Fund Manager Summary
The fund managers believe that the outlook for Paragon Care Ltd presents a significant opportunity for growth. In their opinion, the recent merger with CH2 Holdings, which generated $2.1b in revenue in FY23, has transformed Paragon into a more competitive entity in the healthcare distribution sector. They highlight that Paragon's traditional business, which generated $308m in sales in FY23, combined with CH2's rapid growth, positions the company to gain market share effectively. The fund managers note the company's disruptive operating model, which leverages an efficient cost base to enhance pricing power and earnings growth. Furthermore, with Paragon trading at a 10x FY25e EV/EBITDA, representing a 17% discount to listed peers, they see potential for continued appreciation, especially following a 7% increase since their entry.
Source: Trading View
Commentary From The Managers
Subscribe To Unlock
Date
Price
Summary
Unlock Recent Updates With ThesisTracker Pro
Don’t let information asymmetry undermine your investment returns. Join other engaged investors on ThesisTracker Pro.
Wilson Asset Management
30 Nov 2024
$0.50
Summary
- Paragon Care is an Australian healthcare company providing medical equipment, consumables, and services to various healthcare sectors.
- At the recent annual general meeting, Chair Peter Lacaze highlighted significant progress since the merger with CH2.
- The merger between Sigma Healthcare and Chemist Warehouse could create positive opportunities for Paragon Care, especially if independent pharmacies transition away from Sigma.
- Paragon Care's first quarter results for FY2025 exceeded market expectations, indicating strong business momentum.
- Wilson Asset Management continues to hold its position in Paragon Care, reflecting confidence in the company's growth prospects.
Text:
Text:
Text:
Summary
-
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua, ut enim ad minim veniam.
-
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat, sed ut perspiciatis unde omnis iste.
-
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur, at vero eos et accusamus et iusto odio dignissimos.pedita.
Text:
Text:
Text:
Summary
-
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua, ut enim ad minim veniam.
-
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat, sed ut perspiciatis unde omnis iste.
-
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur, at vero eos et accusamus et iusto odio dignissimos.pedita.
Text:
Text:
Text:
Summary
-
Lorem ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua, ut enim ad minim veniam.
-
Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat, sed ut perspiciatis unde omnis iste.
-
Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur, at vero eos et accusamus et iusto odio dignissimos.pedita.
Updates are made available to members within 12 hours in accordance with the ThesisTracker Pro Service Level Agreement.
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
Commentary From The Managers
Wilson Asset Management
30 Nov 2024
$0.50
- Paragon Care is an Australian healthcare company providing medical equipment, consumables, and services to various healthcare sectors.
- At the recent annual general meeting, Chair Peter Lacaze highlighted significant progress since the merger with CH2.
- The merger between Sigma Healthcare and Chemist Warehouse could create positive opportunities for Paragon Care, especially if independent pharmacies transition away from Sigma.
- Paragon Care's first quarter results for FY2025 exceeded market expectations, indicating strong business momentum.
- Wilson Asset Management continues to hold its position in Paragon Care, reflecting confidence in the company's growth prospects.
Summary
Endeavor Asset Management
30 June 2024
$0.44
- Endeavor Asset Management initiated a position in healthcare distributor Paragon Care (PGC).
- Paragon Care has generated $308m in sales in FY23, focusing on providing medical equipment to hospitals.
- The recent merger with CH2 Holdings enhances the company's growth potential, as CH2 is the fastest-growing among national pharmaceutical wholesalers.
- The combined entity has an impressive $2.1b revenue for FY23, significantly transforming pro forma PGC.
- Endeavor Asset Management believes the merged business is well-positioned to gain market share further.
- The operating model is disruptive, leveraging an efficient cost base to drive pricing power and earnings growth.
- Paragon Care trades at a 10x FY25e EV/EBITDA, which is a 17% discount compared to listed peers.
- The stock closed the month 7% higher compared to the fund manager’s entry point.
Summary
Forager Funds
31 Mar 2024
$0.32
- Forager Funds has significantly increased the Fund’s investment in Paragon Care (PGC) during March.
- Paragon is one of Australia’s largest healthcare suppliers, built through acquisitions over the past decade.
- Past acquisitions underperformed, leading to a share price reflecting a value much lower than the sum of investments.
- John Walstab, who merged Quantum Health with Paragon, now manages the entire business and has shown early signs of improvement.
- Paragon is merging with CH2, a major distributor of medicine and medical consumables in Australia.
- CH2 has captured 7% of Australia’s $18 billion pharmacy wholesaling market since becoming independent.
- CH2 is projected to achieve nearly $3 billion in revenue this financial year with increasing profitability.
- CH2 is the only independent distributor, aiming to maintain its position servicing non-aligned pharmacies, which represent 44% of total retail pharmacy sales.
- The merger could transform Paragon into a profitable owner-manager company with significant growth potential in the healthcare market.
- Forager Funds supports the merger, which will allow for synergies between the two companies and strengthen Paragon’s market position.
- David Collins from CH2 will take over management, enhancing alignment and commitment to shareholder value.
- Management’s significant insider ownership suggests a long-term growth focus, despite potential risks for minority shareholders.
- Forager Funds believes the merger offers a substantial improvement for Paragon shareholders, leading to meaningful investment additions.
Summary
Please note: The completeness, accuracy or current status of the investments referenced are not guaranteed.
ANALYST INSIGHT
Equity Research Analyst
"In a landscape where healthcare distribution is evolving, Paragon Care appears poised to disrupt the status quo. With a transformative merger under its belt and a compelling valuation, it seems investors may be overlooking a significant growth opportunity."
Last Updated: 30 Nov 2024
Query The Data
Frequently Asked Questions
Who is investing in Paragon Care Ltd (ASX:PGC)?
Fund managers including Endeavor Asset Management, Forager Funds and Wilson Asset Management have invested in Paragon Care Ltd (ASX:PGC).
Why do fund managers invest in Paragon Care Ltd?
Fund managers are investing in Paragon Care Ltd due to its strategic merger with CH2 Holdings, significantly enhancing its revenue potential and market position. The combined entity is poised for growth in the healthcare distribution sector, leveraging an efficient operating model that supports pricing power and earnings expansion. Paragon's valuation at a 10x FY25e EV/EBITDA offers a compelling entry point, trading at a notable discount compared to peers.
What happened to Paragon Care Ltd (ASX:PGC)?
There have been no recent updates from fund managers regarding Paragon Care Ltd although fund managers including Endeavor Asset Management, Forager Funds and Wilson Asset Management have previously commented.