Pro Medicus (ASX:PME) share price higher on major contract win and research agreement

The Pro Medicus Limited (ASX: PME) share price has rebounded higher following a morning decline.

At the time of writing the health imaging company’s shares are up 2.5% to $26.60.

Why is the Pro Medicus share price storming higher?

Investors have been buying Pro Medicus’ shares after the release of two announcements just before lunch.

The first announcement reveals that the company has signed a seven-year contract with NYU Langone Health. Management advised that NYU Langone Health is one of the largest health systems in the state of New York and one of the most respected and innovative healthcare institutions in North America.

The contract, which is based on a transaction-based licensing model, will see the company’s Visage 7 technology implemented across all of NYU Langone’s radiology and subspecialty imaging departments. This includes breast imaging and replaces all existing legacy PACS with a single centralised instance of the Visage 7 Enterprise Imaging Platform.

The implementation will span six hospitals and numerous additional locations across the NYU Langone healthcare network, with the first sites expected to go-live in the third quarter of FY 2021.

Pro Medicus CEO’s, Dr Sam Hupert, commented: “NYU Langone completed a thorough selection process that required the final round of vendors to perform extensive on-site pilots. This enabled NYU to assess the differences between systems and, importantly, do so in their production environment, which is the ultimate test of how a product will perform.”

“Winning this deal further validates our belief that we have a unique and highly differentiated offering. We stream the pixel data, unlike others who still compress-and-send the images,” he added.

Research agreement.

In addition to the above, the company announced that it has also signed a multi-year research collaboration agreement with NYU Langone Health.

The agreement will see the two parties work together to design and develop next-generation products for enterprise imaging. This includes areas such as workflow optimisation, integration with multi-vendor reporting platforms, as well as integration of artificial intelligence technology.

NYU Langone will also become a member of the Visage AI Accelerator program.

Dr Hupert believes that this agreement could extend the company’s technological lead over the competition even further.

He explained: “This is a major milestone for our company. We changed the paradigm of what a diagnostic imaging (PACS) product should be by natively integrating 3D and advanced visualisation into a single platform. We believe this, combined with our proprietary streaming platform, has given us an 18 to 24 month technology lead.”

“We are now looking at what is next, what a system would look like in say 3 to 5 years, and are starting to do the research and development to make that a reality and then be the first to commercialise it,” Dr Hupert concluded.

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James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. recommends Pro Medicus Ltd. The Motley Fool Australia owns shares of and has recommended Pro Medicus Ltd. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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