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Dear Shareholders

It is with great pleasure to share with you our first Paragon Care Investor Newsletter, which will provide further insights into trends in our industry, additional information on our market leading suite of healthcare products, as well as an introduction to our dedicated team.

2020 has been a challenging year for many companies, however we are pleased to report that we are ending the year with positive momentum and increasing confidence in the year ahead.

We are now focused on new growth opportunities to increase local manufacturing, to improve cross division sales collaboration, to expand our product portfolio and to capitalise on our national distribution footprint. We are now seeing positive external trends in the healthcare sector which will underpin our growth in the second half of the financial year.

Traction in Cross-Division Sales Collaboration for COVID Kits Supply Contract

Paragon Care has established a strategic partnership with 3DMEDiTech to produce and supply innovative sterile Australian Made 3D Printed Swab Kits to the National Medical Stockpile. The Australian Government is shoring up the strategic reserve of personal protective equipment (PPE) and medicines through the National Medical Stockpile, for use in a public health emergency such as the current pandemic. 

This new supply contract with 3DMEDiTech capitalises on Paragon’s local manufacturing capability, with two ISO13485 and CE approved cleanroom sites in South East Victoria. Importantly, the contract was secured through the internal cross division sales collaboration of the Devices pillar through Lovell Surgical Solutions and the Diagnostics pillar through Immulab. 

Paragon Care will sell COVID testing kits, which include a sterile 3D printed nasopharyngeal swab, viral transport “media” (salt solution), and a biohazard bag for safe transport and lab testing. The swabs are the first sterile 3D printed swabs to be included on the Australian Register of Therapeutic Goods. 

The kits make it easy and safe for healthcare professionals to collect clinical specimens from people presenting for COVID-19 testing, and for the samples to be transported to testing laboratories. The Australian Made kits will be issued from the stockpile to general practitioners, private pathology providers and state and territory governments according to their need for ongoing coronavirus testing.

3DMEDiTech is globally recognised for its speed in the development and production of personalised medical devices that can be manufactured at scale through advanced 3D printing. It has deployed this unique capacity to play a key role in countering critical medical supply shortages during the worldwide COVID-19 pandemic. Paragon Care continues to work collaboratively with 3DMEDiTech on new product development to meet market needs.

National Footprint Enables Support for Indigenous Eye Health

Designs For Vision (DFV) is a specialist provider of diagnostic and surgical products to the ophthalmic and optometry sectors and the DFV business sits within Paragon Care’s Devices pillar. Paragon Care’s extensive distribution footprint across Australia and New Zealand ensures it can work collaboratively with national organisations, including those dedicated to improving indigenous health.

Aboriginal and Torres Strait Islanders experience rates of vision impairment that are three times higher than the rest of the population, of which around 90% is preventable and treatable. One of the leading indicators of poor eye health is the inability to access eye examinations.

Designs for Vision was approached in early 2020 by a consortium consisting of the Australian College of Optometry, Department of Health, Aboriginal Health Council of South Australia, the Brien Holden Vision Institute and Centre for Eye Health in Sydney. The aim of the consortium was to provide 100 slit lamps, which is a microscope with a high-intensity light source used to examine the eye, to aboriginal health centres around Australia.

We are pleased to announce the first deliveries of these slit lamps in December to clinics in Redfern, Miller and Bankstown in Sydney and to a clinic in central Adelaide. The first 50 slit lamps will be delivered to less remote areas, followed by a further 50 to remote aboriginal communities in WA, NT, QLD and NSW.

Designs for Vision is delighted to be involved in this project that helps increase eye health equality to our first Australians by improving access to optometric diagnostic tools. The roll out is expected to be completed by June 2021.

CFO, Stephen MundayYear in Review – Q&A with Chief Financial Officer, Stephen Munday

Q: Over the past year, Paragon Care has effectively implemented the core elements of its comprehensive Strategic Review Program. What were the key objectives of the review and what have you achieved throughout the year?

A:  Over the past year, we have made significant progress on our Strategic Review and these operational refinements have delivered $6m in annualised savings to date. This was achieved through a more unified management team to unlock internal capability and the streamlining of operations, including the consolidation of facilities. We improved the inventory management and working capital cycle by lowering freight costs and introducing LEAN principles. In addition, we have reviewed our ERP systems and will have stable platforms restored by Q3 FY21. These changes ensure that we have a lower operating cost base and a solid foundation for future growth. 

Q: What do you see as the clear competitive advantages of Paragon Care in the market today?

A: Paragon Care is well positioned in the market as a leading provider of medical equipment, devices and consumables to the healthcare markets in Australia and New Zealand. Our clear competitive advantages include our well established distribution with over 100 manufacturers around the world, supported by an experienced and dedicated sales team, as well as our local manufacturing capability. In addition, we have a diversified product portfolio and a strong distribution footprint supplying the majority of hospitals and healthcare facilities in Australia and New Zealand. Our comprehensive sales & marketing, regulatory, service & maintenance and logistics capability ensure we are a preferred partner for overseas distributors. 

Q:  Where do you see the growth opportunities for Paragon Care in FY21?

A: We see many opportunities for growth in FY21. Our inbound enquiries have increased significantly over the past few months, as elective surgery opens up again and we now have an internal focus on cross division sales collaboration. We also see opportunities to capitalise on our existing local manufacturing capability for COVID testing, which is driven by the government requirements for local manufacturing of essential health equipment. In addition, we are well positioned to benefit from further investment in Aged Care following the release of the Royal Commission report into Aged Care which is expected in early 2021.

Thank You.

CEO, Phil NichollWe would like to thank our shareholders for the ongoing support over the past year. On behalf of the team at Paragon Care, we would like to wish you all a happy and safe festive season!

Kind Regards
Phil Nicholl
CEO, Paragon Care

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