The Pro Medicus Ltd (ASX: PME) share price is under the spotlight after announcing an agreement with EchoIQ Ltd (ASX: EIQ).
Pro Medicus is one of the world’s leading companies in the healthcare imaging software space, with its Visage offering. EchoIQ uses AI-driven software to improve decision-making in cardiology.
Pro Medicus agreement with EchoIQ
The two healthcare software companies announced that an agreement has been signed to establish a framework for a strategic investment and US commercial partnership.
Subject to the finalisation of legal documentation, Pro Medicus will make an initial A$10 million investment in EchoIQ through secured convertible notes, together with the right to subscribe for a further A$10 million of secured convertible clearance by the FDA of EchoSolv HF, which the company is currently pursuing.
The FDA submission remains “on track” for an expected outcome in the near-term.
Pro Medicus will become a reseller of EchoSolv, subject to entering into definitive agreements, providing potential access to an extensive network of leading US health systems, academic medical centres and enterprise healthcare customers.
EchoIQ said this funding will provide it with flexibility to seek to accelerate US commercialisation activities. Pro Medicus can benefit from a key potential value catalyst for the company.
Negotiations will occur over the next 20 business days and a legal agreement needs to be entered into within that time period, otherwise the transaction may be terminated.
Management comments
The Pro Medicus CEO Dr Sam Hupert said:
In addition to providing financial backing, we are looking to offer our Visage 7 Cardiology customers the option of Echo IQ’s technology. This is in
line with our AI strategy of offering a curated suite of algorithms that will be a mixture of algorithms created by us, those created in conjunction with our clinical partners and 3rd party algorithms such as Echo-IQ.
Final thoughts on the Pro Medicus share price
It’s still down 33% over the past year, but it has risen 50% since mid-May. Is it good value? That’s hard to say. A few months ago I’d have said it was definitely oversold by the market. But, I think the clear opportunity has reduced – the AI future for software businesses is still uncertain.
I think Pro Medicus is one of the best ASX growth shares around, but interested investors may only want to start with a small purchase considering how quickly it has risen recently.
