Pro Medicus: Monsters Inc

About the author:

Iain Wilkie
Author name:
By Iain Wilkie
Job title:
Research Analyst
Date posted:
27 September 2023, 7:00 AM
Sectors Covered:
Healthcare and Life Sciences

  • Pro Medicus (ASX:PME) has signed its largest contract to date (by quite a distance), inking a A$140m contract over 10 years with a large US-based healthcare system.
  • Outside of the material financial impact, the deal perhaps highlights the potential monster contracts which lurk beneath the opaque waters of the US healthcare system.
  • We classify this contract as a one-off which doesn’t roll through our long-term new contract growth assumptions – but it does also bring into question how many potential deals sit between historical contract sizes and this new upper bound.
  • We have rolled through the upgraded assumptions which takes our target price to (login to view) and retain our Hold recommendation. We still remain cautious purely on valuation grounds.

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