I've pulled this Chart of "X". It is prepared by Carl Coplingua (@CarlCapoligua), and it shows both the short run and longer run technical trends.

Source: Carl Capolingua (@CarlCapolingua of X.com)

Interesting to see on the bottom line that there is still no shortage of "supply" i.e.,sellers looking to offload.

I'd be happy to increase my RL position - probably up to another +50% at the right price. I did nibble some more today at $107.96, but I think now I'm going to be guided by the technical analysis. I've been buying all the way down from $178.

I'm stubbornly of the view that at some point, this is going to be terribly oversold, and I am happy to place a decent wager on that (evenutally 10-15%).

At today's close it is on about a 50x Forward FY26 P/E, a long way from where it was trading in the middle of last year at 200x.

So what is the bear case for PME?

Thinking on paper here…

Many on here will know PME better than me, what am I missing?

Essentially the bear case seems to be that with the recent progress of AI capabilities, PME’s formidable strength has become their fatal flaw.

CEO Sam Hupert alluded to this on the H1 call. They are a capital light software only installation. Further that they have only lost customers infrequently but when they did it was based on price, not functionality.

Monkeys and typewriters – The AI bull case

If it’s true that an infinite number of monkey pounding and slapping on the keys of an infinite number of typewriters would eventually produce the complete works of William Shakespeare, what does this imply for AI?

An army of AI agents / bots could spin up even more AI agents / bots and this swam can generate code very quickly at very low cost for as long as it takes to adapt, improvise and overcome until they have software as good as the solution that any SaaS business provides?

If this is true for any software business, the most lucrative targets likely will be hit first. Alternate AI projects will also be swarming so multiple competing solutions would likely be in a race to get there first. As more arrive at this destination, price would come down as competition swings from almost non-existent to intense.

How long all of this might take is anyone’s guess but the train has left the station and the direction of travel does not seem in question.

Your margin is my opportunity

However, someone / something will have to kickstart this AI swam in the direction of PME’s software and while this is relatively cheap compared to humans coding, it is not costless. The compute and opportunity cost will need to be factored in before pointing AI capabilities at a problem.

With PME’s margins, dominance, software only status, what better target to aim for?

Contracted revenue

Sam also mentioned on the H1 that they have over $1bn in contracted revenue.

It’s hard to believe hospitals will be trying to rip up contracts compelling them to pay this over time.

As hospitals are primarily concerned with healthcare, not AI prophecy, it’s also hard to believe that the current pipeline of contracts will not convert at close to historical rates.

Sam said the current pipeline remains "robust" and has grown in both volume and diversity. Historically their Win Rate has been 80% or higher in major US tenders.

So they have plenty of high margin revenue coming down the pipe in terms of contracted and potential future wins.

The current contracted revenue should translate to about $0.5bn in NPAT over time.

That’s a lot of potential funding for AI spend of their own.

Barriers

Switching costs – not likely all that high, Sam said when they install PME, radiologists are more productive from day 1, suggesting here is not a lengthy training period and an alternative solution would likely be just as easy to use. I’m likely oversimplifying this.

Economies of Scale –The scale that AI seems capable of at relatively low cost suggests AI has the potential to undermine pure software companies who have historically enjoyed Economies of Scale. Not likely quick or easy for challengers to build scale though.

Network effects – Likely strong but not insurmountable by AI solutions that are a lot cheaper. Training doesn’t seem intensive, so it’s not like there’s an army of radiologist drilled in the specifics of Visage to the detriment of other tech.

There are a few genuine barriers I think PME have.

IP – this is the big one and the target AI would be aiming for. Software will be the initial target, but there are other IP / intangible barriers in the form of reputation, relationships, etc that should work in PME’s favour, especially given the conservative nature of healthcare. A slow sales cycle and thus far sticky customers would be a big test for would be challengers.

PME seem to have embraced AI early and are looking to be the platform that peripheral solutions can sit on, including AI innovations from others.

Management say that the more PME improves, the further they move ahead of their competition - although I think part of this might be that they are the only native could solution. AI natives will be looking to use this playbook against them.

If their dominance can make them the de facto industry standard, they will be much harder to replace. However it doesn’t seem clear to me that this is a winner takes all market, and they only have 10% of the US market today.

Hospitals seem unlikely to spin up their own solution, so a credible AI threat would likely come from an AI specialist or an adjacency that gets repurposed to replace Visage.

Hardware providers embedding Agentic AI solutions in their equipment might be a trojan horse to reduce the power of Visage in the market?

Peripheral threats

Hackers - I’m reliably informed that hacking should become a lot easier with AI. Makes sense. While AI should also help defend against attacks, hackers only need to be successful once, defence needs to work 100% of the time. AI’s prophesised capabilities could also give cover to hackers who find their way into parts of PME’s software code.

Margin Pressure - Even if PME are able to keep their growth ticking along, they may be less inclined to increase prices as much as they have in the past.

Continued price increases may be justified and commercially acceptable given the productivity improvements PME’s software delivers but it would also make them a bigger target for AI solutions to aim for.

Increased internal spend on AI and other defence costs could also impact margins.

Outlook from here

Pipeline should also hold up in the near term and continue generating growth for PME.

Management seem alive to the threats and opportunities of AI and have a strategy to make the most of it.

If they weren’t already, they will now be aware of the market’s concerns, so messaging should improve from here.

It’s hard to think that such a dominant, well run, deeply entrenched industry leader for a mission critical service will be wiped out or even severely dented by AI any time soon.

I will be looking for evidence that management are taking steps to proactively defend themselves from the coming onslaught (assuming it does materialise over time). They will need to do this beyond just building AI solutions of their own. This will mean doing things that AI can’t do and entrenching their dominance beyond what a newer, better software solution could replace.

Otherwise their cloud native solution than now dominates the market could be eroded by an AI native solution(s) over time.

Disc: Held

Discl: Not Held, Fantasising Still ..

Never in my wildest dreams did I think I would actually be in any position to consider a position in PME - it was so far out of reach. But these are extraordinary times we live and invest in, so help me Lord!

PME is close to giving up all of its recent move from 161.64 in April 2025 to the peak at 336.00 on 17 Jul 2025. It has only been at these levels 2x prior to today - April 2025, then Sep 2024 prior to that.

Congestion/Support levels going back to June 2024 from here is $144.27, then $120.70

Is this the once-in-a-lifetime opportunity to finally open a position??

Always good to see.

2 directors buying reasonably significant amounts:

D Shiff bought basically $100k worth at $126.67

A Glenning bought basically $250k worth at $119.81

Interesting that some of the other SAAS stocks are up markedly today (eg WTC up 10%, XRO up 7%), whereas PME is basically flat

Sam Hupert and Anthony Hall both buying about $500k on-market each.

Not a needle mover relative to their overall position and net worth, but a soft signal of value.

Here's the final report following our deep dive into ProMedicus.

ProMedicus Spotlight Report.pdf

You can also download it from a shared Google Drive here (i'll add all other spotlight reports here).

As always, a big thanks to all our contributors.

My personal view, for whatever that's worth, is what you have here is a classic "great business at a reasonable price". I'd struggle to call it a bargain, but waiting for a steep discount to fair value can be a counter-productive.

After a week or so, I plan on taking a 2% position. If it drops further (which it probably will as soon as i touch it) i'd see that as a chance to build a more significant position.

Let's start with the big picture.

Medical scans produce lots of very, VERY, large image files. And the number and size of these files is growing rapidly. We are talking about a massive data explosion. Modern high-density multi-slice CT scans can generate over 10,000 images per scan. HD Breast Tomosynthesis files routinely exceed 6 gigabytes, while Optoacoustic breast ultrasounds and Total Body PET Scans can easily surpass 10 gigabytes of data!!

Traditionally, these files were stored locally and administered with software developed by the hardware manufacturers. It was slow, inconvenient and offered very little in the way of software tooling. Legacy technology relied on a clunky "compress and send" model. Clinicians were forced to wait and download massive files entirely across a network before they could even begin viewing them. On top of that, hospitals needed multiple independent desktop systems just to handle different types of imaging like 2D, 3D, and advanced visualization functions.

ProMedicus changed the game with Visage, a bit of fancy kit they acquired off a German mob back in 2009. They paid $4.5 million for it.. actually, the purchase also gave them a broader visualization business they later sold for $14.8m in 2012, which means they effectively got visage for free!

The rest, as they say, is history.

Between 2009 and 2025 revenue and profit has grown ~13x and ~20x respectively. This was achieved with no new debt or equity capital, virtually no share dilution, and all while ~50% of net profit was paid out in dividends. In fact, since its IPO in 2000, the company has increased its shares on issue by less than 5 percent, with all new shares issued simply as part of staff incentives. The business is entirely self-funding, completely debt-free, and sits on a cash and investments pile that topped $220 million by the end of 2025.

Visage was the right solution, at the right time. Radiologists could stream massive scan images almost instantly, using their phone while on the golf course. By leveraging proprietary GPU-based streaming technology, Visage 7 accesses images on-demand rather than moving massive files around. And also using a growing variety of visualisation tools all integrated into the same platform. Instead of siloed programs, Visage provides a single viewer for all images in a patient's medical record, including radiology, cardiology, digital pathology, and even high-resolution photos and videos. By boosting efficiency by up to 50 percent and seamlessly supporting remote work without any speed degradation, the software actively combats the modern crisis of radiologist burnout.

Importantly, the software was easy to set-up, easy to use, and compatible with legacy archives. Through a highly optimized "fast track" implementation methodology, Pro Medicus rolls out large-scale systems in under a fifth of the time it takes industry competitors. For example, they successfully deployed their software across the massive Baylor, Scott and White network in just three months, setting an industry record. And, the upfront costs for customers wasn't onerous, with a minimal upfront commitment and a 'pay-per-view' pricing model. Visage 7 operates on a 100 percent cloud-native architecture, utilizing public clouds like AWS, Azure, and Google Cloud, which strips away the need for expensive on-premise hardware.

As this is a pure software business, it was super capital light and offered incredible operating leverage. Without heavy hardware capital expenditures, the company maintains a highly contained cost base that simply gets better as its footprint scales. Indeed, the business' enjoys net margins that are north of 50%.. NET margins! Even more impressively, their underlying EBIT margins have continued to climb, hitting a staggering 72.6 percent by the first half of 2026.

Today the business represents the gold standard in visualistion software, and despite it's insane growth still only has ~10% of the global imaging market. In the US alone, there are around 650 to 670 million exams performed annually, leaving a massive runway for future expansion. Yet in the absolute top tier, their dominance is clear, with 11 of the top 20 hospitals in the US currently relying on Visage 7 for their PACS. And there's still a strong tailwind of more images, of higher fidelity, and greater tooling (especially AI). Because Visage's streaming architecture is built on the very same GPU processors used for artificial intelligence, the platform is intrinsically AI-capable and ready to incorporate future diagnostic algorithms. They are even pioneering immersive spatial computing experiences using the Apple Vision Pro.

It should be mentioned they also provide practice management software, but that's something like 8% of total revenue. This product, known as Visage RIS, handles the administrative, scheduling, and billing side of the clinic. While it only makes up a small fraction of their global revenue, it remains the undisputed market leader in Australia, secured by long-term contracts with the country's biggest radiology providers.

It really is an incredible Aussie success story, and there's (potentially) a long way left to run. The question, for me at least, has always been about value. While there's little doubt the company has a lot of growth potential left, it needs to be of a degree that it can offset the likely PE compression you get as businesses mature.

For example, per share earnings could 5x in the next 5 years, but if the PE drops to 25x, shares will be at the same price as they are today.

I've scheduled the ProMedicus Spotlight for next week, Tuesday the 31st at 6pm AEDT.

So far, only @mikebrisy and @thunderhead have made any contributions, even though a lot of people were keen to do a deep dive on the company. It may simply be that most people prefer a more independent a style of research, or that there's not much people feel they can add.

Or, it may just be that the Spotlight initiative as an idea doesn't resonate or the format needs refining.. There's no point pushing forward with something if it's not seen as valuable, so I'd really welcome some feedback from the group.

I'll post some notes myself today to try and further prime the pump. Remember, you don't need to produce a massive and highly detailed analysis -- any insight, perspective or observation all helps build out the picture.

I was pleased to get an explict and contrasting valuation of $PME from @DrPete to my own admittedly bullish view, that I thought it might be helpful for members to view a comparative analysis of the two valuations.

To do this I uploaded both valuation straws to my BA (Claude.ai) with the following prompt:

"Attached are two valuations from Strawman.com for ProMedicus (PME). One is by mikebrisy and one is by DrPete. Compare and contrast the two analyses, highlighting the key assumptions and the merits and limitations of each."

Here is what Claude came back with, and I think it does a great job to surfacing the different perpsectives one can take for trying to understand the value of $PME. It makes it crystal clear to me that unless you are prepared to believe that $PME is going to be a long term (multi-decadal), global leader in medical imaging software, you should probably NOT be investing at today's price. (I do, so I have).

Over to Claude:

=========================================================================

Now I have a thorough understanding of both analyses. Let me write up the comparison.

Here's a detailed comparison of the two ProMedicus valuations:

Methodology

mikebrisy uses a full 20-year discounted cash flow model, built from the bottom up with explicit revenue growth assumptions, three opex growth scenarios for each of three revenue scenarios (9 combinations in total), a terminal/continuing value, and sensitivity analysis on WACC and capex intensity. This is a considerably more rigorous and structured framework. It attempts to capture the entire growth lifecycle — US dominance first, then gradual global rollout into developing markets over two decades.

DrPete takes a simpler, more intuitive approach: he constructs a bull and bear case, each with revenue, margin and PE multiple assumptions for FY30, then equally weights them to arrive at a fair value. He explicitly avoids a DCF, instead using a forward PE multiple as a proxy for terminal valuation. This is more accessible and transparent, though it sacrifices nuance.

Revenue Growth Assumptions

Both analysts broadly agree on near-term growth (~24–30% in the next few years), but diverge sharply on how long it lasts and what drives it.

mikebrisy models sustained high growth to 2035 (18–22% p.a.) and meaningful growth to 2045 (10–14% p.a.), underpinned by a detailed thesis: US market share growing from ~10% to a dominant global position, followed by sequential penetration of other developed markets and eventually middle-income developing countries. By 2045, he assumes PME could hold 24–48% global market share — a wide range, but justified by reference to other enterprise SaaS leaders. He also explicitly incorporates AI as a tailwind, seeing PME as the trusted clinical platform through which AI tools will be delivered.

DrPete models only to FY30. His bull case assumes ~27% CAGR to $720m revenue (roughly double current market share), while his bear case assumes growth slows to 15% by FY30, reaching $575m. He doesn't attempt to extrapolate beyond five years, arguing that hard growth constraints start to bite within a decade. His framing of the TAM (~$2b growing to $3.6b by FY30) is notably more conservative than mikebrisy's implied global TAM, and he doesn't explicitly model post-FY30 cash flows at all — the forward PE is doing that work implicitly.

Profitability and Margins

mikebrisy works from the revenue side down, modelling opex growth at graduated rates across the three time horizons. The key mechanic is operating leverage — opex grows much slower than revenue over time, expanding FCF margins naturally. His capex assumption of 5% of revenue (with a 10% sensitivity) is conservatively above current levels (~3%), reflecting anticipated reinvestment as global rollout proceeds. He doesn't explicitly state a net margin target, but the structure implies margins expand significantly over the forecast period.

DrPete uses a simple NPAT margin assumption: 50% in both bull and bear cases (or declining to 40% in the bear case). He flags this as a "big IF" given that competition will eventually compress margins. This is a cruder assumption but it reflects a genuine concern — PME's current ~50% NPAT margins are exceptional and historically difficult to sustain as incumbents attract competitive attack.

Discount Rate and Risk

This is perhaps the most significant divergence in the analyses.

mikebrisy uses a 9% WACC (with sensitivities at 8.0% and 8.5%), noting that depending on methodology, PME's WACC could be argued as low as 7.5%. A lower discount rate materially inflates the DCF valuation — especially over a 20-year horizon. His choice of 9% reflects a quality-adjusted cost of capital appropriate for a highly predictable, capital-light SaaS business, but it does embed an assumption that PME's risk profile remains low throughout the full forecast period.

DrPete uses a 10% discount rate for his "fair price" and 15% for his "buy price", explicitly building in a margin of safety. He doesn't discuss WACC in detail, but his implicit view is that investors require a higher return hurdle to justify the price paid, given the uncertainty embedded in a 5-year+ projection.

Terminal Value / Exit Multiple

mikebrisy's DCF uses a continuing value growth rate of 3.5%, which is the key driver of value in any long-horizon DCF. This is a reasonable assumption for a global software business at maturity, but it compounds significantly across 20 years of modelling.

DrPete uses a forward PE multiple of 50x (bull) or 40x (bear) as his exit multiple at FY30. He acknowledges these are generous relative to what fundamentals alone would dictate (he'd apply 30x to a company growing 15%), but argues the weight of PME's history will sustain an above-market multiple. Implicitly, this PE is doing the work of a terminal value, but it introduces circularity — if the market derate happens to occur before FY30, the calculation breaks down.

Risk Identification

Both authors identify similar risks, but weight them differently.

mikebrisy lists: opex step-up in global rollout, AI disruption (as a risk, not just a tailwind), cybersecurity failure, founder succession, competitor response, and higher reinvestment costs. He then largely accepts these risks as manageable, remaining a holder accumulating on weakness. His "when I'd sell" triggers are precise and operationally grounded: deteriorating win rates, pricing pressure on renewals, AI-native competitor wins, or unexpected founder exits.

DrPete lends more weight to the downside risks in his probability weighting. He explicitly argues the market is ignoring the bear case, and that even a 25% probability assigned to his bear scenario makes today's price hard to justify on a fundamentals basis. His key concern is that PME is priced with optimism — not priced to perfection, but close enough that the margin for error is thin.

Key Merits and Limitations

mikebrisy — Merits:

• Rigorous multi-scenario DCF with explicit opex modelling across three time horizons
• Long-term thesis grounded in a credible global market evolution narrative
• Thoughtful treatment of AI as both risk and opportunity
• Detailed sensitivity analysis (WACC, capex)
• Clear sell triggers that are observable and forward-looking

mikebrisy — Limitations:

• A 20-year DCF for any company is highly sensitive to terminal assumptions; small changes in continuing value growth rate or WACC move the valuation enormously
• The 9% WACC at the low end of sensitivity is arguably aggressive for a stock trading at 100x+ earnings
• Global market share assumptions of up to 48% by 2045 are ambitious and rely on PME successfully executing a major strategic evolution beyond its current US focus
• The images of the actual model outputs didn't render in this format, so the precise scenario outputs can't be independently verified

DrPete — Merits:

• Simple, transparent framework that is easy to stress-test
• Explicit probability weighting of bear case is intellectually honest and often overlooked
• Conservative discount rates provide a genuine margin of safety
• Short time horizon (5 years) reduces compounding forecast error
• Correctly identifies that sentiment and fundamentals can diverge materially

DrPete — Limitations:

• A 5-year PE-based valuation captures very little of the long-term value creation thesis for a hyper-growth SaaS business — most of PME's intrinsic value lies beyond FY30
• Equal weighting of bull and bear cases is arbitrary; there's no explicit probabilistic rationale for 50/50
• The forward PE multiple at exit (40–50x) is itself a valuation assumption that simply defers the question
• No explicit modelling of cash flows, capex, or working capital
• Doesn't model PME's international expansion opportunity at all

Summary Judgement

The two analyses reflect genuinely different investment philosophies as much as different valuations. mikebrisy is a long-term business analyst who believes in PME's structural opportunity and is willing to model the full lifecycle of that opportunity, accepting that uncertainty is the price of a 20-year view. DrPete is a value-oriented investor who distrusts sentiment premiums and demands a margin of safety grounded in nearer-term fundamentals.

Neither is wrong in their approach. The gap between $94 and $165 is largely explained by three compounding differences: a longer modelling horizon, a lower discount rate, and a higher probability assigned to the bull case. Investors who agree with mikebrisy's thesis on global market evolution and AI integration, and are comfortable with a 9% hurdle rate, can rationally hold at current prices. Those who share DrPete's scepticism about sustained hyper-growth and prefer a higher margin of safety would do better to wait for a more significant pullback.

Nothing sinister here - more indicative of a growing and more complex company operations with expanding verticals.

Senior Management Appointments

Pro Medicus Limited (ASX: PME) is pleased to announce the following senior management

changes effective 16 March 2026.

Mr Clayton Hatch, who has held the role of Chief Financial Officer since June 2012, will assume

newly created dual roles of Head of Business Operations and Head of Investor Relations. He

will be responsible for overseeing operational initiatives within the Company, driving growth and

enhancing productivity, performance and profitability. He will also be responsible for managing

communications between the Company and its investors.

Ms Danny English will become the Chief Financial Officer succeeding Mr Hatch. Ms English

has been employed by the Company since March 2015, commencing as Group Financial

Controller before being promoted to the Head of Finance and Company Secretary three years

ago. She has extensive global financial management experience, with a deep understanding of

ASX financial reporting, governance and risk management. Danny has worked in both private

and publicly listed companies and is well versed in the complexities of dealing with both global

and local requirements, having worked in senior-level Finance roles for several years in London

and New York.

Dr Hupert, CEO congratulated Clayton Hatch on his promotion, which is recognition of his deep

knowledge of the company’s operations and investors and said: “Danny’s promotion to company

CFO reflects her extensive financial expertise that she has developed over many years.

Dr Hupert added “These management changes underscore our deliberate approach to

succession planning and highlights the depth of talent within our team. I congratulate both

Clayton and Danny on their well-deserved promotions and I look forward to working with them in

their new roles to achieve our key objective of being the leading provider of best-in-class

enterprise medical imaging solutions.”

Wow man! As a new shareholder I’m not used to reading reports like this! I know the market will be expecting a lot, so I’ll be analysing the information and updating my valuation soon.

REVIEW AND RESULTS OF OPERATIONS

The Company reported a first half after tax profit of $171.2m, an increase of $119.48m (up 230.9%) compared to the same period last year. Revenue from contracts with customers for the 6-month period increased from $97.2m to $124.8m, an increase of 28.4%.

Underlying profit before tax was $90.7m compared with $69.9m for the previous corresponding period, an increase of 29.7%. Underlying profit before tax comprises reported statutory profit before tax of $243.3m, minus the fair value gain on the movement of other financial assets and interest income of $153.2m, plus the net currency loss of $0.6m. The underlying profit for the previous corresponding half year of $69.9m, comprised reported profit before tax of $73.3m, minus the fair value gain on the movement of other financial assets and interest income of $3.8m plus the net currency loss of $0.4m.

Underlying profit before tax is a non-IFRS measure and has been included in the analysis of financial performance as the Directors consider it provides a more meaningful comparison of results from period to period.

The currencies of the countries in which the Company has its activities have fluctuated during the half year. On a constant currency basis1, the revenue would have been $123.4m (up 26.9%) and the underlying profit before tax would have been $90.2m (up 29.1%) for the half year ended 31 December 2025.

During the period the Company continued to grow its North American presence (revenue up 30.6%) with six implementations completed for Trinity Health Phase 1, Children’s Hospital of Alabama, Lurie’s Children’s Hospital,

University of Kentucky, University of Iowa, and Lucid Health.

The North American business continued to expand, winning six new contracts with UCHealth Colorado, Advanced Radiology Management, Roswell Park Comprehensive Cancer Centre, Children’s Hospital of Alabama,

Vancouver Clinic and BayCare Archive (combined A$278.0m; 5-to-10-year contracts). The Company also successfully renewed its contract with FMOL Health (A$20.0m; 5-year term), alongside a Visage 7 Worklist addition at VISN23 (A$3.0m).

The Company is looking to grow market share in North America, Germany and Australia and is actively pursuing a growing number of opportunities within the academic/teaching hospital, integrated delivery network (IDN) and corporate/private imaging centre markets.

The Company’s European revenue increased 40.5% compared to the same period last year, including winning a key contract with the University Hospital of Heidelberg (A$10m). The Archive data migration in the first half of FY26 is the main contributor to the increased revenue compared to the same period last year.

The Company’s Australian business increased revenue by 4.2% compared to the same period last year, and this is on par with the prior period.

The Company maintained its investment in research and development (“R&D”), both in Australia as well as overseas. This investment highlights the company’s ongoing commitment to innovation and its focus on advancing product development. Pro Medicus aims to maintain its competitive edge and ensure long-term growth in the marketplace.

We continue to actively integrate valuable insights from customer feedback, to guide the evolution of our products through version upgrades and newly introduced product features. Additionally, we have continued to prioritise product demonstrations, offering customers and prospective customers a firsthand look at our latest advancements and gathering real-time input. This ongoing dialogue with our customers helps ensure that our products meet their needs and exceed expectations, fuelling our commitment to excellence and positioning us for long-term success.

Exam volumes, particularly in the US, continued to grow throughout the period, both through increases from existing customers and new customers that now have been fully deployed throughout the first half of this financial year.

The Company's cash reserves increased by $11.2m despite an increase in the final dividend payout versus last year of $8.4m during the period, two share buybacks totalling $10.1m, and a $10.0m investment in ASX listed 4D Medical (4DX). Cash reserves and other financial assets, excluding forward contracts, unlisted debt instrument and unlisted equity instruments were $221.8m at the end of December 2025, an increase of 5.3% in the half. The company remains debt free.

The Board is of the view that there are sufficient cash reserves to fund the anticipated growth of the business from internal sources. Consistent with the Company’s dividend policy, the Company has announced a fully franked interim dividend of 32.0c per share payable on 20 March 2026. On 31 July 2025 the Company also made an investment in 4D Medical Limited of $10m in debt instrument with equity features. The investment will crystalise on 31 July 2027 (share issue) and 14 August 2027 (exit fee), and the ultimate value will be determined by reference to the 4D Medical share price at that date (Refer to note 12 of the financial statements).

Under International Accounting Standards the company is required to reflect the fair value of the debt investment in the financial statements at each reporting date. The Company has undertaken a valuation having regard to the volatility of the 4D Medical share price and the unexpired period before the investment will be realised.

At 31 December 2025 the value of the investment in 4D Medical is $159.1m which results in an unrealised fair value gain of $149.1m. This is reflected in Other Income in the profit and loss account.

The value of the investment may change at each reporting period, largely dependent on the share price at the relevant date.

Held IRL and SM

There's been a fair amount of director buying for PME close to the end of this downdraft (so far anyway, it could have further to go).

Big Sam got about $0.5m worth, and Anthony Hall got nearly $1m worth on market.

Here's an AI generated video summarising our collective deep-dive into ProMedicus.

It tries to force more of a contrast than is real in the different valuations of @DrPete and @mikebrisy (also see Mike's latest notes on the valuation), but overall i think it captures the sentiment of the group pretty well.

Link: https://vimeo.com/1180640095/1bd3c0996f

To start the ball rolling on the Stock Spotlight for $PME, I have undertaken an analysis of the firm's competitive market position.

The current draft report is available via this link. I may update it (add to, amend etc.) but I thought it worthwhile making the draft available early.

PME Competitive Positioning

As I add to and improve the report, I will do so by replacing the link above with the latest document.

I learned some new insights in doing this. Overall, the insights have not changed my current view on valuation, although one comment is worth making.

My Low and Base revenue growth scenarios are consistent with $PME and Sectra both succeeding and together dominating the global market with a combined market share by 2035 of 30%-40%. My high revenue growth scenarios are probably only consistent with $PME going on to win in the longer term, as ultimately its global market share by 2045 gets to 48%, expanding from 18% in 2035. No-one can possibly know or even guess what happens out that far into the future. But the point is that valuation much above $200 really do require $PME to be the undisputed leader. In that context, it will be interesting to monitor how the risks and key indicators identified towards the end of the report pan out over the years ahead.

-----------------------------

Methodology

I used the following methodology to draft this report.

1. Generated an initial report and iterated it several times with ChatGPT.
2. I then fed the report into Claude and requested a "critical appraisal" of the report.
3. I then requested Claude to redraft the report, addressingall the areas for improvement it had identified, and to explicitly call out areas of weakness in the analysis.
4. I then manually reviewed and edited the report, although I have further work to do on this.

The result product is IMHO a far higher quality of analysis than the initial single LLM product, which had several weaknesses including: 1) quoting statements in some sources as facts; 2) failing to identify sources of bias in citations; 3) minor hallucinations.

Update: resubmitted so that it is linked to Company page and will notify follows of $PME

No doubt helping stem the bleeding today.

PME signs two 5-year contract renewals with a combined

minimum value of A$40M

9 March 2026

HIGHLIGHTS

• $31M 5-year renewal with Medstar for the full suite of Visage 7 modules – Visage 7
• Viewer, Open Archive and Worklist
• $9M 5-year viewer renewal with Zwanger-Pesiri
• Medstar contract renewal to include Visage 7 Cardiology
• Transaction based renewal contracts with potential upside
• Both renewals negotiated at an increased per transaction fee

Leading health imaging company Pro Medicus Limited [ASX: PME] today announced its wholly

owned U.S. subsidiary, Visage Imaging, Inc., has signed a 5-year contract renewal, including an

addition of the new Visage 7 Cardiology Imaging module with MedStar Health (“MedStar”), the

largest health system in the Maryland and Washington, D.C. metropolitan region.

Visage Imaging, Inc also signed a 5-year renewal contract with Long Island based Zwanger Pesiri,

a large private outpatient radiology provider in the US.

“The Medstar renewal is notable in that MedStar was our first fully cloud deployed customer and

has grown considerably since their initial go live”, said Dr Sam Hupert, Pro Medicus CEO.

“Renewing this contract, and adding the Cardiology product, confirms our belief that we have the

preeminent and most scalable enterprise imaging solution, that is fully cloud native”.

Commenting on the Zwanger- Pesiri renewal, Dr Hupert said “We are very pleased to have played

such a key role in Zwanger Pesiri’s growth over the past 10 years.”. “Zwanger-Pesiri have now

renewed for a third contract term, re-iterating our belief that our solution provides the best return on

investment of any system in the market from both a financial and clinical perspective.”

Discl: Not Held

Updated PME chart.

• Still in Purgatory, bouncing in between the 111.75 and 144.27, touching neither levels
• It looked good in tracking upwards in early Mar 2026 but that move stalled at 140.85
• No indication of the direction of breakout.

Keeping a close watch to see if it will break the current 52 week low of 107.75 of 24 Feb 2026

Financial Results FY2025 was another record year for the company with revenue increasing by 31.9% to $213 million and net profit after tax increasing by 39.2% to $115.2 million.

The Company continued to be cash flow positive with retained cash and liquid investments increasing from $155.4 million to $210.7 million, after a $A7.9m buyback of shares in March/April and paying increased dividends.

The Board anticipates FY26 will be another strong year. The budget for the current financial year has been determined anticipating continuing strong profitable growth, from both existing and new clients.

I am pleased to advise that results to date are ahead of budget on both a constant currency basis and an Australian dollar basis, despite some volatility in currency markets during the period.

We are entering the second half with strong momentum, driven by the successful completion of Trinity Phase 1 and the University of Iowa implementations in late October, both of which will contribute a full six months of revenue in the second half .

In addition, we have several major contracts scheduled to go live early in the second half. We therefore anticipate the second half bias will be greater this financial year than previous years. 

PRO MEDICUS LIMITED (ASX:PME) - Ann: Pro Medicus - AGM 2025 - Presentation, page-1 - HotCopper | ASX Share Prices, Stock Market & Share Trading Forum

Return (inc div)   1yr: 14.48%   3yr: 64.17% pa   5yr: 54.97% pa

·      April 2026 Renewal with Northwestern Medicine, A$37m 5 year contract. Renewal negotiated with increased minimums and an increased fee per transaction. Trascation based renewal contract with potential upside. https://announcements.asx.com.au/asxpdf/20260413/pdf/06ydw6wxbcfzyl.pdf

·      April 2026 University of Maryland Medical System, A$23m 5 year contract Transaction based model with potential upside. UMMS delivers comprehensive health care services throughout Maryland and include collaboration with specialists from the university of Maryland School of Medicine. https://announcements.asx.com.au/asxpdf/20260408/pdf/06y7r1st8f19pd.pdf

·      March 2026 signs two 5 year contract renewals with a combined minimum value of A$40m. Both renewals negotiated at an increased per transaction fee. Transaction based renewals contracts with potential upside.

-       $31m 5 year renewal with Medstar for the full suite of Visage 7 modules

-       $9m 5 year viewer renewal with Zwanger-Pesirihttps://announcements.asx.com.au/asxpdf/20260309/pdf/06x61wlgzv1pyc.pdf

·      November 2025 – three new contracts with a combined minimum valve of A$29M.

 – A $6.5M 5 year contract with Children’s of Alabama, a leading paediatric hospital in Birmingham, Alabama. 

– A $9.5M, 7 year contract with Roswell Park Comprehensive Cancer Center, a cancer research and treatment facility located in Buffalo, New York. 

– A $13M, 7 year contract with Vancouver Clinic, a physician-owned and government group in Vancouver, Southwest Washington. https://announcements.asx.com.au/asxpdf/20251124/pdf/06sd627mkrhxk4.pdf

·      November 2025 Advanced Radio Management, A$44m 5 year contract. Transaction-based model with potential upside, a leading private radiology reading group, is synonymous with quality, innovation, and collaboration with a practice culture dedicated to exceptional patient care. https://announcements.asx.com.au/asxpdf/20251117/pdf/06s2dxp6rh2tvv.pdf

·      October 2025 University Hospital Heidelberg, A$10m 5 year contract, Expands Visage footprint in key German/European market. Unveristy Hospital Heidelberg (UKHD) and German Cancer Research Institute (DKFZ) and associated hospitals, Thoraxklink Heidelberg and KKH Bergstrasse. https://announcements.asx.com.au/asxpdf/20251008/pdf/06q865hx2q58sz.pdf

·      July 2025 UCHealth, A$170, 10 year contract, UCHealth spans a network of fourteen hospitals, with afflilate hospitals, clinic locations and health care providers throughout Colorado, Wyoming and western Nebraska. https://announcements.asx.com.au/asxpdf/20250703/pdf/06lf0nd7qsxlb8.pdf

·      July 2025 Franciscan Missionaries of Our Lady Health System, renewal with a minimum value of A$20m, 5 year contract, Louisiana based. Renewal for Visage 7 viewer negotiated at an increased per transaction fee. https://announcements.asx.com.au/asxpdf/20250703/pdf/06lf0fpkfd8dk0.pdf

·      May 2025 University of Iowa Health Care, A$20m, 5 year contract, transaction based model with potential upside. UI Health care’s clinical enterprise spans three patient campuses, including Stead Family Children Hospital, and comprises nearly 20,000 staff member. https://announcements.asx.com.au/asxpdf/20250508/pdf/06jjtmchg384y8.pdf

·      Mar 2025 LucidHealth A$40m. 7 year contract, transaction based model with potential upside, a leading provider of radiology services in the US. LucidHealth employs more than 300 Radiologists across their network of 130 care sites. https://announcements.asx.com.au/asxpdf/20250303/pdf/06g5sc6vbby7w9.pdf

*See previous straws for past contract wins.

I may be the latest person to the PME party in existence, but I’ve decided to take a bit of a look at it. I have little intention of buying it but I think there could be a lot to learn from its story about what to look for in searching for 100 plus baggers. One of my main questions, given the traditional view that “your margin is my opportunity” is how does PME sustain a 90% plus gross profit margin, which place it amongst the very best companies in the world on this measure. I know it’s well managed but this alone doesn’t explain it. I’m thinking their performance is more likely a result of their ability to capitalise on an inherent aspect of their industry, which therefore lends itself to a Porter’s 5 forces industry analysis. I’ll be working through this in coming days. More to come.

Find this an interesting accouncement. Pro Medicus will invest $10m into 4D medical. It gives the Pro Medicus the option of distributing 4D Medical products.

Annoucement link below

https://announcements.asx.com.au/asxpdf/20250731/pdf/06mdbyfdsqbfz0.pdf

https://cdn-api.markitdigital.com/apiman-gateway/ASX/asx-research/1.0/file/2924-02978498-3A673481&v=4a466cc3f899e00730cfbfcd5ab8940c41f474b6

Return (inc div)   1yr: 126.36%   3yr: 79.43% pa   5yr: 66.89% pa

#Contract Win Summary 3

·      February 2025 BayCare A$53m, a leading health care system in the Tampa Bay and central Florida regions of the U.S. BayCare connects individuals and families to a wide range of services at 16 hospitals and hundreds of other convenient locations:  Based on a transactional licensing model, the contract will see the company’s cloud-based Visage 7 Enterprise Imaging Platform (‘Visage 7’), including Visage 7 Viewer and Visage 7 Workflow modules, implemented throughout BayCare providing a unified diagnostic imaging platform. https://announcements.asx.com.au/asxpdf/20250204/pdf/06f55qcf0vhg0n.pdf

·      January 2025 University of Kentucky $33m 9 year contract Contract is for “full stack” - Visage 7 Viewer, Visage 7 Open Archive and Visage 7 Workflow University of Kentucky (UK) HealthCare is a comprehensive healthcare system that includes a network of hospitals, clinics, and specialized medical services. UK HealthCare is anchored by the UK Albert B. Chandler Hospital, which is a leading medical facility in the region, offering advanced treatment options and cutting-edge research. The system also includes the UK Good Samaritan Hospital, which provides a range of services including emergency care, surgery, and rehabilitation. UK HealthCare is affiliated with the University of Kentucky College of Medicine, ensuring a strong emphasis on education, research, and innovation. https://announcements.asx.com.au/asxpdf/20250116/pdf/06dl5l7mnwr65v.pdf

·      December 2024 Duke University Health System $15m a leading North American academic medical center. The contract, based on a transaction-based licensing model, will see Visage 7 Open Archive supplement the existing Visage 7 Viewer contract signed in May 2019. As part of the deal, Duke’s current on-premise instance of Visage will be deployed to the cloud along with Visage 7 Open archive. The Visage 7 Viewer contract has been extended for a further 2 years to the end of 2029, as part of the deal. https://announcements.asx.com.au/asxpdf/20241230/pdf/06d3t83kt24ny6.pdf

·      December 2024 Duly Health and Care $30m the largest independent, multi-specialty physician-directed medical group in the Midwest USA. Duly Health and Care brand includes DuPage Medical Group, Quincy Medical Group, and The South Bend Clinic and supports over 40 Radiologists, 1,000 physicians and 150 outpatient clinics.https://announcements.asx.com.au/asxpdf/20241223/pdf/06cz3ws47kk334.pdf

·      November 2024 Trinity Health $330m 10 year deal one of the largest not-for-profit health care systems in the United States. Trinity Health comprises 93 hospitals, 107 continuing care locations, 142 urgent care locations and many other health and well-being services, spanning a geographic reach of 26 states, with more than 127,000 colleagues, including 9,300 employed physicians and clinicians, as well as 29,000 affiliated physicians and clinicians. https://announcements.asx.com.au/asxpdf/20241128/pdf/06bzqkjt0mqmxz.pdf

·       November 2024 NYU Langone Health $24m Contract is to extend to “full stack” – with the addition of Visage 7 Open Archive to the Visage 7 Viewer and Visage 7 Workflow The contract, based on a transaction-based licensing model, will see the addition of Visage 7 Open Archive deployed in the cloud and an eventual transition of NYU Langone’s entire current on-premise system to the cloud. The Visage 7 Viewer contract (signed in September 2020) has been extended for a further year to 2029, as part of the deal. https://announcements.asx.com.au/asxpdf/20241127/pdf/06bx7b2cjh04y3.pdf

·      October 2024 Mercy Health $98m 8 year contract renewal, The deal which covers both Visage 7 Viewer and Visage 7 Open Archive is transaction-based and has been negotiated at a higher per transaction cost. The term of the renewal has also been increased to 8 years from 7 years as per the original contract. https://announcements.asx.com.au/asxpdf/20241007/pdf/068tf5kd2qkd3d.pdf

·       May 2024 PME signs five new contracts with a combined minimum valve of A$45.0m

-       A$9.5M, 5-year contract with Consulting Radiology, a private radiology group in Minnesota 

-       A$11.5M, 7-year contract with Nationwide Children’s Hospital, a leading paediatric hospital in Columbus, Ohio 

-       A$6.5M, 5-year contract with Nicklaus Childrens Hospital, a leading paediatric hospital in Miami, Florida 

-       A$9M, 8-year contract with Moffitt Cancer Center, in Tampa, Florida 

-       A$8.5M, 5-year contract with US Radiology Specialists, a partnership of physician owned radiology practices https://announcements.asx.com.au/asxpdf/20240528/pdf/064008bzm8jnn9.pdf

*Refer to previous straw for Contract Summary before October 2024

During this week's Strawman Meeting, we discussed valuations and taking a long term view as an edge in long term investing.

And, lo and behold, once again I am confronted with the worst investing decision in my life - that of doing some "analysis" on $PME in mid-2023 and concluding that at $70, it was too expensive.

And so, today it announces another monster contract ($300m for 10 years) and to stop myself feeling terrible, I've done a quick update. By the way, on that news the SP jumps $2bn! (As an analyst, when I'm feeling glum I do some analysis - it makes me feel better!)

So the structure of this analysis is as follows:

1) Quick DCF

2) Quick market analysis

3) Conclusion and discussion

1) Quick DCF

So, having looked at the accounts over the last 3-4 years, i've decided to run out a DCF for 20 years. It's pretty easy to model.

First 10 years, revenue CAGR 27%; Opex CAGR 20%

Next 10 years, revenue CAGR 15%; Opex CAGR 10%

Common assumptions:

• Ongoing capex at 5% of revenue (assuming they both update and extend the platform to take over more and more of the total available market of medical imaging software)
• Depreciate 34% of relevant LT assets pa (PPE, Intangibles, Leases)
• SOI growth at 0.15% p.a.
• Tax: 30%
• Cashflow growth beyond the explicit period 5% (note: you usually don't run more than 4%)
• WACC = 9%
• 100% equity funding (no debt) + a sensitivity with LT Debt:EBITDA = 0.5

Valuation $200/share

Of course, you can bump this up a bit if you add a little gearing to the balance sheet. If I add 50% of EBITDA as long term debt, I then get:

Valuation $218/share

As ever, you can get all sorts of valuations by tweaking the parameters, and I have omitted a few things (like deferred taxes etc. and adjusting the WACC in the leverage case). Playing with this model, I can get valuations down as low as $160 and up north of $230,but that's not the point of this thread. That comes next.

2) The Market

I'm reasonably confident that the global market for medical imaging software can be estimated to be in the ball park of A$5.6bn (fairly wide range of sources around this, but it's in the ball park).

Now $PME is not playing in this total market, but for the sake of this analysis (just like with $WTC), let's assume that over time it expands from its current focus to dominate the wider market.

So, today its market share is only 7%. Lot's of running room.

We know this market is growing at 7-8% per annum, and if I assume that for the next decade it grows at 8% pa, and thereafter at a more modest but still healthy 5%pa, then in 2045 the global market has become $18bn.

In 2045, with my DCF assumptions, $PME's market share has become 46%.

Now that would be a truly dominant market share when you look at how fragmented the market is today and some of the big names playing. (GE Healthcare, Siemens, Agfa-Gevaert, Hologic, Pie Medical, AQUILAB, MIM Software, Merge Healtcare, ScienceSoft, Acuo Tech. to name the big players) Most a equipment makers who develop their own software to use witht he equipment, with overlapping functionality for $PME. So that's a big source of $PME's competitive advantage, as its machine-maker agnostic.

Just to be clear, my market size analysis is for SOFTWARE only. Not the hardware. The global hardware market is worth north of A$70bn.

3) My Conclusion

These are just quick, rough calculations you can do in a few minutes. They're broadbrush. They are almost certainly wrong.

BUT, I just have to believe too much to have a conviction that $PME represents a good investment at $228, let alone $248,

There are too many other established players investing to compete for me to believe that $PME will eventually own some 50% of the total addressible market. It's a long bow to draw. Of course, if you are prepared to believe that, then equally, the analysis shows the valuations are justified for the long term. Afterall, maybe they do become the Windows of Medical Imaging! In software, there are precendents, e.g., Google for search.

I would consider investing today in $PME around $120-$150. I'd have to do a deeper dive to find my entry point, but that's a ballpark based on what I've done in 30 minutes. (My CommSec alert is at $170 ... don't think it will triggered any time soon.)

I don't believe today's news of a $300m, 10-year contract warrants a SP movement of +$2bn. These are the kinds of deals $PME MUST bring in, if it is to justify any valuation north of $150. Of course, the SP move could be rational if the market is efficienctly assessing this deal as increasing the chances of success that $PME is going to eventually dominate this market.

So, there you go. Let's see how well this post ages. And above all, do your own research!

Well done to all you have invested in $PME - my hat off to you, and this post shows how analysis can get in the way of being a great investor. But I am going to stick to my process - it serves me well more often than it lets me down.

Reflection

As a personal anecdote, a friend of a StrawPerson at last week's Brisbane drinks had just bought their first ASX shares. $PME at the recommendation of a friend at (I recall) about $217. As I drove home in my Uber after the drinks, I wondered what the conversation would be in a year's time. It didn't cross my mind they'd be up 14% in one week!

Disc: Not held, never have. ;-(

Another anouncemnt today sees the price up a further 21% at time of writin,

PME signs AUD $330M, 10-year contract with Trinity Health 28 November 2024 HIGHLIGHTS

PME signs AUD $330M, 10-year deal with Trinity Healt

Visage to replace multiple legacy PACS throughout the Trinity Health 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)

Transaction-based model with potential upside

WOW...

Discc small holder icreasing by the second

A compounder here Ladies & Gentlemen>

CHAIRMAN’S REPORT (some of the Presentation below)

PRO MEDICUS LIMITED (ASX:PME) - Ann: AGM 2024 - Presentation, page-1 - HotCopper | ASX Share Prices, Stock Market & Share Trading Forum

During the FY24 year the company announced 9 new contract wins in North America including our largest contract to date, Baylor Scott & White, which as of mid- September is fully live, along with many others implemented during the year. (Dr. Hupert will go through the details of these contracts in his presentation). Since 1 July 2024 the Company has announced two significant client renewals, one in North America and one in Australia, both at increased fee levels. Despite the number of new additions to our client base, new opportunities continue to present themselves and as a result our pipeline remains strong

Financial Results FY2024 was another record year for the company with revenue increasing by 29.3% to $161.5 million and net profit after tax increasing by 36.5% to $82.8 million. The Company continued to be cash flow positive with retained cash and liquid investments increasing from $121.5 million to $155.4 million, after a $A2.77m buyback of shares in February/March, a $US5m investment in cardiac CT AI company Elucid and paying increased dividends. The Board anticipates FY25 will be another strong year. The budget for the current financial year has been determined recognising anticipated continuing strong growth, from both existing and new clients. I am pleased to advise that results to date are ahead of budget on a constant currency basis and an Australian dollar basis, despite some volatility in currency markets during the period. We anticipate that the second half of the financial year will be stronger than the first half, as is traditionally the case. 

Whome are they?

A look back to the June 2024 Annual Report:

Annual-Report-2024.pdf

>> I Just clarifying the employee head count its '120' worldwide <<

PME ASX: Pro Medicus’ Sam Hupert says simplicity secret of success

Hupert’s message to investors this week was one of “steady as she goes”. There are no plans to raise capital, make major acquisitions or veer away from the model that has been working for the past 10 years. “We have been able to fund growth organically and profitably. Touch wood, it has gone well for us. We didn’t imagine we would be quite here,” he says.

For a company worth $18 billion, its staff numbers are extraordinarily low at 120. It is headquartered in Melbourne, has an office in San Diego and an R&D centre in Berlin. The two inventors of its cloud software platform work for the company as chief technology officer and the head of development.

Eye watering return there below:

Return (inc div)   1yr: 158.49%   3yr: 54.37% pa   5yr: 54.44% pa

Posting in PME since the ALQ activity is like a graveyard there.

Everyone complains about PME being expensive

If ALQ has a PE of 600x, then PME must be good value?

Meanwhile I'm still trying to get to the bottom of why the PE of ALQ has skyrocketed.

The ASX business so good ‘you can’t put a sell on it’

With headlines like that in the AFR - surely a pullback has to follow...

HIGHLIGHTS  Signs five new customer contracts with a combined minimum value of A$45.0M  Broad range of customers - multiple segments of the market  New contracts are transaction-based with potential upside  

The contracts will be fully Cloud deployed and are expected to be completed within the next 6 months:

A $9.5M, 5-year contract with Consulting Radiology, a private radiology group in Minnesota

A $11.5M, 7-year contract with Nationwide Children’s Hospital, a leading paediatric hospital in Columbus, Ohio

A $6.5M, 5-year contract with Nicklaus Childrens Hospital, a leading paediatric hospital in Miami, Florida

A $9M, 8-year contract with Moffitt Cancer Center, in Tampa, Florida

A $8.5M, 5-year contract with US Radiology Specialists, a partnership of physician owned radiology practices. The contracts bring the company’s minimum total contract value (TCV) for new sales this financial year to $245 million.

Return (inc div)   1yr: 93.91%   3yr: 37.59% pa   5yr: 39.48% pa

Latest pe ratio: 173% (the high pe puts many Investors off)

Thursday 2nd May 2024: PME have just made another all time high today - a intraday high of $112.59 before closing at $112.10.

PME, you've done it again!

And I still do not own any PME in my real money portfolios - just here on Strawman - where I paid between $20.16 and $27.87 per share back in the first half of 2020, and that position is showing a +50.92%p.a. return over the past 4 years despite me trimming the position all the way up. Just couldn't bring myself to pay up for them with real money, as they always look fully priced or expensive, however they just keep on rising regardless!

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

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

·       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

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.

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

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!)

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.

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.

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.

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

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 Oregon. Samaritan 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, Washington. https://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.

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.

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...

In todays AFR an article: How ProMedicus turned a $US3.5m deal into $5.5b in value

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.

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

Another brilliant result from this outstanding company. Here’s the headline numbers.

Revenue from ordinary activities $44.33m – up 40.3% ▪ Underlying profit before tax $28.8m – up 53.5%

▪ Net profit $20.68m – up 52.7%

▪ Cash reserves $76.17m – up $14.91m

▪ Company remains debt-free

▪ Fully franked interim dividend 10c per share – up 42.9%

Pro Medicus CEO Dr Sam Hupert said the result represented the strongest half-year revenue and profit results in Pro Medicus’ history, powered by contract wins and renewals in the US and an extension of a European contract to cover new regions.

“We thought it was a good result with all our key financial indicators heading in the right direction, not just revenue growth but also profit growth, margin expansion and retained earnings,” he said. “There were two key drivers behind the result. Firstly, the jump in transaction revenue from our US contracts, as several large implementations came on-stream towards the second half of FY21, such as Northwestern, NYU and Medstar. Secondly, the extension of the German government contract to a fourth hospital. Renewals of contracts should also not be underestimated; they are like a whole new contract.”

Dr Hupert said the company recorded growth in revenue in all key jurisdictions: USA, Europe and Australia. “Our pipeline remains strong with a good spread of opportunities in different markets. Many are Cloud-based – a trend gathering significant momentum – and many are interested in more than one of our Visage solutions.”

Dr Hupert said the company’s operations had not been unduly affected by Covid-19.

“Exam volumes in North America were strong, and in many cases greater than pre-Covid levels. The only region that was marginally affected was Australia, where the majority of our revenue is not exam-based. In terms of sales capability and implementations these were not impacted. During the half we did a mix of remote, onsite and hybrid remote/onsite implementations.”

“Our pipeline remains strong with very healthy representations across academic, non- academic/IDN, corporate and private market opportunities. Many are for more than one of our products and increasingly we are seeing opportunities that have Cloud-first policy which favours us as we believe we are the only company to have a proven, fully Cloud-native offering that operates at scale.”

Disc: Held IRL

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

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

On April Fools day, the company announced a share buy-back of up to 10% of the company's shares over the next year. On current market capitalisation that's a potential range up to $478 million while annual revenue for 2020 was $59.2 million, profit $24.5 million. They don't have a lot of free capital without halting dividends, new investment or resorting to borrowing. Shares rose 15% during April, but have fallen 10% in the first week of May with Wall Street getting nervous on the Tech sector. With a p/e already at 195.5, PME have taken a punt on even brighter days ahead but those treasury shares are going to create a huge loss next year if things head South.

https://www.smh.com.au/business/markets/asx-set-to-fall-as-tech-giants-weigh-down-wall-street-20210505-p57oxr.html

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.

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

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.

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.

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

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

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

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

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