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Dear Shareholders

During the FY21 financial year, Paragon Care successfully concluded its cost rationalisation program which marked the start of the operational turnaround for the Company.  This was a significant achievement, particularly in a business environment with major disruptions due to the COVID-19 pandemic. 

In this edition of the Paragon Care investor newsletter, we will review the key announcements in the past quarter, including the successful renegotiation of banking facilities, the share capital reduction to enable future franked dividend payments, and the announcement of a new joint venture with a Chinese healthcare company for the distribution of in vitro diagnostic blood reagents in China.

We will also provide an insight into some of the unique strengths of Designs for Vision from Brad Grills and Nik Apostolou, both General Managers, which was acquired by Paragon Care in 2015.  Brad and Nik explain the importance of long-term relationships in accessing new eye care technologies and discuss the strategic rationale for joining Paragon Care.

Successful renegotiation of banking facilities is a major milestone

In May, Paragon Care announced the successful renegotiation of the existing banking facilities with NAB.  This represents a significant milestone for the Company and reflects the underlying strength of the business.

The improved operational performance of Paragon Care over the past year, including the successful implementation of cost management initiatives and an improved working capital cycle, has led to a significant increase in the Company’s net operating cash flow generation.

The new 3-year banking contract extends to July 2024 and the new covenants have been designed to support the future growth of the business, enabling Paragon Care to consider resuming dividends and explore acquisition opportunities.

Click here for the ASX Announcement on banking facilities

In addition, in late May, Paragon Care announced that the Company’s share capital will be reduced, thus reducing the accumulated accounting losses and enabling the payment of future franked dividends.  The capital reduction has no impact on Paragon Care’s assets, net assets, financial results, cash flow of funding or the number of shares on issue.

Click here for the ASX Announcement on share capital reduction

First steps in China growth strategy

Paragon Care expects China to be an attractive growth market for the Company’s world class diagnostics products over the longer term and in June, Paragon Care made an important announcement regarding the first steps in its China growth strategy.  

Paragon Care’s diagnostics business, Immulab, has entered a joint venture with Jiangsu Zojiwat Bio-Pharmaceuticals Co. Ltd (“JZ Bio-Pharmaceutical”), a Chinese healthcare company, for the distribution of Immulab’s proprietary In Vitro Diagnostic Blood Bank Reagents in China.

Paragon Care is now working cooperatively with JZ Bio-Pharmaceutical to complete the required patient trials for the approval of the In Vitro Diagnostic Blood Bank Reagents for sale in China.  These trials will be completed in at least three domestic clinical institutions and are expected to be completed in approximately 24 months.    

Click here for the ASX announcement on the China JV

Eye Care for the Future: Spotlight on Designs for Vision

Designs for Vision (DFV) is a leading provider of diagnostic and surgical ophthalmic products in Australasia, sourcing the highest quality products from a global network of specialist eye care manufacturers.  DFV currently represents over 50 companies to a wide range of medical and para-medical disciplines.

Designs for Vision was established in 1978 by optical dispenser Richard Grills to distribute eye care products throughout Australia.  In 2011, DFV was taken over by Richard’s son Brad Grills and business partner Nik Apostolou, and the company was acquired by Paragon Care in 2015.  Brad and Nik are the General Managers at Designs for Vision and they remain substantial shareholders in Paragon Care. They discuss the competitive advantages of DFV, give further insight into the growth opportunities ahead and explain the benefits in joining Paragon Care.

Brad: Designs for Vision was founded over 40 years ago and one of our core strengths is the long-term relationships with both clients and suppliers, which is directly correlated to the long tenure of our staff.  In fact, we believe that we have the longest tenured staff in the industry!  The strength of these relationships means that we often receive inbound enquires to represent new technologies in Australia as they trust us to represents them well in this market.

Nik: This was highlighted over the past year during the COVID-19 pandemic as travel restrictions prevented our sales reps from travelling to major eye care conferences, but we were still able to acquire multiple new contracts in surgical eyecare and capital equipment from European suppliers.

Brad: A major focus in the year ahead is on expanding our already significant market share in intraocular lenses, which are implants for cataract surgery.  There are approximately 250,000 cataracts procedures performed each year and we see opportunities to expand in this large and growing sector.

Nik: Our strategic rationale in joining Paragon Care in 2016 was to benefit from their corporate infrastructure, so that we could focus on doing what we do best, which is leveraging our expertise in the eye care market to bring world class technologies to the Australian market.

Brad: Over the past decade, we observed industry changes, in terms of the corporatisation of private hospital groups and the emergence of large commercial players in the eye care market, including SpecSavers.  We believed that we could compete more effectively as part of a larger corporate entity.  We are now on track to double our revenue since joining Paragon Care, so overall it has been a huge success for us.

Nik: Overall, we are very energised to be working with a great team of business owners, like us, across different healthcare verticals.  We believe this team collaboration combined with deep industry expertise ensures Paragon Care is well positioned for growth over the years ahead.

Click here to learn more about Designs for Vision

CFO, Stephen MundayThank You.

We would like to thank our shareholders for their ongoing support and we will keep you updated with further news throughout the year.

Take care and stay safe!.

Kind Regards
Phil Nicholl
CEO, Paragon Care
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