Pro Medicus Limited (PME) Earnings Call Transcript & Summary

Good morning, and thank you for standing by. Welcome to the Pro Medicus Limited full year results briefing. [Operator Instructions]. I would now like to hand the conference over to Dr. Sam Hupert, CEO. Please go ahead.

Thank you. Thanks, everybody, for joining us this morning for the full year results presentation. As you know, we currently work in 3 jurisdictions, Melbourne, our corporate headquarters and where we do our risk development. Germany, our R&D and support for the Visage product. And North America, which is over 90% of our revenues and our largest core of people. So it's the biggest implementation group of people we have now overtaking both Europe and the U.S. and Melbourne. In terms of the highlights for the year, I think I won't go through all the financials. We have some other slides to deal with it. But we did win 1 contract in Europe and 9 in the U.S. worth a total of $407 million at minimums. We completed 6 out of 6 renewals for a total of $407 million, keeping our 100% renewal run rate intact. We have all our implementations on or ahead of schedule. Our cardiology option is gaining traction with new Colorado, Vancouver Clinic and others. We did announce 2 new products in digital pathology and in our optimized reporting module. We completed or are in the process of completing 2 investments, 1 completed with 4x and another with coin cardiac AI, where further down the track with our breast cancer detection, pending FDA clearance, and we have a very strong pipeline going into FY '27. In terms of the financials, we think all of the key metrics went in the right direction. Revenue up to $261.7 million underlying EBIT, [ $196 million ], and our margins, which were already sort of 3x derisk competitor, we were able to out another 90 basis points to become -- to get them just under 75%. And the underlying impact again, well went up. So all the figures are there. So I won't go through them all, but happy to have some questions on them a little later on. As we had headed to the market earlier on, currency was an issue in as much as this time, the fluctuations were more material than they have been in the past. On a constant currency basis, certainly, our EBIT and NPAT were over the 30% mark, which is our benchmark that we try and achieve greater at. And the impact in dollars was $11.8 million for revenue and $9.9 million EBIT. So bigger than previous years. In terms of balance sheet and return to shareholders. Our cash reserves went up to over $216 million, cash and financial assets now $250 million, up nearly 20%. And as a result, our total dividend increased by 25.5% to be $0.69 per share fully franked for the year. In terms of revenue growth, I think this chart does show quite strong revenue growth year-on-year. Those that have seen in the chart before the bright green is exam license recurring revenue that has grown strongly again in this last financial year. Support is for the older contracts that we have largely around recent Australia and some term contracts. Again, in the gray that is recurring revenue. There is the archive data might. So the bulk of the revenue we have continues to be recurring revenue, which gives certainty going forward. In terms of revenue by geography, again, I think it bears out that the U.S. is over 90% of our revenue and growing strongly. But in the current or previous year, FY '26 all jurisdictions did increase. So that was very pleasing and added to the total picture. The other thing is our forward contracts of recurring revenue over a 5-year window has increased now to $1.3 billion. So a substantial increase, largely fed by the renewals and also by the material new contracts we wrote in the period. So this shows year-on-year FY '25 was a bit of an outlier because it had our biggest contract ever in Trinity which was arguably the biggest contract ever signed in our space just for medical informatics is enterprise imaging informatics. But pleasing to say that we had our second strongest year with strong growth across multiple markets. But just about 2 years ago was about half what we did in this financial year. So again, another strong year for new contracts signed. Going forward, I'll talk about the contract wins a little bit. We came out of the gate early with our second biggest contract in July 2025 with UC Health -- this was a relay for those who do know is one of the big -- 2 big health care systems in the Boston area, and it is now going to -- looking bigger. We also wrote a contract with one of the largest private reading groups in the U.S. called Radiology Associates North Texas to $44 million, again, at minimums. And we added archive to Baker, who was a previous client and that archive sale was substantial of $25 million for the length of their contract. And then there were 5 other contracts that we have talked about, including contract with Heidelberg University with a total of $55 million. So second biggest year, very good spread of across different markets, 9 in the U.S. and one contract but a material one in Europe. Talking about UC Colorado, as I mentioned, it was our second biggest. It is full stack plus 1. In other words, they took cardiology as well as our work less beer and archive. They are a highly respected hospital system and an academic medical center, and we went live with them in May 2026. So towards the end of the financial year, but we will get a full 12 months of UC revenue coming into FY '27. The University of Heidelberg, again, a very prestigious hospital that's regarded as one of the top hospitals in the world. It's affiliated with a German research Cancer Research Institute, which is the largest and most prestigious in Europe. So it has not only increased our physical footprint in Germany, but also our presence in that high-end academic space, and that went live with a full suite of products in April '26. And Radiology Associates in North Texas, as I mentioned, it's the largest fully private remote reading group in the U.S. We went live with breast imaging in April of '26 and just recently about a week ago or 1.5 weeks ago, went live with the rest of grand. And so it will greatly increase our presence in the private market. Another academic came relatively 2/3 of the way through the year was University of Maryland. It is an academic medical center known for its [ Ramadan ] Shock Trauma Center that became the leading center and of trauma treatment in the U.S. and globally. It's based out of Baltimore, Maryland. And it was a reference site for a key Visage competitor for many, many years. So a good one to win from a tactical point of view as well as footprint. As I mentioned before, [ Beth Israel ], it is full stack. It is a very highly respected hospital system, academic teaching centers as well as community and specialty hospitals. And it will now include the Dana-Faber Cancer Institute. So if plus our other client base in the state of Massachusetts will give us by far, the biggest share of the hospital systems in that stake. In terms of contract renewals, I won't go through all of them. We announced them as they came but it was 6 out of 6 and allowed us to maintain our 100% client retention record. I think the interesting things with renewals. They were all for a 5-year period, so the full contract term and they were all for higher per transaction dollar values than the original contract done previously. So again, keeping in the way that we've been able to do renewables with increased pricing and for a minimum of 5 years and sometimes actually longer. In terms of implementations, it was our busiest period ever. There was 16, if we include Trinity, the 4 cohorts because Trinity is so large, it has to be done in it. But having said that, some of the cohorts, particularly 1 and 2 were as big as doing an NYU as a big bank. So they're huge. So for were completed in the financial year UC Health was completed in May. FMOOs and visit cloud migrations, New Heidelberg, as we mentioned, top best hospital in the world went live in the -- towards the middle of the second half. And to round things out, RSNA 25, which is our biggest conference of the year, many of you heard me speak about it. That was our busiest to date and provided a very solid number of leads going forward. In terms of implementations, we often get asked, particularly by the analysts that are on the call, when the sites go live and how completed are they? So we've decided to include this slide. You'll see that as of 30th of June 2026. Trinity was 75% complete. A number of the others are 100% complete. As I mentioned, rand, which was 10% complete at 30th of June is now 100% complete as of 2 weeks ago. And the new sales that we made subsequent to that in terms of Maryland and Israel. Title some looks, which we announced, I think, 1.5 weeks ago. Obviously, they're still in the pre-implementation planning phase but will be live on the dates that we have put in that go-live targets. Now the only thing about go-live targets is sometimes the client will push the target out a week or 2 or a month due to internal things. But by and large, we have never today been the hold up for go live. And as you can see, the amounts that we did in the last fiscal year was really -- [ 16 ] was most probably our record. In terms of Trinity, this was our largest contract ever has a national footprint. As I said, the first 4 cohorts were done by June '26, we completed the fifth cohort in July 20 of 2026 and just at the end of the financial year. So that cohort 6 and 7 are around 13% remaining. So we have now done about 87% of Trinity by volume and pretty much all of that will contribute 12 months worth into FY '27. So a material step-up in terms of transaction numbers and value. We have always said, and I think it's becoming more and more prevalent that our implementation capabilities, competitive advantage. We're able to do very large-scale projects in a quarter to assist the time of industry norms, like in Colorado, getting Trinity live within such a short window has never been done before. We think it is a huge differentiator for us, particularly as the market now is looking to move and move to cloud quite rapidly, being able to implement quickly and complete those implementations has turned out to be a very big strategic plot. Just going through 2 or 3 other quick things. Most of you would have been aware, we made some strategic investments. One was a $10 million investment in Pro Medicus. It will, for 2 years, maturing in July 2027. And the terms of the deal were basically the share price doubled, then we would get double our money back. If more than that, which it clearly has, we would be able to get equity based on that. So we did book an unrealized gain of $172 million as of 30th of June. But clearly, the final result will depend on the share price in July of next year. Echo IQ was another investment similar but slightly different. It was $10 million convertible notes. With an option to do another $10 million at the same strike price, assuming if Echo IQ received FDA clearance for the Echo sold, which is the heart failure algorithm currently in with the FDA. It has a coupon rate again of 12.5% and their options attached should the share price continue to improve. Again, a 2-year window. And the value of that investment will largely depend on the Echo IQ share price at the time. In terms of progress, a few quick things. I know there's been an enormous A lot of talk about AI in the market, but I think a few things have stood to be true. Health care and AI are ideally matched matter of fact speaking to some of the founders of the big AI companies, they say the #1 market where AI could have the most impact is in health care. Imaging is at the vanguard of that 75% to 80% of FDA-approved algorithms in health care per imaging. But like everything in health care, it is a highly regulated environment. There's FDA in Americas in Europe and TGA here. And the important thing about health care is unlike their sake. And the other thing we've seen time and time again is AI must be indebted in the complex work flows used by clinicians. It is not well accepted if it runs in a window on the side. and it must be trusted. People need to know that this is not just the like box. They need to understand the clinical evidence and support behind it in order to use it. So we think we're ideally placed to benefit from AI. We are the gatekeeper for image-based AI for now at 11% of the market in the U.S. is growing. Anyone that wants to fully integrate the output that's image-based needs to integrate to in half and since the visage desktop. So it is a very important place to be in the value proposition. We have the ability to embed AI into our core busy job offering, which we think, again, will be a strategic advantage for. And importantly, we have a capital-light strategy. We don't need to invest billions in data centers, and we don't need to invest hundreds of millions of dollars producing foundation models, like many others do, to get the result that we're aiming for. So I think we're incredibly well positioned being the gatekeeper and adopting a capital-light strategy. Things that we've done, as I mentioned, breast cancer detection. We did that with MIU. We're pending FDA clearance. We've done investments with the Lucid up to cardiac CT, 4D Medical IQ and Echo IQ for the cardio cart failure, and we've extended our research collaboration agreements with UCSF -- and others that will help us not only do the sourcing of the algorithms but helped in the clinical validation process, which is such an important part of it all. And we are looking at a growing number of third-party algorithms to integrate into the platform on a curated basis. The team is the same team that leads our visit development because -- invest half and the stalling the 2 care founders of the Visage platform have PhDs in this particular area, so well suited. And we have in who's our PhD medical scientist based out of Yale, but also as part of the team that looks and assesses the third-party algorithms. Our products, we've made very significant progress on our concept of 1 platform. So unlike others that have various products that are all different and different code bases and run on different servers. Ours is the 1 platform, 1 co-base. No one has ever done this before. We started with obviously, diagnostic imaging, including all breast imaging and advanced visualization in the on desktop. We've extended that to cardiology, which is doing well. And so we've now extended it into the areas of digital pathology, and we're replacing something not pixel-based but something that was always part of the radiodesktop, which was the reporting system because radiologists dictated in the past and used voice recognition to create a clinical opinion or report as we call it. So we've now bought out 2 products that we think fill out the mix, which is the digital pathology and the optimized reporting system. So very significant steps taken in terms of new product as well as ongoing updates to the Visage 7 platform. So arguably, our biggest year in development that we've had. The things that always make us different to continue to be the same in terms of legacy technology as a compressor Sen. Many of you have heard me say this before, faster just getting too big. And so ours is totally different. We use a streaming technology. We don't move the farm. We just stream pixels a bit back the Netflix of Diagnostic Imaging, but it's a lot more sophisticated because it's two-way streaming and adapt is streaming depending on bandwidth, but depending on network, depending on number of pixels need to be strength, et cetera. So here are some new data points. There's some new CT called [indiscernible] CT, where you have up to 10,000 images, each and each over half mix. That's 5 gigs right there. hard density pristine synthesis can be 6 gigabytes plus study digital pathology, massive between 6 and 20 gigabytes a set of slides. And there's a new form of first ultrasound called to acoustic where the tiles are 10 gigabytes plus. So you can see that as new equipment and new technologies come out, the fares are growing exponentially and the old compressor send technology just as able to code. The other thing driving the industry is not just the size of the images, but the number of images and the number of radiologists around to read them, the shortage has continued its acute pretty much every group worldwide is on the hunt for radiologists to just do the work volume that they currently have yet alone additional work. The fact that we are able to increase radio lots productivity whilst maintaining the same or better accuracy to the way we do is, again, a very strong strategic advantage for us. Cloud has been a big thing for us again. Many people talk about it. We believe we're the only ones that can do full cloud even to this day. we celebrated our fifth anniversary of our first -- kind in MedStar in 2020, and every single implementation since in the U.S. has been 100% cloud-based. It is -- the market is beginning to understand the delta between hybrid cloud and real cloud. And I think that's playing as again, a big plus for us in the RFPs we do. Open archives, Again, I won't go into too much, but as we go into cloud, we do more and more Open Archive, not only a full stake with new clients, but also some of the clients that were originally on-premise as they move to cloud, they will adopt archive, and we've had a number of instances of that. So there's less and less on-premise work as a result going forward. The workflow, another key part that allows a lot of workload distribution dynamically. It's a very intelligent product. It's been well received by the market. And again, part of that full stack strategy that has played out significantly over the last 24 banks, particularly in the last year as well. Visage 7 reporting. This is the new one. This was announced at simulation 2026. We've had our first implementations, which are in Europe at the moment. It replaces third-party product -- and it allows radiologists to have one single desktop that includes not only everything to do with image, but now also the reporting, we're looking to bring it into the U.S. early calendar year '27. We think it has a lot of incredibly good features, including optimization for drafting and revision, which will make the radiologist far more productive. And of course, it will have complete integration between image and text, both being visited. So measurements come straight across areas of interest come across. Things that used to play radiologists, we've been able to solve by this integration being the same product, the same code set. Cardiology imaging, again, I won't talk too much about it. Most of you heard about it. We did release it a few years ago. We are seeing a lot of increased traction. Our first really big contract was with you Colorado. But we've now signed a number of others, both with existing clients, some of existing clients, some with new. So we call it full stack plus 1, and we are seeing more and more RFPs where there is diagnostic imaging and cardiology together. Definitely, not all of them, but an increasing number. Digital Pathology, as we mentioned, this is a new product we have it working in Europe. And we again look to bring it to the U.S. early in calendar year 2027. It will round out our diagnostic imaging platform. It is different to the diagnostic imaging market, which is 100% digital pathology at the market is less than 10% penetrated for various reasons. One of the key ones being the slides that -- colored slides that are produced in digital pathology create very big files and the cost benefit has not been there until recently. But we are seeing increasing interest from prospective clients and new clients in digital technology. So this will be an important part of the product mix. The risk, beginning, we've been able to eke out some growth in Australia with some new bolt-on clients as well as increased volumes in some of our big users. We are the undisputed market leader in risk in Australia. Clinical outcomes, we talk a lot about the money, but we are moving the needle in terms of what radiologists can do and what speed and therefore, the clinical outcome that they achieve. And I think this is fundamentally important because not only do we make them quicker. We make them more capable and in many cases, more accurate. The growth strategy we often get asked about it. I think it's the same that we have had that has been working with new clients, which is sort of footprint and as we've grown our market share and the market share in 11% is on higher figure. We used to estimate the market at around $670 million. We now estimate it with organic growth somewhere around $690 million. So the 11% of -- that $690 million. The launch of new products, we just talked about that and the entered to new geographies, we think our position at New Hiedelberg, which is so preeminent, so prestigious will provide us with an excellent base, not only to expand within Germany and surrounding areas in the future, also the parts of the EU. Just mentioned that $690 million and 11%. So whilst it's a material figure, we still have an enormous amount of runway. Pipeline is the last thing -- second last thing I'll talk about, it has been robust. We have -- did have a big year of sales. But on the flip side of that, we've had an increased number of inbound RFPs across all market segments. And we had opportunities at various stages of maturity in the pipeline and very excises. So it is a diverse and robust pipeline and look good -- a reasonable portion of that came out of RSNA '25, which is our biggest. So yes, the pipeline has been robust, and we see opportunities across a lot of segments. We are now the latest U.S. news best hospitals. We're greater than 50% with the 11 of the top 20 hospitals, so by far the largest provider systems to the client base. We are growing in the DM space. We are growing in the private market space. So academics, IDNs, private market, all of them have improved for us in the last fiscal year. RSNA 25, as I mentioned, was huge for us. It was there that we were able to do a out-store event. I think it's the first time in Chicago and Apple Store has been used for such that were over 450 people there. This is just some of them. And it was showing how the vision pro has been used by some of our clients incredibly well attended and interesting some of the groups that attended have shown increased interest in the product. citing that store event is showing that we really are at the pointy edge when it comes to new product development and new technologies. This is the team, biggest ever, and we think that will be replicated is not done by RSNA later this year. So in summary, we had our record financials. Cloud was a big advantage. We had our second biggest year of contract wins with 6 out of 6 renewals. New products, cardiology increased penetration. And strong pipeline will set us up well for FY '27. Thank you for that, and we are up for questions.

[Operator Instructions]. Our firsy question today comes from Josh Kannourakis from Barrenjoey.

Perfect. Just the first one, just with regard to the implementation. So obviously, that's all going on track. If we look across to '27 now, you obviously have those uplifts coming through. What's your expectations in terms of once the go lives happen to be able to achieve above the minimums as you sort of have been doing historically? And when we sort of look at, I think, consensus around [ 340 ] or so for next year, like it feels like a lot of next year's growth feels like it's covered by that. Is that fair to say at the moment where we're sitting?

Yes. So there are a few things, as we mentioned in our corporate presentations. A lot of the implementations that we did in FY '26 came in the second half and some late. And that's just how they occurred that wasn't intentional when the clients are ready. So '27 will get a big leg up with those now being 12 months. I mean, Trinity Cohort 5 was third week of July. So as good as 12 months, all the rest -- Colorado, first 4 cohorts. And then yes, you're right, because it takes roughly 6 months on signing for the groups to be ready to go live. We know that some of the ones that are there like Bet Israel, like Maryland, et cetera, will fill out the rest for the financial year. And then the other thing is our clients the growth rate of the existing client base is roughly 3x that of industry average. So obviously, the bigger base is and apply that formula that grows as well. So it's multifactorial, but you're correct. The sales we made will cover a fair bit of that revenue upside.

Got it. And just my second question, which follows on from the market volume growth, Sam. I know there was a few concerns earlier in the year after a number of the sort of hospital groups and some of the reading groups and things that talked about some hits to elective volumes. And the like as a result of some of the rival of Medicaid funding packages. Can we just -- just keen to hear your view on whether you've seen any of that? And maybe if not, why not?

I think there's more work out there that can be read. So that's one thing that's producing more. When we say 8%, obviously, and sometimes it's 9%, it just depends year-on-year. Some of that is acquisition, some of that's organic growth. But no, we haven't seen any slowing off and we haven't seen any group number go down quite the opposite. They've all gone up.

Right. And just on that, do you think that's due to the type of clients that you've got within the portfolio? Like is this -- if you looked at more at the lower end or larger sort of public-related hospitals, would they have more impact to that, do you think?

Impossible, but again, that's not what we've seen. Some of them are a bit more expansive Like, there's no secret about NYU, that they're opening new centers. They're sort of on the front foot. And they're not the only ones. We see more and more of that. So maybe this is the client base, but we do spread across a whole lot in regional ones and other bits and pieces that lots of people hadn't heard of timely announce them, and they seem to be doing pretty well, too. So by and large, no, we haven't noticed any decrease quite the opposite.

The next question is from David Stanton from Jefferies.

So just on the previous question, you talked in the presentation at a benchmark of around 30% growth. I mean should we be thinking that in constant -- on a constant currency basis for '27 for revenue and profit?

That's where we are, yes. And in some years, as I've said, currency doesn't have a material impact. So what we report in the constant currency is much the same. It just really depends how much it moves around from period to period. But yes, I mean, we think that's achievable. Given we know all the stats we put on late in FY '26, as we mentioned, Trinity and all those others, they're actually big in their own rights. It's not just that they came on towards the end of the financial year, but they're big. So having a full 12 months of them will have an impact in '27, which we know already. And then the other ones we're putting on. So yes, we think we can't relet currency. I don't think anyone can. But constant currency basis and hopefully reported if currency doesn't move too much. We're still aiming for that.

David, just on that, the reported number does carry just $10 million of currency headwinds. That's got nothing to do with our underlying operating performance. So that's something to bear in mind. And also secondly, the growth rate is being measured on a materially larger base each year. So in absolute dollar figure, the increase in FY '26 was extensive, and it will set us up really well for FY '27.

Understood. Second question, please. I'd be interested in your aspiration for your North American PACS market share currently at 11%. What do you think that could get to as an aspirational target on a 3-year view, please? .

Yes. That's a good question. Maybe I'll answer it this way. No one's gotten from 0% to 11% as quickly as we have. No one has gotten the mix of the luminary institutions in that 11% like we have we have over 50% of them. And I think when we look at it, we say what's to stop us from getting from 11% to 12% to 15% tomorrow. And we think we have the best technology. So we don't have technological debt. We think we have a highly optimized implementation capability. So you can sell up the cab to put it in, and I think we're proving that. And then we're looking at what is the market itself because it's made up of slightly different segments. So the private market has different drivers to Ameo clinic. They need the same platform, but they look that they have slightly different drivers. So can we address the large majority of the market with our product. And the answer to there is 100%, yes, because we already are. We have it in the private market. We have it in small groups, and then we have it in May clinic and NYU and it's the same product. So we have to figure out there that we believe from a TAM point of view, it could be up to 85% of the market is addressable if not more. And the only reason that 15% or 10% is not, it's purely around commercials, when small is too small with all the data security and contracting and -- but having said that, that tail is actually reducing or nearly disappearing because those clients are so small, it's not viable for them to stand on their own 2 feet, but that part being part of something bigger. So that 85% is in the time go to 90%. So we're at 11%. Where would I like to be [ 90% ]. But obviously, step by step, we are making good progress, and we believe going from 0 to 10 when we go from 10 to hopefully 20 will be quicker than the first half. And we're starting to see that going from. We're at not 8, 9, 10, not 11. And bear in mind, the pars bigger, too. So the number that 11% is now $690 million IRS. So yes, look, I don't think there's any impediment. It's purely how many opportunities come to market. And of those, how many we win and we're seeing more coming and we're winning more.

The next question comes from Paul Mason from E&P.

Just a couple on the reporting tool. So the first, I wanted to ask about is just what proportion of your customer base you think is on the sunset of PowerScribe 360 tool. And second, related to that is just if you could give some color on like whether you think that element might actually be tendered out separately across your client base or whether it sort of requires like whole of system tender that might come up at the end of contracts before you'd be able to chase it.

Yes. Well, I'll answer the second one last year, it comes tendered out. We've already received some RFIs and things. And coming back to your first question, there is this there is this moment there's been this talk in the road. So you're right, there was a company called Nuance that had most of the voice speech to text engines. They used to be called Dragon and they had Dragon Medical. And they really cornered the majority of the diagnostic imaging market, particularly in the U.S. There was a second group came out of Europe called the model, it's now called [ Fluid ], I think 3M bought them years ago, and we see some of that -- some of the groups in Australia use Fluid. They'd be they the 2 big ones. But we think there's been this fork in the road where all of a sudden, power scribe in its original version will. It is coming to end of life. And people would have to upgrade to the new version now. Nuance has been bought by Microsoft a few years ago, and that's not that core business, as you know. So we think there's a huge opportunity. And yes, that could be mid-cycle absolutely. You could easily sell that back to existing clients. And we think because it's the same platform and imaging techs fully integrated because it's the one platform there's some big advantages there. Clearly, we have to sell it. There's a whole product cycle to it, but we're really off and running because it's like in Europe at the moment.

Yes. So just on that, the -- I was just wondering, would most of your existing customers actually probably use power scribe then or end mode nodal or...

Yes.

The next question comes from Chris Cooper from JPMorgan.

Maybe just a quick follow-up on that one. I had a similar line of questioning, but can you contextualize what the incremental contribution might be in some ways. Maybe just give us some sense of incremental pricing or -- maybe just an idea about the business model? Is this going to be a pay-per-click bottle in a way that clearly visits? Or is this going to be something more like a subscription model...

So it'll be paper click because it's a one-for-one correlation, pretty much every exam every test needs a report. So they pay per usage. And that is a model that is currently in the market for reporting systems. In terms of the pricing, we haven't finalized it yet, but my gut feel would be -- it could be material, it could be somewhere around 30%, 35% additional, if they took it February thing. Depending on the modules could be a bit more. So it's a material component it will be a material component of that on if people take it up. Having said that, we're not the only new shiny toy on the block. There's a number of reporting tools that have either been around or are around that we're trying to compete with us. I think our main advantage will be the quality of the product and the fact that it's part of the desktop, so you don't need to do data elements between various from pixels to tax, which is what you need. So whilst there's competition and there will be price pressure, it could be quite material if clients do take it.

Great. And maybe just one more on AI, please. I mean we're obviously seeing one of your peers, in particular, demonstrating very clear demand for these cardiac CT algorithms. You've obviously got your own partnership with Lucid. What are the next steps at this point for integrating that into the visage workflow? And how could the economics for that work, please?

Yes. So we're not [ 1:1 ] in any one AI area. So we did do the -- made a small investment in a lost get in site the tent. And we would just -- we would resell the product. Why would people buy from us because they're really dealing with us. That's a huge thing. And also, if there's pixel-based output in obits image-based output, we could integrate that into the desktop. So we are in the process of finalizing reseller agreements like we will be with and process with Echo IQ and others, and it will be a reseller where we get a pass-through plus an integration fees. So that's the way we see it.

The next question is from Sarah Mann from Moelis Australia. Please go ahead.

Simon, Sam and Danny. Just a question on the renewals. Circle, you've had a yet good run rate this year in terms of what you received. Can I just ask if any of those discussions being, I guess, assist against other competitors? Or have they all been closed or discussions?

We just have to go through the wall in my head. I believe they've all been closed to look. As you know, we've been successful that way. And yes, it's all about term and price. And in some cases, people like have taken additional product at that point in time. So yes, we're very pleased to get 6 out of 6 main an report and obviously, deal with the ones that's still ahead of us.

Right. Okay. And then just on the Veterans Affairs opportunity. So obviously, you've transitioned over your existing use customer to the cloud. Can you talk about, I guess, how the impacting more a, I guess, change in interest from other kind of VA customers?