ParagonCare has released its audited FY25 financial results, confirming steady profit while revealing a significant reclassification of debt and ongoing challenges with a major retail pharmacy receivable.
- Profit after tax unchanged from preliminary report
- Intangible assets restated, boosting goodwill and supplier contracts
- $125 million debt reclassified from non-current to current borrowings
- Auditor flags $57.13 million expected credit loss on retail pharmacy receivables
- Company pursuing recovery efforts and growth opportunities in Asia
Steady Profit Amid Financial Refinements
ParagonCare Limited (ASX – PGC), a prominent healthcare wholesaler and manufacturer across the Asia Pacific region, has published its audited financial statements for the fiscal year ended 30 June 2025. The company confirmed that its profit after income tax remains consistent with the preliminary figures released earlier, providing reassurance to investors about the underlying profitability of the business.
Revaluation of Intangible Assets
One of the key adjustments in the final audited results involved a retrospective restatement of intangible assets, including goodwill, supplier contracts, and brand valuations. This revaluation, linked to the reverse acquisition of ParagonCare, resulted in an increase of $10.8 million in Other Comprehensive Income. The adjustment reflects a more accurate valuation as of 30 June 2024 and incorporates foreign exchange impacts, highlighting the company’s commitment to transparent and precise financial reporting.
Debt Classification Shift Raises Liquidity Questions
ParagonCare also disclosed a significant reclassification of $125 million from non-current to current borrowings following amended financing arrangements with Scottish Pacific Business Finance Pty Ltd. Although the debtor finance facility includes a $125 million minimum drawdown available beyond 12 months, the directors exercised judgment to classify this portion as current debt. This move may prompt closer scrutiny of the company’s short-term liquidity position despite management’s confidence in ongoing financing stability.
Receivables Risk and Recovery Efforts
The auditor, EY, issued a qualification concerning the expected credit loss allowance of $57.13 million related to trade receivables from a retail pharmacy group. Since the reporting date, this exposure has decreased to $46.92 million, reflecting ongoing collection efforts. ParagonCare is actively engaging with the retail pharmacy group and leveraging personal guarantees and securities to recover outstanding amounts. While the company does not anticipate this issue affecting its financing arrangements, the sizeable exposure remains a notable risk factor.
Growth Strategy Focused on Asia
Looking ahead, ParagonCare is pursuing both organic growth and acquisitions, with a particular emphasis on expanding its footprint in Asia. The company’s pipeline of potential mergers and acquisitions signals ambition to strengthen its market position despite the current financial complexities. Investors will be watching closely to see how these strategic initiatives unfold in the coming months.
Bottom Line?
ParagonCare’s FY25 results underscore solid profit but spotlight debt reclassification and receivables risks that will shape its near-term outlook.
Questions in the middle?
- How will the reclassification of $125 million debt impact ParagonCare’s liquidity and credit metrics?
- What progress will ParagonCare make in recovering the outstanding retail pharmacy receivables?
- Which acquisition targets in Asia are likely to materialize from the company’s current pipeline?