pro+medicus OUR SUPPORT. YOUR SUCCESS.

CHAIRMAN'S ADDRESS AGM NOVEMBER 2019

CHAIRMAN'S REPORT

Overview

The Board has continued to follow its strategic plans, which were updated in August last year, and which have provided the company with significant growth and improved profitability during the last financial year. Each of our businesses in our main markets (Australia, Europe and North America) contributed strongly to the result.

The group continues to invest in our best of breed suite of innovative products - to maintain market leadership, which we believe, is fundamental to your company's success. Today Sam will talk about our new AI platform, Visage AI Accelerator a unique end to end solution that will enable our clients to fast track the implementation of AI as part of their imaging strategy.

The global management team has remained constant throughout the year and the Board is confident that they can continue to deliver long term sustainable financial results given the appropriate strategies.

During the year we announced several new contract wins in North America, including Carle Foundation in Illinois (July 2018); Partners Healthcare which includes Massachusetts General Hospital and Brigham Women's Hospital (November 2018); Duke Health in North Carolina (April 2019) and most recently Ohio State University, as well as the renewal of our Department of Veteran Affairs contract. All of these will contribute to our future revenues. In Germany we won a contract extension with a Government Hospital. In Australia the expansion of our relationships with I-Med Radiology Network and Healius (formerly Primary Healthcare) are progressively contributing additional revenues as the respective roll outs continue.

The group remains in an excellent position to continue to capitalise on the increasing global and local opportunities as they present themselves. The management team is working on a significant number of new opportunities and our pipeline continues to grow.

Financial Results

The financial results for the 2019 financial year recorded another healthy increase in underlying net profit after tax (2019 $22.74 million: 2018 $12.24 million or 83.1%). A change in the accounting standard regarding revenue recognition reduced the reported net profit after tax to $19.13 million which compared with the adjusted result for the prior year was an increase of 91.9%. The change also resulted in the recognition of certain revenue being deferred to future periods and at 30 June 2019 the amount deferred was $22.91 million.

On either measure, the result for the year was another record for the company and just reward for maintaining our strategic focus and has been achieved after making the necessary ongoing investments for future growth.

The Company continued to be cash flow positive with retained cash increasing from $25 million to $32 million after paying an increased dividend. This trend has continued as a large proportion of the significant balance of trade receivables at 30 June 2019 has been realised.

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 recognising continuing strong growth and I am pleased to advise that results to date are comfortably ahead of budget.

Dividend Policy

The Board was pleased to increase dividend payments for the 2019 financial year to 10.5 cents per share fully franked. This represents an increase of 75% over the previous year and a payout ratio of approximately 50%. The dividends were fully funded from the company's internally generated cash flow. The Board anticipates that future dividends will be fully franked. The Board will continue 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.

Sale of Shares by the Founders

As reported last year the Board encouraged the Founders to sell some of their shares to improve the liquidity in the company's shares. In March 2018 both founders sold 1 million shares and in September 2019 a further 1 million shares each, the two tranches equating to less than 7% of their individual shareholdings prior to the sale of shares. Post the sale of shares, the Founders retain their position as majority shareholders in the company with a combined stake of approximately 54%.

ASX 200 Index

In June 2019 the company was included in the ASX 200 index having met the criteria with respect to market capitalisation and liquidity (assisted by the Founder share sales). The inclusion in the ASX 200 index has increased the volume of the company's shares traded; however movements in the share price have become more volatile. As a result the Board decided to commence buying back some of the company's shares to mitigate the impact of the volatility for the benefit of all shareholders.

Gender Diversity - Female Director

The Board recognises the benefit of gender diversity at all levels of the Company.

The Board also recognises that it is one of seven companies in the ASX200 index which do not have a female director and has been taking steps to address this issue. As the company's business grows we see the opportunity to appoint an additional director and we hope to be in a position to make an announcement early in the New Year.

Closing

In closing, on your behalf, I would like to thank all of our dedicated staff in Australia, North America and Europe for their contribution to the company during what has been another very positive year. I would also like to thank my fellow directors who have also worked tirelessly and diligently to ensure that the company reaches its ultimate goals.

pro+medicus OUR SUPPORT. YOUR SUCCESS.

CEO PRESENTATION AGM NOVEMBER 2019

PRO MEDICUS (ASX:PME)

Healthcare IT company specializing in Enterprise Imaging and Radiology Information System (RIS) software.

Leading edge products, growing global presence.

pro+medicus

GLOBAL MANAGEMENT TEAM

Malte Westerhoff Chief Technology Officer

Sean Lambright Head of Sales

Brad Levin Head of Marketing

Teresa Gschwind Head of Services

pro+medicus VISAGE IMAGING®

VISAGE RIS

										EVISAGERIS
	Visage RIS - Dr R Simpson (rsna) visage2 (2) @ Visage General Hospital (ris.promed.com.au)
RECEPTION	TECHNOLOGIST		DOCTOR TRANSCRIPTIONIST SEARCH	CLAIMINGOFFICE	SETUP						Recent $\blacktriangledown$ Dr R Simpson $\blacktriangledown$ $\bigcirc$ $\blacktriangledown$

Appointments	Requested Arrival	Billing Banking
	Book			$\longleftarrow$ Tue, 17-Oct-2017 ▶	$\boxed{\circ}$ $\boxed{z}$		AM PM . Patient O Procedure Cancelled V Blocked			Reset	$1 \quad 2$
Region Northern		Visage General Hospital									Septima
Visage X-ray		Visage $CT \rightarrow$		Visage US Room 1 $\blacktriangledown$		Visage US Room 2 $\vert \bullet \vert$		Visage US Room 3		Visage Mammo $\vert \bullet \vert$
	70		70		70		70		70		7 Q
◀ Tue, 17-Oct-2017	D - 111 12 12 13 14 15 15 16 17		1 Tue, 17-Oct-2017 ▶ ■ ■ ■ ■ ■ 1	◀ Tue, 17-Oct-2017	$\rightarrow$ mm $\rightarrow$ 1		1 Tue, 17-Oct-2017 ▶ ■ 【】 A 0		1 Tue, 17-Oct-2017 ▶ ■ ■ ■ ■ ● 0	$\leftarrow$ Tue, 17-Oct-2017 $\rightarrow$ m $\rightarrow$
08:30 AM		08:30 AM		TEST, Mr Roger: U08:00 AM	$\bullet$	08:30 AM		08:30 AM		09:00 AM
08:45 AM	Blocked	09:00 AM		Test 43.60708:15 AM		09:00 AM		08:50 AM		09:15 AM
09:00 AM		09:30 AM		08:30 AM		09:30 AM		09:10 AM		09:30 AM
09:15 AM		10:00 AM		08:45 AM		10:00 AM		09:30 AM	Urgent	09:45 AM
09:30 AM		10:30 AM	$\mathbf{Q}$ +SMITH, Mr John: C	09:00 AM		10:30 AM		09:50 AM	Urgent	10:00 AM
09:45 AM	Blocked	11:00 AM		09:15 AM		11:00 AM		10:10 AM	Urgent	10:15 AM
10:00 AM		11:30 AM		09:30 AM		11:30 AM		10:30 AM	Urgent	10:30 AM
10:15 AM10:30 AM		12:00 PM12:30 PM	LunchLunch	09:45 AM10:00 AM		12:00 PM12:30 PM		10:50 AM11:10 AM	Urgent	10:45 AM11:00 AM
10:45 AM	Blocked	01:00 PM		10:15 AM		01:00 PM		11:30 AM	Urgent	11:15 AM
11:00 AM		01:30 PM		10:30 AM					$\leftrightarrow$
11:15 AM		02:00 PM	Non Contrast	10:45 AM	Edit Appointment					$\Box$$\times$$\overline{\phantom{0}}$
11:30 AM		02:30 PM		11:00 AM							Lunch
11:45 AM	Blocked	03:00 PM		11:15 AM	Θ	APPOINTMENT	Mr John SMITH	FOLIO 10.645		ACCESSION 10.1270	Lunch
12:00 PM		03:30 PM		11:30 AM	Tue, 17-Oct-2017		Male 05-Oct-1977 (40y)				Lunch
12:15 PM		04:00 PM		11:45 AM	10:30 AM - 11:00 AM		450 Swan Stree J. Dr Doogie Ho (03) 9800-1231 Appointment(s) $\triangleq$ Medium			$\overline{\mathbf{v}}$	Lunch
12:30 PM		04:30 PM		12:00 PM
12:45 PM	ADAMS, Mrs ROSE$\mathbf{P}$			12:15 PM
01:00 PM				12:30 PM	▼ SUMMARY
01:15 PM				12:45 PM
01:30 PM				01:00 PM		Patient SMITH, Mr John 10.645			Referrer Dr Doogie Howser 0000000Y
01:45 PM				01:15 PM		Born: 05-Oct-1977 (40y)Male		Practice
02:00 PM				01:30 PM		(03) 1212-1211			Address 23 Holywood lane ThePlace RICHMOND
02:15 PM02:30 PM				01:45 PM02:00 PM					VIC 3121 Australia
02:45 PM				02:15 PM			Address 450 Swan Street RICHMOND VIC 3121	Referral date 09-Oct-2017
03:00 PM				02:30 PM		View all details
03:15 PM				02:45 PM				Referral period 12
03:30 PM				03:00 PM
03:45 PM				03:15 PM		Accession 10.1270
04:00 PM				03:30 PM		Order Status Arrived (1/1)
04:15 PM				03:45 PM	K					E.
04:30 PM				04:00 PM					Save	Cancel
04:45 PM				04:15 PM
				04:30 PM
				04:45 PM

VISAGE RIS

Long term (5 year) contracts with Primary Healthcare and I-MED, the 2 biggest radiology providers in AUS
Combined additional revenue of $4.4M pa once fully deployed
Rollouts progressing well
Potential upside via organic and M&A growth
Increased market interest new opportunities
Repositions PME as undisputed market leader

LEADING EDGE PLATFORM

Visage 7 continues to be #1 in Speed, Functionality and Scalability.

LEGACY TECHNOLOGY

"Compress and Send"

SOLUTION:

VISAGE 7 Streaming Technology

NORTH AMERICAN MARKET

PACS market estimated at > US $2B pa and growing
Expanding into Enterprise Imaging
Paradigm shift to modular, best-of-breed approach
Market fragmented in process of consolidating
VISAGE 7 proven, market leading technology
Rapidly growing PME footprint

MASSIVE DATA EXPLOSION

High density Multi-slice CT 10,000+ images
HD Breast Tomosynthesis 6 GB+
Optoacoustic breast ultrasound 10+ GB
Total Body PET Scan 10+ GB
7T MRI much larger than 3T

ELECTRONIC HEALTH RECORD (EHR)

Mandated in US Hospitals by end of 2018
Consolidates all hospitals data clinical and financial
Massive investment often in $ Billions
90% of EHR is imaging data (by volume)
Post EHR implementation next focus is imaging
Need for a single viewer for all images

YEAR IN REVIEW

PARTNERS HEALTHCARE

Largest health system in Massachusetts
Massachusetts General Hospital ranked (#2) and Brigham and Women's Hospital (#13) best hospital in US
Top two teaching hospitals for Harvard Medical School
Leader in biomedical and data science research MGH & BWH Center for Clinical Data Science

PARTNERS HEALTHCARE

7-year, $27M deal, transaction-based $\bullet$ licensing model (Phase 1)
Largest contract in the history of PME
Transformational a key component of Partners 2.0 initiative $\bullet$
Phase 1 fully implemented in record time

DUKE HEALTH

7 year $14 Million deal
Largest health system in North Carolina
Visage 7 to be implemented across all of Duke's radiology departments - commencing January 2020
Transaction-based model with potential upside $\bullet$
Adds to PME's growing footprint in the tier 1 U.S. academic hospital segment

OHIO STATE UNIVERSITY Wexner Medical Center

Minimum of $9 Million over 5 years
Transaction-based licensing model with upside
Large regional hospital system
Teaching hospital for The Ohio State College of Medicine
Implementation scheduled for Q3 FY20

RESULTS FY 2019

Financial Highlights	FY2018	FY2019	% YoY
Revenue ($M)	33.87	50.11	48%
Profit before tax ($M)	15.30	26.12	71%
NPAT ($M)	9.97	19.13	92%
Cash ($M)	25.24	32.32	28%
EPS (cps)	9.7	18.5	91%
DPS (cps)	6.0	10.5	75%

$- $10,000,000 $20,000,000 $30,000,000 $40,000,000 $50,000,000 $60,000,000 FY2015 FY2016 FY2017 FY2018 FY2019 Revenue by geographic segment - * reinstated for new accounting standards North America Australia Europe (net of hardware)

OPERATONAL (TRANSACTION) MODEL

Used in vast majority of US contracts
Delivered as SaaS model
Now used in RIS contracts in AUS
Model based on guaranteed transaction minimums
Contracted revenue > A$180M/5 years*
Upside as client examination volumes grow
Annuity style revenue stream greater predictability

* Assumes the majority of key contracts up for renewal in years 4 & 5 are renewed

EXAM (TRANSACTION) REVENUE

Recurring in nature
Increased by 43.5% YoY
Growth to continue in FY 2020 onwards (Partners, Duke, OSU & Others)
Growth from existing clients (organic and M&A) plus new clients
Further upside with adoption of new products (VISAGE 7 Open Archive and Enterprise Imaging)

pro÷medicus

PROFESSIONAL SERVICES

Project planning, training & implementation Revenue spread over the length of the contract
- new accounting standards (AASB 15)
- Recurring in nature ~ 10% contract value
- Will decrease as a % of total revenue as exam (transaction) revenue increases

OPERATING LEVERAGE

Highly scalable offering
No capex (HW) SW only model
Training & Installation charged as professional services
Relatively fixed cost base
High operating leverage
Margin continues to grow as footprint increases

MARGIN EXPANSION

pro÷medicus VEREVISAGE IMAGING®

FAST TRACK IMPLEMENTATION

All implementations on or ahead of schedule
Fast track methodology continues to deliver
Large scale projects completed in under 1/4 the time of industry norm
Delivers huge savings for client
Frees PME staff for other jobs
Reduces barrier to change
A key differentiator of Visage offering

GROWTH STRATEGY

Transaction growth from existing clients

Expand footprint-New clients

New product offerings for existing clients

Extend to other geographical markets

Leverage R&D capability to introduce next generation products

NEW PRODUCTS

Same highly scalable enterprise imaging $\bullet$ platform used in VISAGE 7
Interoperable works in complex $\bullet$ environments
Enables Visage to offer choice of $\bullet$ modular or single vendor solutions
Pipeline includes opportunities for $\bullet$ Viewer and Visage Open Archive
Well placed for North American archive market

VISAGE 7 OPEN ARCHIVE

NEW PRODUCTS

Single viewer for ALL images in the medical record (EMR)
Radiology/Cardiology (DICOM format)
Non-radiology-reflected lighthi-res photos & videos
VISAGE 7 technology ideally suited
Increases Visage value proposition
Growth opportunities within existing $\bullet$ contracts

ENTERPRISE IMAGING

VISAGE in the CLOUD

Visage 7 highly optimised for Cloud deployment
Same Ultrafast performance as on premise
Full Visage 7 functionality
Security and scale of the cloud
Full deployment or as backup/disaster recovery
Suitable for all size implementations
Opens up new market opportunities

Visage 7

Unique end to end solution
Supports both research and production environments on a single platform
Based on market leading Visage 7 technology

ACCELERATOR

Enables Visage clients to fast track AI as part of their imaging strategy

Visage 7

Visage Research Server streamlines Al algorithm development
Optimised for AI data curation and validation

ACCELERATOR

Open API seamless integration
Al Ecosystem 3rd party and Visage developed algorithms
Joint development/commercialisation opportunities - 3rd parties and academic clients.