One of the ASX’s most exciting (and volatile) growth stories faces its next test

“Gross margins above 90% and FDA clearance in hand. Now it is all about commercial scaling.”

That was the assessment from Michael Wayne of Medallion Financial Group when we discussed 4DMedical's (ASX: 4DX) latest results. 

In a market that has been unforgiving for growth stocks, 4DX has been one of the brighter performers over the past six to 12 months - albeit very volatile. 

With Pro Medicus on the register and fresh capital raised to fund expansion, the company has moved beyond technological validation and into the critical execution phase. 

The opportunity set is significant, but as Wayne outlines, so too are the risks that come with commercialising new medical imaging technology at scale.

Key stats 

• Revenue – $2.85m, down 1% (pcp $2.90m)
• Underlying SaaS revenue – up 31% YoY, gross margin >90%
• Scans delivered – 151,905, up 110% YoY
• SaaS sites – 430 globally, up 43% YoY (pcp 301)
• Operating expenditure (ex-SBP) – $19.1m, down 17% (pcp $22.9m)
• Adjusted net loss – $16.2m, down 18% (pcp $19.7m)
• Cash balance – $56.8m, pro forma $206.2m post-placement

Do you currently hold 4DX and what is your rating?

Rating: BUY

Yes, we do hold it. It’s one of our better performers over the last six months. We continue to like the business, so we maintain a Buy rating.

We’ve held it since around the time when Pro Medicus took up its stake. That’s what really focused our attention on it.

What matters from the results?

The first half of FY26 was certainly a transformational period. They’ve got their FDA clearance in place.

If you’re looking at metrics specifically, gross margins are above 90%. They’re continuing to grow their SaaS revenue, which makes up a growing proportion of their business.

They are primarily focused in the US at the moment when it comes to revenue. I think 95% or even slightly more is concentrated in one geographical region. 

I actually see that as a positive because that’s where all the rich university hospitals operate and they have the capacity to integrate these new systems and workflows a lot quicker than other parts of the world.

How do those outcomes affect the outlook?

They’ve got the technological validation part under control and now it’s all about the commercial scaling phase.

They’ve got substantial capital backing in place. They have a relationship with Pro Medicus and they completed an insto raising at the beginning of this year, which took a bit of heat out of the share price but has put them in a good position, well capitalised for commercialisation.

We would expect this commercialisation phase to really develop and manifest over the next couple of years, particularly as they get in front of more clinicians and work them through how it all works.

There’s a good chance they’ll enter the ASX 300 in the coming rebalance, which will help with some passive flows.

What should investors be paying attention to as the story unfolds?

Contract wins are a massive component.

There’s also a broader market opportunity there that’s not necessarily being fully recognised at the moment. 

The nuclear medicine portion of the pulmonary embolism market is only a small slice, but they have the opportunity to expand into the wider pulmonary embolism market. If they can broaden out their opportunity set, that bodes well for them long term.

On the risk side, revenue is still very tiny relative to the valuation. There’s execution risk in getting in front of the right people at the right time and getting responses quickly and new contracts in place. There is also earnings volatility given the way the Pro Medicus facility was set up.

What could you be wrong about?

A lot of the valuation comes from the goodwill in the business. There is a chance of goodwill impairment in the years to come because they are assuming explosive revenue growth over the next couple of years.

There’s also the natural inertia in the healthcare space. It’s not only a technological shift, but it’s also a structural shift in the way workflows are conducted and the way radiology is conducted.

They’re plugging in new technology and actually shifting the way practitioners and hospitals go about things. That is a large risk for a company like this.