Company Reports

Pro Medicus’ strategy revolves around renewing existing contracts and winning new clients for its main product, Visage 7, while increasing its price point. The company is winning major public tenders, and its renewal rates are impressive. While this likely highlights Visage 7’s current superior speed, scalability, and resilience, continued investment in research and development is imperative for the firm to remain at the forefront of innovation and consistently win contracts. Most of the firm’s expenses are allocated to over 40 software engineers, with the main R&D center located in Berlin. The company also extended its R&D capability in New York in collaboration with NYU Langone Health in 2021. Its R&D efforts mostly revolve around software enhancements, program extensions, and research in artificial intelligence to assist in diagnoses.

Pro Medicus’ fiscal 2026 underlying net profit rose 24% to AUD 145 million, with underlying EBIT also up by the same magnitude to AUD 196 million. The board declared a final fully franked DPS of AUD 0.37, up 23%, bringing the full-year total to AUD 0.69. Shares rose around 10%.

We transfer coverage of Pro Medicus, a provider of software for radiologists to quickly view, enhance, and manipulate images from any device and make a diagnosis. Shares have fallen over 40% in the last year due to increasing angst that advances in artificial intelligence will affect software firms.

Pro Medicus’ strategy revolves around renewing existing contracts and winning new clients for its main product, Visage 7, while increasing its price point. The company won six out of six major public tenders it competed for in fiscal 2021, which often involved on-site pilot tests. While this likely highlights Visage 7’s current superior speed, scalability, and resilience, continued investment in research and development is imperative for the firm to remain at the forefront of innovation and consistently win contracts. Most of the firm’s expenses are allocated to over 40 software engineers with the main R&D center located in Berlin. The company also recently extended its R&D capability in New York in collaboration with NYU Langone Health in 2021. Its R&D efforts mostly revolve around software enhancements, program extensions, and research in artificial intelligence to assist in diagnoses.

Pro Medicus’ revenue growth barely outstripped costs. Interim 2026 EBIT grew 30% with revenue up 28% on contract wins. However, EBIT margin expanded just 70 basis points to 73%, with employee expense growing 44%. Shares fell 24%.

Pro Medicus’ strategy revolves around renewing existing contracts and winning new clients for its main product, Visage 7, while increasing its price point. The company won six out of six major public tenders it competed for in fiscal 2021, which often involved on-site pilot tests. While this likely highlights Visage 7’s current superior speed, scalability, and resilience, continued investment in research and development is imperative for the firm to remain at the forefront of innovation and consistently win contracts. Most of the firm’s expenses are allocated to over 40 software engineers with the main R&D center located in Berlin. The company also recently extended its R&D capability in New York in collaboration with NYU Langone Health in 2021. Its R&D efforts mostly revolve around software enhancements, program extensions, and research in artificial intelligence to assist in diagnoses.

Pro Medicus won three new US contracts for a combined minimum value of AUD 29 million with implementation expected in second-half fiscal 2026. The three contracts are with a Children's hospital in Alabama, a cancer center in New York, and a physician-owned regional provider in Washington.

Pro Medicus’ strategy revolves around renewing existing contracts and winning new clients for its main product, Visage 7, while increasing its price point. The company won six out of six major public tenders it competed for in fiscal 2021, which often involved on-site pilot tests. While this likely highlights Visage 7’s current superior speed, scalability, and resilience, continued investment in research and development is imperative for the firm to remain at the forefront of innovation and consistently win contracts. Most of the firm’s expenses are allocated to over 40 software engineers with the main R&D center located in Berlin. The company also recently extended its R&D capability in New York in collaboration with NYU Langone Health in 2021. Its R&D efforts mostly revolve around software enhancements, program extensions, and research in artificial intelligence to assist in diagnoses.

Pro Medicus’ fiscal 2025 EBIT grew 40%, with revenue up 32% on contract wins and EBIT margin expanding 450 basis points to 74%. Revenue from new contracts is outstripping cost growth, with new staff for research and development making up most of the year’s increase in costs.

Pro Medicus’ strategy revolves around renewing existing contracts and winning new clients for its main product, Visage 7, while increasing its price point. The company won six out of six major public tenders it competed for in fiscal 2021, which often involved on-site pilot tests. While this likely highlights Visage 7’s current superior speed, scalability, and resilience, continued investment in research and development is imperative for the firm to remain at the forefront of innovation and consistently win contracts. Most of the firm’s expenses are allocated to over 40 software engineers with the main R&D center located in Berlin. The company also recently extended its R&D capability in New York in collaboration with NYU Langone Health in 2021. Its R&D efforts mostly revolve around software enhancements, program extensions, and research in artificial intelligence to assist in diagnoses.

Pro Medicus won a contract with UCHealth of at least AUD 170 million over 10 years, marking its second-largest contract, roughly half the size of its largest with Trinity Health. UCHealth has 14 hospitals in three US states, including its most advanced hospital, the University of Colorado Hospital.

Pro Medicus’ strategy revolves around renewing existing contracts and winning new clients for its main product, Visage 7, while increasing its price point. The company won six out of six major public tenders it competed for in fiscal 2021, which often involved on-site pilot tests. While this likely highlights Visage 7’s current superior speed, scalability, and resilience, continued investment in research and development is imperative for the firm to remain at the forefront of innovation and consistently win contracts. Most of the firm’s expenses are allocated to over 40 software engineers with the main R&D center located in Berlin. The company also recently extended its R&D capability in New York in collaboration with NYU Langone Health in 2021. Its R&D efforts mostly revolve around software enhancements, program extensions, and research in artificial intelligence to assist in diagnoses.

Pro Medicus’ strategy revolves around renewing existing contracts and winning new clients for its main product, Visage 7, while increasing its price point. The company won six out of six major public tenders it competed for in fiscal 2021, which often involved on-site pilot tests. While this likely highlights Visage 7’s current superior speed, scalability, and resilience, continued investment in research and development is imperative for the firm to remain at the forefront of innovation and consistently win contracts. Most of the firm’s expenses are allocated to over 40 software engineers with the main R&D center located in Berlin. The company also recently extended its R&D capability in New York in collaboration with NYU Langone Health in 2021. Its R&D efforts mostly revolve around software enhancements, program extensions, and research in artificial intelligence to assist in diagnoses.

We maintain our AUD 48 fair value estimate for narrow-moat Pro Medicus. Our constant-currency earnings estimates are unchanged. We expect further contract wins to underpin our forecast five-year earnings per share compound annual growth rate of 21%. The firm announced a contract win with LucidHealth, a US private provider of radiology services, for a total committed minimum value of AUD 40 million over seven years. Planning for the rollout is commencing immediately based on Pro Medicus’ established cloud-based implementation and we assume a nine-month earnings contribution in fiscal 2026. Our broadly unchanged fiscal 2026 EBIT forecast of AUD 222 million implies 44% growth on fiscal 2025.

Narrow-moat Pro Medicus increased interim fiscal 2025 underlying EBIT by 43% to AUD 70 million. While revenue grew by 31% to AUD 97 million, broadly tracking our full-year forecast, underlying EBIT margin expanded more than expected, up roughly 600 basis points to 72%. We increase our EBIT forecasts by 3% on average over the next 10 years. Our revenue forecasts soften by 2% on average due to the slight weakening of the US dollar and stagnant sales outside the US, but our forecast midcycle EBIT margin increases to 77% by fiscal 2034 from 73% prior. With significant new contracted revenue about to come online, we are more optimistic and our fair value estimate increases by 4% to AUD 48.

Pro Medicus’ strategy revolves around renewing existing contracts and winning new clients for its main product, Visage 7, while increasing its price point. The company won six out of six major public tenders it competed for in fiscal 2021, which often involved on-site pilot tests. While this likely highlights Visage 7’s current superior speed, scalability, and resilience, continued investment in research and development is imperative for the firm to remain at the forefront of innovation and consistently win contracts. Most of the firm’s expenses are allocated to over 40 software engineers with the main R&D center located in Berlin. The company also recently extended its R&D capability in New York in collaboration with NYU Langone Health in 2021. Its R&D efforts mostly revolve around software enhancements, program extensions, and research in artificial intelligence to assist in diagnoses.

Pro Medicus’ strategy revolves around renewing existing contracts and winning new clients for its main product, Visage 7, while increasing its price point. The company won six out of six major public tenders it competed for in fiscal 2021, which often involved on-site pilot tests. While this likely highlights Visage 7’s current superior speed, scalability, and resilience, continued investment in research and development is imperative for the firm to remain at the forefront of innovation and consistently win contracts. Most of the firm’s expenses are allocated to over 40 software engineers with the main R&D center located in Berlin. The company also recently extended its R&D capability in New York in collaboration with NYU Langone Health in 2021. Its R&D efforts mostly revolve around software enhancements, program extensions, and research in artificial intelligence to assist in diagnoses.

We maintain our AUD 46 fair value estimate for narrow-moat Pro Medicus. Our constant currency earnings estimates are unchanged. We expect further contract wins to underpin our forecast five-year earnings per share compound annual growth rate of 20%. To this end, the firm announced a contract win with BayCare in Florida, for a total committed minimum value of AUD 53 million over seven years. Planning for the rollout is commencing immediately based on Pro Medicus’ established cloud-based implementation, and we assume a nine-month earnings contribution in fiscal 2026. Our broadly unchanged fiscal 2026 EBIT forecast of AUD 215 million implies 43% growth on fiscal 2025.

We raise our fair value estimate for narrow-moat Pro Medicus by 2% to AUD 46 per share, largely due to a strengthening US dollar and the time value of money. Our constant-currency earnings estimates are broadly unchanged. We expect further contract wins to underpin earnings growth. To this end, the firm announced a contract win with the University of Kentucky for a total committed minimum value of AUD 33 million over nine years. Planning for the rollout is commencing immediately based on Pro Medicus’ established cloud-based implementation and we assume a two-month earnings contribution in fiscal 2025.

Pro Medicus’ strategy revolves around renewing existing contracts and winning new clients for its main product, Visage 7, while increasing its price point. The company won six out of six major public tenders it competed for in fiscal 2021, which often involved on-site pilot tests. While this likely highlights Visage 7’s current superior speed, scalability, and resilience, continued investment in research and development is imperative for the firm to remain at the forefront of innovation and consistently win contracts. Most of the firm’s expenses are allocated to over 40 software engineers with the main R&D center located in Berlin. The company also recently extended its R&D capability in New York in collaboration with NYU Langone Health in 2021. Its R&D efforts mostly revolve around software enhancements, program extensions, and research in artificial intelligence to assist in diagnoses.