AGM Presentation 26 November 2019 ASX | PGC
Executive summary Executing on vision and strategy: Strategic initiatives progressing well in each business vertical, focused on delivering strong organic growth and achieving category leadership Transformation back on track: ERP implementation initially had challenges which have now been resolved, business anticipates significant benefits to be realised over FY20/21 Solid start to FY20: 6% revenue growth YTD pcp (excluding Western Biomedical where litigation is in process); with momentum building in key businesses Positive outlook: Strategy delivery, benefits from transformation and removal of low margin products leading to continued growth and improved profitability going forward Paragon Care Limited (ASX:PGC) 2
Vision and Strategy Executing on vision and strategy: Strategic initiatives progressing well in each business vertical, focused on delivering strong organic growth and achieving category leadership Transformation back on track: ERP implementation initially had challenges which have now been resolved, business anticipates significant benefits to be realised over FY20/21 Solid start to FY20: 6% revenue growth YTD pcp (excluding Western Biomedical where litigation is in process); with momentum building in key businesses Positive outlook: Strategy delivery, benefits from transformation and removal of low margin products leading to continued growth and improved profitability going forward Paragon Care Limited (ASX:PGC) 3
Vision and strategy Paragon’s strategy on a page Mission To achieve category leadership in focus areas to be ANZ’s leading supplier of healthcare & vision equipment and integrated services Organic growth rate EBITDA margin Customer NPS Employee NPS FY21 goals 7%+ 12%+ +5 y.o.y +5 y.o.y Where to play Grow with leading Expand into Asia, Focus on novel tech, Redefine and grow & how to win product set refine range improve profitability ▪ Ophthalmic: Invest in leading ▪ IVD: Enter Asia, broaden ▪ Consumables: Optimise ▪ Services: Refined product products and to deepen product offering product mix, sourcing and offering focused on high practitioner relationships digital delivery; focus on margin service; codified sales ▪ Lab equipment: Refine novel, differentiated products approach to improve sales ▪ Orthopaedics: Investment to product offering and sales and delivery efficiency, and ▪ Electro-diagnostics: Deepen win new customers and model to improve cross-sell agencies with more efficient profitability relationships and broaden sales model range for key call points Senior team Deepen Reduce sourcing Strategic Acquire Substitute low Increase Leverage e- Zero-based focus on practitioner costs through differentiated, margin products leverage for reps commerce and redesign of initiatives acquiring relationships to better terms and proprietary to higher margin to win with ERP to reduce shared services attractive new increase share growing private products products practitioners costs to serve cost base customers of wallet label offering Strategic Commercial Excellence Product innovation Technology platforms Operating model enablers Paragon Care Limited (ASX:PGC) 4
Vision and strategy Dedicated salesforce and agile solutions paying off STRATEGY IN ACTION Dedicated national sales and service team for core supplier +15% Excellent service contributes to additions of 4 new hospitals in early 2020 Satisfied customers with Paragon’s agility to customise Growth in custom packs surgical packs sales Key partnerships formed leading to competitive pricing model Leading supplier of medical and surgical products/consumables to +25% Positive feedback and reviews conveyed in articles , hospitals and specialists distributed through wider network in Australasia Proactive team starts forming relationships with Growth in power prospective customers tools sales Uplift seen in purchase orders , including an order double the size of the previously largest REM Systems is Paragon’s largest business by far ($70m), and growing at +6% Paragon’s repeatable growth model proving successful in Capitals & Consumables Paragon Care Limited (ASX:PGC) 5
Vision and strategy A continued transition towards premium products STRATEGY IN ACTION Increased focus on higher margin products Focus on higher margin products that offer superior clinical outcomes AUS pain management portfolio Q1 results positive with unit growth of +14% and sales growth of +20% One of Australia’s leading distributors in Orthopaedic, Pain Management and Infection Prevention sectors Building a world-class sales culture Deepened relationships with orthopaedic surgeons Tailored, effective approach in selling - offer bespoke ultrasound regional anaesthesia training opportunities for Anaesthetists Create need for continuous adductor canal nerve block for total knee arthroplasty Surgical Specialties is Paragon’s third largest business ($30m), and growing at + 10% Paragon seeing the benefits of its new sales strategy through focus on high margin products Paragon Care Limited (ASX:PGC) 6
Vision and strategy Success of the immulab business continues post acquisition STRATEGY IN ACTION Strong traction in the business bouncing back from a disappointing FY19 Strong traction across the business with some new wins (e.g. Sri Lanka blood grouping tender) Stronger collaboration and regulatory support leading to strong sales performance (e.g. Philippines) Pick up in export sales driving group performance A leading supplier of vital reagent red blood cell Delivering strong against financial targets products used in pathology laboratories across Immulab sales YTD at 105% to target and 120% to prior year Australia and New Zealand. Stand out performance in international business with sales at 123% of budget Forecast for FY20 expected to be well ahead of budget immulab is our largest diagnostic business ($15m), and growing at + 20% Integration of new acquisitions progressing well Paragon Care Limited (ASX:PGC) 7
Vision and strategy Total communications a good news story STRATEGY IN ACTION Integration and Acquisition in Growth being strategic November realised initiatives 2018 PGC strategically acquires Total Strategic initiatives and Strong performance in FY20 Communications in November growth catalysts executed expected to continue with 2018 solid future pipeline • Alignment with Paragon $6.0m Services division • Preliminary results from the Royal Commission into Aged YTD Revenue up 110% pcp Care leads to strong orders Specialised provider of communication technology solutions in the health and aged care sectors Paragon Care Limited (ASX:PGC) 8
Transformation update Executing on vision and strategy: Strategic initiatives progressing well in each business vertical, focused on delivering strong organic growth and achieving category leadership Transformation back on track: ERP implementation initially had challenges which have now been resolved, business anticipates significant benefits to be realised over FY20/21 Solid start to FY20: 6% revenue growth YTD pcp (excluding Western Biomedical where litigation is in process); with momentum building in key businesses Positive outlook: Strategy delivery, benefits from transformation and removal of low margin products leading to continued growth and improved profitability going forward Paragon Care Limited (ASX:PGC) 9
Transformation update Paragon is nearing the end of a significant transformation period FY18 FY19 FY20 Challenges nearing Clear need for Transformation resolution, positive future integration programme underway outlook Experienced initial disruption with ERP PGC had completed 16 acquisitions A whole of business transformation migration program but business now back in 5 years, creating corporate and programme across three categories on track operational complexity: was implemented: ▪ ▪ 6 business units (54% by revenue and 46 companies, 19 trading 1) Business and product review 70% by # of transactions ) have migrated companies, 4 trust companies 2) Standard work and progression onto the single IT platform as at 30 th Oct ▪ 14 different IT systems 3) Single operational platform 2019 ▪ 36 property leases ▪ Legacy systems proved much harder to ▪ 545 pay runs p.a. migrate than predicted, hence the ▪ Disparate processes and careful forward plan procedures ▪ On track to complete 100% migration in ▪ Limited cultural integration FY20 as key issues now resolved Synergies from transformation programme expected to reap major benefits in FY20 Paragon Care Limited (ASX:PGC) 10
Transformation update IT implementation programme temporarily extended cash cycle Delayed collections as a result of the disruptions with the IT migration resulting in a lower cash balance – program is now back on track with trend expected to reverse through H2 FY20 Cash balance at end of month (A$m) 1 Forecast Historical 40 • ERP migration disruptions were experienced as part of this process causing disruption to the cash collection cycle: 30 ▪ Delayed statements to customers ▪ Delayed collection of receivables 20 • Underlying business continues to perform strongly and disruptions now resolved 10 • Cash position expected to improve in H2 FY2020 0 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Notes (1) Based on latest internal cash flow forecasts (Nov 2019) Paragon Care Limited (ASX:PGC) 11
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