Paragon Care Announces its Preliminary Results for 1H FY19

PGC

Leading provider of medical equipment, Paragon Care Limited (ASX: PGC) has announced its preliminary results for the first half of FY 2019 (1H FY19) and the outlook for FY19. As per the company’s outlook, the continuing business is performing at or above expectations. It is expected that the company will generate revenues of around $240 million and EBITDA of $28 million in FY 2019.

The company will release its financial information for 1H19 on or around 26th February 2019. The company is expecting 1H19 revenue from continuing business to be around $119m with a Gross Profit Margin of 38%. Further, the company is expecting its 1H19 EBITDA to be around $14 million.  

The 1H19 Revenue from Discontinued business & non?recurring costs is expected to be around $11 million. The Gross Profit Margin from Discontinued business & non?recurring costs is expected to be around 37%.  Paragon is very pleased with sales growth and a stabilized gross profit margin during the first half, with organic growth now tracking at 9% from the continuing business.

According to the company’s announcement, the 1H19 results will be negatively impacted by the legacy capital equipment business, which has not performed as profitably as expected, and delays with MIDAS business development. The management of the company is currently focused on maintaining strong organic sales growth and firmly executing on the change program.

The company’s continuing business is on track to integrate 70% of activities onto a single IT/ERP platform by 1 July 2019 and 100% by 31st December 2019. The company is expecting the benefits of integration to flow from 1st July 2019 and the cost reductions in FY20 is expected to be greater than $3 million. The Company’s performance for 1H19 and its outlook is influenced by the Strengthened sales leadership team and improved accountability which has resulted in a strong sales pipeline.

In November, Paragon commenced a strategic review of its capital equipment business as a part of the group-wide transformation programme. The strategic review will consist of an evaluation of capital equipment business with reference to the company’s tightened vision and strategy with an increased focus on high technology and recurring revenues, as well as its performance against group-wide growth hurdles. The capital equipment business represents around 10% of Paragon’s forecast FY 2019 revenue of A$260 million.

In November 2018, the company issued 33,934,869 fully paid ordinary shares to Pioneer Pharma (Australia) Pty Ltd, as a wholly owned subsidiary of Stock Exchange of Hong Kong-listed China Pioneer Pharma Holdings Limited. The Shares were issued at a price of AU$0.89 (89 cents) per Share.

PGC’s shares traded at $0.505, down by 12.174% during the day’s trade. It has a market capitalization of ~$193.85 million as of 12 February 2019. The counter opened the day at $0.550 and touched the day’s high of $0.550 and touched the day’s low of $0.500 with a daily volume of 18,248,624. The stock has provided a YTD return of -8.73 and also posted returns of -28.13%, -24.34% & -8.00% over the past six months, three & one-months period respectively.


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