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Speaker 1: Welcome to the Fear and Greed Business Interview. I'm Sean Almer.

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Speaker 1: Promedicus is one of the most interesting companies on the

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Speaker 1: AX and one of the best performing stocks in the

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Speaker 1: last few years. Yesterday, the medical imaging software company announced

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Speaker 1: record revenue and profit off the back of a stack

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Speaker 1: of new contracts, particularly in the United States. But while

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Speaker 1: its share price initially rose, it closed down more than

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Speaker 1: three percent, consequence of the stock being priced to perfection

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Speaker 1: and the result being just a touch below expectations. Today's

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Speaker 1: interview with doctor Sam Hupert, co founder and chief executive

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Speaker 1: of Promedicus, comes to your courtesy of our partnership with Osby's,

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Speaker 1: Australia's leading provider of live and on demand video of

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Speaker 1: the latest news in Australian business markets, economy and startups.

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Speaker 1: Sign up free at Osby's dot com dot are You.

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Speaker 1: Nadine Blaney talks to doctor Hubert not just about the result,

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Speaker 1: but about Promedicus competitors, AI, succession, planning, in the car,

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Speaker 1: all sorts of things. Enjoy it.

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Speaker 2: I say, I'm nice to see you today, thank you

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Speaker 2: for joining us. Record result and I suppose in some

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Speaker 2: way it needed to be considering the valuation. As I

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Speaker 2: mentioned higher share price in CSL, Are you confident that

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Speaker 2: you can fulfill investor confidence in your future prospects?

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Speaker 3: Well, I can't talk about the share price. I leave

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Speaker 3: that to the markets and the analysts and the traders.

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Speaker 3: But certainly we've had a consistent growth pattern of thirty

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Speaker 3: percent plus period on period, not just in revenue, but

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Speaker 3: more importantly in after takes profits. I think we've also

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Speaker 3: had the biggest new contract wins, biggest set of new

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Speaker 3: contract wins in the last six months, which set us

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Speaker 3: up not so much for the second half of this

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Speaker 3: financial year but fair Fly twenty six and beyond. So

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Speaker 3: what we contract now sets the flaw for future growth

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Speaker 3: in I twenty six FI twenty seven.

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Speaker 2: Yeah, I think it was ten plus contract wins over

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Speaker 2: the past twelve months. Can you keep up that momentum

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Speaker 2: or was there something idiosyncratic about that time period?

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Speaker 3: Each contract has its own cadence, and the fact that

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Speaker 3: we recently signed five in a period of two months

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Speaker 3: is I won't say coincidental, but you know they could

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Speaker 3: have been stretched out over a longer period. I think

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Speaker 3: if you look at our over longer periods of time,

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Speaker 3: the dollar value of the contracts we win keeps going

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Speaker 3: up every twelve months on twelve months. And some of

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Speaker 3: that is the network effect. People know us, it's a

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Speaker 3: big market. Some of it is price secretion, in other words,

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Speaker 3: we charge more for each transaction, that's how we charge,

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Speaker 3: and some of its additional products that we've been able

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Speaker 3: to sell back into the market. So it's a number

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Speaker 3: of factors that have given that increased total contract value

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Speaker 3: a year on you.

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Speaker 2: So, I note that the Baylor, Scott and White or

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Speaker 2: BSNW contract was fully implemented in eleven months from the

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Speaker 2: date of signing. I think this is a record for

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Speaker 2: the industry. So is this sort of the goal for

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Speaker 2: speed of implementation? Is this what you think you can

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Speaker 2: continue to achieve? Because I ask because you know, the

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Speaker 2: market sometimes has difficulties sort of estimating the phasing of

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Speaker 2: those contract contributions.

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Speaker 3: Yeah. So some of it not only depends on us,

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Speaker 3: but some depends on their client and their state of readiness.

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Speaker 3: Some clients are rolling out of the product that they

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Speaker 3: need to do, like an electronic health record before they

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Speaker 3: roll us out. Baylor, Scott and White didn't have any

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Speaker 3: of those other restrictions, So you're right, from time of signing,

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Speaker 3: it was eleven months. The first six to seven months

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Speaker 3: really are under the bond you planning, testing preparation. They

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Speaker 3: started to go live in June and there were four

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Speaker 3: sort of you know cut across where they switch off

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Speaker 3: their old system on a Sunday night, start with visage

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Speaker 3: Promedicus on Monday. So we really did the actual go

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Speaker 3: live where the radiologists change systems from June to September, which,

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Speaker 3: as you say, is unusually very unusual in the industry.

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Speaker 3: But it's actually better for both companies because once they've

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Speaker 3: made the decision, they want to move on our platform

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Speaker 3: as quickly as possible, and for us it's better because

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Speaker 3: we obviously get that transaction revenue sooner, So it works

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Speaker 3: well for both.

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Speaker 2: Now you've continued to build the pipeline of opportunities really

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Speaker 2: across all market segments, across our client sizes. The strong

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Speaker 2: result though, was driven largely by the North American segments.

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Speaker 2: So where are you focusing on growth going forward? I'm

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Speaker 2: talking geographies.

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Speaker 3: Well, squarely on North America and particularly the US. Roughly

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Speaker 3: sixty cents of every dollar spent in healthcare globally is

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Speaker 3: spent in the US, so it's a huge market. We

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Speaker 3: have a strong footprint there and we've gone from a

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Speaker 3: bit over seven percent market penetration to a touch under

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Speaker 3: nine percent, but there's still a huge amount of runway left.

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Speaker 3: So I think our number one the price is definitely

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Speaker 3: the US, and that's where we will continue to focus.

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Speaker 3: But having said that, we've won contracts in Germany in particular,

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Speaker 3: where we have a base in Europe, and that will

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Speaker 3: be a secondary growth market for US, but it'll be

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Speaker 3: slower and more midterm, whereas the US is quite rapid

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Speaker 3: and here and now, and.

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Speaker 2: You're quite confident that there will be no major upsets

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Speaker 2: coming from the new administration, no big changes in how

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Speaker 2: you know the technology is being adopted, will be largely

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Speaker 2: immune to any of the instability there.

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Speaker 3: No one can be one hundred percent confident as you

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Speaker 3: see things change daily. But we haven't been impacted by

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Speaker 3: any of the things really that have occurred pre election,

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Speaker 3: like interesst rates. We haven't been impacted by the election itself,

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Speaker 3: so people didn't hold off making decisions for the six

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Speaker 3: months beforehand, and as far as we can tell from

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Speaker 3: what we read and what's out there in the press,

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Speaker 3: we don't see anything that will negatively impact us, certainly

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Speaker 3: not at this stage. And speaking to our clients, particularly

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Speaker 3: in the US, they don't see anything on the horizon either.

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Speaker 3: But you know, the President can do make executive orders

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Speaker 3: that we just haven't thought of, but this point we

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Speaker 3: don't see any impact.

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Speaker 2: Well, you've got quite a lot of cash on the

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Speaker 2: balance sheet one hundred and eighty million dollars net cash position.

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Speaker 2: I know you've been asked this already. So potential M

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Speaker 2: and A obviously you'll funder growth, but what could potentially

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Speaker 2: be in your sites in terms of non organic opportunities.

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Speaker 3: Yeah, so, as you've rightly pointed out, we are achieving

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Speaker 3: believe we can achieve our growth targets organically so that

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Speaker 3: we don't have to do M and A just to

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Speaker 3: do that. But we think there will be some opportunities,

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Speaker 3: particularly around extra capability areas, around AI which is becoming

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Speaker 3: a lot more commercial, in the health space, where it

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Speaker 3: looks there are hundreds, if not thousands of companies each

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Speaker 3: that has a small pocket of technology that could be

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Speaker 3: of interest to us. So we are actively looking, as

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Speaker 3: you say, we have plenty of dry powder, but will

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Speaker 3: be very very selective.

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Speaker 2: Is there any competitor that's threatening to come in over

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Speaker 2: the top, any you know, you still got this moat

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Speaker 2: around you, these barriers centry.

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Speaker 3: Well, we think our technology, we've always said, is eighteen

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Speaker 3: to twenty four months ahead of the competition, and we

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Speaker 3: believe that if not even more, we keep on moving.

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Speaker 3: We've been one of the first, if not the only ones,

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Speaker 3: to be fully cloud based, so we haven't put an

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Speaker 3: on premise system in the US in four years. So

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Speaker 3: all of our clients, all the new contracts we announce,

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Speaker 3: are all fully in cloud. So we already have that

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Speaker 3: up our sleeves. Plus, we believe that just the whole

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Speaker 3: way we handle the image that we don't compress and

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Speaker 3: send it, we stream it, and it's unique in proprietary

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Speaker 3: gives us that mode. But having said that, you know,

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Speaker 3: your only defense against competition is to move quicker than them,

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Speaker 3: So we're always continually reinvesting in the platform and new capability.

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Speaker 2: I was speaking with an analyst today who pointed out

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Speaker 2: that the next phase of AI would bring him to

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Speaker 2: think that you'll be able to make a lot when

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Speaker 2: it comes to the data. You know, the database of

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Speaker 2: diagnostics that you've have, What are you working on there.

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Speaker 3: Well, the first thing is, even though we handle a

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Speaker 3: lot of data on behalf of our clients, it is

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Speaker 3: their data. And even if you're a researcher in an institution,

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Speaker 3: you don't have can't blanche access to the data. But

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Speaker 3: having said that, we do have collaboration agreements with a

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Speaker 3: lot of key medical centers, academic medical centers, and on

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Speaker 3: a project by project basis we can get under certain

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Speaker 3: conditions access to anonymized data which no one gets it

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Speaker 3: without being anonymised. So we do have some advantages there

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Speaker 3: and we are using those as part of our collaboration,

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Speaker 3: particularly around upcoming AI projects that we think would be

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Speaker 3: material going forward.

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Speaker 2: Sam, just an interesting time. On a personal level, you

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Speaker 2: co founded the business back in nineteen eighty three. You're

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Speaker 2: clearly still passionate about growing the business and effective, I

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Speaker 2: must say as well, But can I ask us a

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Speaker 2: succession plan in place? You know, any idea of how

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Speaker 2: long you want to keep running this show?

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Speaker 3: Well, it's good corporate practice to have a succession planning

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Speaker 3: and it's a key function of our board, not just

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Speaker 3: for myself but for other key key executives, and so

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Speaker 3: we have, you know, quite a robust and an ongoing process,

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Speaker 3: so there's no definitive timeline per se. But you know,

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Speaker 3: people say, well, what happens if you get hit by

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Speaker 3: a bus. I'd like to think of something not as dramatic,

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Speaker 3: but if I want to go on a holiday. So

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Speaker 3: we do have that process and you would expect us to.

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Speaker 3: But you know, I'm enjoying what I'm doing. You know,

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Speaker 3: I particularly enjoy the clinical side, the ability to see

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Speaker 3: the research and more importantly the impact that we're having

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Speaker 3: in moving the needle clinically, not to mention that financially

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Speaker 3: it's been rewarding as well. So I'm not going anywhere

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Speaker 3: at the moment, but we are always making you know,

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Speaker 3: succession plans, as I said, not just for myself but

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Speaker 3: really for all leadership.

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Speaker 1: That was doctor Sam Hubert, co founder and CEO of Promedicus,

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Speaker 1: talking to Nadine Blaney on Osby's, Australia's leading provider of

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Speaker 1: live and on demand video of the latest news in

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Speaker 1: Australian business, markets, economy and startups. Sign up at Osby's

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Speaker 1: dot com today you It's free. This is the Fear

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Speaker 1: and Greed Daily Interview. Join us every morning for the

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Speaker 1: full episode of fear and greed. Daily business news for

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Speaker 1: people who make their own decisions. I'm Sean Elmer. Enjoy

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Speaker 1: your day,