Pro Medicus Ltd (ASX: PME) has won another contract in the US, from Intermountain Healthcare. Are Pro Medicus shares a buy?
Pro Medicus describes itself as a leading medical imaging IT provider, with radiology IT software and services to hospitals, imaging centres and healthcare groups.
US Intermountain contract win
The company said that it has signed a 7-year, $40 million deal with Salt Lake City based Intermountain Healthcare, the largest health system in the State of Utah. Intermountain also provides medical services in the states of Idaho and Nevada, making it the largest healthcare provider in the Intermountain West region.
Visage will replace legacy PACS and other specialty systems across their 24 hospitals and more than 200 clinics.
The contract, which is based on a transactional licensing model with potential upside, will see the company’s Visage 7 Viewer and Visage 7 Open Archive products implemented across all of Intermountain’s radiology and subspecialty imaging departments.
The implementation will be fully deployed on Google Cloud Platform, leveraging Visage’s native, cloud-engineering enterprise imaging technology.
Planning for the rollout is to begin in this quarter, with data migration commencing immediately by Visage’s team. The first sites will be scheduled to go live shortly after that.
Management comments
Pro Medicus CEO Dr Sam Hupert said: “This is a very important deal for us, not only because of its size and scope, it will provide us with a material footprint in Intermountain West, previously an untapped region for us.
“It also validates our decision to engineer Visage 7 from the ground up to be natively cloud capable.”
Summary thoughts
Pro Medicus said that this extends its leading position in large and regional health systems.
This is the fifth major contract win in six months. Management believes its market leading technology, expanded product portfolio and native cloud capability has significantly increased its total addressable market in the key jurisdictions of North America, Europe and Australia.
Pro Medicus is probably one of best ASX shares around, with a very high EBIT margin (EBIT explained) and great balance sheet. But its valuation reflects that quality. Using earnings projections on CommSec, it’s priced at 112 times the estimated earnings for the 2021 financial year. To me, that’s very expensive.
I’d only be interested in Pro Medicus shares in the low(er) $20s. There are other ASX growth shares that are still growing very strongly that look good to me, such as Pushpay Holdings Ltd (ASX: PPH).
