The Pro Medicus Limited (ASX: PME) share price has started the week deep in the red.
This is despite the healthcare technology company making a very positive announcement this morning.
At the time of writing, the Pro Medicus share price is down 5% to $39.20.
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Why is the Pro Medicus share price sinking?
Investors have been selling down the Pro Medicus share price after the market selloff overshadowed news of a couple of major contract renewals.
According to the release, the company's Visage Imaging business has signed two key contract renewals with a combined value of $47 million.
The release reveals that Sutter Health, which is a large IDN based in California, has signed for a further seven years, whereas Pennsylvania-based Wellspan Health has signed for a further five years.
Pleasingly, both deals are transaction based with committed minimums and have been negotiated at a higher per transaction cost than their original contracts.
'A positive message'
Pro Medicus' CEO, Dr Sam Hupert, was pleased with the renewals and highlights the unusually lengthy term extensions and higher transaction costs. He believes this is a testament to the quality of the technology.
Dr Hupert commented:
The industry norm for renewals is for short extensions to the original contract at the same or lower price. The fact that our clients have renewed for a full or longer contract term at an increased price supports our belief that the Visage solution delivers unparalleled value both in terms of financial and clinical ROI.
Whilst it is still early days, our renewal success rate sends a positive message to the market and helps build on the network effect that we have been experiencing.
The Pro Medicus share price is currently trading within a fraction of a 52-week low following today's decline despite this positive news.
