The Pro Medicus Ltd (ASX: PME) share price has jumped 10% in response to positive contract wins and other updates.
Pro Medicus says it provides a full range of medical imaging software and services to hospitals, imaging centres and healthcare groups worldwide.
Contract wins
The company announced two contracts to the market this morning.
It revealed a 7-year, A$16 million contract with TidalHealth, which provides a unified network of care, including three hospitals that serves communities of Delaware, Maryland and Virginia. This contract is for the full-stack, including cardiology imaging.
Pro Medicus also announced a 5-year, A$28 million contract renewal with Allegheny Health Network (AHN), with the renewal to also include Visage 7 Workflow. The renewal has been negotiated with increased minimums and an increased fee per transaction. AHN is one of the biggest health networks in the Pittsburgh metro area, while also serving parts of New York, Ohio and West Virginia. AHN has 14 hospitals, as well as hundreds of other primary care and other medical locations.
CEO commentary
In a separate ASX announcement, the company’s CEO, Sam Hupert, also made a number of interesting and positive comments.
It noted that it has won contracts from competitors, while also showing its winning contracts of a variety of types of clients.
The Pro Medicus share price had (and still has) fallen significantly from September last year, perhaps mostly due to AI worries. But he outlined how the contract wins, and renewals disprove that all software companies will be negatively disrupted by AI.
AI can help be a “second pair of eyes” to improve the speed and consistency of radiology reporting. Hupert also noted that its software was built from scratch, without using existing AI tools, making it difficult to replicate and compete with. It also operates in a regulated, mission-critical industry where the margin for error is zero.
For Pro Medicus’ own staff, AI is helping the same number of staff achieve more and the company doesn’t see a need to reduce headcount. AI could help the company get further ahead of competitors.
The CEO also noted that its pipeline is “very strong”, covering a broad range of market segments. It’s seeing good traction with its cardiology offering, with both new and existing clients.
He also noted that FY27 is expected to see a material step-up in transaction volumes as some clients go-live.
Finally, after the success of the 4DMedical Ltd (ASX: 4DX) investment, Hupert said Pro Medicus sees “other opportunities in the market for possible collaboration and investment going forward”.
Final thoughts on the Pro Medicus share price
I did believe the market was being too negative on the company’s prospects – it still has a great future, in my opinion. Today’s announcements underlined why the future is still bright.
It’s not exactly cheap with its high earnings multiple, but it’s still down heavily and could be undervalued. It is one of the ASX growth shares I’d be looking at as possible long-term opportunities, despite today’s rise.
