Date: 30/01/2025
*** GENERAL AVICE ONLY***
Paragon Care Limited (PGC) is a provider durable medical equipment, medical devices, consumable medical products, and maintenance of technical medical equipment to the health, aged care and veterinary markets throughout Australia, New Zealand and Asia, as well as the distribution of pharmaceuticals, medical consumables, and complementary medicines to the Australian healthcare market.
Paragon Care looks like a promising investment after its recent merger with CH2, a fast-growing healthcare distribution company.
Why Paragon Care Looks Attractive
- CH2’s Growth: Since 2017, CH2 has expanded its market share in pharmacy wholesaling from 0% to 7%.
- Unique Position: It’s the only independent distributor among major competitors.
- Market Potential: There’s an opportunity to capture up to 44% of the non-aligned pharmacy market.
- Strong Leadership: CH2’s managing director, David Collins, is now leading the merged company.
- Cost Savings: The merger allows for big savings through:
- Combining warehouses
- Streamlining logistics
- Sharing services
- Cutting duplicate roles
Impressive Financial Results (FY24)
- Revenue Growth: Up 33.72% to $3,336.3 million
- Underlying EBITDA: $90.8 million
- Available Funds: $173 million for future growth opportunities
Future Strategy
Paragon Care is focusing on:
- Selling a wider range of products across its network
- Improving efficiency and reducing costs
- Expanding through both organic growth and potential acquisitions
Trade Rationale
There are always risks in the healthcare distribution industry, but Paragon Care’s smart merger and strategic focus position it well for future growth. Technically PGC has been consolidating and has just broken out touching 52.5c. Wilsons has just gone substantial on PGC in a news release two weeks ago. So with one of the more popular fund managers on board, we can buy PGC on an uptrend where the downside risk is easily managed
Trade Strategy:
Buy PGC up to 52.5c
Stop Loss 42.5c
Initial profit target 62.5c
Disclaimer: The recommendation given is general advice only. It does not take into account your personal objectives, financial situation, or specific needs. This information should not be your sole resource when making such decisions. We strongly recommend you to seek the advice of financial, taxation, and legal professionals before finalising any investment decisions.