Pro Medicus (ASX:PME) Share Price Rises On New US Contract Win

The Pro Medicus (ASX: PME) share price is up 3% after winning a new US-based long term contract.

Pro Medicus is a Melbourne-based software owner and developer, licensing products to large US hospitals and Australian radiology clinics. The company has offices in Richmond, Victoria, Berlin, Germany and in the United States.

Pro Medicus’ Latest Contract Win

It has signed a five year deal with the Ohio State University Wexler Medical Center (OSUWMC). Visage 7 will be implemented across all of OSUWMC’s radiology departments.

The contract is based on a transaction-based licensing model which will span seven hospitals and outpatient clinics as well as being integrated to OSUWMC’s electronic health record.

OSUWMC is a large organisation, employing approximately 30,000 staff, 1,700 physicians supporting 1,500 inpatient beds. It’s also the teaching hospital for the Ohio State University College of Medicine (OSUCOM).

The implementation will be in the second quarter of FY20 and complete in mid 2020.

Management said in an interview with Open Briefing that this contract is similar to its other North American contracts with minimums so there is upside in terms of normal volumes and anything else that is added in the future.

Pro Medicus has won a few large contracts over the past 12 months including one in Germany, an agreement with Partners Healthcare and an agreement with Duke Health.

In the interview Pro Medicus CEO Sam Hupert explained that the recently-awarded WA Governemnt contract worth $45 million wasn’t worth bidding on because the revenue to the supplier is only a fraction of the headline number and not worth the effort, instead it was better focusing elsewhere. Pro Medicus has decided not to bid on government contracts for that reason.

Mr Hupert explained that the announced North American contracts are the opposite – the numbers are baseline and 100% of the revenue goes to Pro Medicus.

Finally, Mr Hupert talked about how the company is working on a number of opportunities in the pipeline. Pro Medicus is seeing the network effect benefits of its implementation with Partners Healthcare.

At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.

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