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.
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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.
