Pro Medicus reveals a $25m US contract with NYU Langone

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Pro Medicus reveals a $25m US contract with NYU Langone

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Pro Medicus (ASX: PME) has announced a $25 million seven-year deal with NYU Langone Health, one of the largest US Healthcare institutions. Looking into FY21 the deal represents the resilience of Pro Medicus and a continuation of their strong performance through the 2020 calendar year. The company’s industry placement and sustained demand for its products have assisted its performance during the period.

Pro Medicus is a leading provider of radiology information systems (RIS), Picture Archiving and Communication Systems (PACS) and advanced visualization solutions. Essentially, Pro Medicus Technology acts as the operating systems behind advanced Health Care applications. The company’s products provided “seamless integrated solutions in managing IT.” Pro Medicus is headquartered in Richmond, Melbourne and has been selling its products across the globe for over 30 years.

Pro Medicus’s new seven-year contract with US firm, NYU Langone Healthcare involves the usage of the companies Visage 7 technology for radiology and Subspecialty imaging departments. Visage 7 will be implemented across 6 hospitals and in other locations across Langone’s network. The contract furthers the company’s presence in the US Market, as the partner with one of the top 10 hospitals in the US (News and World Report 2020-2021).

“We are confident that this decision will lead to further expansion of our services and improved quality outcomes for those who turn to us for assistance,” said Chief Executive Officer Dr Sam Hupert. The scheme is planned to be implemented in the third quarter of FY21.

The announcement follows the release of Pro Medicus’ full-year results, released to the ASX on the 20th of August 2020. The results presentation revealed a $56.8 million increase in Underlying Revenue, a 23.9 per cent rise. These revenues delivered a strong profit after tax of $23.1 million, an equally impressive 20.7 per cent rise. Growth was strong from an existing client base, though further upside from a variety of different contracts displays the company’s growth prospects.

Due to these strong results, Pro Medicus’ cash reserves sit at a healthy $43.4 million strengthening the company’s balance sheet which already contains no debts. In FY20, the company was hence able to pay a 12-cent dividend per share up 14 per cent from the prior corresponding period.

As of the 11th of September 2020, Pro Medicus’ is currently trading at $26.20 per share (2:30 pm), a strong 80 per cent above its March lows. The company’s all-time highs set in September of 2019 are still over 45 per cent away. In a recent interview, Dr Sam Hupert flagged integrating artificial intelligence with their existing technology as central to their future growth prospects. In particular, the Langone project will become a member of the Visage AI accelerator program.

Caroline Wong

Caroline Wong is a Research Analyst at KOSEC – Kodari Securities. She writes on markets and focuses on ASX Top 300 companies. Email Caroline at c.wong@kosec.com.au.

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