[GUEST ACCESS MODE: Data is scrambled or limited to provide examples. Make requests using your API key to unlock full data. Check https://lunarcrush.ai/auth for authentication information.]

![EugeneNg_VCap Avatar](https://lunarcrush.com/gi/w:24/cr:twitter::915576521129041920.png) Eugene Ng [@EugeneNg_VCap](/creator/twitter/EugeneNg_VCap) on x 24.5K followers
Created: 2025-02-13 08:08:55 UTC

Pro Medicus $PME 1H25 Earnings
- Rev A$101m +32% ↗️🟢
- GP A$101m +32% ↗️🟢 margin XXX% +7 bps ✅
- EBIT A$73m +46% ↗️🟢 margin XX% +692 bps ✅
- Net Inc A$52m +43% ↗️🟢 margin XX% +381 bps ✅
- OCF A$49m +68% ↗️🟢 margin XX% +1032 bps ✅
- FCF A$45m +76% ⤴️🟢 margin XX% +1100 bps ✅

By Geography
- NA (RIS) A$86m +35% ↗️🟢
- AU (RIS) A$8m +7% ↗️🟡
- EU (PACS) A$2m +1% ➡️🟡

By Product/Segment
- Visage 7/PACS A$89m +34% ↗️🟢
- RIS A$8m +7% ↗️🟡

By Recurring Revenue
- Exam/License Rev A$75m +32% ↗️🟢
- Support/Baseline Rev A$12m +13% ↗️🟡
- Professional Svcs Rev A$5m +37% ↗️🟢
- Archive Data Migration Rev A$5m +70% ⤴️🟢

Biz Metrics
- Forward Rev A$894m/5 years  (excl. >5Y)
- XXX% renewal rate to date at higher price points, and many for longer terms

X | Strong customer wins, total $365m over 7-10 years, Trinity was a top XX US IDN

During the period Pro Medicus won key contracts with Trinity Health, Lurie Children’s Hospital and Duly Health and Care. These contracts were for a combined minimum amount of $XXX million spread over 7-10-year deals.

The key highlights in terms of volume certainly was Trinity. It is one of the top XX IDNs in North America. It's $XXX million at minimum 10-year deal.

X | Renewed contracts total $169m over 5-8 years

In addition, the company renewed contracts with Mercy Health in the USA ($98 million, X years) and with a large Australian radiology practice ($32 million, X years). Additional modules were also added to existing contracts at both Duke Health (archive addition, $XX million, X years) and NYU Langone (archive addition, $XX million, X years).

X | XXX% convinced they are #1 in speed, functionality and scalability

We often test our application and look at it compared to others in the market, and we're still XXX% convinced we're the #1 in the X key areas that differentiate systems, speed, functionality and scalability. And in that scalability piece, cloud is a huge strategic advantage because most RFPs now coming to market will stipulate cloud as the platform because most of the large health enterprises know they need to transition to cloud from on-premise.

X | Legacy remains the slow and inefficient compress and send, takes 10-20mins or hours

Legacy technology is compress and send, take the file, compress it, unpack it at a local workstation that has to be highly configured and manipulated there. The problem is the data sets are getting too big to do that in a timely manner. We moved to one system that was taking between XX to XX minutes to do that photonosynthesis remotely to hours, which is less than XXX seconds. So the delta can be huge because we don't compress and send.

X | XXXX% <1 second, rest is <2 second, because it is a streaming technology

It is a streaming technology, which means that all the manipulation and rendering in 3D is done centrally when we stream pixels to the radiologist. So no matter where they are, XXXX% of their work is sub-1 second, the rest is sub-2 depending on the modality.

So our solution is really a streaming platform based on a central core of cloud, one application that does everything from plane X-rays through the most sophisticated advanced imaging, 3D, 4D fusion, and breast that used to be done by stand-alone systems in the past. And we're now adding the other ologies to that same platform extension of the software as a license. So that concept of one core product, spinning o multiple applications in cloud as a service, we're building towards and achieving that.

X | They are the most expensive but yet still have the best ROI with clinical outcomes

We are known as being the most expensive but have the best ROI. Many of you have seen the slide. It's not just in terms of financials, which we provide an unparalleled return, but also in terms of clinical capability and acumen. So we do move the needle when it comes to clinical outcomes, but we do have a large number of cases where clinicians have told us that they're able to do things that they previously couldn't do or if they could, it would take them too long, so they didn't do it.

X | Will win much more than they lose, and when lose, XX% of the time, its on price, and the perception that it is cheaper

Yes. So there always. There are two things, some where we -- particularly smaller ones where you may not even get a look in. The ones where we've competed on RFPs. I'd say XX% of the time, it's on price and the perception that the sticker price of another product is cheaper. And second, it's not as good, but it will do. But having said that, our win rate has been consistent, and we win far more than we lose, but you're not going to win everyone, at least not rst time around. We are seeing some and Trinity being a case in point, but by no means the only one where we lost them originally and then a short time later, they've come back to the market, and we've been able to pick up that business. So yes, our hit rates as good as it's ever been.

X | Started winning customers who chose cheaper solutions that are inferior and end up coming back to them, good example are Trinity

Now there are X buckets to those. There are those that actually think they're getting a cloud product and haven't even tried it before they buy. And usually, they are the ones that become very unhappy or the implementations get stalled and take forever or they are those where they look at price and they do a pilot and wherever they do the pilot, we pretty much get that business because the di erence -- the delta is so huge that you can't help but see it. So everybody is still worried about price. We have been able to get price accretion. A lot of that is because of reputation. We'll always have some that will look at price, and we'll do a pilot and then [indiscernible] say, yes, I'll go to you or I'll go somewhere else, at least in the interim.

Now some of them, as you know, Trinity went elsewhere a number of years ago. That project failed and then they have to stop it, go back out to market, which no one likes to do. But we're going to see more and more of that, I think.

X | Have XX of the top 20, nearest competitor which is older has 2-3 only

The segments we work in, one of the one that's most known is the academic medical centers where we currently do XX out of the top XX. They used to be ranked. They're now listed alphabetically. We don't believe that anyone has got anywhere near that. I think our nearest competitor that's been in the market quite a bit longer than us would have X to X. So again, we've been able to show the product is well suited to that high-end leadingedge sophisticated user.

XX | Able to sell to the very big, medium and smaller now

But having said that, we have an increased footprint in the IDN space. Many of these are large and sophisticated. The di erence being they don't have universities and medical schools. We've noticed the sale from very large to medium to small, which is important, so we can cover the biggest spread of the market. And many of our recent sales have been full stack.

XX | Only ones that can really execute off-premise in the cloud and agnostic across the X majors, AWS, Azure, and GCP

Importantly, we are -- we can work and have large-scale implementations in all the X big clouds, AWS, Azure and Google GCP. So if a client has a preference for one over the other, we're able to work within that. And we see it as a huge strategic advantage because we know a lot of our competitors talk cloud, but in reality, we believe that we're the only ones who can actually execute on that and give them a full XXX% cloud implementation.

XX | Thinks their technology is XX months ahead of the competition, e.g. Vision Pro

We think it's also very important that it underpins our belief that our technology is adding to XX months ahead of the competition. We don't have any of our competitors that is able to use the Vision Pro or have an application for it like we've been able to do.

XX | US TAM US$650m growing 2-3% CAGR, they can address 100%, currently top dog at X% penetration and still long runway

The TAM in the U.S., XXX million, growing roughly X% to X% per year. We believe we're able to address XXX% of that from a product point of view.

Our current penetration has gone up with recent sales from around X% to just under X% of the market and growing. So whilst we've made terrific inroads, we believe there's still a huge amount of runway addressable for us.

XX | Sales pipelines are long, and can take between 18-24 months

The pipeline continues to grow. So it's a dynamic thing, clearly, with all the recent slew of new contracts that we moved from pipeline to contract. They've decremented the pipeline, but I'm pleased to say, particularly following RSNA, we've had a number of net new opportunities to helping replenish all of that. And there's been a number of opportunities in the pipeline for a number of -- throughout 2024, which is standard because sales are usually an 18-month to 2-year period.

XX | AI has been beneficial and will work with 3rd party partners instead where their algorithms can help in diagnosis, cardiology to be installed in April

We're strategically positioned to leverage the AI and other ologies. As I mentioned, cardiology will be installed at its first site in April.

The Visage X platform, as we mentioned, just from a pure platform point of view, is very well suited to AI. And we see that we not only will develop our own or develop them with joint partners, but we will be part of that third-party ecosystem. And as many of you know, we've made an investment in a company called Elucid, which has AI for cardiac CT. One of their X modules has now received FDA approval, and we will be looking to help integrate that and put it out into the market in around the 6-month time frame. So we're starting to see activity there.

So we are seeing some real-world applications starting to appear, particularly in interventional radiology, surgery and other areas where immersive or spatial computing will actually help in the diagnosis and medical treatment.

XX | Will get benefit on the sale of 3rd party algorithms with pass-through revenues, while they remain responsible for the algorithm (think cloud hyperscalers and LLMs)

So with Elucid, the commercial agreement is that we get a certain markup on what's sold. And we will be their route to market for part of that markup. So we will get a pass-through on everything sold. And we will also get a benefit because we're a minor equity player if they make money on all of that. But leaving that aside, we'll get a pass-through. That's the way we see it with most of the third parties where we will get a percentage of the sale of integrating it and doing all of that. They'll still be responsible for the algorithm. They have to be. We'll be responsible for the integration and the client-facing side.

XX | While cardiology volumes are lower than radiology, they can charge 2X more for cardiac CT

So we've always said cardiology volumes much less than radiology, but the amount of unit we can charge per unit per transaction is more. And I think that we've always said roughly double and that it's within that realm. So the pricing structure we always had in our minds and the volume structure has been correct. So we've charged materially more, but there are fewer of them. So we think the cardiology market changes because cardiac CT is growing rapidly.

XX | Playing more the role of the aggregation / platform to distribute other’s products instead

Given that we're now somewhere roughly around X% of the market and growing, we think we have a compelling proposition for those third-party AI players. So yes, you'll see our ecosystem expand in that direction, something we agged in the past. So yes, they certainly could be now that they've got FDA, they certainly could be one of those parties, but definitely not a competitor.

XX | Minimum contract values are minimums and generally present inherent 20-25% upside

Yes. I mean the minimum contract value that we normally announce is around that XX% of their volume. So there's 20%, XX% inherent upside in all the contracts, and that's what we're generally seeing within their rst year. We do see then our customers grow between X% and 10%. So we do see the upside. So if the minimums are XX -- X or X years in, they could be doing XXX% of that volume, but we have seen upside of double their volume of what they originally signed for us. So we do -- that is purely what we announced is what we say, which is a minimum. We always see an inherent upside in all the contracts.

XX | A lot of operating leverage left in the tank towards ever higher profit margins

We believe in operating leverage. It's highly scalable. There's no CapEx hardware cloud fees. So all of revenue we announced in these contracts is revenue to us. We do build the professional services. As you know, they're roughly XX% of contract value. And as we've noticed, our margins have continued to grow as our footprint increases.

XX | Long tenure of staff, and even have parents and children working in different roles

XX% of our staff have been with us for long periods of time. We have one that's been with us over XX years, a number over XX. We even now have second generation where parents and child is working for us in different roles. So all of that, we think, helps build that culture too.

XX | Returning XX% of profits via dividends, rest using it to reinvest

Well, at the moment, our guideline for dividends is roughly XX% of retained earnings. And obviously, we reassess that every half before we announce the dividend. I think the Board is comfortable with that. And I think we're comfortable retaining a growing part of retained earnings to give us exibility, particularly around investment, M&A and of course, most importantly, investing in the business as we need it. So we do assess it every half.

XX | Revenue growth will definitely reaccelerate in H2 with the full 6mths of Baylor Scott White’s revenue in H2

And is it reasonable to assume that revenue growth will accelerate in the second half? Thanks, Anabel. Yes, it will. Implementation of Baylor Scott White, as Sam mentioned, was completed in September. So we had X months' worth of revenue in the rst half. Clearly, we will have X months revenue for that in the second half.

XX | Will see an even bigger step up in 1H26 with the new contracts that have just been signed

is of all the new contracts, their revenue won't start. That's all ahead of us. That won't start until rst half '26. So we anticipate a good second half and then an even bigger step-up into '26 as the contracts we've just announced will start coming on stream.

➡️ Final Takeaways of Pro Medicus $PME

Software SaaS for medical imaging. Top dog in with a streaming technological advantage that despite it being priced the most expensive, still has very high ROI outcomes for its customers. Revenues are highly recurring with long duration 5-10 year sales contracts minimums. One of the strongest operating leverage out there, as profitability should continue to rise indefinitely. Large market opportunity remains, and for the implementation of the recent large deals to kick in and accelerate growth even faster.

![](https://pbs.twimg.com/media/Gjpy96faIAQiMbt.jpg)

XXXXX engagements

![Engagements Line Chart](https://lunarcrush.com/gi/w:600/p:tweet::1889949863728783639/c:line.svg)

**Related Topics**
[2m](/topic/2m)
[$2m](/topic/$2m)
[$8m](/topic/$8m)
[$86m](/topic/$86m)
[$45m](/topic/$45m)
[$49m](/topic/$49m)
[$52m](/topic/$52m)
[$73m](/topic/$73m)

[Post Link](https://x.com/EugeneNg_VCap/status/1889949863728783639)