Paragon Care (PGC) H2 2024 earnings summary

Executive summary

• Completed merger between CH2 and Paragon, creating a fully integrated healthcare business with expanded product range and geographic reach across Australia, New Zealand, and Asia Pacific, including Japan, Thailand, Vietnam, Korea, and the Philippines.

• New organizational structure with six sales streams and a shared service model implemented from July 1 to drive operational efficiency and cost synergies.

• Integration progressing rapidly, with all business units targeted for full ERP integration by June 2025 and expected annual synergies of $5m in FY25 and $12m in FY26.

• Board and management refreshed, blending leadership from both legacy companies.

Financial highlights

• FY24 pro forma revenue reached AUD 3.33 billion (+33.7% YoY), with underlying EBITDA of AUD 90.8 million (+14.5% YoY) and after-tax profit of AUD 28.4 million.

• Statutory EBITDA was AUD 44.8 million, including AUD 8 million in one-off costs, resulting in after-tax profit of AUD 8.4 million (-34.4% YoY).

• Revenue growth driven by CH2 (+31.4%), Oborne (+21.7%), and ParagonCare (+5.5%), with market share gains and sector growth.

• Gross margin: CH2 at 5.38%, Oborne at 23.2%, ParagonCare at 41.65%; CH2 margin declined due to high-cost, low-margin drug growth, while Paragon and Oborne improved.

• Net debt at year-end was AUD 176.7 million, with average daily net debt at AUD 169 million.

Outlook and guidance

• On track to deliver expected cost and revenue synergies in FY25 and FY26, with focus on organic growth, operational efficiencies, and cross-selling opportunities.

• Additional inorganic growth will be pursued selectively if it complements the core business.

• FY25 trading update and outlook to be provided at the November AGM.