Pro Medicus Limited reported a robust half-year performance, with underlying profit after tax rising by approximately 30%, driven by significant new sales and strategic implementations. The company remains confident in its proprietary technology's resilience against AI disruption while expanding its market footprint.
- Underlying profit after tax grew ~30% excluding one-off 4D Medical gains
- Seven new sales contracts valued over $280 million secured
- Completed six major implementations including industry-leading Trinity cohort 1
- Unrealised $150 million gain from 4D Medical investment
- Confident stance on AI impact and continued strong EBIT margins above 70%
Solid Half-Year Growth and Sales Momentum
Pro Medicus Limited (ASX, PME) has delivered another strong half-year result, with underlying profit after tax increasing by around 30%, excluding a one-off gain from its investment in 4D Medical. This growth was achieved despite the largest go-live event, Trinity cohort 1, occurring late in the period, limiting its immediate financial impact but setting the stage for a stronger second half. The company secured seven new sales contracts worth over $280 million in minimum value, spanning diverse healthcare segments including academic hospitals, specialist children’s hospitals, and private radiology providers.
These sales represent a remarkable acceleration, matching what PME previously achieved in a full year within just six months. The total minimum contracted volume for the next five years has now surpassed $1 billion, marking a significant milestone for the company’s recurring revenue base.
Strategic Investments and Financial Strength
Pro Medicus’ investment in 4D Medical has proven highly lucrative so far, with an unrealised gain nearing $150 million due to a substantial share price appreciation. While the ultimate value depends on the share price as of July 2027, the current performance underscores the company’s ability to identify and capitalise on promising opportunities. Holding over $220 million in cash and financial assets, PME continues to explore selective investments, balancing organic growth with a cautious approach to mergers and acquisitions.
The company also returned value to shareholders through increased dividends and share buy-backs, maintaining a policy of distributing roughly 50% of profits. Importantly, PME emphasises that its cash reserves primarily serve to fund ongoing innovation and market leadership.
Navigating the AI Landscape
In an industry abuzz with AI disruption fears, Pro Medicus offers a measured perspective. CEO Dr Sam Hupert stresses that while AI hype has unsettled many software companies, PME’s capital-light, software-only model is insulated from the heavy infrastructure investments that have rattled the sector. The company’s flagship Visage 7 platform is built on proprietary, patented technology developed over 30 years, making it resistant to replication, even with AI tools.
Moreover, PME highlights that AI currently serves more as an efficiency tool rather than a replacement for radiologists, given the growing complexity and volume of imaging data. The company’s integrated approach, including rapid implementation capabilities and 24/7 support, further differentiates it from competitors and mitigates disruption risks.
Expanding Market Reach and Pipeline Strength
PME’s recent contract with the University Hospital Heidelberg, a prestigious European institution, enhances its footprint in Germany and broader Europe. The company is also seeing growing traction in cardiology, with notable clients like the University of Colorado and Vancouver Clinic adopting its cardiology solutions alongside diagnostic imaging.
Looking ahead, PME’s pipeline remains robust across all market segments, bolstered by strong leads from the recent RSNA conference. The company’s ability to serve a wide range of healthcare providers, from small specialty hospitals to large integrated delivery networks, positions it well for sustained growth.
Operational Excellence and Margin Expansion
Operationally, PME continues to refine its cloud-hosted implementations, successfully completing some of the largest go-lives in the industry with remarkable speed. This efficiency contributes to underlying EBIT margins exceeding 70%, a figure that has improved even in the traditionally lower-margin first half of the fiscal year.
With a strong balance sheet, a diversified client base, and a clear strategy to leverage proprietary technology, Pro Medicus appears well-positioned to maintain its growth trajectory despite broader economic uncertainties such as rising interest rates.
Bottom Line?
Pro Medicus’ blend of strategic sales, strong margins, and AI resilience sets the stage for continued market leadership.
Questions in the middle?
- How will the Trinity cohort 2 implementation impact second-half financials?
- What new investment opportunities might PME pursue beyond 4D Medical and Elucid?
- Can PME sustain its high EBIT margins as its customer base and product offerings expand?