Paragon Care (ASX:PGC) reported first-half results that management described as a “good solid” underlying performance, while statutory earnings were heavily affected by a board decision to fully provide for an outstanding receivable from the Infinity Group.
On an underlying basis, the company posted revenue of AUD 1.9 billion, underlying EBITDA of AUD 49 million, and net profit after tax of AUD 13.3 million. Statutory revenue was unchanged, but statutory EBITDA was a loss of AUD 0.4 million and statutory net loss after tax was AUD 21.3 million.
Infinity provision drives gap between statutory and underlying results
Pentland said the statutory-to-underlying EBITDA bridge included adding back the Infinity Group debt provision net of GST recoverable of AUD 46.4 million. Management said it continues to work weekly with administrators and other creditors, and expects the administration process to seek binding offers in the fourth quarter, with a potential update for shareholders by early May.
In the Q&A, management reiterated that net debt guidance excludes any Infinity recovery. Pentland also noted that GST recovery timing is influenced by tax rules, with further GST recoverable expected once the relevant period passes 12 months from when trading ceased.
Revenue recovery offsets Infinity and “COVID drag” impacts
Management highlighted that the company lost AUD 78 million of revenue in the first half after placing Infinity on hold, alongside an additional AUD 48 million “COVID drag” deflation. Carmen said the team rebuilt that volume and returned the business to positive growth.
Pentland walked through a revenue bridge that rebased the prior comparative period after removing Infinity sales and the COVID drag, resulting in a rebased prior period revenue figure of AUD 1.7 billion. He said GLP-1 drug sales were “very positive” in the half, helped by being added to the PBS and the Safety Net end date in December. The company also cited AUD 114 million of organic growth and a smaller contribution from acquisitions, including AHP Dental (acquired in July) and Somnotec (acquired in December), with a larger contribution expected in the second half.
Management also characterized underlying EBITDA growth as 3.3% versus the prior year, after excluding Infinity impacts and integration and acquisition-related costs.
Costs, freight pressure, and Willawong site transition
On expenses, Carmen said operating costs were “well maintained” as a percentage of revenue, but the period included freight pressure, particularly in New South Wales. She attributed this to a “double whammy” of new contract logistics wins that increased network load and a delay in opening the company’s new Brisbane facility at Willawong. The company received the keys just before Christmas, and management said the facility has already helped relieve space constraints, with better cost control expected in the second half as the transition completes.
Management said it also made strategic marketing investments intended to support future growth.
Segment commentary: ANZ steady, Asia strong, contract logistics surges
In ANZ, management described the result as featuring solid normalized revenue growth with steady margin. The company said ANZ growth was 2.1% before normalizations and 9.8% after adjusting for Infinity and COVID drag, while the margin remained steady at 7.8%.
- Wholesale: Reported revenue of AUD 1.5 billion declined 2.6% year over year due to Infinity and COVID impacts; normalized growth was 6%. Wholesale margin improved slightly to 6.1% from 6.0%.
- Dental: Management highlighted AHP Dental as a platform to expand under a single brand and pursue “profitable revenue growth” in the dental market.
- Medtech (ANZ): Revenue increased 4%, driven by growth in Australian medical and surgical units, New Zealand orthopedics, and an aesthetics launch. Vision revenue declined as the company transitions and rebuilds its portfolio. Management said it is investing in surgical robots and aesthetics to support future growth.
- Contract logistics: Revenue grew 47.1%, underpinned by a significant contract win in June 2025 and organic growth with existing principals. Margin improved to 4.7%. In Q&A, Carmen identified the major win as Owens & Minor distribution across Australia and said she expects additional wins, describing the division as having a “long runway.”
- Clinical manufacturing: Delivered solid revenue but faced delays in some equipment sales; margin improved. The company cited an ongoing opportunity pipeline supported by its capability producing Reagent Red Blood Cells.
In Asia (reported within medtech), management said revenue grew 33.2%, largely organic, driven by strong aesthetics sales and delivery of large capital equipment units. Pentland cited organic revenue growth of AUD 16.2 million (or 31%) and said margin was 44%, calling the region attractive and a priority for further investment.
Guidance reiterated; focus on integration completion, net debt, and new contracts
Management reconfirmed full-year guidance of approximately AUD 3.6 billion in revenue and AUD 97 million to AUD 107 million in underlying EBITDA. The company also reiterated a target of net debt at approximately 2x by the end of June. Asked what could push results toward the bottom versus the top end of the EBITDA range, Carmen pointed to completing the “3-2-1” transition program and finishing the Willawong site transition as key risk areas.
Management said it expects net working capital to moderate in the second half after the seasonal calendar-year inventory build. The company also discussed the Ramsay contract exit, noting it was a large top-line number but low margin, and said it was confident in removing associated costs. In Q&A, Carmen said the OpEx against Ramsay’s gross margin was “basically line ball,” and that working capital release begins around February following the January contract exit.
The company also highlighted that it had been awarded an Australian Defence Force contract covering pharmacy, medical, and dental for five years with options. Carmen said the contract was won on capability rather than price and that it is expected to deliver better gross margin dollars than the Ramsay contract. She said she expects around AUD 40 million in revenue from the defence contract, while noting commercial confidentiality.
No interim dividend was declared, with management stating it will review dividends at the end of June and remains committed to reviewing distributions each half.
Management also provided leadership and M&A updates, noting that Carmen will transition to managing director from March 1, while David will focus on M&A and integration of acquired businesses. Pentland said the company incurred AUD 2 million of M&A-related costs during the half and continues to pursue a pipeline of strategic acquisitions, particularly to support expansion in Asia. Management noted it is now operating in nine Asian countries and remains focused on those markets while evaluating additional opportunities.
About Paragon Care (ASX:PGC)
Paragon Care provides end to end healthcare solutions including equipment and service solutions for acute, aged and primary care.
