PRO MEDICUS LIMITED (ASX:PME) shares have extended their gains for a second straight session as investors respond to a fresh wave of US contract wins, renewals and management's increasingly confident stance on artificial intelligence.
The medical imaging software company is up more than 6% at 12:30 pm AEST on Tuesday after notching a nearly 10% gain on Monday, following a series of major contract announcements and comments from chief executive Dr Sam Hupert pushing back against suggestions that AI will undermine established healthcare software providers.
While the stock remains well below its 2025 highs, recent trading suggests investors are becoming more comfortable with management's argument that AI could strengthen rather than weaken Pro Medicus' competitive position.
The rally has also stood out against a softer backdrop for much of the broader healthcare sector, with investors rewarding the company's growing pipeline of long-term contracts and expectations for rising transaction volumes.
Contract momentum continues
The positive reaction stemmed in part from a pair of contract announcements on Monday.
Pro Medicus secured a seven-year, A$16 million contract with TidalHealth, a three-hospital network serving communities across Delaware, Maryland and Virginia, while also announcing a five-year, A$28 million renewal with Allegheny Health Network. The renewal included higher minimum transaction volumes, increased fees per transaction and the addition of Visage 7 Workflow.
The announcements build on the company's recent momentum in the US market. Last month, Pro Medicus signed a seven-year, A$90 million agreement with Boston-based Beth Israel Lahey Health, one of the largest healthcare systems in New England.
Management says the company has now signed more than A$400 million in total contract value during FY26, making it one of the strongest sales years in the company's history. It has also secure more than A$120 million in renewals in recent weeks, including Northwestern Medicine and MedStar Health.
Hupert takes aim at the 'SaaSpocalypse'
Alongside the contract announcements, investors were also digesting a detailed interview with chief executive Dr Sam Hupert that directly addressed concerns about artificial intelligence and the future of software businesses, particularly for companies trading on premium valuations and recurring revenue models.
While acknowledging that AI-related fears had weighed on software stocks globally, Hupert argued Pro Medicus' experience contradicts the idea that healthcare providers are preparing to replace established enterprise imaging platforms with AI-driven alternatives, pushing back against fears of a “SaaSpocalypse” event hitting medical software.
"Our recent wins and recently announced long-term contract renewals tend to disprove the theory that all software companies will be negatively disrupted by AI," he said.
Betting on AI rather than fearing it
Rather than viewing AI as a competitive threat, Pro Medicus believes diagnostic imaging could become one of healthcare's biggest AI growth markets.
Radiology is increasingly seen as a natural fit for AI-assisted workflows, with software helping clinicians prioritise scans, identify abnormalities and improve reporting efficiency.
Hupert argues Pro Medicus is well positioned for that shift because its platform is already embedded within many of the largest healthcare systems in the United States and has been designed to support AI-enabled workflows at scale. The company says its technology is now used across more than 10% of the US market.
He also argued that the company's technology stack, implementation expertise and workflow processes remain difficult to replicate, regardless of advances in AI.
The company is already using AI internally as a productivity tool, with Hupert describing it as a "force multiplier" for its software developers rather than a reason to reduce headcount.
Expanding beyond radiology
The TidalHealth deal also offers a glimpse of where Pro Medicus sees its next growth opportunity.
The agreement includes Pro Medicus' cardiology imaging platform, while management says healthcare providers are increasingly looking to consolidate multiple imaging disciplines onto a single enterprise platform rather than maintain separate specialty-specific systems.
The expansion into cardiology broadens Pro Medicus' addressable market while deepening its relationships with existing customers.
At the same time, the company is entering what management expects to be a significant implementation cycle. A record number of major deployments are currently under way, with Pro Medicus forecasting a material increase in transaction volumes from FY27 as recently signed contracts progressively come online.
For investors, the combination of contract momentum, expanding product adoption and a clear strategy around AI appears to be outweighing concerns that have weighed on parts of both the software and healthcare sectors this year. The market's response over the past two sessions suggests many see Pro Medicus as a potential beneficiary of the next phase of healthcare AI adoption rather than a casualty of it.