Execution Risks Loom as Pro Medicus Secures Major Long-Term Deals
Pro Medicus Limited has delivered a record interim profit of $51.7 million, boosted by major North American contract wins and strong margin expansion.
- Net profit rises 42.7% to $51.7 million
- Revenue climbs 31.1% to $97.2 million, driven by North America
- Secured $365 million in new long-term contracts
- Underlying EBIT margin expands to 72%
- Company remains debt-free with $182.3 million in cash and financial assets
Robust Financial Performance
Pro Medicus Limited (ASX: PME) has reported a standout half-year result for the six months ending December 2024, with net profit soaring 42.7% to $51.7 million. Revenue from ordinary activities rose 31.1% to $97.2 million, underpinned by a 34.6% surge in North American sales to $86.4 million. The company’s underlying EBIT margin expanded to an impressive 72%, up from 66% in the prior corresponding period, reflecting operational leverage and a favorable revenue mix.
Strategic Contract Wins Drive Growth
Central to this performance were significant contract wins and renewals in the US healthcare market. Pro Medicus secured deals worth a combined minimum of $365 million over 7 to 10 years with major healthcare providers including Trinity Health, Lurie Children's Hospital, and Duly Health and Care. These new agreements complement contract renewals with Mercy Health ($98 million, 8 years) and a large Australian radiology practice ($32 million, 5 years), alongside expansions at Duke Health and NYU Langone through additional Visage 7 Open Archive modules.
Operational Highlights and Market Position
CEO Dr Sam Hupert highlighted the rapid implementation of the Baylor Scott & White (BS&W) contract, completed in just 11 months, a record for the industry. BS&W contributed three months of revenue in the half and is expected to bolster the second half with a full six months of earnings. The company’s modular Visage 7 platform continues to attract clients seeking scalable, cloud-enabled imaging solutions, reinforcing Pro Medicus’s reputation as a flexible and innovative player in health informatics.
Balance Sheet Strength and Dividend
Pro Medicus remains debt-free with cash and other financial assets increasing 17.7% to $182.3 million. The board declared a fully franked interim dividend of 25 cents per share, signaling confidence in ongoing cash flow generation and financial stability. This strong balance sheet positions the company well to capitalize on future growth opportunities and market expansion.
Looking Ahead
While the new contracts will ramp up revenue contributions in FY26 and beyond, the company’s pipeline remains robust across all client segments. The recent RSNA conference reportedly generated significant interest, underscoring the potential for further contract wins. Pro Medicus’s ability to serve diverse healthcare providers, from large integrated delivery networks to specialized pediatric hospitals and regional networks, demonstrates its broad market appeal and adaptability.
Bottom Line?
Pro Medicus’s record interim results and substantial contract backlog set the stage for sustained growth, but execution on implementations will be key to maintaining momentum.
Questions in the middle?
- How quickly will new contracts like Trinity Health begin contributing materially to revenue?
- Can Pro Medicus sustain or further improve its high EBIT margins amid scaling operations?
- What competitive pressures might emerge as the company expands its footprint in North America?
