Bell 18AugStrong result, now headed for ASX100PME reported FY21...

Bell 18Aug

Strong result, now headed for ASX100
PME reported FY21 earnings today with revenues in line with market expectation at
$68m, representing 19% growth for the year. This result implied 35% growth in 2H21
revenues. Perhaps the most significant driver of the market reaction following the
result was the 1100bps improvement in EBIT margin to 62%. Reported operating
expenses ex D&A actually contracted by 6% in the period and while this result was
partially attributable to currency movement, it demonstrates the earnings leverage.
As a further demonstration of earnings leverage potential and successful track record,
over the last two years revenues have increased by $20m relative to a $1.3m increase
in cash operating expenses. PME has 9 of the top 20 hospitals in the US as
customers. These luminary sites will no doubt continue to encourage broader
adoption of the Visage technology platform.
The outlook for earnings growth continues to be attractive with the new contract
pipeline continuing to be described as full. In the past (such as in August 2020) this
led to record levels of new contract signings and the revenue growth. For FY22, at
least two of the contracts signed in FY21 are yet to be fully implemented. These
implementations along with the first full year of revenues from other more recent
contracts will underpin revenue growth. Consensus revenues for FY22 are ~$90m and
while this remains a stretch target, management commented to the effect (on the
earnings call) that it is not unreasonable. This statement is not guidance, nevertheless
baring some unforeseen adverse occurrence FY22 should again deliver solid revenue
and earnings growth.