Another big contract win for ProMedicus, this time signing US-based Novant Health for a 7-year, $40m contract. (~$5.7m pa)
As the company has pointed out, this is the 7th major US contract in the last 18 months.
Over the last year they've signed deals worth >$160m, typcially for 5-8 year periods -- let's call that an additional $25m per year, for a company that last year had $67m in sales. This is high margin revenue, most of which drops to the bottom line. (this is why operating margins have been growing so fast -- the fixed cost base is scaling extremely well)
The sales momentum is very strong and the company seems to enjoy a very high win rate. The team is well practiced at integrations and tends to have new customers up and running within months of signing.
Best of all, once established, there's virtually no churn, little customer-specific costs and inbuilt revenue flex due to the transactional based nature of their contracts.
I think both scale and network advantages will continue to build too.
I love this company... just not the price. I know I shouldn't overthink value too much when it comes to such extreme quality and growth potential (which is why i still retain a small holding), but at ~85x sales it's hard to give it too much weighting in the portfolio.
