Pro Medicus (ASX:PME) share price sinks despite new deal

The Pro Medicus (ASX: PME) share price is a poor performer so far today, despite the company announcing a positive update. We take a look.

| More on:
falling healthcare asx share price Mesoblast capital raising

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Pro Medicus Limited (ASX: PME) share price is a poor performer so far on Thursday despite the company providing a positive update. In early morning trade, the health imaging company's shares are fetching $40.05, down 1.26%.

What was announced?

Investors have been selling Pro Medicus shares regardless of the company's announced contract win.

According to its release, Pro Medicus' wholly-owned United Stated subsidiary, Visage Imaging Inc., has signed a deal with The University of Vermont Health Network Inc (UVM).

Under the agreement, Pro Medicus will deploy its Visage 7 Enterprise Imaging Platform across 6 hospitals operated by UVM. It is expected that, once the system is fully functional, a unified diagnostic imaging platform will run across the network. This replaces the existing multiple legacy PACS platforms that are currently being used.

The contract is valid for a period of 8 years and is estimated to generate $14 million in revenue for Pro Medicus.

Rollout of the system is scheduled to commence immediately, with go-live dates targeted for the second half of 2021. The Visage 7 platform will be deployed in the public cloud.

The company noted that the latest deal further expands its United States academic institution footprint. Pro Medicus believes that its transactional licensing model could also lead to further potential sales in the future.

Pro Medicus CEO Dr Sam Hupert commented:

We continue to build momentum in the market with this, our seventh contract win in a row, adding to other recent major announcements.

UVM Health Network is the fourth of these to opt for a cloud-based solution, a trend we see increasing rapidly amongst healthcare systems in North America.

Our pipeline continues to grow. Visage 7 with its proven cloud-native capability provides us with a significant strategic advantage that enables us to address these opportunities across a growing segment of the market both in North America and other regions.

Pro Medicus share price snapshot

Over the last 12 months, the Pro Medicus share price has stormed around 55% higher, with year to date performance delivering gains of around 17%. The company's shares reached an all-time high of $48.69 last month.

Based on valuation grounds, Pro Medicus commands a market capitalisation of around $4.2 billion, with approximately 104 million shares outstanding.

Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Pro Medicus Ltd. The Motley Fool Australia has recommended Pro Medicus Ltd. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Healthcare Shares

Cropped shot of an attractive young female scientist working on her computer in the laboratory.
Healthcare Shares

CSL share price leaping higher amid $1.9 billion funding news

ASX 200 investors are bidding up the CSL share price on Wednesday.

Read more »

Two happy scientists analysing test results.
Healthcare Shares

Mesoblast share price rockets 36% on breaking FDA news

ASX investors are sending the Mesoblast share price soaring following promising FDA news.

Read more »

a doctor in white coat and stethoscope stands in front of a building holding an electronic device in his hands.
Healthcare Shares

Guess which ASX 200 healthcare share is jumping 7% on a guidance update

This healthcare share is performing better than expected in FY 2024.

Read more »

a biomedical researcher sits at his desk with his hand on his chin, thinking and giving a small smile with a microscope next to him and an array of test tubes and beackers behind him on shelves in a well-lit bright office.
Earnings Results

Chemist Warehouse merger target Sigma reports 149% FY24 profit jump

This could be the last set of results from Sigma as we know it if its merger is approved.

Read more »

Cropped shot of an attractive young female scientist working on her computer in the laboratory.
Healthcare Shares

1 ASX healthcare stock that looks severely undervalued

I think this stock looks too cheap to miss.

Read more »

Stethoscope with a piggy bank and hundred dollar notes.
Healthcare Shares

Own Medibank shares? Here's why it's a rewarding day for you

Shareholders are getting a healthy boost today.

Read more »

Health professional looking at a laptop.
Healthcare Shares

Are CSL shares a must-buy in March?

Let's see what analysts are saying about this high-quality company.

Read more »

A woman jumps for joy with a rocket drawn on the wall behind her.
Healthcare Shares

This ASX healthcare stock is up 72% on FDA news and 'historic moment'

Huge gains are been recorded by this stock on Tuesday. But why?

Read more »