I listened in to the investor call and overall was very impressed.
This is a business that is firing on all cylinders at the moment. The main takeaways were
- Revenues will continue to increase as more of the newly contracted sites come online e.g. Novant Health, UCSF and the volumes for existing sites continue to increase
- The consolidation of smaller radiology groups and overall move to cloud, plays into their hands as the emergence of larger groups puts more customers in PM's 'sweet spot' i.e. they can afford Visage. Also, when these smaller groups are combined there ideally needs to be a single system used to replace the existing disparate systems. Also, they are seeing more proposals mandate that the solution be cloud based
- They still do not see any viable threat from competitors. Even though there are some new competitors in the space they do not believe there are any which have technology to match the Visage 7 solution. Also, there are federal approvals for these new-comers to go through. They have not lost any tender which they have been part of, in the last 6 months.
- The pillars to their growth strategy are Expand customer footprint, Increase transaction volumes, Increase product offerings and RnD spend
They are seeing good take-up of their adjacent products such as workflow and archive, especially from new clients, with some taking all 3 products.
They are also progressing with their AI solution, although this is probably still a ways from commercialisation.
- Some of their existing clients are involved in M&A, which will benefit PM as they will roll out their solution to the newly acquired businesses. They specifically mentioned that Inter Mountain are making an acquisition and in discussions have mentioned that they would roll out the Visage solution to the new business
- Pipeline is still strong. Some smaller contract wins do not get announced to market due to their size
- Wage costs will continue to increase over the next couple of years, due to both increased head count and general rise in IT salaries
- They would be interested in acquisition if it adds new functionality and can be integrated. They continue to be on the lookout.
- They do not see any adverse impacts from current macro issues i.e. inflation, interest rates. Health spend tends to be insulated to a degree from these.
So, overall, if PM can stay ahead of the competition, the future looks bright. The management seem to be very level headed i.e. steady as you go, but still with a growth oriented outlook. The industry trends seem to be playing into their hands. Their current focus is still predominantly the US, but as they pointed out this solution is applicable anywhere and over the longer term they should hopefully expand globally.
The business model is such that once the customer is up and running the revenue feeds through, with very little additional cost, so margins should continue to improve.
Their biggest threat would be from competition, but up until now they have managed to stay ahead of the pack.
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