Following the recent pullback in software stocks, we have selectively increased our exposure to technology companies. One example is Pro Medicus (ASX: PME), a radiology imaging software provider for large hospital groups in the US. Pro Medicus has increased its earnings before interest and taxes (EBIT) by approximately 13 times since FY2018, reflecting the business’ continued success in securing progressively larger contracts with major US healthcare providers, supported by the strength of its technology platform.
When assessing software companies in the context of AI disruption, we consider several factors, including the potential risk of disruption and the company’s ability to demonstrate tangible benefits over the medium term. We believe Pro Medicus is well positioned to benefit from the adoption of AI, particularly given the significant hurdles involved in deploying AI solutions in the highly regulated environment that it operates in. The company’s technical expertise and agile approach to software development further establishes its position as an industry leader. Looking ahead, we expect its AI capabilities to become increasingly embedded within the platform’s user interface, helping to solve client challenges while continuing to drive contract momentum and growth.
