Key Highlights

• On 19 October 2026 the company announced a seven-year, A$24 million contract with Billings Clinic – Logan Health in Montana.

• Two days later, on 21 October, it announced a seven-year, A$43 million agreement with Virtua Health in New Jersey.

• Both involve the cloud-based Visage 7 platform and a transaction-based licensing model, which the company says offers potential upside.

• Billings Clinic is targeted to go live in the first quarter of 2027, while Virtua is targeted for late in the second quarter or early in the third quarter of 2027.

Pro Medicus (ASX:PME) is testing that question. Its latest announcements show contract momentum continuing, even as the market has become more cautious about what it is willing to pay for growth.

The central development

On 19 October 2026 the company announced a seven-year, A$24 million contract with Billings Clinic – Logan Health in Montana. Two days later, on 21 October, it announced a seven-year, A$43 million agreement with Virtua Health in New Jersey. Both involve the cloud-based Visage 7 platform and a transaction-based licensing model, which the company says offers potential upside.

These matter because contract wins underpin the long-dated, Recurring Revenue that investors have traditionally valued in Pro Medicus. Billings Clinic is targeted to go live in the first quarter of 2027, while Virtua is targeted for late in the second quarter or early in the third quarter of 2027. Revenue from each therefore depends on implementation timing and on the Volume of imaging studies processed.

What the company does

Pro Medicus develops medical imaging software, sold in North America through its Subsidiary Visage Imaging. Hospitals and imaging groups use it to store, view and distribute radiology images. The Visage 7 offering combines a viewer, a workflow tool and an open archive, and the Virtua contract adds a cardiology module.

Revenue is largely driven by multi-year contracts under which customers pay per transaction, typically with minimum annual amounts. Growth therefore comes from signing new health systems, renewing existing ones on better terms and, as clients scale usage, from higher study volumes. Management describes this as a "full stack" strategy, aiming to replace several legacy systems with one cloud platform. Both October contracts include migrating legacy archives into Visage 7 Open Archive and integrating with the customer's electronic health record.

FY26 results

For the year reported on 18 August 2026, revenue was A$261.7 million, up 22.9%. On a constant-currency basis, the company said underlying revenue was A$273.5 million, up 28.4%. Underlying EBIT was A$196.1 million, a Margin of 74.9%.

Reported net profit after tax was A$265.3 million, up 130.3%, while underlying NPAT was A$144.7 million, up 24.1%.

The final Dividend was 37 cents per share, fully franked, taking the full-year total to 69 cents. Cash and financial Assets were A$252.3 million, and the company remains debt-free. These are reported results; no formal numerical guidance was given for FY27.

Contract activity beyond the latest wins

Alongside the results, management cited ten new contracts worth at least A$407 million. The largest was a ten-year, A$170 million agreement with UC Health in Colorado, followed by a seven-year, A$90 million deal with Beth Israel Lahey Health.

Management said the Trinity implementation is largely complete and will contribute for a full year in FY27, and that 16 implementations were completed during the year.

Sector conditions and competitive position

US health systems continue to modernise imaging infrastructure, moving from on-premises archives towards cloud platforms and consolidating multiple departmental systems. That trend favours vendors that can handle very large image volumes and integrate with electronic health records.

Pro Medicus says it holds about 11% of the US market, which implies a large addressable pool but also entrenched competitors, including larger healthcare technology and imaging vendors. Contract cycles are long, often involving formal requests for proposal, and switching costs cut both ways: they protect incumbents once a platform is installed but lengthen the sales process.

Artificial intelligence is another area of development.

index context

The shares have underperformed. Another article in June noted that the index provider would remove the company from the S&P/ASX 50 effective 22 June 2026.

It was not listed in the June or September 2026 S&P/ASX 200 additions or removals reviewed, but that is an inference rather than confirmation.

Risks and uncertainties

Several risks deserve attention. Revenue is concentrated in the United States, so currency movements matter: the difference between reported and constant-currency growth in FY26 shows the effect. Because fees are transaction-based, revenue depends on customer volumes rather than fixed licence payments, and contract minimums may not always be exceeded.

Implementation delays can postpone revenue recognition, and a small number of large contracts can make results uneven. Competition, pricing pressure and changes in US healthcare funding are further uncertainties. Contract values announced by the company are minimum commitments over several years, not annual revenue, so headline figures should not be read as a single year's income.

The margin also deserves monitoring. An underlying EBIT margin near 75% leaves little room for error if pricing or volumes soften, although the company's debt-free Balance Sheet provides some buffer.

What to watch next

Upcoming developments include progress on the go-live dates for Billings Clinic and Virtua, and any further contract or renewal announcements. Investors will also look to the next half-year result for evidence of how FY26 contract wins are translating into revenue.

Management has described the pipeline as encouraging across segments and said it expects cardiology Demand to continue. Whether that translates into sustained growth will depend on execution, usage volumes and the pace of cloud adoption among US health systems.