Agfa Deal Launches Pro Medicus into North America

• Agfa to exclusively license PME technology in US and Canada

• An estimated A$10m minimum revenue for PME during first 3 years

• Considerable upside could more than double business

Leading e-health company Pro Medicus (ASX:PME) today announced that AGFA-GEVAERT N.V. (Agfa) have signed a three-year agreement to exclusively license the Pro Medicus Practice Management and digital radiology software products to address the large and rapidly growing private imaging centre market in both the US and Canada.

The deal is expected to generate a minimum revenue of A$10 million in the first three years for Pro Medicus with considerable upside based on sales volumes.

Under the agreement, Pro Medicus will receive a percentage of software sales backed by minimum payments that increase in each of the three years. A share of ongoing maintenance fees will provide the company with a recurring revenue stream in addition to license royalties. All intellectual property rights are retained by Pro Medicus.

The products will leverage the strong brand presence Agfa has in the North American radiology markets with all marketing, implementation and end user support performed by Agfa's extensive network of over 700 Healthcare sales, services and IT professionals.

It is anticipated that costs for localising the software for the North American market will be largely covered within normal R&D expenditure for the year with all work carried out to date on the project being fully expensed. As a result, margins on revenue from this deal are expected to be comparable to those currently achieved in Australia.

Pro Medicus Managing Director Dr Sam Hupert described the agreement as a watershed for the 21-year-old medical IT company. "This deal validates our focus and strategy on a future based on our digital imaging software and builds massively on existing Australian opportunities," he said. "Our technology is being taken into a market over 20 times larger than ours by a company with an established presence and reputation second to none. Agfa is one of the biggest players in the US radiology market with huge links into the market, both from an analogue perspective - it supplies film to over 40% of the market - and in digital where it is also one of the biggest players. With this kind of backing we can see the potential to more than double the size of our business within the next three years."

Around 400 million X-Ray scans are taken annually in the United States, compared to around 14 million in Australia. Imaging Centers are the fastest growing segment of the US radiology market. There are currently around 5,000 imaging centers and over 3,000 community hospitals with standalone imaging departments with the number increasing by 12-15% annually for the past three years and this strong growth is expected to continue. Image numbers are also increasing an average of 16% per annum.

"We are extremely pleased to be chosen as Agfa's exclusive supplier to such a huge market," said Dr Hupert. "They conducted an extensive due diligence process in which they evaluated the best technologies from North America. Their choice validates our long held contention that what we have developed here in Australia is absolutely world class."

Agfa Healthcare CEO Philippe Houssiau said, "This agreement with Pro Medicus is structured to maximise the strengths of both companies and gives us a potent offering for the rapidly growing Imaging Centre market. Our imaging technology, market position and distribution channels combined with Pro Medicus' elegant software integration technology and practice management experience make for a product set designed to provide improved delivery of patient care backed with a sound business platform for the imaging centre space."

"The deal, which is huge in its own right, has the added potential to open up a raft of other overseas opportunities," said Dr Hupert. "We have leading edge technology that is applicable to other medical segments of the North American health market as well as to other regions around the world."

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