Why the Pro Medicus Limited (ASX:PME) share price is rocketing higher today

The market may be sinking lower again today but the same cannot be said for the Pro Medicus Limited (ASX: PME) share price.

In morning trade the health imaging company’s shares have rocketed over 10% higher to $10.11 following the announcement of a major new deal.

What was announced?

This morning Pro Medicus announced that its wholly-owned U.S. subsidiary, Visage Imaging, has signed a A$27 million, 7-year contract with Partners Healthcare.

Partners Healthcare is the largest health system in the state of Massachusetts and one of the largest and most respected health providers in North America.

According to the release, the contract is based on a transaction licensing model and will see Pro Medicus’ Visage 7 technology implemented at Partners’ two flagship hospitals, Massachusetts General Hospital and Brigham and Women’s Hospital, eliminating their legacy PACS. It also includes scope to expand to other Partners network hospitals at a later date.

Pro Medicus CEO, Dr Sam Hupert, believes the deal is a milestone for Pro Medicus and that it is a testament to the quality of its technology.

He said: “Not only is it our biggest deal to date, there is the potential for further upside within the Partners network after this initial rollout is completed.”

Before adding that these hospitals are: “two of the most prestigious medical institutions in North America renowned for their medical research, as well as their key roles as teaching hospitals for Harvard Medical School. The fact that both institutions selected Visage 7 as their platform of choice reinforces our view that Visage’s leading edge technology is suitable for a broad range of clinical environments, including the most sophisticated and demanding users.”

Should you invest?

While Pro Medicus’ shares are certainly expensive, I believe deals like this demonstrate the enormous potential that the company has and why it could prove to be a great long-term buy and hold investment along with fellow healthcare technology companies Nanosonics Ltd (ASX: NAN) and Volpara Health Technologies Ltd (ASX: VHT).

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Nanosonics Limited, Pro Medicus Ltd., and VOLPARA FPO NZ. 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 Scott Phillips.

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