Pro Medicus Ltd (ASX: PME) shares are catching the eye of investors on Monday.
In morning trade, the health imaging technology company's shares are up 2% to $129.80.
This compares favourably to the performance of the ASX 200 index, which is down 0.6% at the time of writing.
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Why are Pro Medicus shares charging higher?
Investors have been bidding the company's shares higher today after it announced another major contract win.
According to the release, its wholly owned U.S. subsidiary, Visage Imaging, has signed a five-year contract renewal with Northwestern Medicine.
It notes that Northwestern Medicine is a premier academic health system based in Chicago, featuring top-ranked hospitals, including Northwestern Memorial Hospital, and over 200 sites across Illinois.
It is also the primary teaching affiliate for the Northwestern University Feinberg School of Medicine.
The contract is valued at $37 million and is for its leading Visage 7 Viewer. Importantly, management highlights that the renewal has been negotiated with increased minimums and an increased fee per transaction. This should be a big confidence builder given how some bears believe that artificial intelligence (AI) will drive down the prices that software companies can command.
It also notes that the contract is transaction-based with potential upside beyond the $37 million.
Commenting on the news, Pro Medicus' CEO, Dr Hupert, said:
We are extremely pleased that in addition to committing to a second five-year term at an increased fee per exam, NM have also committed to an increase in their minimums reflecting the growth in their exam volumes since standardising on our platform five years ago.
In the last month we have contracted nearly $80 million in renewals maintaining our track record when it comes to client retention. This underpins our belief that our solution provides unparalleled return on investment from both a financial and clinical perspective.
Busy period
As mentioned above, this is the second contract announcement in as many weeks.
Last week, Pro Medicus signed a five-year contract with the University of Maryland Medical System that is worth $23 million.
That contract, also based on a transactional licensing model, will see the company's cloud-based Visage 7 Enterprise Imaging Platform implemented across the University of Maryland Medical System, providing a unified enterprise imaging platform for diagnostic interpretation.
