Pro Medicus Limited (ASX: PME) shares are starting the week on a positive note.
In morning trade, the health imaging technology company's shares are up 1.5% to $251.90.
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What's happening?
Investors have been buying the high-flying ASX tech stock on Monday following the release of an announcement.
According to the release, the company has signed a $30 million, seven-year contract with Duly Health and Care (DHC). It is the largest independent, multi-specialty physician-directed medical group in the Midwest of the United States.
It notes that the DHC brand includes DuPage Medical Group, Quincy Medical Group, and The South Bend Clinic. It supports over 40 radiologists, 1,000 physicians, and 150 outpatient clinics.
Based on a transactional licensing model, the contract will see Pro Medicus' cloud-engineered Visage 7 Enterprise Imaging Platform (Visage 7), including Visage 7 Open Archive and Visage 7 Workflow modules, implemented throughout DHC. This will provide a unified diagnostic imaging platform.
Management expects the migration from DHC's legacy PACS archive and vendor neutral archive to Visage 7 Open Archive to complete during the second quarter of the 2025 calendar year. Planning for the rollout is to commence immediately and will be based on Visage's proven cloud-based implementation process.
Management commentary
Pro Medicus CEO, Dr Sam Hupert, was pleased with the deal for a number of reasons. He said:
Duly Health and Care is an important deal for us as they are in the private radiology/outpatient space, an area of the market where we are starting to see increased opportunity. They also join a long list of Visage 7 clients to opt for a fully cloud-engineered solution, which, as a result of our CloudPACS strategy, is becoming the standard in the North American healthcare IT market.
Our pipeline remains strong and spans all market segments including academic medical centers, IDNs and the private/teleradiology market. As has been the case with many of our recent contracts, this deal is for our "full stack" comprising all three Visage products namely viewer, workflow and archive, a trend we see continuing.
Should you buy Pro Medicus shares?
Goldman Sachs is a fan of the company and recently put a buy rating and $278.00 price target on its shares.
While the broker acknowledges that its shares are not cheap, it feels they deserve this premium valuation. It said:
PME is not cheap, trading on 114x FY26E EV/EBITDA, but we highlight its revenue/margin outlook, unique cloud offering, and significant long-term opportunity. Additionally, with a focus on the US regulatory outlook, we believe MedTech is increasingly being evaluated as a safe haven within healthcare as it is generally more insulated from impending policy volatility.
