About Pro Medicus Limited

Pro Medicus Limited (Pro Medicus, ASX: PME, or the Group) was founded in 1983 and is a global provider of medical imaging and radiology information system software services to hospitals, imaging centres and healthcare groups. Its main product, Visage 7, is a clinical desktop application used by radiologists to view images from any device to make a diagnosis.

Record full-year result 

Significant ongoing demand for healthcare imaging and related software services has boosted FY24 Group revenue by 29 percent to $161 million and net profit by 36 percent to $82.8 million. Earnings Before Interest and Tax margins continue to increase from 53 percent in FY20 to 69 percent in the current financial year.

Ninety percent of Group revenue is generated in North America whilst Australia and Europe account for about 5 percent each. The US healthcare market leads the world in terms of IT and Cloud-based solutions for medical diagnostic imaging. US-based hospitals are drawn to the technology-advanced Pro Medicus software suite that provides unparallelled radiologist efficiency and greater clinical accuracy.

During the year nine significant contracts were awarded to Pro Medicus, worth a total of $245 million and with an average contract duration of 7 years.

Pro Medicus maintains a debt-free balance sheet and at 30 June 2024 held cash assets of $155 million, up from$121 million on June 2023.

The Group declared a 22 cents per share fully franked final dividend, taking the full year dividend to 40 cents, an increase of 33 percent on the prior year. The final dividend is payable on 26 September.

Scalable business model provides high operating leverage

The Group’s transaction-based model means that the more diagnostic images processed by clinicians using the Group’s software, the higher the revenue generated for Pro Medicus. This scalable business model provides high operating leverage for the Group that enables revenue growth while at the same time provides for a tightly contained cost base. This explains the Group’s high 69 percent EBIT margin which is expected to continue growing as Pro Medicus builds it footprint throughout the US and globally. Although North America now accounts for 90 percent of revenue, the Group has only 7 percent of the world’s largest diagnostic imaging market. This leaves a large addressable runway of future growth.

Cloud technology is the new paradigm

Pro Medicus is the only vendor that can fully deploy in a Cloud-based environment at scale. The Cloud is important for healthcare systems because it is far more secure and scalable than traditional on-site solutions. It also saves on hardware costs and makes system implementations more streamlined.

The data explosion for ultrasound and high-density images creates larger data sets requiring more storage capacity which on-site solutions can’t provide. This provides Pro Medicus with a strategic competitive advantage over the competition which has not been able to re-engineer their systems to take full advantage of the Cloud. Furthermore, large scale projects can be completed in under a quarter of the time of industry norms using a Cloud-based data storage system.

The Future

The record year in FY24 for new contract wins totalling $245 million over 7 years implies a material uplift in transaction volumes in FY25 and beyond.

These new contracts and existing multi-year contracts enable Pro Medicus to confidently state their five-year forward revenue estimate of $624 million, which is equivalent to an approximate annual revenue growth rate of 30 percent per year. This figure is based on the annuity style revenue stream of software contracts and service agreements which are relied on by Integrated Delivery Networks. These Networks coordinate various healthcare providers, clinicians, and associated service providers to deliver superior healthcare services to patients within a specific community or healthcare organisation. The Pro Medicus product suite is ideally suited to the needs of these Networks because they require Cloud-deployed solutions and many of them are large US multi-state clients.

Pro Medicus continues to add feature functions to the Group’s cardiology offering as a single platform enterprise solution and this is another likely new revenue source in the period ahead. There exists an acute world-wide shortage of radiologists which makes the scale efficiencies afforded by the Group’s medical imaging software solutions highly attractive.