Pro Medicus Limited (ASX: PME) has today reported a massive 83% surge in profit for the half year ending December 31.
While the share price has slipped around 3% in a soft market which has seen the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) drop 0.6%, over the past 12 months Pro Medicus' share price has still recorded a gain of over 100%!
The interim financial results reported the following five facts:
- Revenue leapt 65% to $14.3 million
- Underlying profit from operations (which excludes the effects of currency gains and one-offs) surged 188.5% to $2.8 million
- An unfranked dividend of 1.5 cents per share has been declared. The stock will trade ex-dividend on March 10, with payment on March 25
- The company remains debt free and with cash reserves of $16.2 million
- Forward contracted revenue over the next five years now totals more than $60 million
What now
The drivers of the improved performance included the North American business where sales more than doubled thanks to Pro Medicus winning some significant contracts in the region such as the $11 million contract with Allegheny Health Network, a large health system in the Pittsburgh area.
The group's European business also performed strongly thanks to a $3 million deal with a German government hospital network.
Pro Medicus' Visage 7 product appears to be enjoying positive sales momentum and this has resulted in the market driving the share price significantly higher over the past year.
Word of caution
As I noted in this previous article, a number of ASX information technology companies have appealing products and business models but investors do need to consider the price they are paying compared with the value they are receiving in each instance.
It appears all is tracking to market expectations for Pro Medicus for now, however, as shareholders in 3P Learning Ltd (ASX: 3PL) are witnessing today – the stock is down over 20% – failing to deliver the lofty expectations of the market can lead to a dramatic decline in assessed value.
