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Dear Shareholders

We had a great start to 2021, delivering a solid first half financial result in February and we continue to benefit from the positive external trends in healthcare and the gradual economic recovery in the second half, following the COVID related business disruption of the previous year.
In this edition, we would like to share the key highlights from the first half results, including recent videos from Finance News Network (FNN) discussing the results.  We also provide greater insight into our Diagnostics pillar, by highlighting a new agency agreement for transplant products and discussing the growth opportunities in the Diagnostics pillar with the General Manager of Diagnostics, Mary-Jane O’Sullivan.

First Half (1H FY2021) Results Deliver Improved Profitability and Cashflow

Paragon Care delivered a solid first half financial result with improved profitability and cashflow.  Our diversified product portfolio generated revenue stability, down only 5% on the previous corresponding period due to the disrupted healthcare market.  EBITDA was up a significant 63% to $14.7m, reflecting the improved margins and streamlined operations.  Gross margins were up slightly to 38.7% and we delivered over $7m in annualised savings.

Operating cashflow increased to $15.5m due to the significant reduction in days debtors and inventories.  In the first half, we also paid out over $14m to vendors in earn-outs from previous acquisitions.  As at March 2021, there are no further vendor payments outstanding, thus leading to future improvements in cashflow moving forward.

Our focus is now on organic growth and continuous improvement to drive revenue growth and operational efficiency across all four pillars.  We expect further opportunities to capitalise on our existing local manufacturing capability and we are well positioned to benefit from growth in aged care moving forward. 
Paragon Care CEO, Phil Nicholl, recently discussed the first half results with Finance News Network (FNN).
  • See here for the key highlights of the first half results
  • See here for the full investor presentation of the first half results

Expanding Product Portfolio in Transplant Diagnostics

Paragon Care has recently expanded its product portfolio in Diagnostics through a new supply contract for transplant products.  This new product offering will contribute to the underlying growth in the Diagnostics division over the years ahead.

Immulab is a leading manufacturer and provider of blood banking reagents and solutions in Australia and the Immulab business sits within Paragon Care’s Diagnostics pillar.   Immulab is the only Australian owned manufacturer of In Vitro Diagnostics (IVDs) for Blood Banks.

Immucor is a leading provider of transfusion and transplantation diagnostics products globally and is dedicated to matching donors with patients in need of blood or an organ.

In 2014, Immulab was appointed the exclusive distributor for Immucor Transfusion Diagnostics in Australia and New Zealand. Since that time, Immulab has grown the Immucor transfusion business significantly. In fact, since 2016 blood donations in Australia have been screened using Immucor automation and reagents – that is over 1 million donations each year!

Immulab has now expanded its exclusive distribution relationship with Immucor in Australia and New Zealand to include Transplant Diagnostic products, commencing in early 2021.  The transfusion and transplant diagnostic product ranges are highly complementary as they are utilised to ensure the right match for patients in need of blood or an organ.

Immucor’s transplant diagnostics division develops, manufactures and sells a complete line of assays to perform pre-transplant typing and screening and post-transplant monitoring.  In Australia, there are over 1,700 people waiting for their life-saving second chance, a transplant. With the right match, the transplant can transform a life.

The extension of this distribution relationship validates Paragon Care’s market leading position as a distributor of choice for global manufacturers who want to expand in the Australian and New Zealand market.

CFO, Stephen MundaySpotlight on Mary-Jane O’Sullivan, General Manager Diagnostics

Mary-Jane O’Sullivan is the General Manager of the Diagnostics pillar within Paragon Care. Mary-Jane joined Paragon in April 2018 when Immulab (previously a business unit of CSL) was acquired by Paragon Care.

Q:  What trends are you seeing in the broader Diagnostics industry?

A:  Diagnostics is clearly a growth industry, with innovation and increased regulation driving demand for in vitro diagnostics (IVDs) and associated equipment in both the clinical and R&D markets.

Rather than simply being a way to identify which patients have a specific disease, diagnostics are now used to support the clinical development of drugs, predict disease before symptoms begin, forecast the progress of a disorder, and identify patients who are most likely to respond (or not respond) to specific treatments.

Over the past year, there has been a focus on increasing Australia’s ‘Sovereign Manufacture’ capabilities to reduce reliance on overseas supply chains for essential products.

Immulab is a local manufacturer of Class III and Class IV IVDs used in blood banks. In addition, Immulab has the capability to manufacture other diagnostics products and has recently increased manufacturing of Viral Transport Media, which is used in COVID testing.

Q:  What do you see as the major growth opportunities in the Diagnostics pillar over the next year?

A:   The Diagnostics pillar is well positioned for growth over the next year through both the addition of new agencies and underlying organic growth through operating efficiencies and cross-selling. We have a diverse and innovative product portfolio designed to meet the growing demand.

A new agency, Immucor Transplant, was onboarded from 1st March (see above article) and we have had ongoing success in recent tenders.

We are also focused on the growth and expansion of existing agencies. The Diagnostics pillar is comprised of Immulab, Immuno and LabGear and these individual businesses have now been successfully consolidated, which has delivered operational synergies and efficiencies. This consolidation now provides a solid platform to cross sell the complementary Diagnostic product range across pathology, R&D and tertiary sectors by leveraging existing relationships and maximising coverage.

Customers are responding very positively to this strategy and the next step will be to look for cross-selling opportunities with other pillars within Paragon Care.

Q:  What are the opportunities for expansion in China over the next few years?

A:   We view China as an exciting growth opportunity for the Diagnostics pillar and Immulab currently sells a range of contract manufactured and raw materials into China. The market demand in China is huge, with ongoing growth driven by innovation and regulation.

The longer-term growth strategy is to establish some strategic partnerships to expand sales into China. Immulab has appointed the first distribution partner in China and is now working towards the registration of key products.

CEO, Phil NichollThank You.

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

Kind Regards
Phil Nicholl
CEO, Paragon Care

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