The two ASX 200 stocks having given very good returns this year are poised to grow higher in 2025. These high growth stocks are
Pro Medicus Limited (ASX: PME)
Pro Medicus Limited (ASX: PME) recently made significant announcements regarding leadership share sales and major contract wins. On December 4, 2024, the company disclosed that its co-founders, Dr. Sam Hupert and Mr. Anthony Hall, sold 1 million shares each during the current trading window, representing less than 4% of their individual holdings. Despite the sale, both founders remain the company’s largest shareholders, each holding over 24 million shares, and their combined holdings still represent 46% of the company’s total shares on issue.
In late November 2024, Pro Medicus secured two significant contracts that will further expand its presence in the North American healthcare market. On November 28, the company announced a monumental AUD $330 million, 10-year deal with Trinity Health, one of the largest not-for-profit healthcare systems in the U.S. This deal will see the implementation of Visage 7, the company’s cloud-based imaging platform, replacing multiple legacy PACS systems and improving the distribution of medical images across Trinity’s extensive network of hospitals and clinics. The contract includes Visage 7 Viewer, Visage 7 Open Archive, and Visage 7 Workflow, offering a comprehensive imaging solution for over 650 radiologists and thousands of clinicians.
Additionally, Pro Medicus secured an AUD $24 million, 5-year contract extension with NYU Langone Health on November 27, 2024. This deal will extend NYU Langone’s use of Visage 7 by adding the Visage 7 Open Archive to their existing platform, which had initially only used the Visage 7 Viewer. The contract further extends the use of the full “stack” of Visage products and involves migrating the institution’s archive to a fully cloud-based solution. These wins are part of Pro Medicus’s ongoing expansion into North American healthcare institutions, demonstrating the growing demand for cloud-based imaging platforms. The company’s strong performance continues to reflect its success, with FY2024 seeing a 29.3% increase in revenue to $161.5 million and a 36.5% rise in net profit after tax to $82.8 million.
Technology One Limited (ASX: TNE)
Technology One Limited (ASX: TNE) continues to demonstrate strong performance, driven by its strategic investments and growth in the SaaS+ model. For FY24, the company saw an 18% increase in profit, surpassing earlier guidance of 12%-16% growth. The Total Annual Recurring Revenue (ARR) grew by 20%, with the UK market seeing a remarkable 70% increase in ARR. Technology One’s SaaS+ offering, which combines its global SaaS ERP solution with implementation in one fee, has proven highly successful, reducing the need for traditional, costly, and time-consuming consulting services. This innovative approach has not only simplified implementations but also unlocked greater value for customers, contributing to their impressive savings and strengthening the company's pipeline for 2025.
The company’s continued investment in Research and Development (R&D), which remains a key focus, is set to support sustained growth. R&D spending is expected to remain between 20-25% of revenue as Technology One enhances its product offerings, including modules like DxP, App Builder, and SaaS+. This commitment has allowed the company to establish a competitive edge, providing greater scalability and efficiency. The company’s long-term outlook is ambitious, with a target to exceed $500 million ARR by the first half of FY25 and to surpass $1 billion ARR by FY30, positioning itself to double in size every five years.
Technology One's robust financial position reflects its growth trajectory. The company has generated cash flows greater than 100% of NPAT, with a strong cash balance of $278.7 million and no debt, providing flexibility for future acquisitions. Their disciplined capital management strategy continues to reward shareholders, with a 15% increase in the FY24 dividend to 22.45 cps, marking the 28th consecutive year of dividend payments. The payout ratio remains consistent at 62%, and the dividend is 65% franked. With this solid foundation, Technology One is poised for further success, particularly with its expanding presence in the UK and ongoing focus on SaaS+ opportunities.
Source: Company’s Report
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