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Pro Medicus share price hits an all-time high on Duke Health deal

James Mickleboro
Health technology shares

In morning trade the Pro Medicus Limited (ASX: PME) share price has stormed to an all-time high following the release of a positive announcement.

At the time of writing the health imaging company’s shares are up 6% to $18.93.

What was announced?

This morning the company announced that its wholly-owned U.S. subsidiary, Visage Imaging, has signed a seven-year contract with Duke Health worth $14 million.

Duke Health is the largest health system in the state of North Carolina and one of the most respected health providers in North America.

According to the release, the contract, which is based on a transaction licensing model, will see the company’s Visage 7 technology implemented across all of Duke Health’s radiology departments and integrated into its electronic health record.

The release advises that the implementation will span three hospitals and dozens of additional locations across Duke Health, including its flagship 957-bed academic medical centre, Duke University Hospital.

Planning for the rollout will commence in the fourth quarter of the financial year, with the first sites scheduled to be implemented in the first quarter of FY 2020.

Pro Medicus’ CEO, Dr Sam Hupert, appeared to be very pleased with the deal and described it as “significant”.

He said: “Duke is a leading US academic institution and adds to the growing number of top-ranked North American health systems standardising on our technology. This not only helps consolidate our strong position in this highly competitive market, it enables us to leverage our development and commercialisation efforts across an increasing base of academic, research oriented clients which we feel provides us with a strategic advantage particularly in rapidly evolving fields such as artificial intelligence and machine learning.”

Should you invest?

Whilst its shares are certainly not cheap, I believe deals like this demonstrate why the company could be an outstanding long-term investment.

Due to the quality of its products and its significant addressable market, I would class its shares as a long-term buy along with fellow healthcare technology shares Nanosonics Ltd (ASX: NAN) and Volpara Health Technologies Ltd (ASX: VHT).

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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. owns shares of and recommends Pro Medicus Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Nanosonics Limited and VOLPARA FPO NZ. The Motley Fool Australia has recommended Nanosonics Limited, Pro Medicus Ltd., and VOLPARA FPO NZ. 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.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2019