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Scaling Up [S5.E3]: The forty year overnight success story with Dr Sam Hupert, CEO and Co-founder of Pro Medicus

This episode covers the 40 year history of innovation and value delivery at Pro Medicus (ASX:PME) with its Co-founder Dr Sam Hupert.

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Ed (02:46): Sam, I must admit, this is the first time I’ve interviewed a CEO and founder of a 40-year-old business. We’re going to have to wind back the clock to 1983. Bob Hawk was still Prime minister. Kim Hughes was captain of the Australian cricket team they’d just been England two one. This is a different time, but maybe the best way to tell the Pro Medicus story is just to walk through the timeline and let’s do some time travel. Back to 1983, you were a general practitioner. Tell me about starting a software company.

Sam (03:17): Well, Anthony and I had met a few years earlier at a wine tasting of all things. We’re both very keen wine collectors and have maintained that passion and we had become friendly, and I was recently out of medical school set up my own practice. Anthony was working as an analyst programmer for a large multinational and I knew nothing about computers, and I approached Anthony looking to buy one thinking, look, it’s going to be the new form of literacy. And after a whole lot of there and back where he was never happy with anything that I put forward, I got frustrated and I said, look, we should go into business. And had these great ideas about doctors need computers, and we could get, and he thought I was crazy and knowing what I know today was most probably right, but back then I had no idea and eventually convinced him, and we started and as you say, we incorporated early in 1983 and then the journey started from there. But we’ve always been in solely healthcare IT and healthcare. We haven’t gone outside the medical profession

Ed (04:23): And what the start of an incredible journey it’s been, it’s one of Australia’s great and sadly largely untold growth stories I hope the next hour or so can fix that. Can you give a sense of the ecosystem in 1983? I mean to my mind IBM may have just brought out their personal computer, maybe it was a year either side, but there was no venture capital. That ecosystem didn’t exist in Australia, it was self-funded. Can you give a sense of the times?

Sam (04:51): Yeah, and you’ve pretty much summed it up. Had the IBM PC been available? This most probably wouldn’t have happened. The PC came out just after we started, and the world was very different. No VC funding as you said, but more importantly trying to develop computer programs was incredibly expensive. There was no internet and all the compilers and things that you needed were really designed for massive businesses. So cobalt compiler could have been $200,000 back then that was close on a million dollars. So, we had to find a way that we could get access to those tools without having to pay for them. And we were fortunate enough that the world’s second largest computer company, Digital Equipment Corp or DEC had won this large New South Wales tender for their health department. And were looking at companies that could provide software for the medical industry.

And look, we just had a design, we didn’t even have the software, but after about nine months of intense negotiations, we were able to make a deal with DEC where we had access to all the tools and their mainframe computers at no cost. So that was at least a million dollars that we saved. Plus, we committed to developing the software for their equipment and that was a very successful partnership. So basically, meant we could fund it ourselves without going into debt. And that was really one of the key things we’ve done over the 40 years.

Ed (06:15): It’s incredible insight. As you say, being debt free has given such optionality in the business but will come to that. Can you give a sense of what the product looked like and what you were trying to achieve and who you were trying to cater for with that sort of version 1.0?

Sam (06:31): Yeah, look at that stage. Computers didn’t have a graphical user interface or a mouse that that came later. And so really it was all just character sell terminals, and it was all around billing. So, doctors either literally had a shoebox, so they had their accounts in a shoebox or they used the system called Kalamazoo, which look it was pretty archaic. And so, it was all around billing. Certainly, for the first few years, my practice was the first practice to use the product. So, we were the alpha beat at trial site. And then we sold to a range of GPS and specialists and then eventually by about 1986/87 moved into radiology simply because they needed more computing. They had multiple receptionists at their front desk, they had multiple practices. And so, it was a bigger deal doing radiology and that became our mainstay after that.

Ed (07:25): I love the idea of solving, in your case for yourself and understanding the needs of doctors and becoming this practice management system or operating system as you will for radiologists and what that has enabled you to layer on over the years. Let’s fast forward a little bit to 2000 or not just a little bit. We’ll fast forward 15 years, but the business has been ticking along. You’ve been growing, you’ve self-funded, you’re in fact paying dividends. You’ve been profitable since day one, listing in 2000. And for those old enough to remember what happened in 2000 trying to list a business in the middle of a tech crash. I’m sure there’s some key insights you’d love to share as to that transformation from private to public.

Sam (08:08): Yeah, look, it was incredibly ironic. We saw there was this big rush of the internet in 1999 and we thought, how much is the share in Pro Medicus worth anything from nothing to a lot or in between? And we thought, look, it would put us on the radar, it would give us an ability to retain staff even though we only had a handful at that stage. So, we made all our plans, and we had the endorsement of JB Were that then the blue blood brokers in Melbourne. And everything was all set. My family and I went away on a weekend. Kids were young and I remember waking up to Jim Whaley on Sunday morning and on Sunday with his booming voice going, Dow and NASDAQ in turmoil World Markets decline. And I thought, well, wake up Sam, it’s a nightmare.

But as it turned out it was true. Tech wreck occurred just the weekend before we were announcing our IPO back in March and we just thought, oh no, what awful timing, this is going to take years. But thankfully a few months later, JB Were, re-contacted us and we listed successfully in October of 2020. But back in March we thought all this work was going to be for nothing. But thankfully it wasn’t. And the listing was unusual in that I think only two or three companies had IPO’d before us and their RPOs had not gone well. They hadn’t traded for an hour or two after opening. And then, shares sort of traded under listing, at least us thankfully was a vibrant and positive opening. So, we were pleased with that.

Ed (09:40): And are there any other reflections of those early months of being a public company? Just the transition for many companies, particularly in in small and microcap land can be hard. The systems and processes might not be as streamlined as they might needed to have been to actually deal with the rigor of being a public market company.

Sam (09:58): Yeah, look, it’s definitely a step up. There’s no question in terms of governance. We a fabulous chairman, Mel Ward, unfortunately he passed away in 2010, but he had a lot of business experience. He was the CEO of telecom that then became Telstra. He was on many boards plus also very active in the arts and charitable fields. So, we had really good guidance and that helped a lot. We had a strong independent board. Look, it’s a learning curve, so much work to get to that listing or IPO, you know the due diligence and the groundwork. And I remember things where they asked me, well how do we know you’re a doctor? You have to show us your medical certificate. And I thought that’s crazy. Till a year later, another public company, the CEO had to resign or retire because he purported to be something that he wasn’t. So, then I then understood it, but look it, it’s a step up in governance. It’s all pardon and parcel what we do every day now. But then it was a change and today if you were listing it’d be even bigger because of the broader governance requirements.

Ed (11:01): We’re going to come back to your life as a public company because it’s been a hell of a journey to say the very least. But we’re going to keep moving along the timeline. There was another big event, 2008, 2009, something called the GFC. But in many ways having the balance sheet strength that you had debt free cash on the balance sheet enabled you to be flexible, enabled you to be hungry in many ways to potentially acquire a business and what you did from a capital allocation point of view during this time period, in fact probably on reflection made the company.

Sam (11:37): Look, it’s interesting how people view a balance sheet and how it can change very quickly. Pre GFC people would’ve thought our balance sheet was quote lazy. We had retained earnings, no debt, you’re not using the money enough. And the minute GFC hit the exact same balance sheet became very strong. So, it really depends through which prism you look at it. But yeah, it certainly paid huge dividends for us. We’d been looking for an acquisition for about two years, 18 months to two years we’d had advisors, KPMG we had onboard, and we came close to one or two opportunities, but for various reasons they didn’t get consummated. And then right in the depths when we thought, well, will we ever find anything we were at in Chicago for the big RSNA, which actually is on this coming weekend this year. And we are at drinks for a company that does voice recognition. And we met the CEO of Visage and they were pretty much locked and loaded to be sold to one of their competitors due diligence. Done just settlement was waiting a few days out and somehow that fell over and we stepped in and because we had cash and no debt, and we were able to consummate the whole deal in six weeks including settling the transaction. So yeah, that, that balance sheet really helped.

Ed (12:56): For the uninitiated Sam, maybe can you give some colour as to what Visage as a product allowed you to do?

Sam (13:04): Yeah, look, when we first saw it, we almost walked past it because most of radiology was largely what they call a PACS, which is the digital imaging system that allowed radiologists to diagnose on screen. Most of that was 2D. So, chest, hands, CT, axial slices, all 2D. And then people started to get advanced technologies that could make some of the 2D into 3D in particular CT scanning and Visage was like that. It was an appliance that sat on top of a 2D system. And so, it would address in those days, I would say about only 5% of what a radiologists would do unless they’re hyper specialized. And so, one of the things we did look at when we bought them was this technology. How could they do these large files, visualize these massive files so quickly and have all the tools to manipulate the data in 2D and 3D.

And I said to them, look, can we go back and actually put in things like can we look at a chest x-ray? And they said, yes, we’ve developed the technology to stream the pixels for 2D as well as create 3D. And I think that was the big game changer that we were able to in one desktop, do anything from a basic chest x-ray all the way through to tracing coronary vessels in a cardiac CT. And to this day we think we’re the only company still that is able to do that within one product set. So, when we first found it, it was a niche specialty product. We were able to expand what it did to cover the full gamut or spectrum of what a radiologist needed. And I think that was a fundamental part of our success going forward.

Ed (14:46): That’s great colour of course, as you’ve layered on different functionality that’s included mobile and, on the go, and radiologists can now diagnose while they’re on their super yachts, I guess

Sam (14:58): Yeah, it’s not just for radiologists, but if you’re an orthopedic surgeon and, you get rung up and it’s a child that’s fallen off a monkey bar and broken an arm and the mother wants to know, well, does it need to be operated? You can just look at it on your phone or iPad if you’re in the ward or at home and just go, no, all it needs is a plaster and come and see me in three weeks. So, it applies all the way through the chain of healthcare. But, yeah, it certainly made a difference.

Ed (15:25): I can’t imagine the shareholder value that has been created from a $5 million acquisition Visage at that time was loss making for the NASDAQ listed Mercury computer systems. You came in, integrated it with your operating system, they were providing the ability to link images into this process. When you’re dealing with radiologists, this was driving huge utility for them. Can you discuss what that did for your product?

Sam (15:52): It seems simple now in retrospect, but the first few years were very difficult. I was instrumental in the Visage acquisition but had stepped back as operational CEO and we were losing about $2 million plus a year. So, when we acquired the business, we acquired things that were either very good or actually really not up to scratch. And what was really good was the original technology platform been developed by two PhD guys out of Berlin. They’re still with us. Most of that team is still with us. One’s our global CTO, one’s ahead of development. That was the excellent piece, the technology and the platform. The US Sales and marketing group were really not up to par. And I think also the way the product was positioned, it was positioned as an add-on to a 2D system, which was how it was normally done in those days. So, I came back in 2010 literally blowing up the US organization, keeping two people and rebuilding from there. And those two people are still with us. And then repositioning the product as the whole doctor’s desktop rather than just a niche 3D/4D part of it. I think they were the two things that set us on. But look, it took a number of years, we were in the trenches, but thankfully we were able to turn it around and we’re in a terrific place with it now.

Ed (17:15): One of the key call outs that I’m hearing is those cultural synergies. Not always when you acquire a business, can you extract great talent, but in, in your case it sounds as though you got some of the best in the business and they’re still with you. That speaks to the culture and the business that you’ve built around them.

Sam (17:31): Again, like everything, it took work. I remember listening to the presentation they gave us, which was on a like a WebEx and Malte Westerhoff our CTO must have thought, what Melbourne Australia next it’ll be Antarctica and then we fall off the earth. These, these guys are so far away, but they’d had difficulty they’d been promised a lot of opportunity in the US that never really eventuated. So, they were a bit wary of a company coming in and saying, well we’re going to make it right. But as I said, we were able to work together, and it’s been a terrific partnership and we’ve very pleased with where we landed.

Ed (18:06): As it turned out, it’s been well worth their time 2013. Another inflection point as we’re trying to tell this story that the products come together more layers to that you, you’re driving utility to the radiologist and the industry at large. First big deal, 2014 I think it was a $20 million deal at the time it was large feu to a large US Health network. This must have been a pivotal point in time. And just to give some context, this is 30 years since inception.

Sam (18:37): There was a few major inflection points that deal with DECK the IPO in 2000, clearly buying Visage in 2009 and then you’re right, Sutter Health in 2014. What most people don’t know is originally they had said thanks but no thanks and had chosen another, but then found out that the other company couldn’t deliver on what they said they were going to and then reapproached us. But even then, we were an unknown. We competed against 29 other companies at the starting line. People even wondered why we were even there yet alone that we’d even get down the process. And when we won it, two of the incumbents, which were both very large multinational, who I won’t name, but they basically said, Well don’t worry, we’ll be back you guys won’t you, you just don’t have a clue. You’re not going to be able to put this thing in. And thankfully we proved wrong in the rest is history. But yes, Sutter was a huge turning point for us. Still good clients of ours today.

Ed (19:37): It speaks to the quality of the product that such a huge client almost 10 years later it’s so sticky driving huge utility for them. As you called out this was David and Goliath. I know you won’t name them, but to my mind it’s sort of GE and Phillips and Siemens. These are huge global businesses and little Pro Medicus at the time from Melbourne, Australia winning a contract that changed the course in many ways of the direction of your business. Can you give a sense of what it’s like selling into these large hospital networks in the US for those that, familiar with enterprise sales that they can take a long time? Hospitals are a different beast. Doctors hate to change a workflow. There’s patient outcomes that they’re trying to optimize for. It really can be an absolute grind.

Sam (20:23): Yeah, look, I think there are a few things. One, you’re right, they are large, complex, and often conservative organizations. I think the industry had been promised a lot in the late nineties, early two thousands when it transitioned from hard copy or film based reporting to screen based reporting. And a lot of that promise never really materialized. So, coming in and saying, look, we’re going to make material ROI and change and value creation pretty much fell on deaf ears in the beginning. But when you go more towards the academic end of the spectrum, the radiologists have a lot more say and they could see the difference. They couldn’t understand all of the technology, but they got the clinical difference. And so bit by bit as we got client after client and could prove, A, it works, and B it scales and see we could actually implement it without this sort of two-year transition period that others had was routine in the industry. I think that really helped.

Being a doctor makes a big difference because I understand what they’re looking for and I think we can show that we understand and we get what it is. So, look, it took a while and you’re right, some of the groups we’ve been speaking to for five plus years on and off and then one day they just say, right, processes started and then within six months you get to, vendor of choice and then a multi month period of contracting. So, it’s not uncommon for the big ones to be multiple years before we actually get to that end point.

Ed (21:59): Something that you touched on there at the academic endpoint and often for these sales into hospital networks, you need key opinion leaders, you need mountains of research and one thing that comes to mind that you’ve done really strategically and thoroughly is partner with universities in the states. And so not only do they have these large hospitals often attached to them, but they’re large research organization and also the next generation of doctors being trained on your software. It seems like a great way to build a competitive advantage.

Sam (22:29): We actually cut across multiple markets and you’re right in the sort of tier one academics as we call them. There’s usually a survey or a poll by US news every year and they name the top 20. They’re pretty much always academics and we do nine of them and we are very proud of that because it’s not just the size of them because they’re not always the biggest hospitals in the US but the clinical demands they have of a product right at that pointy end because these are the leaders in the industry. But then having said that, as you mentioned, Sutter was one of our first, we had a very large client in Mercy based out of St. Louis. And if you look at our recent sales, three out of the six and then two of the biggest we’ve ever made are in this non-academic or IDN space. So, the ROI applies across the spectrum, but certainly our ability to gain those tier one academics certainly put us up there in lights because people just know of them.

Ed (23:45): I guess the joy of your business is they’re not huge sales team. I’m sure you could probably count on one hand the amount of sales executives you’ve got on the ground In the states

Sam (23:55): We have three and if you count me for a fraction three and a bit have bigger fraction you think I might be. And people say, well if you had three and you are successful, why don’t you have 30? The market doesn’t work like that. It’s not a land grab. Like some of the internet-based businesses you hear about today. There’s nothing that forces a client to change their system. There’s not like some tax ruling or in the case of the electronic health record, there was a massive rebate as part of Obamacare, but it was time limited. So, it compressed the sales cycle in that market down to a few years. Nothing like that in ours. And the other thing is we found that what the large companies were doing, what I call sort of breaking up the country in these small areas, giving a guy a briefcase and saying knock on every door, that just wouldn’t work for us. So, we think we are addressing most of the opportunities that come our way. And matter of fact, we sure we are, and we think yes, we’ll get more people, but we’re not going to go from three to 30. It will be incremental. Most of our leads come directly from reference from existing customers so they’re already pre-qualified, which is makes it that much easier. And, yeah, we think that that model really suits us and is key to our success.

Ed (25:11): And in terms of driving shareholder value, we talked about inflection points 2013 since then, I think if you were a shareholder invested $1, you’d end up with 60 in your pocket. So, it’s fair to say that shareholders that have been on this journey with you and shared your long-term view have done very well. It leads me to talk about technology and innovation that you’ve been at the cutting edge of and a few things that I’ve heard already. There’s been a, in your time as a business transition from physical photos to digital, you called out 2D to 3D, desktop to mobile and of course now on premises to the cloud. And so, you’ve not just had to deal with the innovation around you, but you’ve probably had to see around corners and navigate it before it’s actually come. How have you thought about navigating these technological changes around you?

Sam (26:04): Well, I think a lot of it’s got to do with trying to work out what’s next, even if there’s not a way to get there, so mobile was one before all the smartphones, clearly not everybody’s anchored to a screen all day every day. People are in the ward seeing patients and they don’t have a screen with them. So, seeing around the corner little in in terms of what ideally would be the case and then looking at the technologies when they come out. And I think the important thing there is all around timing. If you’re too early, it sort of comes out of the gate and tends to disappoint. If you’re too late, you’ve missed the boat. So, it’s really around imagining what you’d like to have happen and as soon as you see a technology you think could fulfill that, making sure around the timing of when you release the product,

Ed (26:54): You talk about what’s next. And there’s a lot of, I guess, hot chatter in the world around AI and its use in not only imaging but medical profession more widely to my mind, particularly in the US there’s this huge sort of tailwind around personalization of healthcare and this democratization. I mean their healthcare system’s a bit of a mess at the best of times, but also this consumerization of the consumer or those that are receiving healthcare, really being able to personalize the solutions. How’s Pro Medicus thinking about getting ahead of this?

Sam (27:27): Yeah, well that’s a very interesting question and it, two of the things we are showing literally at the end of this week are an opposite ends of that spectrum. One is on the diagnostic side where we’ve in our AGM we showed a few slides of a research project we’ve been doing with a paediatric neuro radiologist at Yale who’s an authority, US authority. And one of the problems they have is multiple tumours of the head of children and depending on the type, the prognosis is either six months or they can live almost normal life and some of these tumours that embedded deeply in the brain. So yes, you can biopsy them, but it’s not without risk. So, we’re looking at a way of being able to see on MRI more than just how big the tumour is. We’re able to cement it, we’re able to actually work out the different consistency of the tissue because the tumours have a harder core and softer on the outside and also some of the molecular structure that you see in Radiomics.

So, we’ve been able to extrapolate that and do more on the diagnostic side, which will then lead to a more personalized treatment plan for each of these unfortunate children that they have these tumours. Then if we wind back completely on the consumer side, we’re actually showing a project that we’ve piloted with NYU Langone where you actually get a video report. And the reason for that is a lot of patients the doctors tell them you’ve torn the capsule of your shoulder and if you look at an MRI it just looks like a grey and white and black fuzzy picture. Whereas this shows the MRI with a radiologist pointing out this is the normal shoulder capsule and here’s yours and here’s the tear and it’s all on a video and the videos are one minute. So, they really incredibly well accepted not only by the patients but by the referring clinicians. They put out over a thousand of them in the initial pilot and that’s now getting embedded into our newest release of visit so that the patient can have a much better view and understanding of what’s actually wrong on the x-rays rather than just being told it was a tear of your shoulder.

Ed (29:41): Incredible. Who would’ve thought that sometime in the future Pro Medicus would have a consumer facing app that you might log into and see where all your scans and have a general database of videos as you talk about?

Sam (29:53): Yeah, well look, it’s something similar. Look, a lot of the hospitals have an electronic health record that has a patient portal, but this dovetails into the imaging section of that portal. So, it just makes it a lot more understandable, a lot more personal and a lot more targeted to the patient and their particular issue at the time they have the x-ray or MR.

Ed (30:12): It’s fascinating to think that a business as mature in many ways that the Pro Medicus is, has such an opportunity ahead of it. It almost feels like act three and Act four, given the rate of change in technology in the world, the runway and the possibilities are almost endless.

Sam (30:30): Well certainly with AI as you mentioned, I think there’s talk about AI in every single industry, but healthcare is ideally suited and within healthcare diagnostic or healthcare imaging is most probably the biggest subset. And I think the recent stats are of FDA cleared AI algorithms in healthcare roughly 70% are in the imaging field. So, look, we think it’s going to open up huge possibilities, it’s emerging. We think the possibilities will not only be just as a second set of eyes that there’ll be things where AI will be able to show you things that you can’t see with the naked eye and that’s going to be incredibly exciting as well. So there, there are a whole lot of uses for it and clearly, we’re looking to tap into as many of those as we can

Ed (31:20): Strap your boots on. You might be running this company for another 50 years just yet.

Sam (31:25): I wish

Ed (31:26): One of the great things that comes to mind of having been at the helm of a business that’s seen such a growth journey is dealing with investors right from after 2000 as a micro-cap now to a ASX 200 company would’ve been the basic principles that you’ve applied when talking to investors from an investor relations point of view.

Sam (31:47): There are a few consistency in the message is number one, making sure that you are conservative in what you say, number two. In other words, don’t set an expectation that you can’t meet or that you’re not sure you’re going to meet because, they write it down and then that’s banked. Now what do you do? We’ve seen that when people ask us about our pipeline for instance, we have to be very careful what we both say and don’t say to make sure that we portray it as we see it without giving away material things that are confidential between us and clients. So, it’s a delicate balance but I think being consistent in the message and that people being able to see release on release half on half that message panning out now look, they’re always going to be bumps in the road. We had ours way back in about 2006, 2007, but as long as you continue on that journey in a consistent, I think they’re the main things.

Ed (32:51): That’s a great call out. Was there any frustration on your behalf in those years after, as you saw momentum operationally building the business that wasn’t necessarily reflected in the share price?

Sam (33:02): I don’t think it was really frustration. We understood it. We had lost the confidence of the market. We’d fallen off our perch and under the radar a bit, as you’ll see from our corporate history, I came back in 2010 and it was hard yards. Then Chairman Peter Keon who knew the company well because he was at Ernest & Young and had managed our IPO for us. He came back, then Chairman Mel Ward who knew Peter well was already unwell. And so, we did that transition and we had to roll up our sleeves and it was tough, and I was actually very thankful that one of our biggest shareholders when I met them, I basically said, look, I need some time, I’ve just got back. They said, how long do you need? I told them and they said, all right, you got it.

And they were true to their word, and it worked for them and for us because as the share price went up, they were able to sort of sell down some of their holding at a reasonable margin over what they bought it. But, for a while there it looked like they’d be underwater forever. So, look, I think we were lucky we had the patience of, of some of the bigger investors and, I realized it would take more than just one or two wins for that to turn around because they just see it as maybe another spark. But thankfully, we got to a point where we were out of that, and it’s been a lot better for us since.

Ed (34:24): That it has, it’s a great case study in having long term supportive shareholders and having that base be able to ride the bumps with you and as partners share on the op upside.

Sam (34:36): It’s interesting, the AGM and last two years, including the ones the other day was virtual. So before then it was not uncommon to see the same group of faces year in, year out. And it’s actually very encouraging and number of them that I’ve met or even those that I haven’t would often write to us telling us they’ve been able to use the shares to buy a deposit on a house for a daughter or other great news stories like that. So yeah, it’s made it all worthwhile.

Ed (35:04): Of course the two biggest shareholders are you over time and your co-founder, but in Australia it can be a slightly convoluted process of trying to sell shares and you haven’t sold many over the years, but you, well within your rights to having created so much value and having essentially most of your net wealth tied up in one asset, do you have a view as to whether Australia should potentially change the system around founder settle downs? Because at the moment the market sees it as a smoke signal, often there’s no easy or frictionless way. Even buying shares for insiders can be hard. So, can you give a sense of where you think Australia could do better from a regulatory point of view?

Sam (35:47): There’s been a fair amount of talk recently about the US based system, which I think is actually quite a good system where the founders release an intention over a period of time and it doesn’t come as some sort of shock to the system because you’re right, you’re pretty much damned if you do and damned if you don’t. And even if you sell down just a small amount and retain a huge percentage of your holding, people get incredibly nervous. As I said, I don’t think there’s one easy answer to this, but I think a system that maybe is a little bit broader based and heralds to the market in advance of an intention, most probably would be better tolerated because people would say, okay, I get it. They’ve told us and, it’s within their right to buy and sell, but can look at it through two prisms. One is, yeah, you’ve built the value you need to diversify. We do the same in your position. Whereas others go, Is there something wrong? Are they bailing? And most probably that second one is usually not the truth. It’s purely for diversification, but I can’t speak for everybody.

Ed (36:54): Of course, and for those that want to do more research on this topic, the 10B five one plans is what Sam’s referring to in the US because it does feel as though Australia will be a, a little brother. We’re trying to foster wonderful technology companies in this era and yet most of them will be found led and unfortunately, they’ll end up listing on the NASDAQ or the, or the II and the ASX will be left behind.

Sam (37:19): Yeah, look, I hope not. And you see in the paper more and more companies listing here, but certainly sale of shares by directors or founders is certainly something that I think people should look at and I believe there has been some active conversation around it.

Ed (37:36): Can you talk to the role of the board over time and how they have supported the growth journey of the business? To my mind it feels though they really have been hand in glove with you in growing this business.

Sam (37:48): Look, we were very, very lucky as I mentioned we were able to get the services of Mel Ward when we listed and most probably, we were punching above our weight when it came to a chairman because we were such a small company. But Mel’s the sort of guy that when he said he would do something, you got a hundred percent attention. And Peter Johnson and Philip Molyneux, our other directors at the time, so it was pretty hands on, and they help guide a lot of what the market expects and governance. So that’s how we learned it, their heels in all those areas. I think our board shrunk, as I said in that 2006, 2007 where we sort of fell off the radar a bit and it was really all hands-on deck. There were just two non-execs Anthony and myself and thankfully once we got out of that period, we’ve been able to build it and we now have a broader range of skills.

The company is bigger, the markets we service are bigger, everybody contributes so they’re not just figureheads on a board. And we’ve been very lucky that way so people from years and years of experience, Peter and then to people who are coming up through the ranks they’ve had plenty of experience but different ones. So, Tony Glenning had an IT company, he sold into Google for instance and Luke Boyan worked more in venture capital, Leigh Farrell worked in drug trial industry and licensing and other bits and pieces. We’ve had Deena Shiff who’s a lawyer and has worked in Telstra Ventures and a number of other companies. And now recently Alice Williams, who’s done a lot of work in finance risk audit. So different sets of skills, but so far touch wood, it’s all working pretty well.

Ed (39:34): It’s great call out in terms of having diversity of thought around the table and the power and that maybe to wrap things up, there aren’t many people in Australia that have had the longevity and success that you’ve had. So, I am interested in, in maybe finishing with some bigger picture questions. What are the biggest changes to corporate Australia for good or for worse that you’ve seen in your time?

Sam (39:58): I don’t know so much about corporate Australia, but certainly in terms of being publicly listed, the governance, the disclosures, and look, I get why they’re necessary in, in in most cases, but it is becoming a very significant part of the board’s work that I think is just getting bigger and bigger and bigger. I think not so much in our industry because, we are controlled by quality assurance bodies like the TGA, the CE and the FDA. But I think for some industries they may have been overregulated, we’re lucky we’re not. And as I said, most of our regulation is all around quality assurance and fit for purpose type things. So, they’re the main things that I see. But other than that, the transition has not been as great for us as maybe some of the other industries we’re a lot more regulation has coming.

Ed (40:52): And what about as a last question, the legacy that you personally and you hope Pro Medicus leaves not just on industry but on the world more largely?

Sam (41:03): Look, I think there are a few things. One, you start something and if you stick at it and you have a good idea, you can get there. Not everybody has to be an overnight sensation. And I’m sure the ones that are deemed to be overnight, usually there’s a lot more history behind them. Maybe not our 40 years, but still a lot more. The other thing is, as I often tell my family, we actually do good. It’s not just about doing good for our shareholders and enabling them to do things, but clearly, we move the needle when it comes to clinical capability and clinical outcome. And the more we can do that a as a group, the more our legacy will continue on. And we’re very proud of, of being able to do that and hope to do even more of it in the future.

Ed (41:46): Sam, I’ve been lucky enough to interview some fantastic people over the years, but I think this takes the cake. I’ve absolutely loved this. Thank you so much for your time. Wish you and Pro Medicus every success I’ll be cheering you on.

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