Pro Medicus’ constant software innovation likely to propel long-term earnings growth

About Pro Medicus Limited

Pro Medicus Limited (Pro Medicus, the Group, ASX: PME) is a ground-breaking radiology software business that provides medical imaging software and services to hospitals, imaging centres, and healthcare groups around the world. The Group’s acquisition of Visage Imaging in 2009 was a transformational event that has positioned Pro Medicus as a global provider of leading-edge medical imaging solutions. Today Visage Imaging is home to a suite of products that are the foundation of an ultra-fast, clinically rich, and highly scalable platform that can seamlessly be implemented in public and private cloud environments.

Pro Medicus was co-founded by its current CEO in 1983, Dr Sam Huper, who as a young medical school graduate recognised the benefits of applying computer technology to medicine. In the Group’s formative years, it assisted medical practices to do business more efficiently by maintaining computerised clinical records and managing patient billing and scheduling. Subsequently, the business expanded into providing patients with their radiology images and diagnostic results much faster.

Medical diagnosis using 3D models of CT scans and MRIs

Pro Medicus has recently launched a software app that enables radiologists, oncologists, and surgeons to examine three-dimensional (3D) digital images of the human body created from CT scans and MRIs, using wearable goggles to improve patient care. The app uses a wearable headset device developed by Apple that projects an interactive, 3D visual image controlled by eye, voice recognition and hand gestures. The device places CT scans and MRI scans in front of the wearer and enables the wearer to view a computer-generated image deep into a patient’s body to make a diagnosis. One application of the technology is that it allows a group of doctors and health care specialists to meet remotely and discuss as a group the best treatment for a patient. Tier-1 academic medical centre UC San Diego School of Medicine Health is expected to be the first customer to pilot the technology to enable medical specialists to collaborate in healthcare.

The role of Artificial Intelligence in radiology imaging

The co-founder of Pro Medicus, Dr Sam Hupert, considers that Artificial Intelligence (AI) and the use of computer algorithms may be the next area of innovation and source of earnings growth for the Group. “There’s no question [AI] will become mainstream particularly in radiology,” Dr Hupert said.

AI in radiology works on the principle of pixel/pattern matching from different radiological imaging modalities using vast amounts of data to predict future outcomes based on past occurrences.

Doctors perform a diagnosis in a similar fashion but are limited by the sheer amount of data that they can absorb and process, and by biases they inherently hold. While AI may not soon replace radiologists, it will certainly supplement the role of radiology in performing a diagnosis.

Clearly Pro Medicus intends to be at the forefront of the commercialisation of this technology given it is particularly well suited to the Group’s specialty focus of health imaging.

The Future

Pro Medicus is firmly established in the US where about 600 million X-rays are done annually. Apart from market share growth, there is the opportunity to move into other diagnostic areas such as cardiology, dermatology, and pathology where images are used to determine a diagnosis. This means that software is especially useful and effective in helping clinicians with analysis. Pro Medicus is ideally placed to use its existing Visage Imaging platform and its powerful software feature functions to cover these adjacencies outside radiology. The Group’s initial target is likely to be cardiology which uses the same imaging equipment as radiology, being ultrasound, CT, MRI, and nuclear. The ability of one single system to serve up cardiology-related images within a healthcare enterprise is a significant revenue opportunity for Pro Medicus that has been estimated at 30 to 50 percent additional revenue on top of radiology, according to Dr Hupert.

Healthcare is non-discretionary expenditure and so is not affected by the level of interest rates, inflation, or the state of the economy. Furthermore, the Group has no debt and operates in the US where it has just six percent market share and which is the world’s largest healthcare market.

The results release set down for 15 February should set a positive tone for the remainder of the June 2024 financial year.