Pro Medicus (ASX:PME) reported higher FY26 revenue, profit and contracted Revenue as hospital customers continued to renew long-term agreements and new health systems adopted its Visage imaging platform. All six contracts that came up for renewal during FY26 were extended for five-year terms at higher fees, while the company also signed A$407 million of new agreements. Together with a debt-free Balance Sheet and expanding margins, the result shows how recurring hospital imaging volumes and long customer relationships are shaping the company's Earnings profile.

Pro Medicus develops medical imaging software used by hospitals, radiology groups and other healthcare providers. Its Visage platform enables clinicians to view, manage and analyse large medical imaging files across multiple sites. The Business earns much of its revenue under long-term contracts linked to imaging volumes, meaning revenue can grow as customers process more scans, add sites and adopt additional products.

FY26 revenue and profit increased

For the year ended 30 June 2026, Pro Medicus reported revenue of A$261.7 million, up 22.9% on a reported basis and 28.4% in constant currency. Underlying EBIT increased to A$196.1 million, representing a Margin of 74.9%, while net profit after tax rose 24.1% to A$144.7 million.

The difference between reported and constant-currency growth reflects the company's large exposure to US-dollar revenue. A stronger Australian dollar reduced reported revenue and earnings when overseas income was translated back into Australian dollars. Even with that currency effect, the company continued to expand both revenue and profit.

Margin remained close to 75%

Underlying EBIT margin reached 74.9%, reflecting the scalability of the software model. Once the core platform and infrastructure are in place, additional transaction volumes can contribute revenue without requiring a corresponding increase in costs.

The margin outcome also indicates that growth in customer volumes, contract pricing and implementation activity continued to translate efficiently into operating earnings. Maintaining margins near this level will depend on product investment, staffing requirements and the pace of future implementations.

Six contracts were renewed on improved terms

All six contracts that reached renewal during FY26 were extended for further five-year periods. The renewed agreements were also repriced at higher fees.

These renewals are important because they provide evidence of customer retention across large healthcare systems. A hospital that has already integrated the Visage platform into clinical workflows faces practical and operational costs if it changes systems, particularly when imaging volumes are large and spread across multiple sites.

Long-term renewals therefore provide Recurring Revenue visibility while also showing that customers are continuing to use the platform after the initial contract period.

New contract wins added A$407 million

Pro Medicus signed A$407 million of new contracts during FY26. The largest was a A$170 million, ten-year agreement with UCHealth in Colorado for a full-stack deployment.

Other major wins included a A$90 million contract with Beth Israel Lahey Health and a A$44 million agreement with Radiology Associates of North Texas. These contracts expand the company's presence across large US healthcare systems and add to its future transaction-based revenue base.

Contract values are spread over multiple years, so they should not be treated as annual revenue. Their financial contribution builds progressively as systems are implemented, sites go live and imaging volumes increase.

Renewals added another A$141 million

Existing contracts worth approximately A$141 million were renewed during the year, taking the combined value of new and renewed agreements to around A$548 million.

This matters because renewals and new wins support different parts of the growth model. New contracts broaden the customer base, while renewals preserve existing recurring revenue and can add value through higher transaction fees or broader product use.

The combination of both provides a more diversified path to revenue growth than relying solely on new customer wins.

Contracted recurring revenue increased

Pro Medicus reported approximately A$1.3 billion of contracted recurring revenue over the next five years, up 41.3% from the previous year.

This figure gives an indication of revenue already supported by signed contracts, although actual recognition depends on customer volumes and implementation timing. It does not represent guaranteed profit because operating expenses, currency movements and customer activity can still influence the final result.

The size of the contracted revenue base does, however, provide visibility that many software businesses do not have.

Hospital imaging volumes remain central

Pro Medicus generally earns revenue based on the number of imaging studies processed through its platform. This means growth can come from several sources at once: new customers, more sites within existing customers, rising imaging volumes and increased use of premium modules.

Healthcare imaging Demand is supported by the growing use of CT, MRI, cardiology imaging and other diagnostic procedures. As health systems consolidate and operate across larger networks, software that can stream and manage images across multiple locations becomes increasingly relevant.

Implementation activity supports FY27

Sixteen system implementations were completed during FY26. Most of the associated revenue is expected to be recognised in FY27 as those systems become fully operational and transaction volumes build.

Implementation timing can cause revenue to move between reporting periods because a signed contract does not contribute fully until the platform goes live. FY27 growth will therefore depend partly on how quickly completed implementations ramp towards expected usage levels.

The pace of new go-lives will remain one of the main indicators of whether contracted revenue is converting into reported results.

Visage is expanding beyond radiology

The Visage platform now extends beyond traditional radiology imaging. It includes capabilities for cardiology, digital pathology and whole-slide imaging, broadening the range of clinical workflows the platform can support.

This creates opportunities to increase revenue from existing customers by adding more imaging disciplines. A hospital already using Visage for radiology may be able to adopt the platform in other departments without implementing an entirely separate system.

That approach can deepen customer relationships and increase the value of each contract over time.

Artificial intelligence is being embedded into the platform

Pro Medicus is incorporating artificial intelligence into Visage, including reporting tools that can assist with drafting reports using prior studies and clinical context.

AI is becoming increasingly important across medical imaging, where tools can help radiologists manage workloads, identify patterns and streamline reporting. For Pro Medicus, embedding AI inside the existing platform allows the company to treat artificial intelligence as an additional feature rather than a separate product competing against its core system.

The commercial impact will depend on customer adoption, pricing and whether AI tools improve clinical workflow sufficiently to justify broader use.

Customer concentration remains an important consideration

Pro Medicus serves several large health systems, meaning individual contracts can be significant relative to group revenue. Large customers provide substantial long-term revenue opportunities but also create concentration risk if a major agreement is delayed, reduced or not renewed.

The FY26 renewal record reduces that concern in the near term because all six contracts due for renewal were extended. However, customer concentration remains an important Factor because large systems can influence annual growth rates depending on implementation timing and transaction volumes.

Debt-free balance sheet supports flexibility

Pro Medicus reported no Debt at the end of FY26. This reduces financing costs and gives the company greater flexibility to invest in software development, infrastructure and strategic opportunities.

The balance sheet also supports Dividend payments without placing pressure on leverage. A debt-free structure is particularly relevant for a company whose revenue is largely recurring and Capital requirements are lower than those of asset-intensive healthcare businesses.

Full-year dividend increased

The full-year dividend was 69 cents per share, fully franked, representing an increase of 25.5%.

The increase was supported by higher profit and cash generation. Future dividends will continue to depend on earnings, Investment needs and board decisions.

The company's software model, high margins and absence of debt provide capacity for Shareholder distributions while still funding ongoing product development.

External investments remain separate from core earnings

Pro Medicus also holds Equity investments in 4DMedical and Echo iQ. These holdings provide exposure to other healthcare technology businesses but are separate from the core Visage operating model.

Changes in the Market Value of these investments can create unrealised gains or losses, but those movements are different in nature from recurring software revenue. The long-term value of the business therefore remains more closely linked to hospital contracts, transaction volumes and product adoption.

Currency remains a reporting risk

A large proportion of Pro Medicus revenue is generated in the United States, while the company reports in Australian dollars. Currency movements can therefore affect reported growth even when underlying customer activity remains unchanged.

A stronger Australian dollar reduces the value of US-dollar revenue when translated into local currency, while a weaker Australian dollar has the opposite effect. Constant-currency figures provide a useful comparison of operating performance without this translation effect.

Competition continues to evolve

Medical imaging software is a competitive market that includes established imaging vendors and newer technology companies. Artificial intelligence is also increasing competition as new tools are developed for image analysis, workflow and reporting.

Pro Medicus' competitive position depends on platform speed, scalability, interoperability and customer satisfaction. Contract renewals are therefore an important indicator because existing customers are choosing to remain with the platform despite competing alternatives.

FY27 growth target remains ambitious

Management is targeting constant-currency revenue and EBIT growth above 30% in FY27. Achieving that target will depend on the implementation pipeline, transaction growth at existing customers and continued conversion of new contracts into live revenue.

The target also assumes that the business can maintain operating Leverage while investing in additional products and customer support. FY27 results will provide evidence of whether the scale benefits seen in FY26 continue as the customer base expands.

What to watch next

The most important indicators will be new contract announcements, renewals, implementation timing and transaction growth across existing hospital systems. These factors determine how quickly the A$1.3 billion contracted revenue base converts into reported revenue.

Margin performance will also remain important. If EBIT margins remain close to 75% while revenue continues to grow, it would indicate that the software model is retaining its scalability. Currency movements, customer concentration and competition will remain the main external factors to monitor.

Pro Medicus (ASX:PME) enters FY27 with a larger contracted revenue base, higher earnings and a record of successful renewals. The six five-year extensions completed during FY26 show that hospital customers are not only staying with the platform but accepting higher fees, while new contract wins provide another layer of future growth.