The Pro Medicus Ltd (ASX: PME) share price is in focus after the ASX healthcare share won a new contract with Novant Health.
Novant Health contract
Health imaging business Pro Medicus has won a 7-year contract with Novant Health worth $40 million.
Based on a transactional licsensing model, the contract will see the company’s Visage 7 Enterprise Imaging Platform and Visage 7 Workflow module implemented throughout Novant Health, providing a unified diagnostic imaging platform across the network.
Planning for the rollout is to commence immediately, with initial ‘go-lives’ targeted for the second half of the financial year. The implementation will be fully deployed in the Microsoft Azure cloud.
Novant Health joins an increasing number of Visage clients to opt for a fully cloud-based solution. Pro Medicus said this is a trend that is growing rapidly through healthcare providers in North America.
What is Novant Health?
Novant Health is headquartered in North Carolina in the US. It is a community-based integrated delivery network (IDN) that operates across three US states, including 15 medical centres and hundreds of outpatient facilities and physician clinics. It serves more than six million patients annually.
Management comments
Pro Medicus CEO Dr Sam Hupert said: “Novant Health is our seventh major North American contract in less than 18 months and our equal largest deal to date, underpinning the strong momentum we continue to build in the market.
“Like several of our other recent deals, it includes more than one of our products, in this case, Visage 7 Workflow as well as Visage 7 Viewer, validating our strategy of providing clients maximum flexibility by offering a highly modular, multi-product solution.
“Our pipeline remains strong. Deals like this confirm our view that Visage 7, with its proven cloud-native technology and modular design, provides us with a significant strategic advantage that enables us to address opportunities across a growing segment of the market both in North America and other regions.”
Summary thoughts on Pro Medicus and the share price
This is another very good deal for Pro Medicus. It continues to win over important clients, on long contracts. I think Pro Medicus is one of the best ASX shares around. It has high profit margins and a lot of revenue baked in for the next few years.
However, whilst it’s profitable and a great business, it has a huge valuation. I’m not sure what a good price to buy Pro Medicus shares would be, but it’s trading at a triple digit earnings multiple. That’s why I have my eyes on other ASX growth shares for now.
