Paragon Care Splits Fund Managers Over Balance Sheet Risk

One manager exited on leverage concerns tied to a collapsed pharmacy counterparty, another sees a value opportunity in the same stock

25 May 2026 · 3 min read

Two fund managers looked at the same Paragon Care balance sheet in May 2026 and reached opposite conclusions. Wilson Asset Management, which had been a large shareholder, said it had sold out, explaining the decision had nothing to do with management or the board but reflected a view that the balance sheet carried too much leverage, compounded by the fallout from Infinity Retail Pharmacies, a pharmacy group counterparty that had fallen into insolvency. The manager said it would revisit the stock if the balance sheet issue resolved itself, but for now regarded it as a hold given how far the shares had already fallen.

Forager Funds, a more recent entrant to the register, took the opposite side of the trade in the same month, calling the stock a buy and describing it as a value play. The manager said it had previously held the business in the early days of the first iteration of the merger that created Paragon, and argued management had built a business and ground out impressive growth from what it acknowledged is a genuinely difficult business to operate, running on very slim margins. It said it expected the balance sheet relief Wilson Asset Management was waiting for to materialise over time as the Infinity cash exposure is sorted out, and pointed to a growing Asian business as an additional growth lever.

It's definitely a value play. It's something that's a more recent entrant to our portfolio, but we had held it back in the original days of the first iteration of the merger to make what is now Paragon some years back.

— Forager Funds, Article, May 2026

What sits behind the balance sheet strain

The roots of the current caution trace back to December 2025, when Tamim Funds Management reported a run of material corporate developments. Paragon Care completed the acquisition of Somnotec Group, expanding its medical device distribution footprint across Southeast Asia, and agreed to acquire Haju Medical for A$70 million, split between A$30 million upfront and contingent consideration, with Haju generating around A$30 million in FY24 revenue and A$7.7 million in EBITDA and expected to be earnings accretive from FY26. The same update addressed the appointment of administrators to 54 Infinity Retail Pharmacies, a counterparty previously involved in a restructuring arrangement with Paragon, with the company saying it was working with administrators to manage its exposure and support an orderly outcome.

What managers are watching next

With Wilson Asset Management on the sidelines pending balance sheet clarity and Forager Funds betting the Infinity exposure resolves in the company's favour, the key questions for the stock are how quickly the Infinity administration process concludes, whether the Haju and Somnotec acquisitions deliver the earnings accretion flagged for FY26, and whether the Asian distribution business continues to grow quickly enough to offset margin pressure in the core operations.