Today we discuss one of my favourite stocks in Pro Medicus (ASX:PME) and how it has managed to defy gravity in terms of price to know be considered the most expensive stock on the ASX.
For those unaware, PME was started 40 years ago by current CEO Dr Sam Hubert and Anthony Hall in 1983 to basically sell software to help medical professionals (particularly radiologists) manage their practices. But the business was really transformed by the 2009 acquisition of a US radiology software firm called Visage for $US3.5 million.At the time the business was worth just $115 million. Today it has a market cap of $15.6 Billion. Its headquarters are still a very humble office space in Swan Street Richmond (ps… I love that!)
With Visage they got the technology platform, a technical team in Germany and most importantly a foot in the door in America where big hospitals and healthcare groups are much easier to sell to than Australian equivalents. In fact the North America segment currently makes about ~87% of all revenues for the business.
Source: PME Annual Report 2024
As you may have noticed from the image above, While the website looks flashy, they are still scientists at heart, no better reflected than in a fairly bland annual report that in my view is chock full of great reading, rather than pretty layouts. This includes reference to the nine contract wins this financial year, including the AUD $140 million 10-year contract with Baylor Scott and White, which was the company’s largest contract to date. The company still sees future growth opportunities there as they now service eleven of the top and best 20 US hospitals as well as a rapidly growing number of large and mid-sized Integrated Delivery Network (IDNs) and health systems across North America. They actually see this as a key target moving forward given the size. That said, they see their Totally Addressable Market (TAM) in the US is huge with capacity to manage it all if necessary.
Source: PME Annual Report Presentation
In its latest result, it confirmed all that we already knew. That it is a highly scalable offering with little in…
