The Pro Medicus Ltd (ASX: PME) share price is down 15% after reporting a large increase of profit in the FY26 first-half result.
Pro Medicus provides a range of medical imaging software and services to customers such as hospitals, imaging centres and healthcare groups.
Pro Medicus FY26 half-year result
Here are some of the highlights from the six months to 31 December 2025:
- Revenue rose 28.4% to $124.8 million
- Underlying EBIT (EBIT explained) margin rose to 73% (from 72%)
- Underlying profit before tax increased 29.7% to $90.7 million
- Reported net profit after tax soared 230.9% to $171.2 million
- Dividend per share up 28% to $0.32
What happened in this result?
This half-year period was another pleasing period of contract wins for the company. It signed seven new contracts for a total of $278 million, though this result was driven by contracts won in previous periods.
Two of those particularly stood out to me. There was a huge 10-year, $170 million contract with the University of Colorado, for the full stack of software modules and cardiology, which goes live in May 2026. Huge contracts like this are very helpful for driving revenue and profit higher at a fast pace.
It was also pleasing that it signed a 7-year, $25 million contract with BayCare for Visage 7 Open archive which will go live in the second half of 2026. It’s promising to see that Pro Medicus can sell additional modules to existing clients, extracting the most value from its current customer base.
Additionally, the company’s cardiology offering is gaining traction, which suggests it could become a material contributor if this continues.
Management see the ‘full stack +1’ (cardiology) trend continuing.
Profitability
The company’s crazy-high underlying EBIT of 73% continues to impress. During COVID-19, in February 2021, the company’s CEO said that he didn’t think a 59% EBIT margin was sustainable – yet here it is above 70% and still rising. It means a high proportion of new revenue is dropping straight onto the profit line.
The reason why Pro Medicus’ net profit grew so much was because of an unrealised gain of just under $150 million in 4DMedical Ltd (ASX: 4DX) from the company’s $10 million hybrid debt and equity investment in July 2025.
Despite paying out larger dividends, two share buybacks and the $10 investment in 4D Medical, the company’s cash and other financial assets balance grew by 5.3% to $221.8 million.
Pleasingly, the company remains debt-free.
Management commentary
The Pro Medicus CEO Dr Sam Hupert said:
We plan to complete another seven go-lives before the end of the financial year including three more Trinity cohorts.
Revenues will flow as each implementation comes on stream, building the base for a stronger second half and beyond.
We have proven that with the one product and business model we can address the full gamut of opportunities in the US diagnostic imaging market. We believe we are unique in this regard.
Outlook for the Pro Medicus share price
The company said that its pipeline remains “very strong” across all market segments, with “many leads coming from the company’s attendance at the RSNA conference” in the US. The conference is an opportunity for healthcare-related organisations like Pro Medicus to present to potential radiology customers. The 2025 conference was the “most successful” to do date, according to Pro Medicus.
Despite those strong numbers, clearly the market was expecting more and the Pro Medicus share price has continued its decline. Prior to today, it was down 44% in the past six months amid AI worries about the tech sector.
It still has a very high price/earnings ratio (p/e ratio) of over 100, so it still isn’t cheap. But, for investors who believe in its long-term future and wanted a lower entry point, it’s clearly a lot cheaper now and profit seems likely to continue rising strongly for the foreseeable future.
It’s one of the ASX growth shares I’d keep my eye on.
