The Pro Medicus Ltd (ASX: PME) share price is up another 3.5% today after another contract win.
Pro Medicus is a medical imaging IT provider. It provides a full range of radiology IT software and services to hospitals, imaging centres and health care groups worldwide.
Pro Medicus contract win
The company has won a 5-year $18 million contract from MedStar Health, which is the largest health system in the Maryland and Washington DC metro region.
This contract win is based on a transactional licensing model, which will see the company’s complete enterprising imaging solution across all of MedStar’s radiology and subspecialty imaging departments including MedStar Georgetown University Hospital.
Management said that this implementation is notable in that it will provide MedStar with a fully cloud deployed environment on the Google Cloud Platform, leveraging Visage’s native, cloud-engineered enterprise imaging technology.
Planning for the rollout is to commence in the second quarter of FY21 with the first sites scheduled to go live in the third quarter of FY21.
Management comments
Pro Medicus CEO Dr Sam Hupert said: “MedStar went through an extensive evaluation process including a pilot that not only benchmarked Visage 7 compared to on-premise systems from other vendors, it served to verify the speed of Visage 7 in the public-cloud.
“Unlike systems from other vendors, Visage has been deployed from the ground up for cloud deployment. Traditionally, our clients have deployed Visage in their own “private-cloud” where all images are sent to a single, central server and streamed on demand from there. This deal signifies a shift in the way US healthcare providers are now starting to think about public cloud platforms.
“We see this, and the move to public-cloud as two key initiatives that will broaden our addressable market in North America allowing us to leverage our addressable market in North America allowing us to leverage our rapidly growing footprint in this region.”
Summary thoughts
Pro Medicus is a very high quality business with high margins, no debt, a growing dividend and a growing cash balance.
However, it is priced very highly. Whether you look at trailing earnings or projected near term earnings, the price/earnings ratio is extremely high. Is it worth buying shares at above $30? Maybe, it depends how many more contracts it wins over the next few years.
Other ASX growth shares look much cheaper to me, perhaps with better returns potential too, such as Pushpay Holdings Ltd (ASX: PPH).
