Paragon Care's Acquisition Growth Meets a Leverage and Insolvency Scare
Rapid medical device distribution expansion strained the balance sheet, and a pharmacy customer's insolvency prompted an exit, even as some managers see value in the core business.
30 Jun 2026 · 3 min read
In short
Paragon Care expanded rapidly through the Somnotec Group and Haju Medical acquisitions, the latter worth A$70 million and expected to be earnings accretive from the outset.
Wilson Asset Management exited its position, citing balance sheet leverage strained by the acquisition spree and exposure to failed pharmacy group Infinity's insolvency.
First Samuel and Forager Funds both see value beneath the ugly statutory numbers, arguing the core wholesaling business delivered a respectable underlying result despite the Infinity setback.
Paragon Care delivered rapid acquisition-led growth through Somnotec Group and Haju Medical purchases, before a leveraged balance sheet and exposure to failed pharmacy group Infinity's insolvency prompted Wilson Asset Management to exit, even as First Samuel and Forager Funds argued the ugly statutory result masked a respectable underlying core business.
Rapid acquisition-led expansion
Tamim Funds Management said Paragon Care reported multiple material developments in December 2025, completing the acquisition of Somnotec Group, expanding its medical device distribution footprint across Southeast Asia, and agreeing to acquire Haju Medical for A$70 million, comprising A$30 million upfront plus contingent consideration, with Haju generating approximately A$30 million in revenue and A$7.7 million in EBITDA in FY24, expected to be earnings accretive from the outset.
The company completed the acquisition of Somnotec Group, expanding its medical device distribution footprint across Southeast Asia. It also agreed to acquire Haju Medical for A$70 million, with Haju generating approximately A$30 million in revenue and A$7.7 million in EBITDA in FY24, and expected to be earnings accretive.
— Tamim Funds Management, Monthly Report, December 2025
A leveraged balance sheet strained by acquisitions, then an exit
Wilson Asset Management held at hold, having been a big shareholder before selling out, saying the decision had nothing to do with management or the board, but the fund felt the balance sheet carried too much leverage, compounded by an issue with Infinity, a pharmacy group that effectively fell away and had insolvency problems, indicating it would revisit the stock if the balance sheet sorted itself out. In its annual report, Wilson Asset Management said pharmacy wholesaler Paragon Care delivered disappointing results in August 2025, and following a series of acquisitions that strained its balance sheet, the fund exited the position in December 2025.
We were a big shareholder in this one and we did sell out. It wasn't anything to do with the management or the board, but we just felt their balance sheet had too much leverage and they're having an issue with Infinity which is a pharmacy group that effectively has fallen away and had insolvency problems.
— Wilson Asset Management, Article, May 2026
A value play with an underappreciated core business
Forager Funds rated it a buy, calling it definitely a value play, a more recent entrant to its portfolio after having held it during the original iteration of the merger that formed the current Paragon Care some years back, crediting management with building a business and grinding out impressive growth from what it acknowledges is a pretty difficult business. First Samuel said Paragon Care's first-half FY26 result was easy for the market to dismiss because the statutory numbers looked ugly, but that would miss a more interesting point, since beneath the noise the core business actually delivered a respectable half, with the Infinity exposure genuinely regrettable but part of the inherent risks of a wholesaling business, remaining impressed by the acquisitions the company has made at relatively well-priced earnings multiples.
Paragon Care's 1H26 result was easy for the market to dismiss because the statutory numbers looked ugly, but that would miss the more interesting point. Beneath the noise, the core business actually delivered a respectable half. The Infinity exposure is genuinely regrettable but is part of the risks of a wholesaling business.
— First Samuel, Article, March 2026
What fund managers say they are watching next is resolution of the balance sheet leverage from the acquisition spree, containment of the Infinity insolvency fallout, delivery of the earnings accretion expected from the Haju Medical and Somnotec acquisitions, and whether the underlying core business continues outperforming the ugly statutory numbers.
Questions
Why did Wilson Asset Management exit its Paragon Care position?
Wilson Asset Management exited Paragon Care due to concerns about balance sheet leverage following a series of acquisitions, compounded by exposure to pharmacy group Infinity's insolvency problems.
What were Paragon Care's recent acquisitions?
Paragon Care completed the acquisition of Somnotec Group, expanding its Southeast Asian medical device distribution footprint, and agreed to acquire Haju Medical for A$70 million, expected to be earnings accretive.
Why do First Samuel and Forager Funds see value in Paragon Care?
First Samuel argues Paragon Care's ugly statutory numbers mask a respectable underlying core business, while Forager Funds sees a genuine value play in a business management has grown despite inherent wholesaling risks.
5 managers, 10 comments, with each manager's latest recorded position.
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