Paragon Care Ltd ("PGC") - Healthcare upside!!

[Damo79]

RB Milestone research report out. Available from Paragon's website here:

http://paragoncare.com.au/pdf/Parago...0June%2020.pdf

They have come to a valuation of 6.1 cents per share. Good on the buggers

[steve fleming]

Nice announcement by PGC today confirming disposal of Tender Living and Lifetime Planning - $1.5m to apply to debt repayment

I would think it is very rare to see a listed company buy an operating business and then sell if off three years later for a capital gain (approx $600k capital gain which represents a 70% return on PGC’s 870k investment in these two businesses in 3 years). Most divestments by ASX companies are at a loss on “non-core” (read underperforming) businesses.

Further evidence of what good operators the PGC team are.

This will allow Management to focus 100% now on building up its durable medical products distribution businesses.

Will also help now in selling the PGC story and valuations– a pure-play medical products distributor

[steve fleming]

I think this announcement is more significant than any other put out by PGC over the last few years.

It proves the PGC strategy is working.

That is, the larger product range from combining the various aquired businesses makes the PGC value proposition much more attractive to customers. It proves the combined businesses can win contracts beyond the capabilities of any the businesses operating individually.

To win a high profile $1.5m contract will do wonders for the morale and confidence of the PGC directors and staff. The tendering experience and to now have this on the PGC 'resume' will assist greatly in winning future large contracts.

congratulations PGC!!

Another momentus day for PGC – a $2m contract win.

It proves that PGC can consistently win multi-million dollar contracts.

I can’t think of another sub $10m market cap company that has that capability.

Remember there are some 60 major hospital re/developments across the next three to five years that PGC have identified.

“This contract clearly demonstrates the enhanced capabilities of Paragon Care following the
acquisition of several successful health and aged care businesses and the benefits that have
flowed from merging and integrating these businesses.”

[steve fleming]

$1.6m (normalised) EBITDA for PGC – so profit is starting to get pretty chunky. And demonstrates the success of the turnaround, from being unprofitable 2 years ago.



Really pleased to see big GP margin expansion, from 30% in FY10 to 34% in FY11. Some of that will be a result of the higher margin Volker product hitting FY11, but shows that PGC is able to secure top line profit growth as well as benefit from economies of scale in terms of overheads reducing as a proportion of sales.

I do like this statement from the MD, confirming PGC’s competitive advantage that has arisen as a result of the acquisition strategy, and suggests a reason why they are able to increase margins:

“Paragon Care now has in place a range of products for hospitals, aged care, day care and

other medical facilities that is unmatched by our competitors. We are extremely well positioned
to win future hospital and aged care development and refurbishment projects as well as ongoing
supply contracts.”

Looking forward to the next 6 months as the revenues from the big contracts hit the P&L and the margin expansion continues.

Now, I wonder if this year the directors are going to have the b*lls to put out profit guidance for FY12.

[percy]

Been waiting hours for you to post.A very pleasing result.I expect the balance sheet is now even stronger than 30/6/11.

[Corporate]

Nice quarterly result for PGC (a record). It looks like there are only options for sale at the moment. Does anyone have a view on purchasing these over heads given there is only 7 months until expiry

[percy]

Nice quarterly result for PGC (a record). It looks like there are only options for sale at the moment. Does anyone have a view on purchasing these over heads given there is only 7 months until expiry

yes they are in the money.Conversion is 20cents,so trading at 15 cents means a share costs 35cents.I sold heads about the time of the SSP and brought more options.I intend to convert all or nearly all of my options.I knew SSp would affect the option price,but have been surprised it has stayed weak for so long and not tracked the heads price.

[steve fleming]

Looking forward to the next 6 months as the revenues from the big contracts hit the P&L and the margin expansion continues.

Now, I wonder if this year the directors are going to have the b*lls to put out profit guidance for FY12.

The cash is rolling in now for PGC, with record receipts ($6m+) and operating cash for the quarter.

I guess the pressure is on PGC to continue to win the big contracts to maintain and grow those sort of numbers.

Meanwhile, I will continue to pester Mark Simari to put out an FY12 forecast. There is not really an excuse why they shouldn't now, FY12 guidance will be important from a valuation/ re-rating perspective

[Entrep]

Something funny going on today... trades always weird on this one anyway. Anyone have any insight?

[percy]

Something funny going on today... trades always weird on this one anyway. Anyone have any insight?

Not just today.PGC and PGCOA have been very thinly traded since last year's SPP where everyone got their fill.The PGCOAs have not really followed the heads.Now we are seeing the heads follow the options!!! I am not a happy chap as I have mostly options.To convert or not to convert is becoming a hard decision.