Pro Medicus (ASX:PME) Banks A$80M in One Month: Is the 60% Selloff Finally a Buy?

Pro Medicus Secures A$80M Amid 60% Selloff

Pro Medicus (ASX:PME) jumped 4.3% on Monday after securing a A$37 million contract renewal with Northwestern Medicine at higher per-exam fees than its original deal. That single win pushed total contract announcements to nearly A$80 million in just one month. Yet the stock still trades around A$132, down roughly 60% from its July 2025 peak of A$336. Here is the paradox worth understanding: contracts keep arriving at better terms, clients are not leaving, and management is buying back stock. So why hasn’t the share price recovered? The answer tells you exactly what kind of opportunity, or risk, this might be.

What are the Best ASX Healthcare Stocks to invest in right now?

Check our buy/sell tips

A$80M in One Month Signals the Moat Is Still Intact

The Northwestern renewal is the most important data point from this entire selloff period. Pro Medicus did not discount the client. It charged more, and Northwestern committed to higher minimum volumes on top of that. The week before, the University of Maryland Medical System signed a fresh A$23 million five-year deal. In March, MedStar Health renewed at A$31 million, and Zwanger-Pesiri signed on for A$9 million, both also at higher per-transaction fees than their original agreements.

Not one client has walked away. Every renewal has come back richer. For a software company embedded deep inside hospital radiology workflows, this kind of pricing power is rare. Switching costs in medical imaging are extremely high; radiologists build their entire diagnostic process around these systems. We believe this pattern of renewals is the clearest evidence that the competitive moat remains intact, regardless of what the share price is doing.

The Business Behind the Selloff

The fundamentals back this up. In H1 FY26, revenue reached A$124.8 million, up 28% year on year, with underlying profit before tax of A$90.7 million, up 30%. It is worth noting that the statutory profit figure was significantly higher due to an unrealised accounting gain on the company’s investment in 4D Medical (ASX:4DX), but analysts rightly focus on the underlying number as a cleaner measure of operating performance. These are not the results of a business in trouble.

The balance sheet is equally strong, with A$221.8 million in cash, zero debt, and a return on equity above 70%, exceptional by any global software standard. Following the half-year results, management announced an on-market buyback of up to 10.4 million shares, representing around 10% of issued capital. When a board acts like that, it is worth paying attention.

The Investor’s Takeaway for Pro Medicus

Here is where it gets complicated. Even after the 60% selloff, Pro Medicus still trades at a forward price-to-earnings ratio of roughly 65 to 70 times. That is not a cheap stock by any definition.
The bull case is straightforward: contracts are accelerating, pricing power is proven, and management is putting real money behind its conviction. For growth investors with a two to three-year horizon, the risk-reward is shifting in a more attractive direction than it has been in months.

The bear case deserves careful thought. The biggest risk is not necessarily a client walking away. The 60% selloff was heavily driven by fears that artificial intelligence could commoditise radiology software and make platforms like Visage obsolete. That fear has not fully gone away. The irony is that renewals at higher fees are the most direct rebuttal to that narrative. If AI were truly threatening the moat, clients would be hesitating, not recommitting at richer terms. Still, any slowdown in contract momentum or execution miss would bring that fear back quickly at this multiple.

Our view is that the key thing to watch is whether Pro Medicus starts landing large blockbuster deals again, comparable to its A$365 million Trinity Health contract. When that kind of deal flow returns, the recovery case becomes much harder to argue against. Until then, position size matters more than timing.