract - The implementation will span five hospitals — Bridgeport, Greenwich, Lawrence Memorial, Westerly, and Yale New Haven hospitals, including Yale New Haven’s Children Hospital and Smilow Cancer Hospital at Yale New Haven, as well as numerous additional imaging locations across the state of Connecticut. Yale New Haven Hospital is the primary teaching hospital of the Yale School of Medicine. https://www.asx.com.au/asxpdf/20171117/pdf/43pb2mk65tf270.pdf

·      March 2017 Primary Health Care Limited 5 year deal, Transaction based agreement to provide Visage RIS. One of Australia’s largest diagnostic imaging networks. https://www.asx.com.au/asxpdf/20170314/pdf/43grq3npvchvbj.pdf

·      July 2016 Mayo Clinic A$18 6 year deal - Non-profit research and teaching hospital group https://www.asx.com.au/asxpdf/20160704/pdf/438b5j8hxvcl7z.pdf

·      April 2016 Franciscan Missionaries of Our Lady Health System (FMOLHS) A$7m 7 year deal – the largest health system in the US State of Louisiana. https://www.asx.com.au/asxpdf/20160427/pdf/436s1mrrhytm21.pdf

·      April 2016 Mercy Health A$21m 7 year deal – has 46 acute care and specialty hospitals spanning fours states (Missouri, Arkansas, Oklahoma, Kansas). https://www.asx.com.au/asxpdf/20160404/pdf/4368dbpn7nc3jq.pdf

·      February 2016 American College of Radiology and UF Health provide at no cost – will provide ACR and UFH with Visage 7 imaging technology to assist in training and accessing radiology residents throughout the US. https://www.asx.com.au/asxpdf/20160211/pdf/434zdc9sm962ps.pdf

·      November 2015 German Government Hospital A$3m 5 year capital deal – with one largest government hospitals in Germany https://www.asx.com.au/asxpdf/20151116/pdf/433091crtd9mhj.pdf

·      September 2015 Allegheny Health Network (AHN) A$11m 5 year deal – AHN comprises of eight hospitals Allegheny General Hospital, Allegheny Valley Hospital, Canonsburg Hospital, Forbes Hospital, Jefferson Hospital, Saint Vincent Hospital, Westfield Memorial Hospital and West Penn Hospital (Pittsburgh Area) https://www.asx.com.au/asxpdf/20150924/pdf/431k3g992rry1j.pdf

·      April 2015 University of Florida Health Network A$9.5m 7 year deal – a large university health system in Northern Florida. https://www.asx.com.au/asxpdf/20150421/pdf/42y09lzhd63pd3.pdf

·      January 2015 Zwanger-Pesiri A$5m (US$4.1m) 5 year deal – is one of the largest US providers of outpatient imaging services with 18 imaging centres and 58 radiologists, regionally distributed across Long Island. https://www.asx.com.au/asxpdf/20150112/pdf/42vyldz23csmlx.pdf

·      November 2014 WellSpan Health A$8m (US$7m) 7 year deal – a large regional health network in the north-eastern United States. https://www.asx.com.au/asxpdf/20141120/pdf/42tvgvzptds472.pdf

·      April 2014 Unknown A$20m 6 year deal- a large US health network to use Visage 7 https://www.asx.com.au/asxpdf/20140422/pdf/42p3qmp44c6rvz.pdf

·      October 2013 VISN23 US $4m 5 year contract – a large regional veteran affairs network servicing more than 400,000 veterans. Visage 7 https://www.asx.com.au/asxpdf/20131021/pdf/42k5cc3gg1dg9m.pdf

·      May 2013 vRad (Virtual Radiologic) 5 year contract - Radiology group more than 400 radiologists reading 7 million radiology studies annually. Visage 7 https://www.asx.com.au/asxpdf/20130508/pdf/42frtdff5d4y1b.pdf


Note: Most contract are Transaction-based financial model with potential upside than quoted.

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#AUD $25m deal
stale
Added one year ago

PME signs 7-year, $25M contract with University of Washington's UW Medicine

Visage to replace legacy PACS throughout the UW Medicine network

Contract includes Visage 7 Open Archive and Visage 7 Workflow in addition to Visage 7 Viewer

Visage 7 platform to be fully deployed in the cloud

Continues PME's rapid expansion into North American Tier 1 academic institutions

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#New 12m deal
stale
Added one year ago

PME signs A$12M, 8 year deal with Samaritan Health

  • PME signs 8-year, AUD $12M deal with Oregon-based Samaritan Health Services
  • Visage to replace legacy PACS throughout the Samaritan Health Services network
  • Contract includes Visage 7 Open Archive and Visage 7 Workflow in addition to Visage 7 Viewer
  • Visage 7 platform to be installed in the cloud
  • Continues PME's rapid expansion into North American integrated delivery networks
  • Transaction-based model with potential upside
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Valuation of $71.00
stale
Added one year ago

7 Dec 2022 - Wilsons target price $71

2 June 2022 - Wilsons target price $51

Whoa !!

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#Financials
stale
Last edited one year ago

PME out with another set of strong results posted as some highlights following the AGM. I sold out IRL a while back, pre the big tech sell off only to watch the resilience in PME share price. Especially hard as compared to not selling xero and watching it crater.


Back to the results, they have said they have considered a few acquisitions however none have yet met the criteria, and then go on to acknowledge the tech sell off and that they expect this will create further acquisition targets for them. I know there are conflicted views on this but I think they would surely have to consider Volpara, however others have commented that they don’t see this as likely.

Regardless. Strong results and some interesting comments from a solid management team with a heap of cash to play with. Will be interesting to see how it gets spent.

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#Industry/competitors
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Added 2 years ago

When going to RNS Private Hospital last week for family reasons, the doctor pulled up the imaging software to view some scans.

I couldn't catch the name of the software, but don't think it started with a V maybe an X

So I'm wondering who are the competitors in this space, and if so, is PME overvalued? And are fund managers and institutions getting it wrong bidding the price up 50+?

Need to start doing some research...

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#AFR Article
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Added 2 years ago
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#FY22 Results
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Added 2 years ago

Pro Medicus (PME) released their FY22 results today. From their release:

  • Revenue from ordinary activities $93.5m – up 37.7%
  • Underlying profit before tax $62.4m – up 46.8%
  • Net profit $44.4m – up 44.1%
  • Cash and other financial assets $90.6m – up $28.8m
  • Company remains debt-free
  • Fully-franked final dividend 12c per share

Another fantastic result from Pro Medicus with NPAT up 44%. Hard to believe that this company has yet reached $100m in revenue even though it is trading at a valuation of over $5.5b. IMO this is one of the highest quality companies on the ASX and their results speak for themselves.

Net margins expanded once again and the company is continually signing up new customers especially in the US. At sub $100m of revenue there is still a very long runway for growth. However shares are basically pricing in perfection at this point. Close to 60x sales and 120x PE makes it very hard for me to buy at the current share price.

Will update my valuation accordingly later.

Disc: Held IRL and on Strawman.

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Valuation of $51.00
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Added 2 years ago

Wilsons rated Overweight

Adding a bullish valuation for a change to balance all the Sell recos being put in by Claude, Rudi and Wini.


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#Bear Case
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Added 2 years ago

@edgescape - my daughter has access to Sentieo and currently it says that of 9 brokers covering PME the distribution of recommendations is:

Strong Sell - 0

Sell - 1

Hold - 1

Buy - 6

Strong Buy - 1

With an average price target of $53.13 - so on average the broker consensus appears to be buy and not sell

However when looking at what's available as far as broker reports - only Goldman and RBC appear to have recent updates (in Jun 2022, many of the others are from last year)

GS appears to have a Sell with a PT of $39.10 and RBC an Outperform with a PT of $58

In summary - it's a crapshoot as to what the brokers think, and only worse due to the distribution of timeframes over which those broker recommendations are made

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#Bear Case
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Added 2 years ago

Tallying up the Sell Recos

Sell PME from both in Buy Hold Sell from May - https://www.livewiremarkets.com/wires/buy-hold-sell-5-discounted-growth-stocks-2022-05-26

Sell from Claude Walker and Luke Winchester - The call 23 June 2022 (??)

Sell from Rudi - FNArena


No buy recos

Apart from Pro-Medicus who are doing a buyback and the contraction cycle we are in (if Pro Medicus qualifies as healthcare despite the high growth multiple), I would like to see a bull thesis from a fund on Pro Medicus for a change.

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#Bear Case
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Added 2 years ago

Have to say no one can make up their mind on the valuation of PME.

On the latest "the call", Claude and Luke put a hold saying they'll buy in the low 30's

Then there are other price targets floating around in here from 39 to 45.

Finally there is a buyback happening which distorts price discovery (and is conveniently not mentioned in the latest episode)

All we know is that this is a quality software company, if they can execute the future strategy.

Probably should have left my buy order sitting at 38-39.

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#Quality
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Added 2 years ago

These 5 reasons why PME is a good quality business may be useful, from the A Rich Life Pro Medicus Results Coverage


  1. Aligned founder-led management who run the business like the true long term owners they are.
  2. Benefits from powerful long-term tailwinds including:
  • ageing population
  • worsening health due to covid and obesity
  • inflation in healthcare costs in America
  • shift to cloud storage (healthcare companies are generally late movers)
  • rise of artificial intelligence
  1. Ridiculously high EBIT margins, likely to be sustainable over 60%, but almost definitely sustainable over 50%
  2. Global growth runway
  3. Potential to become a platform business if it can sell AI algorithms developed by independent third parties on its platform


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Valuation of $45.00
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Added 3 years ago
My previous valuations look pretty laughable right now -- and i even felt i was being reasonably ambitious with some of my forecasts! I'll say at the start that this is a classic example of why you shouldn't be too fussy with price when it comes to high quality companies. And PME is among the best -- strong, consistent, internally funded, cash gushing sales and profit growth -- leading it's market globally and riding a massive structural shift that is well underway. So without overthinking it, i think the investment position for me is this. PME continues to enjoy very strong and enduring growth for a decade or more. Somewhere in the realm of 30%pa compound. But if it does, at the current price, you could roughly expect a 10-12% compound annual return over the next decade. Which is very reasonable. But that's probably as good as it gets. On the other hand, if growth stalls somewhat, or there are a few poor capital allocation decisions from management, or perhaps a new disruptive competitor. The business could face a brutal market re-rate. Even if shares were to drop back to a P/S of 20 the share price drop would be significant. For me, on a balance of probabilities, im happy to retain what's left of my holding, but wouldn't be tempted to buy more unless the price got back to at least $45 or so. Below $30 i'd back up the truck.
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#FY21 Results Conference Call
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Added 3 years ago

I don't suppose anyone really thinks its cheap right now but here's Claude Walker's Pro Medicus Results write up. Includes some commentary around the conference call if you missed it.

 

Some TLDR:

Record profit & revenue

Pipeline “continues to grow strongly” and “we’ve had new opportunities come into the pipeline and opportunities progress”.

New US product Visage Worklist now has 4 clients.

Hoping to sell Visage into non-radiology departments, and we may see revenue from this as soon as FY2023

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#FY21 Results
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Added 3 years ago

Another very solid result for PreMedicus.

For the FY21 year revenue was 19.5% stronger to just shy of $68m, with net profit up more than 33% to $30.9m as the business continues to scale well.

The top line has grown at an average pace of almost 20%pa for the last 5 years, while NPAT has grown at a stunning 37% per year (on average). Net margins are not only incredibly high, but have steadily improved (see attached chart) -- NPAT *NET* margin now sits at 46%.

It would have been much stronger than this if it werent for FX movements (revenue and NPAT would have been up 30% and 56%, respectively).

Not only that, but all this growth has been entirely self funded, with no new share issues being issued, or virtually any debt, over the last decade. In fact, PME has over $60m in cash at the bank.

It's even paid a consistent and fast growing dividend along the way. For FY21 it'll pay 15c per share all up, 5x more than it did in FY16.

A record number of new contracts were secured over the period, and the sales pipeline remains very "healthy" according to CEO Sam Hupert.

The Research collaboration agreements with with the Mayo Clinic and NYU Langone Health have yieled an FDA approved AI algo for breast density screening, and there's good growth potential there.

I regard this as one of the best businesses on the ASX. The only issue is price, which is rather "full"

On the latest numbers, shares are trading on a Price to Sales of 86 and a PE of 190.

I've had some very serious regret being too fussy on price in the past, but i'm not tempted to buy any more at these levels.

That being said, given the economics and growth runway, shares could be considered 'fair'. EG. assume 30% NPAT growth for 10 years and assume the business trades on a PE of 35 at that time, and you get a FY31 share price of  ~$140. Discount that back by 10%pa to today and you get a valuation of $54 -- roughly where it sits now.

The only trouble here is that even if things go extraordinarily well (30% CAGR in net profit for a decade!), you get a market average rate of return. Anything short of that and you'd get an underperformance. So the phrase priced for perfection seems apt.

Of course, perhaps PME exceeds even this. But I find it prudent not to assume such lofty targets -- "margin of safety" being the other phrase that comes tro mind.

Results announcement here

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#Founders sell 1m shares each
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Added 3 years ago

19-Feb-2021:  Sale of 1M shares each by founders

  • Co-founders Dr Sam Hupert and Mr Anthony Hall have each sold 1 million PME shares during the current trading window
  • The sale represents less than 4% of their respective shareholdings
  • The sale to a number of local institutions was made at the closing price on 18 February 2021 without any discount.
  • Dr Hupert and Mr Hall remain the two largest shareholders in the company with both founders retaining in excess of 27 million shares each.
  • Their combined shareholdings after the sale represent in excess of 52% of the company’s shares on issue.

The Pro Medicus Board has been advised that co-founders Dr Sam Hupert and Mr Anthony Hall have sold 1 million shares each at the close of business on 18 February which is within the Company’s current trading window and represents less than 4% of their individual holdings.

Mr Peter Kempen Pro Medicus Chairman said “We announced in February 2018 that the Board had encouraged the founders to consider selling up to 3 million shares each, in order to improve the liquidity in the company’s shares. This latest transaction completes that process. The sale, to a number of local institutions, was done “at market” which reflects the very strong underlying demand for the company’s shares.”

Dr Hupert and Mr Hall re-affirmed that they do not intend to sell any further shares in PME in the foreseeable future. Mr Kempen added “Dr Hupert and Mr Hall remain actively engaged in the company and are committed to its future. This is evidenced by the fact that they remain the two key stake holders, with their combined holding post this recent sale being in excess of 52% of the shares on issue.”

--- ends ---

All good.  As you were.

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#CEO Interview 17/2/21
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Added 3 years ago

Interview with Dr Sam Hupert, CEO Pro Medicus Ltd

~Half-year results - impact of COVID and appreciating AUD

~ Step up in transaction volumes

~ $31M – 7-year deal with leading Californian academic Health system

~ Other recent wins and pipeline

View Attachment

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#New Contract Win
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Added 3 years ago

This new contract win is BIG, and comes only a month after the record $40m contract with Intermountain was announced.

Signed with 5 academic health systems, the 7-year deal is valued at AUD$31m, with further upside afforded by the transaction model and the option for affiliates to standardise on Visage platform (which seems very likely to me, at least to some extent).

Visage 7 will be implemented across 5 diagnostic imaging departments, the first time the entire imaging diagnostic system will be unified on a single platform.

PME has won 6 out of 6 major contracts in their industry in the last 7 months. All of which were competitive tenders. This is a very strong validation of the offering.

What a fantastic company. The hard part is the valuation, which seems rather rich despite the pace of growth and available market opportunity.

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#$31M 3Yr Contract 16/2/21
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Added 3 years ago

PME signs $31M – 7 year contract with a major University Health System in the United States

HIGHLIGHTS

~ PME signs 7-year, A$31M deal with a major academic health systems comprising UCSF, UCLA, UCSD, UC Davis and UC Irvine

~Visage to replace multiple legacy PACS systems unifying all 5 academic campuses on a single diagnostic imaging platform

~ Visage 7 to be deployed in the public cloud

~ Further extends PME’s footprint in tier 1 academic health systems

~ Provides an option for affiliates to adopt the Visage platform

~ Transaction based model with potential upside

....The contract, based on a transactional licensing model, will see the company’s Visage 7 Viewer implemented across the five diagnostic imaging departments, the first time the entire system will be unified on a single diagnostic imaging platform.

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Valuation of $32.00
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Added 3 years ago
I'm guessing fair value is probably around $30 - 34
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#ASX Announcement2/2/21
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Added 3 years ago

PME receives FDA clearance for Breast Density Algorithm

HIGHLIGHTS

• First Artificial Intelligence (AI) algorithm developed by PME

• Developed using PME’s unique end to end AI Accelerator solution

• FDA clearance is in addition to previously received CE (Europe) and TGA (Australia) approvals

• Paves the way for commercialisation in North America, Europe and Australia

• Opens up further research collabouration opportunities

View Attachment

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#ASX Announcement
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Added 3 years ago

14 January 2021

HIGHLIGHTS

• PME signs 7-year, A$40M deal with Intermountain Healthcare

• Intermountain is the largest healthcare provider in the Intermountain West (Utah, Idaho, Nevada)

• Visage to replace legacy PACS and other specialty systems across their 24 hospitals and more than 200 clinics

• Contract includes the Visage 7 Viewer and Visage 7 Open Archive

• Visage 7 platform to be fully deployed in the public-cloud

• Extends PME’s leading position in large, regional health systems

• Transaction-based model with potential upside

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#New German University Deal
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Last edited 3 years ago

15-Oct-2020:  PME signs A$10M deal with Ludwig-Maximilians University

PME signs A$10M – 7 year contract with Munich based Ludwig-Maximilians-Universität (LMU Klinikum)

HIGHLIGHTS

  • PME signs 7-year, A$10M deal with LMU Klinikum
  • LMU Klinikum is one of the largest university hospitals in Germany.
  • Visage technology to be deployed throughout LMU Klinikum’s imaging departments replacing systems from legacy vendors
  • Extends PME’s footprint in the European hospital segment

Leading health imaging company Pro Medicus Limited [ASX: PME] today announced its whollyowned German subsidiary, Visage Imaging GmbH, has signed a 7-year A$10million contract with Munich based Ludwig-Maximilians-Universität (LMU Klinikum) one of the largest university hospitals in Europe.

The contract will see the company’s Visage 7 technology implemented across all LMU Klinikum’s radiology and subspecialty imaging departments replacing existing legacy PACS systems with a single centralized instance of the Visage 7 Enterprise Imaging Platform. Visage is also used in the hospital’s state of the art operating theatre suite for HD video documentation and point-of-care Ultrasound archival and viewing.

LMU Faculty of Medicine is the largest medical training institution in southern Germany and regarded as one of the top academic hospitals in Europe.

The implementation is scheduled to commence in December 2020.

“We look forward to taking our partnership with Visage to the next level as we implement their technology across our radiology department,” said Dr Kurt Kruber, CIO of LMU Klinikum. “The Visage platform provides a highly scalable and reliable platform combined with sophisticated clinical features that will support us in both day-to-day patient care and advanced research.”

“We are very excited about this project,” said Dr Malte Westerhoff, Managing Director of Visage Imaging GmbH. “LMU Klinikum is a thought leader in making a digital strategy a core principle of their operations. We are confident that our technology and expertise can make a significant contribution to helping LMU Klinikum further enhance efficiency and achieve better patient outcomes.”

“Traditionally, large European teaching hospitals like LMU Klinikum have standardised on IT platforms from large, multinational imaging equipment (modality) vendors making this a difficult market to penetrate.” said Dr Hupert. “So this is a very significant milestone for us in this highly competitive market.”

--- ends ---

About Pro Medicus Limited:  Pro Medicus Limited [ASX: PME] is a leading medical imaging IT provider. Founded in 1983, the company provides a full range of radiology IT software and services to hospitals, imaging centres and health care groups worldwide. In late January 2009, the company announced the purchase of Visage Imaging, which has become a global provider of leading edge enterprise imaging solutions, pioneering the best-of-breed, or Deconstructed PACS® enterprise imaging strategy. Visage 7 technology delivers amazingly fast, multi-dimensional images streamed via an intelligent thin-client viewer. The company offers a leading suite of RIS, PACS and e-health solutions constituting one of the most comprehensive end-to-end offerings in radiology. Pro Medicus has global offices in Melbourne, Berlin and San Diego. www.promed.com.au

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#Contract wins
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Added 4 years ago

PME has signed a 5 year, $6m (minimum) contract with Nines -- a tele-radiology Palo Alto based software company led by silicon valley veteran David Stavans.

The contract will allow Nines to further develop radiology products based on ProMedicus' Visage 7 platform. Nines has a focus on Machine Learning and AI in developing its cloud based solution.

Seems a good deal that essentially gives PME an entirely new channel. Nines success will be PME's success.

Announcement here

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#2019 AGM
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Added 4 years ago

CEO said they were "comfortably ahead of budget" in terms of financial expectations for the current financial year, with expectations for a stronger second half, and a growing sales pipeline.

Spoke to the founder sell-down earlier in the year, which was supposedly ancouraged by the board to improve liquidity. This amounted to 7% of their shareholdings and they continue to hold 54% of the company.

Spoke to using the buy-back to help mitigate added volatility of the share price. Personally I think that is a silly reason. You only buy back shares when (a) you have no better investment opportunities and (b) shares are trading a material discount to managements estimate of fair value. At the current price, I find the second part difficult to reconcile. 

Promedicus also talked to their AI capabilities, announcing AI Accelerator which better enables AI developement on their platform. Medical images are perfect for AI, and I see this as an increasingly essential component of their offering.

Full AGM presentation is here 

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