Keeping hospitals tooled up
Paragon Care (ASX:PGC) supplies equipment, devices and consumables to the Australian and New Zealand healthcare markets. The company has a secondary business that provides equipment management and repair through its services operation.
A solid FY20, in spite of COVID
Paragon was able to replace most of its lost revenue from the slowdown in elective surgery during COVID. In the end the company reported a 1.8% decline in revenue in FY20, to $231.7m. The decrease in gross margins from 40.3% during FY19 to 37.5% during FY20 was why EBITDA declined 19% to $22.9m year-over-year. In 1HY21 revenue was down 5% but EBITDA was up 63% to $14.7m due to stringent cost savings.
Disclosure: Stocks Down Under staff and/or director(s) own Paragon Care shares.
UPDATE 3 JUNE 2021
Reason for update: New Joint Venture with China-based Jiangsu Zojiwat Bio-Pharmaceuticals
New Joint Venture with Chinese healthcare distributor offers door into a new market
On 2 June 2021, Paragon Care announced a new Joint Venture with Jiangsu Zojiwat Bio-Pharmaceuticals (JZ Bio) for the distribution of Paragon’s Immulab Vitro Diagnostic Blood Bank Reagents. JZ Bio is a subsidiary of Jiangsu Libo Medicine Biotechnology, a manufacturer and distributor of healthcare products, focused on the Chinese blood bank sector. The purpose of this JV is to receive approval for the sale of Immulab’s Vitro Diagnostic Blood Bank Reagents in China through a series of National Medical Products Administration patient trails.
Immulab’s Vitro Diagnostic Blood Bank Reagents were originally developed by CSL and aquired by Paragon in 2018. It is used for the testing of patient and donor blood to help determine blood groups and specific phenotypes as well as to detect and identify red cell antibodies in pre transfusion and antenatal testing.
A quick overview on the potential market
As China’s population has continued to grow and age, the country is consistently experiencing a particularly intense shortage of blood. Fortunately, the number of donations has seen remarkable growth since 1998, to 15m in 2018. Since 2010, the principle of no-fault liability has been in place regarding tort liability relating to blood transfusion malpractice, accelerating the industry’s growth.
The JV trials are expected to be completed in approximately 24 months and, if successful, JZ will be granted exclusive distribution rights in undisclosed territories in China, expiring in 2031. We believe this is an important first step in Paragon expanding its product offerings internationally, with the potential for significant growth down the line.