The Pro Medicus Ltd (ASX: PME) share price is up 1% after announcing a US contract win.
Pro Medicus is a ASX healthcare tech company that provides a full range of medical imaging software and services to hospitals, imaging centres and healthcare groups worldwide.
$15 million contract with Duke University Health System
Pro Medicus announced to the ASX that it has signed an additional $15 million, 5-year contract with Duke University Health System, which was described by the company as a leading North American academic medical centre.
The contract will see Visage 7 Open Archive supplement the existing Visage 7 Viewer contract signed in May 2019.
As part of the deal, Duke’s current on-premise Visage will be deployed to the cloud along with Visage 7 Open archive. The Visage 7 Viewer contract has been extended for a further two years to the end of 2029, as part of the deal.
Planning for the rollout is to commence immediately.
Management commentary
The Pro Medicus CEO Dr Sam Hupert said:
This deal confirms our belief that there is a material opportunity for us to sell Visage 7 Open Archive to our existing base of “viewer only” clients. Not only does this provide clients with a highly performant, highly scalable solution, it is a key step in facilitating their transition from on-premise to cloud, a trend we see continuing.
Does this make the Pro Medicus share price a buy?
I’m not sure that one contract this size is enough to turn the ASX share into a buy if it wasn’t yesterday.
However, it is promising that Pro Medicus has managed to upsell one of its existing clients onto a more lucrative contract. Unlocking more revenue from its existing client base is a useful development.
Pro Medicus earns a very high profit margin, so new revenue is very helpful for the net profit.
I really don’t know whether the current Pro Medicus share price is appealing. It’s priced highly, but I would have said that when Pro Medicus shares were trading around $200 and $150. Would it be reasonable to expect the price/earnings ratio (p/e ratio) to keep rising? I’m hesitant about that.
There are other ASX growth shares that could be better value to consider.
