Paragon Care – 2025 Interim Results Summary
Overall Report Tone
Paragon Care (ASX: PGC) reported strong revenue and profit growth for the first half of FY25, largely driven by the acquisition of CH2 Holdings (June 2024) and Oborne (March 2024). The company’s merger integration efforts are progressing, with increased market share in retail pharmacy and improved gross margins due to a shift towards higher-margin products. However, higher finance costs and borrowings indicate an increased reliance on debt for growth.
Financial Performance Summary
| Metric | 1H FY25 (Dec 2024) | 1H FY24 (Dec 2023) | Change (%) |
|---|---|---|---|
| Revenue | $1,850.4m | $1,440.8m | +28% |
| Gross Profit | $163.5m | $77.4m | +111% |
| Adjusted EBITDA | $47.5m | $23.4m | +103% |
| Profit Before Tax (PBT) | $16.9m | $10.3m | +64% |
| Net Profit After Tax (NPAT) | $13.2m | $7.1m | +85.8% |
| Net Tangible Assets per Share | -3.78c | -5.14c | Improved |
| Dividend Declared | None | $4.2m | -100% |
Key Highlights
📈 Significant Revenue Growth from Acquisitions
- 28% increase in revenue to $1.85 billion, driven by the CH2 Holdings and Oborne acquisitions.
- Stronger retail pharmacy market share contributed to growth.
💰 EBITDA & Gross Margin Expansion
- EBITDA more than doubled (+103% YoY) to $47.5m.
- Gross margin improved significantly (+111% YoY) due to a shift toward higher-margin sales.
💳 Higher Borrowings & Interest Costs
- Borrowings increased to $248.2m, driving a 135% increase in finance costs.
- Working capital requirements remain high, but net debt is expected to normalise in 2H FY25.
🛠 Integration of CH2 Holdings & Oborne Underway
- Purchase Price Allocation (PPA) finalised, recognising $108.8m in intangible assets & $253.3m in goodwill.
- Synergies expected to contribute $5m in FY25 and $12m in FY26.
Positive Surprises / Potential Concerns
✅ Stronger-than-expected Gross Margin Growth: Despite high finance costs, product mix improvements resulted in better profitability.
✅ Net Tangible Assets Improved: Although still negative, NTA improved from -5.14c to -3.78c per share.
⚠️ Rising Debt Levels: Borrowings grew significantly, leading to higher interest expenses (+135% YoY).
⚠️ No Dividend Declared: The company chose not to pay a dividend to prioritise debt management and integration costs.
Results vs. Market Expectations
📊 Revenue & Profitability in Line with AGM Expectations
- AGM guidance in November 2024 indicated that 1H FY25 performance was tracking in line with expectations.
📉 Higher-than-expected Finance Costs:
- Finance costs rose sharply, potentially impacting future profitability if debt levels remain elevated.
📌 Integration on Track, Synergies Expected in FY26:
- Merger synergies of $5m in FY25 and $12m in FY26 are expected to improve margins and reduce operating costs.
Outlook & Guidance
🔮 Second Half Expected to Show Further Improvement
- Net debt expected to decline as working capital stabilises.
- Revenue growth to continue as integration progresses.
💡 Long-term Expansion in Asia-Pacific
- The company aims to expand into Singapore, Malaysia & Indonesia in FY26.
📌 No Dividend Until FY26 Review
- Dividend policy will be reassessed in FY26, focusing on debt reduction & reinvestment in growth.
Analyst Positioning
Comparison with Analyst Revenue and EBITDA Forecasts
Analyst Forecasts:
- Revenue:
- 2025: $3,704.9M
- 2026: $3,902.24M
- EBITDA:
- 2025: $98.45M
- 2026: $109.43M
Company Performance (Half-Year Ended Dec 2024):
- Revenue: $1,850.42M
- EBITDA: $47.53M
Projected Full-Year Performance vs. Analyst Estimates
- If we annualize the H1 2024 revenue and EBITDA figures:
- Estimated FY2025 Revenue: ~$3,700M (close to analyst forecast).
- Estimated FY2025 EBITDA: ~$95M (slightly below analyst forecast of $98.45M).
Conclusion:
- Revenue is tracking close to 2025 expectations.
- EBITDA is slightly below expectations but could improve in H2 with cost efficiencies and integration benefits.
Disclaimer: This information is provided purely for educational purposes. It takes no account of an individual’s personal financial circumstances and hence can in no way constitute financial advice. The above data may be subject to errors or inconsistencies for which the author takes no liability. It is imperative that all investors do their own research or if they need advice, seek it from a qualified financial adviser.
Quick Take: H1FY25 ASX:PGC