Why the Pro Medicus Limited share price is rocketing today

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Shares in medical imaging IT business Pro Medicus Limited (ASX: PME) climbed 7% higher in morning trade to $3.65 after the company announced a $21 million contract win with US healthcare provider Mercy Health.

The deal will see Mercy Health use Pro Medicus’ Visage 7 technology for primary diagnosis and distribution of medical images across its 46 acute care and specialty hospitals.

Pro Medicus shares have rocketed around 350% over the past two years as the company wins big new contracts that totaled $44.5 million in value over the past year alone.

Its cloud-based imaging software is proving attractive to cashed-up healthcare providers in helping them save time and money in managing their complex medical practices.

It also recently won a substantial deal with a government-owned German hospital operator and enjoys the twin tailwinds of the healthcare and technology sectors.

The company also has a large global market to grow into and has enjoyed the benefits of a falling Australian dollar as much of its revenues are generated overseas, with particular leverage to the US dollar.

It is also developing a reputation as something of a market leader, although investors should be aware of the possibility for increased competition as its success is likely to attract competition from large technology companies.

Other junior healthcare stocks performing well thanks to new business wins in the large US market are hospital disinfectant specialist Nanosonics Ltd. (ASX: NAN) and sleep therapy specialist Somnomed Limited (ASX: SOM).

All three of theses businesses could keep growing at strong rates and deserve a place at the top of small cap investors’ watch lists.

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Motley Fool contributor Tom Richardson has no position in any stocks mentioned.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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