Does Pro Medicus Limited have a strong and growing pipeline?

Team Veye | 14 Feb 2020 ASX - PME
Does Pro Medicus Limited have a strong and growing pipeline?

Pro Medicus Limited (ASX: PME)

Leading health imaging company Pro Medicus Limited [ASX: PME] on 13 February 2020 announced an interim after-tax profit of $12.1m for the six months ending 31 December 2019, 32.7% higher than for the previous corresponding period.

(Graphic Source Company Reports)


  • Revenue $29.3m – up 15.7% 
  • Net profit after tax $12.1m – up 32.7% 
  • Underlying profit before tax $14.8m – up 45.3% 
  • Cash reserves $38.8m – up 20.2% 
  • Fully franked interim dividend 6c per share up 71.4% 
  • 2 key contracts announced during the period


Revenue from operations was $29.3m, a 15.7% increase on the previous corresponding period. Underlying revenue which excludes the one-off capital sale to the German Government made in the first half of FY2019 increased by 39.1% due to solid growth in all key jurisdictions: North America (43.1%) Europe (52.0%) and Australia (21.5%).

The company's cash reserves at 31 December 2019 were $38.8m, a rise of 20.2%. Pro Medicus announced an interim fully franked dividend of 6c per share. The company remains debt-free.

(Chart source: TradingView)

During the six-month period, Pro Medicus announced two key contract wins: Ohio State University - November 2019 – a $9 million five-year contract with the Ohio State University Wexler Medical Center, a large multi-disciplinary academic medical centre in Columbus, 

Ohio. Nines Inc - December 2019 – a $6 million five-year deal with Palo Alto-based Nines that will see Nines standardise on the Visage in the Cloud platform. (Data Source – Company Reports)


Veye’s Take

The interim result has provided a solid base for future growth. Pro Medicus surpassed last year’s revenue by over 15% taking into account the $3.0M one-off capital sale from the previous period. By excluding the one off capital sale in HY19 the underlying revenue growth figure is 39.1%. Pro Medicus was able to achieve this as a result of the significant step-up in its transaction revenue which grew by 30% compared to the previous 6 month period. The added benefit is that this revenue is recurring rather than one off so provides Pro Medicus with a good base for growth in the next half and future periods. Its cash balance grew by over 20% despite a bigger dividend, a share buy-back and increased tax payments. As per our earlier analysis the stock bounced from its lower support area and resumed uptrend and could gain momentum only above $25.50. The stock can have the potential of accelerating its move once above $26.80. The stock price of the company has given a return of more than 176% since Veye gave them the last buy recommendation at $9.56 on 21st Nov’18. We maintain a “Hold” recommendation on “Pro Medicus Ltd” at the current price of $26.42


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