Can Pro Medicus (ASX:PME) Bounce Back? A Closer Look at the Radiology Software Leader

April 30, 2025 04:30 PM AEST | By Team Kalkine Media

Can Pro Medicus (ASX:PME) Bounce Back? A Closer Look at the Radiology Software Leader — Image source: Shutterstock

What Makes Pro Medicus Stand Out?

Pro Medicus is a leading global provider of software solutions to hospitals, diagnostic imaging centres, and healthcare networks. Its flagship product, Visage, is a comprehensive radiology platform encompassing Radiology Information Systems (RIS), Picture Archiving and Communication Systems (PACS), and advanced visualisation tools.

One key advantage of Visage is its ability to allow radiologists to access and interpret high-resolution imaging data remotely, including via mobile devices. This capability enhances clinical decision-making speed and efficiency, potentially improving patient outcomes — a compelling value proposition in modern healthcare delivery.

Sector Insights: Why Healthcare Still Matters

The healthcare sector, as reflected by the ASX200 Healthcare Index (ASX:XHJ), has delivered subdued returns of -0.39% annually over the past five years, compared to 9.06% from the broader ASX200. However, this underperformance doesn’t tell the full story.

Here are three themes that support continued interest in companies like Pro Medicus:

Resilient Revenue Base
Healthcare is considered a non-discretionary expense, giving companies in this sector more stable and predictable revenues even in uncertain economic conditions.
Expanding Global Healthcare Spend
With the US comprising over 40% of global healthcare expenditure, the expected 7% annual growth in spending there through 2027 is significant. Moreover, niche segments such as healthcare IT and SaaS-based health platforms are forecast to expand at rates exceeding 15% annually through 2030.
Growing Interest in Ethical Investing
As sustainability themes gain traction, sectors like healthcare—which serve essential societal needs—may benefit from increased investor allocations. A recent survey shows more than half of investors are seeking to grow their exposure to responsible sectors in 2024.

Valuation Checkpoint

Pro Medicus currently trades at a price-to-sales (P/S) ratio of 145.25x, well above its five-year average of 82.69x. While this could indicate a premium valuation, it also reflects strong top-line growth over the past three years. It's important to recognise that this is just one metric in the broader valuation picture.

For those tracking quality healthcare names with long-term growth themes, Pro Medicus remains a company to monitor. It may also serve as a valuable complement to a broader income-focused watchlist that includes ASX dividend stocks, particularly given the diversification benefits healthcare can offer.

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