Enterprise Imaging Expansion And AI Adoption Will Drive Powerful Long Term Upside Potential

Catalysts

About Mach7 Technologies

Mach7 Technologies delivers mission-critical enterprise imaging software that connects, manages and activates medical imaging data across health systems worldwide.

What are the underlying business or industry changes driving this perspective?

• The projected near doubling of the enterprise imaging market to about 4.1 billion dollars by 2030, growing at roughly 12 percent annually, positions Mach7 to potentially capture a larger share as hospitals consolidate fragmented systems into unified platforms. This may support more durable revenue growth and larger deal sizes.
• The rapid shift of medical imaging AI from experimentation into operational deployment makes Mach7's AI-ready architecture and intelligent data platform launch strategically important. This could support premium pricing, higher software attachment and expansion ARR as customers standardize on its infrastructure.
• Growing imaging data volumes across radiology, cardiology, oncology, tele imaging and emerging areas like digital pathology increase demand for open, interoperable architectures where Mach7 already differentiates. This may support multi department rollouts, upsell opportunities and potentially improve long term net margins.
• The expansion of a lower cost innovation hub in Asia, combined with returning founders and a refreshed global leadership team, may accelerate product delivery while structurally reducing engineering and staff costs. This could enhance operating leverage and support margin expansion if revenue scales.
• Deepening relationships with large reference customers such as the U.S. Veterans Health Administration and major IDNs, supported by the flight crew engagement model and improving customer satisfaction, may strengthen win rates and renewal visibility, supporting ARR growth and contributing to more predictable revenue.

Assumptions

This narrative explores a more optimistic perspective on Mach7 Technologies compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts. How have these above catalysts been quantified?

• The bullish analysts are assuming Mach7 Technologies's revenue will grow by 14.2% annually over the next 3 years.
• The bullish analysts are not forecasting that Mach7 Technologies will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Mach7 Technologies's profit margin will increase from -18.4% to the average AU Healthcare Services industry of 18.1% in 3 years.
• If Mach7 Technologies's profit margin were to converge on the industry average, you could expect earnings to reach A$9.1 million (and earnings per share of A$0.04) by about December 2028, up from A$-6.2 million today.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 24.3x on those 2028 earnings, up from -20.3x today. This future PE is lower than the current PE for the AU Healthcare Services industry at 61.8x.
• The bullish analysts expect the number of shares outstanding to decline by 2.6% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.26%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• The company is treating FY 2026 as a reset year, with significant restructuring of leadership, sales and operating models. This introduces execution risk if the new strategy from archive to architecture fails to translate into higher win rates and larger contracts, putting sustained revenue growth at risk over the medium term.
• Despite strong industry tailwinds, management openly acknowledges that the current sales pipeline is not where they want it to be and that recent growth in sales orders has come off a low base. Any delay in converting the VA Phase 2 rollout or new RSNA driven opportunities could lead to slower expansion in annual recurring revenue and weaker earnings growth than implied in the bullish case.
• The plan to expand development capacity via a new lower cost innovation hub in Asia and to lean on a globally distributed engineering model may create operational complexity, integration challenges and delivery delays. This could raise development costs over time and limit the expected improvement in net margins.
• The business is investing ahead of revenue into AI ready architecture, advanced visualization, tele imaging and analytics while still being loss making. If customer adoption of these new capabilities or AI monetization is slower than expected, the incremental product and regulatory spend could compress net margins and delay the path to sustainable profitability.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Mach7 Technologies is A$0.8, which represents up to two standard deviations above the consensus price target of A$0.69. This valuation is based on what can be assumed as the expectations of Mach7 Technologies's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
  
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of A$0.8, and the most bearish reporting a price target of just A$0.5.
  
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2028, revenues will be A$50.3 million, earnings will come to A$9.1 million, and it would be trading on a PE ratio of 24.3x, assuming you use a discount rate of 8.3%.
  
• Given the current share price of A$0.54, the analyst price target of A$0.8 is 33.1% higher.
  
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.