Here’s why the Paragon (ASX:PGC) share price has surged 19% today

The Paragon Care Ltd (ASX: PGC) share price is soaring today following updates of the company’s debt financing and third quarter performance.

| More on:
Medical staff wear hero capes, indicting strong shar [price performace for healthcare shares

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The Paragon Care Ltd (ASX: PGC) share price is flying today following two exciting updates from the company. At the time of writing, the Paragon share price is 19% higher than its previous close, with shares in the company trading for 25 cents.

This comes after Paragon announced that it had renegotiated its financing facilities with the National Australia Bank Ltd (ASX: NAB). It also provided the market with a positive update to its quarterly performance.

Let’s take a closer look at today’s news from the medical device company.

Renegotiated financing facilities

Paragon announced today it has renegotiated its financing facilities with NAB.

The company expects the new banking facility to create $575,000 of savings annually, increasing in time.

The new banking contract will cover the next 3 years and is designed to support the company’s future growth.

Paragon states the new facility will allow it to resume dividends and explore acquisition opportunities.

As of the end of March, Paragon had $101 million in debt. Its amortisation will resume from 1 July 2021.

Paragon’s third quarter update

Paragon also announced today its earnings before interest, tax, depreciation, and amortisation (EBITDA) for the financial year to date at the end of last quarter was 79% higher than the prior corresponding period.

It said its improved performance reflects its new cost rationalisation program, which has significantly reduced its employment, marketing, and administration costs.

Paragon also stated its trading conditions have improved over the past six months. Particularly, elective surgery has now returned to pre-COVID levels. As a backlog of elective surgery cases still remain, sustained demand of the company’s devices is expected to continue until next year.  

Paragon’s revenue for the financial year to date is down 3% compared to the prior corresponding period. It’s raked in $173 million so far. Its gross profits are in line with the prior corresponding period.

The company also made $15.3 million in payments to vendors for business acquisitions this financial year. It now has no more payments remaining. Paragon states this will lead to significantly more free cash flow in the future.

As of 31 March 2021, the company had $19 million in cash.

Commentary from management

Paragon’s CEO Phil Nicholl commented today’s updates, saying:

The successful renegotiation of our banking facilities is a significant milestone for the Company. The strength of our underlying business now means that we can repay debt, whilst also preserving our ability to pay dividends and explore acquisition opportunities…

Over the past year, we have been working hard to implement improved processes across the business and these initiatives are now delivering over $7 million in annualised savings and a structurally lower cost base… We are well positioned to capitalise on the growth opportunities to expand our market share as COVID pressure abates.

Paragon Care share price snapshot

The boost to the Paragon Care share price from today’s news has put the company’s shares back into the green on the ASX.

Currently, the Paragon share price is up 8.7% year to date. It’s also gained 25% over the last 12 months.

The company has a market capitalisation of around $70 million, with approximately 337 million shares outstanding.

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.

The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Share Market News

A woman lies back and relaxes in her boat with a big smile on her face as it floats on the rising tide.
Share Market News

Why the Charter Hall Long WALE REIT share price isn’t rocking the boat

It's steady as she goes for this ASX real estate investment trust.

Read more »

A woman standing on a path flanked by big green trees is surrounded by colourful balloons tumbling from the sky.
Share Gainers

Why did the Pure Hydrogen share price pop 21% today?

Why did Pure Hydrogen shares have such an amazing day today?

Read more »

A man and a woman sit in front of a laptop looking fascinated and captivated.
Share Market News

Here are the top 10 ASX 200 shares today

Tuesday was a particularly good day for these 10 ASX 200 shares.

Read more »

A bearded man holds both arms up diagonally and points with his index fingers to the sky with a thrilled look on his face over these rising Tassal share price
Share Gainers

Why Coronado Global, Lake, Megaport, and REA shares are storming higher

These ASX shares are having a good day...

Read more »

A male investor wearing a white shirt and blue suit jacket sits at his desk looking at his laptop with his hands to his chin.
Cryptocurrencies

Can the Bitcoin price reach US$30,000 again in 2022?

Rising interest rates have resulted in significantly less institutional investor interest in cryptos.

Read more »

An office worker and his desk covered in yellow post-it notes
Share Market News

Here are the 3 most heavily traded ASX 200 shares on Tuesday

Once again, its ASX 200 lithium stocks that are dominating today;s volume charts.

Read more »

A male investor wearing a blue shirt looks off to the side with a miffed look on his face as the Electro Optic Systems share price declines today on news the CEO has resigned
Share Fallers

Why Block, CBA, Mesoblast, and NAB shares are dropping today

These ASX shares are dropping on Tuesday...

Read more »

A girl runs along with her kite flying high in the sky.
Share Gainers

3 ASX mining shares rocketing by more than 20% today

Up we go in another day of double-digit gains for the ASX metals and mining equity bucket.

Read more »