Paragon Care (ASX:PGC) FY21 results & outlook

Interviews

by Melissa Darmawan

Paragon Care Limited (ASX:PGC) CEO Phil Nicholl provides an update on FY21 results, which reported growth in all key financial metrics and the recommencement of dividends.

Melissa Damawan: Hello. Melissa Damawan for the Finance News Network. Joining me from Paragon Care (ASX:PGC) is CEO Phil Nicholl. Phil, welcome to the network.

Phil Nicholl: Thanks, Melissa. It's nice to be with you.

Melissa Damawan: It's great to have you. Before we go into the full year results, can you start by giving our viewers a brief overview of Paragon Care?

Phil Nicholl: Paragon Care is a leading provider of medical equipment and devices to the healthcare markets in Australia and New Zealand. We have very well established long-term relationships with over a hundred manufacturers of medical equipment from all over the world. And we supply the majority of hospitals and healthcare facilities in Australia and New Zealand. Our business model is to be the distributor of choice for manufacturers who aren't in the Australia and New Zealand market but would like to be. And we have over 400 employees, so have full capabilities across sales, marketing, regulatory, logistics and service. So, we offer a full suite of representation for companies that want to get into the market.

Melissa Damawan: Thanks, Phil. Now, to the results. What were the key highlights from the full year results?

Phil Nicholl: Yeah, we were very pleased and had a very solid performance over the past year, which delivered growth across all the key financial metrics. It was a year of steady progress. And we really just did what we said we were going to do. Revenue was up 2 per cent. EBITDA was up 16 per cent on a normalised basis when we compare it to last year. Net profit after tax was finished at 8.3 million. And we had earnings per share of 2.45 cents per share. Pleasingly, our operating cashflow was very strong at 27.5 million, which was up significantly on prior year. And we were also very happy to declare a fully franked dividend of 1 cent per share, which is a payout ratio of 40 per cent.

Melissa Darmawan: What were the key trends driving those results?

Phil Nicholl: Over the past few years, we've continued to focus on diversifying our revenue streams by both product line perspective and geographically throughout Australia and New Zealand, which has served us well. Our devices business performed strongly, driven by our eye care business, and that offset some of the declines we saw in aged care, which was a function of the adverse impact of COVID lockdowns. In terms of geography, the growth in our New Zealand business offset a small decline in our Australian business. And our profitability continues to improve off the back of a structurally lower cost base. We've now adopted a continuous improvement mantra throughout the business, which is working well.

Melissa Damawan: In the past year, you renegotiated your banking facilities. Can you tell us a bit more about that?

Phil Nicholl: This was a big milestone for us. And, in May, we announced a successful renegotiation of our banking facilities with NAB. This is a new three-year banking agreement. And the new covenants were specifically designed to support the future growth of Paragon Care. The bank has been very supportive of our growth strategy, and this new arrangement is an endorsement of the underlying strength of our overall business.

Melissa Damawan: And, Phil, what is the outlook for financial year 2022?

Phil Nicholl: Yeah. We continue to focus on securing new agencies and expanding our product range, and also increasing the cross-divisional sales and collaboration, as the pillar structure that we put in place is maturing. And we're well positioned now to fully utilise this opportunity. We're also working with our Chinese partner in preparation to introduce some of our Immulab products into China, with the immediate focus currently being on getting our products registered. We have a backlog of projects ready for completion as soon as we regain access to the aged care facilities, obviously once the COVID restrictions start to ease. And, very excitingly, we operate in a large and growing healthcare market with very attractive fundamentals and tailwinds. And, with our deep industry knowledge and very well-established relationships and access to the hospitals and aged-care facilities, we are very well positioned for continued growth into the future.

Melissa Damawan: Phil Nicholl, thanks for the update, and congratulations on the results.

Phil Nicholl: Yeah. Thanks very much.


Ends

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