Pro Medicus Limited (PME) Earnings Call Transcript & Summary

Ladies and gentlemen, thank you for standing by, and welcome to the PME 2020 Virtual AGM Conference Call. Please be advised that today's conference is being recorded. I'd now like to hand the conference over to your speaker today, Mr. Peter Kempen, Chairman. Thank you. Please go ahead.

Good morning, ladies and gentlemen. On behalf of my fellow directors, I would like to welcome you to the Annual General Meeting of Pro Medicus Limited, and thank you for taking the time to be with us today. As I was introduced, I am the Chairman of the Board and will be Chairman of this meeting. I do regret that we are unable to meet face to face this year as the Board enjoys meeting the company's shareholders and receiving your feedback. We look forward to being able to hold a more traditional meeting next year when hopefully a vaccine will be available and face to face will be back to normal. However, I want to assure you that we will have -- you will have the same opportunity to participate today as you would at a physical meeting. This includes being able to ask questions through the online platform and vote using electronic voting card. I'll discuss these processes later in the meeting. I'd now like to acknowledge my fellow directors. Those present with me in the Pro Medicus boardroom in Melbourne, Dr. Sam Hupert, Joint Founder, CEO and Executive Director; and Ms. Deena Shiff, Non-Executive Director. We're also accompanied by Clayton Hatch, Company Secretary and Chief Financial Officer. Joining us remotely are Mr. Anthony Hall, Joint Founder and Executive Director; Mr. Tony Glenning, Non-Executive Director; and Dr. Leigh Farrell, Non-Executive Director. Also joining us remotely is Mr. Tony Morse with Ernst & Young, the company's auditors, who is available to answer any questions in relation to the financial statements and his report to the shareholders. It is very important to mention the following key personnel who have provided excellent leadership during the year under very challenging circumstances: Malte Westerhoff, General Manager, Europe and Global Chief Technology Officer; Sean Lambright, Global Head of Sales; Terry Gschwind, Global Head of Customer Service; Danny Tauber, General Manager of Australia; Brad Levin, General Manager, North America and Global Head of Marketing. Each of these is depicted on Page 9 of the annual report, and there's a little more detail provided of those individuals. I'd also acknowledge the considerable contribution of Clayton Hatch, our CFO, who is also a part of our global leadership team. Before we deal with the formal business of the meeting, I will provide my report to you, which will be followed by a report from Dr. Sam Hupert, the CEO. As I mentioned earlier, there will be the opportunity to ask questions during the course of the meeting and following the formal business. And now I will deliver my Chairman's report. Overview. The company has enjoyed another very successful year, coinciding with the 20th anniversary as a publicly listed entity. Each of our businesses in our principal markets, Australia, Europe and North America, contributed strongly to the result. The company, and in particular, the management team, ably led by Dr. Sam Hupert, has navigated its way through a very challenging time. The success of the company, despite the challenge of COVID-19, has been due to the quality of the management team, the resilience of all of our staff, the flexibility of our leading-edge technology and robustness of our business model. It is worth noting that Visage PACS enabled our clients to seamlessly switch to remote reading during the COVID-19 crisis, something that was not possible with their previous legacy systems. The global management team has remained constant throughout the year and has continued to deliver long-term sustainable financial results while implementing the steps outlined in the previously determined strategic plan. The group continues to invest in our best-of-breed suite of innovative products to maintain our market leadership, which we believe is fundamental to your company's success. Many of the goals the company set itself in the strategic plan of August 2018 have been achieved. In October of this year, the Board met with the global management team to discuss the next phase of our strategic direction. A follow-up meeting will be held before the end of the calendar year to reset our strategic goals and objectives. During the financial -- 2020 financial year, the company announced several new contract wins in North America, including Ohio State University in November of 2019, Nines in December of 2019 and our largest deal of the year, Northwestern Memorial Healthcare in June of 2020. Since the end of the financial year, we have announced a number of other material contract wins, including New York University Langone Health in September of 2020 and Ludwig-Maximilians University of Munich in October of 2020. We also recently renewed the Zwanger-Pesiri contract for a further 5 years. Each of these contracts is significant in its own right and will make a major contribution to our future revenues. In Australia, the expansion of our relationships with I-MED Radiology Network and Healius, formerly Primary Health Care, are progressing -- contributing additional revenues as the respective rollouts continue. Despite the number of recently announced new contracts, the management team is working on a significant number of new opportunities, and our pipeline continues to be strong. The group remains in an excellent position to continue to capitalize on these opportunities as they present. Turning to the financial results. Fiscal 2020 was another record year for the company, with the revenue increasing by 13.4% and net profit after tax increasing by 21%. Importantly, underlying profit before tax increased by 33% to $30 million. These results were achieved despite the impact of COVID-19 during the last quarter of fiscal 2020, which we referred to in the directors' report on Page 2, and which we estimated to be approximately $1.2 million after tax or 5% of underlying net profit after tax. The company continued to be cash flow positive with retained cash increasing from $32 million to $43 million after paying an increased dividend. The Board anticipates another strong year with the majority of growth occurring in the second half of the financial year. The budget for the current financial year has been determined, recognizing continuing strong growth with examination volumes returning to more normal levels. And I'm particularly pleased to advise that results to date are ahead of budget, notwithstanding the impact of the falling U.S. dollar. Dividend policy. The Board was pleased to increase dividend payments for the 2020 financial year to $0.12 per share fully franked. This represents an increase of 14% over the previous year and a payout ratio of approximately 50%. The dividends were funded from the company's internally generated cash flow. The Board anticipates that future fund dividends will also be fully franked. The Board continues to determine an appropriate level of dividends, having regard to the profitability of the business, its need for ongoing investment and the necessity to retain sufficient funds to pursue other growth opportunities. A new director. As I foreshadowed at last year's AGM, the Board undertook a search for an additional director. We had hoped to finalize an appointment early in the new year, although we were well progressed with the process when our efforts were hampered by the restrictions imposed following the outbreak of COVID-19 in Australia. However, the Board persevered entirely remotely or virtually, and I'm delighted that the company was able to secure the services of Deena Shiff. Deena joined the Board in August 2020, and I'm pleased to report that she is already making a strong contribution to our deliberations. When we consider the formal business of the meeting, I will invite Deena to address you prior to the consideration of the resolution for her election. Corporate social responsibility. The Board and management recognizes the importance of sound environment, social and governance practices, which provides a social license for the company's operations. I would like to direct shareholders' attention to Page 15 of the annual report, where we have set out some of the activities that the company is undertaking in the communities in which we serve. In closing, on your behalf, I would like to thank our dedicated staff in Australia, North America and Europe for the contribution to the company during what has been one of the most challenging but most successful years. I'd also like to thank my fellow directors who have also worked tirelessly and diligently to ensure that the company reaches its ultimate goals. That ends my report, and I'd now like to hand over to Dr. Sam Hupert to give you an overview of the performance of the company over the last year and provide you with an update on the company's current activities. Sam, over to you.

Thank you, Peter. Good morning, everybody, and thanks for joining us. As most of you know, Pro Medicus is a health care IT company, specializing in both enterprise imaging and radiology informational RIS software. We work in 3 jurisdictions, Melbourne, where we are today, which is our head and corporate office; Berlin, our largest office and R&D hub for Visage 7 products; and the U.S., where our office is in San Diego, it's our largest market, and that we have a growing number of staff spread across the U.S. servicing, sales, marketing and support. As mentioned, we have 2 products. Most of you, I'm sure, are familiar with them, the Visage RIS product, which is sold largely here in Australia, but we do have some clients overseas in Canada; and Visage 7, which is our clinical product, the one that radiologists use to call up images, enhance them, manipulate them and then make a diagnosis, which is the product we sell globally with our biggest market for it being the U.S. In terms of our results, I think Peter highlighted some of the key figures. We were pleased that all of our key financial metrics headed in the right direction during the past -- in FY '20. Importantly, cash reserves went up significantly. And I think at the time of COVID, people were worried generally about payments, but clearly, we were able to increase that significantly, and we continue to do so as we progress into this financial year. As Peter mentioned, we were pleased to pay out a record dividend over the full year of $0.12 fully franked, and our margins, even though before were above 50%, continue to grow, and I'll discuss that in a little bit more detail. In terms of the other highlights, the multicolor graph shows the revenue by region. I think it's clear the U.S. being a major contributor in North America, with Australia growing as well. And even Europe, if you take out the capital sale in the previous financial year, continued to grow. So we were pleased all 3 jurisdictions contributed to the success of the year. And as I mentioned, cash balances continued to grow year-on-year even despite paying out larger dividends over the past few years. In terms of the revenue split. It -- the salmon or pink-colored part of the bar graphs, that's our transactional recurring revenue that is largely U.S.-based, but we do have some recurring revenue coming from the Australian model or transaction revenue. The blue is also recurring. It's more the service contracts of our traditional software and trailing service contracts that we had for many, many years. And the green at the top is professional services. And I think the encouraging thing is the recurring nature of our revenue now with professional services spread across the life of the contract. I think all 3 components of the bar graph are now recurring with the transaction revenue growing strongly year-on-year. So we believe the business continues to have higher operating leverage. We don't have any CapEx requirements. We don't provide hardware in the main, only in some corner cases for smaller clients here in Australia. Our cost base has been contained. And as I mentioned previously, our margin continues to grow, which is the next graph. Once we hit about 50% EBIT margins, clearly, our expectation was for incremental growth. That occurred last year as well. And we have no indication -- nothing to indicate that margins will not continue to be around this level, maybe slightly higher in the coming year or 2 in the future. The year was a busy one, as Peter mentioned. This is a 12-month window starting from December last year. As Peter mentioned, our first contract since the AGM was Nines, which is a Palo Alto startup. It was a $9 million 5-year contract. And then in June, we signed one of the largest health systems in Northwestern Memorial Health based out of Chicago, a Tier 1 academic and in the top 10 hospitals in the U.S. Then in September, almost an identical health system, but on the East Coast in NYU Langone, again, one of the top 10 hospital systems in the world, large academic center with a Tier 1 medical school. And then in October, we made our second material sale in Europe with LMU Klinikum, which is based out of Munich, one of the largest teaching hospitals in Germany. Just recently, we re-signed Zwanger-Pesiri, who one of our earlier clients in the U.S., and I'll talk a little bit more about that. That deal is $8.5 million over 5 years. And as Peter mentioned, we continue to build on the pipeline, which I'll give a little bit more color around in the next few minutes. In terms of year-to-date, just reiterating where we're tracking. As Peter mentioned, we're ahead of budget, notwithstanding the impact of the -- a lower U.S. dollar. Pleasingly, client volumes even during COVID and recently have come back to normal, and I'll give a bit more detail around that. We do believe our growth will continue in the second half. Traditionally, second half is stronger for us for multiple reasons, and we believe even more so this coming year. We think it will be due to existing clients, the organic growth in transaction volumes we've seen resume and some of them are taking on new sites which help. But I think the important driver will be 3 large contract wins, which are still to come online and will come online in the second half, namely, Northwestern, NYU and LMU Klinikum, which is still all ahead of us. And we still think there's a possibility of some additional sales that could be implemented within the period that will help bolster second half. In terms of COVID, importantly, we were able to immediately switch to work from home in mid-March. We are still largely work from home here in Australia, 100%, 100% in the U.S. and about 90-something percent in Berlin. We were able to operate at 100% capacity, which is important, because we are a mission-critical system. We do need to support our clients and we were able to also continue in our sales and marketing efforts as witnessed by the fact that we signed 3 of our more material contracts even during the COVID period. The other thing is that's important people often ask us, were you able to continue the demonstrations, you can't go to conferences at the end of this week. Traditionally, we would head off to Chicago to the RSNA, which is the largest radiology conference in the world. But this year, it's virtual. Pleased to say that we are able to demonstrate our system due to its thinness. It is very easy to demonstrate it remotely at high fidelity, which is important for radiologists viewing it. So we've continued with all the sales and marketing activities but have pivoted to a complete remote virtual paradigm, as is required. And the other pleasing thing is we have seen some new opportunities come into the pipeline even despite COVID, particularly over the last 12 weeks, and I'll talk about that a little further. In terms of what impact has COVID had on our clients. Certainly, mid-March, early April was a very difficult period. COVID was new. Clients didn't know exactly how to deal with it. And so what they did is use a conservative approach and postpone all nonessential or elective work to repurpose their hospitals and institutions for the anticipated deluge of COVID patients. Some regions were affected more than others, but those in the worst regions were affected with drop-offs of up to 75% of normal volumes. Thankfully, it didn't last too long. And by the second half of April, we started to see the green shoots of recovery of volume numbers, and it has increased steadily ever since. I'm pleased to report that the vast majority of our clients are now back at 100% as measured by a 6-week window prior to COVID, the average of 6 weeks prior to COVID. And in some cases, some are even greater than 100%, which we think is a clear sign that recovery -- a lot of those tests that were deferred during the peak of COVID are now being done. So there's a bit of a catch-up period. And I think there's no question the clients are now far more adept at dealing with all the overhead that COVID has created in terms of PPE and patient workflows, so they are able to do the normal volumes. And as I mentioned, in some case, even more than that. In terms of the product sets. As Peter mentioned, Visage RIS, we're very pleased. We have had a very strong year in progressing the rollouts of the 2 major contracts we have with I-MED, who's the largest radiology provider in Australia. We finished one of their large regions in the Queensland, plus we've implemented a number of other sites. It's part of their acquisition strategy. We're also pleased to report that the Healius rollout is now nearing completion. It's about 136 or 137 sites out of the total of 144 have now been completed. So we are seeing growth in the product. And as both these large clients and other clients here in Australia continue to grow their business, it benefits the RIS rollout, and we believe we can lay claim to being the undisputed market leader in this market here in Australia. Visage 7, the product, the clinical product, continues, we believe, to be #1, particularly in the 3 areas where it chimes in terms of its speed. It's able to visualize incredibly large data sets in under 2 or 3 seconds even on a low bandwidth. The functionality, we believe, we're still the only company that can provide a full clinical pallet in 1 desktop ranging 2D, 3D, 4D, which is moving 3D as well as all the other fusion and other overlay enhancements where other products usually are a amalgamation of multiple inputs from various companies. And then finally, scalability. We've been able to show that the infrastructure does scale even to the largest organizations, including some of our clients, particularly in North America. The market is being driven. Those that have seen my presentations before, I think the key driver is the massive explosion in data sets, created by the new forms of imaging equipment. It's not uncommon for test now to be 1 or 2 gigabytes. And as is in the case of breast tomosynthesis, studies can range from 6 to 8 gigabytes. And often, there are multiples of those. So large data sets are creating a problem for the legacy type systems. This is a schematic of what traditionally was done. The file was taken from the scanner. It was compressed as much as possible without losing fidelity, and then it was sent down the network being either WAN or LAN. Then it was uncompressed on a workstation and manipulated on that work station in order for the radiologist or clinician to make the diagnosis. The problem with that, the files are getting too big and radiologists can't afford to sit there and wait sometimes minutes for these images to come and be displayed. Our technology is totally different. It's a unique platform that we have developed in-house. It takes the images in near real time, does all the 3D and advanced visualization work, and then it streams of pixel. So it doesn't actually move the images per se. So we're able to visualize in full definition some of the largest data sets currently being produced by medical imaging equipment all within a few seconds. In terms of the contracts themselves, just to go through them quickly. Nines was a new client for us. It is a start-up out of Palo Alto. It's a venture between ex-Google engineers and radiologists from both Stanford in San Francisco and Mount Sinai in New York. It -- the aim of Nines is to provide a higher quality remote read for after hours and overflow reading supplemented by their own AI algorithms that they have developed and are FDA-approved. So Visage 7 in Google Cloud is the -- a platform in which they apply their algorithms and read the cases. So it does open up a new and possibly exciting market for us going forward. Northwestern is most probably the other end of the spectrum, a large, highly regarded system that has been around and has been growing for many, many, many years. It is one of the largest teaching hospitals and health systems in the Chicago area. It is a transaction-based licensing model, again, voted in the top 10 hospitals in North America. And importantly, it's also the home of the Feinberg School of Medicine, which is one of the top medical schools in the U.S. Again, a growing base of trainee doctors or the doctors of tomorrow being exposed to Visage, we think, will be important and will be very, very positive for us longer term as these doctors then graduate and move on to other institutions. Implementation for that is Q3 of next financial year, so in the first quarter of calendar year. So effectively all the revenue from Northwestern is still ahead of us. The next deal was NYU Langone. Similar in structure, transaction-based deal, again, top-tier 10 hospital, top 10 medical school. It will start again in the beginning first 3 months of next calendar year. And with both Northwestern and NYU, we now can claim to have 7 out of the top 20 institutions in the U.S. standardizing on our technology. LMU Klinikum clearly different in as much as it's European. It's a 10-year -- a $10 million 7-year deal. As mentioned previously, LMU is one of the largest teaching hospitals in Europe. It's the second major contract we've had over the past few years in Germany. It is for both Viewer and Archive. And I think the important thing is it paves the way, we believe, for future sales because in Germany, the traditional way of buying was pretty much a one-stop shop from an incumbent vendor that did everything from leading equipment to the informatics. And we think we've broken the mold for that model. And hopefully, we will see more sales come out of this opportunity. Zwanger-Pesiri, the last one on my slide, was a renewal. I think the important thing is it was renewed at -- the minimum contract value increased by about 70%. Zwanger, we believe, have grown substantially over the 5 years. And they've told us that our technology was a key enabler to that growth. And again, we believe this is a very concrete validation of our view and value proposition that the technology can make very significant and material differences to the practices that use it. One thing is to sell it, the other thing is to put it in. Again, we believe we have a unique methodology of implementation. I think the key addition this year has been the OSU, which we did in August. It was 100% remote implementation. We did not have any staff on-site whatsoever, which proves, a, that it can be done and as a model for the future should COVID still restrict on-site presence. And we know already that some of the opportunities that we have slated for implementation in the first quarter of next year -- of calendar quarter will use remote implementation and training if COVID restricts on-site access. So those implementations will not be held up. ROI is very important for us because we are a premium product. We've been told many times we're the most expensive product in the market, but we believe we provide the most significant value. And I think this slide shows some of the areas. They're both financial, but just as importantly, clinical ROI because it's one thing for radiologists to be quicker, but they have to be equally, if not more, accurate because diagnostic imaging is all about accuracy. So in this next slide, this is a perfect example, where someone had suggested that when looking for renal stones in the ureter, you need to do different views to make sure you don't have a catheter. Those views can take additional time to do and one of our users has basically tweeted back with what they call a curve view or curved planar view of it, which in other systems, could take 30, 40 seconds or minutes. In Visage, it's just a few clicks, and it's all within the product. So again, allowing radiologists to do things that otherwise they couldn't do or if they could do, would take too long to do it instantly on demand. The growth strategy, we've, we feel, delivered on that. Certainly, we've expanded our footprint both in North America and in Europe with LMU Klinikum. We have, over the year, delivered or released a new product that I'll talk about, and we are looking to leverage our R&D capability, particularly with a joint R&D collaboration with NYU Langone and the opening of our new office in New York that will house our R&D and development efforts in combination with Berlin. In terms of the pipeline. As Peter alluded to, we have had a number of new opportunities, particularly over the last 12 weeks that have started at the beginning of the pipeline. This time, last year, we did have LMU, we did have NYU, and we did have Northwestern in the pipeline. But there were others that were behind them that are still progressing through the sales process. So we are pleased not only with the quantity but also the quality of the pipeline we have and that it is getting replenished as we are able to convert some of our bigger opportunities into contract over the past 12 months. Finally, in the last few minutes, in terms of product set. Our One View (sic) [ One Viewer ] or enterprise imaging, the concept of extending outside radiology, COVID had slowed down that process to some degree because as you can imagine, large health care institutions looking to repurpose wards would put this on the back burner, but it's resumed again. We are doing some pilots in adjacent, what we call, ologies and clearly, our hope is that within the next 12 to 18 months, that we will be able to have a site where we can demonstrate the effectiveness of the one product across multiple departments for diagnostic imaging. The other products were the Visage 7 Open Archive, as mentioned, some of the opportunities, LMU Klinikum are both for Viewer and Archive. And the important thing for us is some of the opportunities in our pipeline, if they decide to proceed with us, will be for Viewer and Archive. So we are seeing opportunities from the get-go looking at more than one product. The latest product or the last product we released, which was late last year, was the Visage Workflow Manager. It is a worklist product. Here in Australia, the risk provides that functionality, whereas in America, it's usually sold as a separate product. It is important for us because it now enables us to give clients the broadest range of options for the most flexibility. So we can now provide a single vendor solution of worklist, viewer and archive or again a more modular solution, depending on how the technology stack is configured. And we also believe it's an important part for us to offer cloud-based solution, and it is a part of the Nines workflow, the Palo Alto start-up I mentioned a little earlier. Visage in the Cloud. We think this also is going to give a lot of flexibility to our clients and potential clients, future clients. Cloud is now gaining momentum, particularly in the U.S. I'm talking about public infrastructure, such as Google, Microsoft Azure or Amazon AWS. And we are seeing more interest from some of our existing organizations and particularly some of the opportunities in our pipeline that have expressed the preference for cloud deployment. Importantly, we are able to offer exactly the same speed, the same functionality because we're cloud-native or cloud -- or engineered natively for the cloud. It is the same product. It works in exactly the same way with the same performance, whether it's on-premise or cloud, whereas most products aren't able to do that. The beauty is it's suitable for all sizes of implementations, and we believe it will open new market segments for us, particularly those in the mid-market that don't want to maintain their own hardware infrastructure but happy to have it in a Tier 1 cloud where the security and scalability is guaranteed. Finally, on the topic of AI in radiology, those who were at last year's AGM saw the -- some conversation and topics around that. And I'm pleased to say that we have progressed significantly over the past 12 months on a number of fronts. AI in radiology has got multiple purposes. And on this slide, I'm just naming a few. The first one is to be embedded in technology such as software, which would, in Visage 7, would further automate our product, which is arguably the fastest and most automated product on the market and allow us to get even further ahead of competition in terms of usability and speed. And we are seeing AI embedded in equipment, particularly imaging equipment, CT scanning, et cetera. The second use case you see a lot is prioritization of cases such as head trauma. If someone presents to emergency and they have a CT, clearly, if there's any indication that there's a pathology in the head in terms of blood seepage, then that case should be prioritized. And we see that some of our clients starting to use that prioritization software. Then there's screening for large populations where they can take more examinations than they have radiologists to read. And this will let them know which ones should be focused on. But I think the key use of AI, as we see it in radiology, will be in an aid to diagnosis, a second opinion, incidental findings just allow the radiologist to be quicker and in certain cases, more accurate. And then eventually, in some years when this becomes even more sophisticated, the possibility of automated diagnoses in certain instances. So what are we doing as a company to tap into this? We developed a product we announced last year at the AGM called the AI Accelerator. I'm pleased to say a number of our academic clients have already signed up for this program, and I'll talk a little bit more about that. It does allow a bridge between research and production environments that no other product has been able to achieve, so very important for these large groups. It's based on our current Visage 7 technology and allows for these groups to fast track their AI research from lab to bedside pretty much all the way. So as I mentioned, there's the research. So we also allow for curation of data in that extra tools. And another area that we're working on is being able to embed third-party algorithms into the Visage platform so that they're shown natively rather than having separate pop-up windows. And we've made some good progress on that in the past 12 months and feel that we will start to see some results within the next 6 to 12 months in terms of commercializing some of those efforts. Finally, you may remember last year, again, we -- to prove that all the components that we've developed actually do speed up the process, we decided to develop our own algorithm in conjunction with the breast imaging department at Yale. It is now in for FDA approval, and we're waiting to hear back. And we think this is a model for further collaboration with our academic institutions, where we can participate either in the research or commercialization of some of the algorithms that they are all independently developing. To that end, as part of the NYU agreement, we've signed a joint research and development collaboration. We look to kick that off, COVID permitting, next July, August, where we will be collocating some of our R&D facilities at NYU Langone as well as having our own office in New York. It will be a virtual extension of the R&D center in Berlin. Some of our key people in Berlin will staff it in the beginning to help build it up, but we're looking to tap into the talent pool in the U.S. And we think that it will be -- allow us to take the next step in developing next-generation product, not just together with NYU Langone, but with all of our other research-related -- research-based clients in the U.S., of which they're growing number. So we're looking to leverage this R&D in terms of new commercialization opportunities. And we think this is one of the most exciting developments that has occurred over the last 6 years for our company. In terms of the leadership, Malte Westerhoff, who's our CTO; and Detlev Stalling, our Head of Development, will be supervising and heading the joint R&D across Berlin and New York; and MingDe Lin, who is -- helps bridge research to commerce, is a PhD based out of Yale, and he will be active with all the people involved in our accelerated program and a broader team that we're currently looking to build for this purpose. So in summary, it's been a very busy year. As Peter said, despite COVID, we think we've been able to grow substantially, both in terms of footprint. Our transaction volumes grew by over 30% year-on-year. We still believe our technology is significantly ahead of the competition and is unique. We now have a growing product set that we can offer from single vendor solutions to modular. So making sure that we can address the broadest range of market opportunities. Our implementation and support capability has been, again, proven and not only proven on site, but also our ability to provide those services 100% remotely. Our pipeline continues to grow, and we believe AI Accelerator program that has been taken up by a number of our key academic clients will strategically position us to leverage AI in the future. Thank you very much.

Well, thank you, Sam, for that very fulsome report. I'm sure that's given our shareholders a lot to think about and a lot to absorb. And I think it does demonstrate the depth of activity of the company despite the challenges that we've encountered. I'd now like to invite shareholders to submit their questions. We'll initially deal with questions in relation to the comments made by Sam and myself, and we'll later seek to answer questions in relation to the items of formal business as we deal with each item. I'll now address how shareholders can use the online platform to submit written questions and also to vote on resolutions before the meeting. The Company Secretary will read out the question as we proceed. As you can see on the slide, voting on the resolutions will be conducted by way of a poll using the electronic voting card you should receive after clicking the get a voting card button. [Operator Instructions] I do encourage shareholders who have questions to submit them as soon as possible. If you have any trouble using the platform, please check the online portal guide on the Pro Medicus page of the ASX website or contact the help line shown on the screen. Clayton, are there any questions of Sam or me in relation to the remarks we've just made?

Yes. A question from Stewart Burn from the Australian Shareholders' Association. Firstly, we would like to commend the performance of Pro Medicus under such difficult circumstances and the significant growth it has shown over the past year. The new initiatives, we believe, show that the company is moving into a position where it will have a major influence in those areas. We would also like to commend your initiatives within the Victorian Stroke Telemedicine program and wonder if other states will benefit from this program.

Thank you for the question, and thank you for the comments. At the moment, the program is purely for Victorian ambulance. We are speaking to other states. Unfortunately, these particular programs are done on a state-by-state basis. So it's not as simple as just taking it and making it available to other states. But we are in discussions with some groups that are looking to provide similar services to 2 of the other states as well. And if we are able to come to agreement on that, we'll be more than happy to assist them in this area.

If I could just add to the answer there. I believe that I think New South Wales are looking at establishing a stroke ambulance. But I think the only one that currently exists is Victoria. I think I'm right in saying that, Sam, am I?

You are. But this goes broader than that because this is their telestroke initiative. So to explain it a little. If a patient has a suspected stroke and presents to an emergency room in one of the regions of Victoria, they'll do a CT. That will be then put onto the Visage platform, and a senior neurologist here in Melbourne, based on a group of hospitals they rotate, will read that CT and make a diagnosis in real time and make -- give an opinion on what sort of treatment where the patient needs to be evacuated to a major stroke treatment center here in Melbourne. So it's a -- it covers the whole of Victoria. And as I said, we are in discussions with some groups looking to provide similar services in 2 of the other states.

Thank you, Sam. Next question.

Another question from Stewart Burn from the Australian Shareholders' Association. Cash levels are high at $43.4 million, and the return on this must be low in today's environment. Do you have any plans to utilize this cash to benefit shareholders?

Thank you for the question. It is an issue that the Board is looking at currently. And we are -- we still, at this stage, believe it's worth retaining the cash at the current levels, but we are looking at ways to improve the return on that cash in the medium term. So we'll be able to perhaps advise a little later in the year when we put processes in place to achieve that objective. Next question.

A question from [ George Swinburne ]. Is there a scope for a significant increase in sales of Visage 7 and other software to Australian hospitals and radiology practices?

I think the answer is to private practices, yes, we do have a number of private practices using the product. But clearly, some of the largest practices that currently use our RIS technology have another product that they've had well before we acquired Visage. So we are putting Visage 7 forward. The issues that we see in America with data set sizes are the same here. And we believe clearly explaining our return on investment because the product is more expensive than some of our competitors. In terms of the hospital market, the product is ideally suited. Unfortunately, the process in terms of government tenders, we find too onerous for the size of opportunity. So unless that changes significantly, we think most of our opportunity will be in the private space, which here in Australia actually is larger than public hospital space, clearly because Medicare underpin insurance for patients in private practices.

Thank you, Sam.

The 70% increase in Zwanger-Pesiri contract value at the renewal is very encouraging. Could you tell us how much of it is from Zwanger-Pesiri's volume growth and how much from the Visage pricing uplift to the more recent pricing levels?

We are under a strict nondisclosure. They're very sensitive about these things. But I think it's fair to say it's a combination of factors. Clearly, they have grown significantly over the past 5 years. And the CEO there, Dr. Steve Mendelsohn, has been very positive that and confirm that Visage as a technology has allowed them to grow because prior to putting it in, they were hamstrung with their legacy system and were actually stopping to image women, particularly with breast tomosynthesis, which created big fails at certain times of the day because the whole network slowed to a halt. So we have been instrumental. I think a large part of it is because of the growth, but there are some other factors in the contract, unfortunately, due to confidentially, we are unable to discuss.

Thank you, Sam.

Question from Claude Walker. Sam and Peter, thanks for your efforts to facilitate a safe AGM in unusual circumstances. Could you please tell us whether the company has lost any contracts from its pipeline in the last year? Secondly, you said the pipeline continues to grow. Does this mean it is bigger in an absolute sense or simply growing enough to place contracts exiting the pipeline?

In answer to the first one, no, we haven't lost any opportunity in the pipeline. They've all progressed. And pleasingly, we haven't had any of them that sort of during COVID just said, look, it's all too difficult, we just have to stop and wait again. They've all progressed over the period. In terms of size, we look at it, well, the quality and quality of the pipeline. Clearly, we look at it in terms of opportunities, in terms of product mix, in terms of cloud versus non-cloud, in terms of academic as compared to mid-market, and we think we've got a very good spread. And we think it's commensurate, if not slightly bigger, than it was this time last year.