Pro Medicus Ltd (ASX: PME) has announced today that it continues to win market share in the US after winning a contract with NYU Langone Health.
Pro Medicus wins over NYU Langone Health
This afternoon Pro Medicus announced that it has signed a 7-year contract with NYU Langone Health, which is one of the largest health systems in New York state and one of the most respected and innovative healthcare institutions in North America.
The contract is based on a transaction-based licensing model. The company’s Visage 7 technology will be installed across all of NYU Langone’s radiology and subspecialty imaging departments, including breast imaging, replacing all existing legacy systems with a single centralised platform.
This will span six hospitals and numerous other locations across the NYU Langone healthcare network. The first site is scheduled to go live in the third quarter of FY21 – meaning between January 2021 to March 2021.
Pro Medicus said that this is a $25 million deal and extends its footprint in the tier 1 US academic hospital segment.
Dr Sam Hupert, the CEO of Pro Medicus, said: “NYU Langone is a very significant addition to our rapidly growing North American footprint.
“More than any other PACS vendor, we now have 7 of the top 20 ranked US hospitals standardising on our technology and are looking to grow that further across additional market segments. We believe the network effect of this and other recent wins positions us well to increase our lead in this highly competitive market.”
Research and development agreement
Pro Medicus and NYU Langone has also signed a multi-year research collaboration agreement to jointly develop the next-generation enterprise imaging solutions.
Pro Medicus will establish a R&D hub in New York City which will form the foundation for Visage research activities in the US.
Areas of focus will be workflow optimisation, integration with multi-vendor reporting platforms as well as integration of AI technology.
Dr Hupert said: “This is a major milestone for our company. We changed the paradigm of what a diagnostic imaging (PACS) product should be by natively integrating 3D and advanced visualisation into single platform. We believe this, combined with our proprietary streaming platform, has given us an 18 to 24 month technology lead.
“We are now looking at what is next, what a system would look like in say 3 to 5 years, and are starting to do the research and development to make that a reality and then be the first to commercialise it.”
Summary
Pro Medicus is a very exciting business. It’s moves like this that integrates Pro Medicus into healthcare giants like NYU Langone. It builds market share and makes it more likely to win the next healthcare network over.
The healthcare business is very attractive – it has a high EBIT margins (click here to learn what EBIT means), steady existing revenue with an expanding client base. It has no debt, a growing cash balance and focused management. However, it has a valuation to match, with a very high price/earnings ratio.
I’d love to buy it at a lower price, but it’s impossible to know what the lowest share price in the future will be. The COVID-19 crash may have been the only sub-$20 opportunity. Other ASX growth shares may be better value like Pushpay Holdings Ltd (ASX: PPH) which is also growing strongly in the US.
