Paragon Pharmacies Limited

Paragon Pharmacies Limited

April 29, 2008 20:30 ET

Paragon Pharmacies Announces Second Quarter Results, 49% Increase in Operating Income, and Convertible Debenture Negotiations

KELOWNA, BRITISH COLUMBIA--(Marketwire - April 29, 2008) - Paragon Pharmacies Limited ("Paragon" or the " Company") (TSX VENTURE:PGN) today reported its financial results for the three and six month periods ended February 29, 2008.

Revenue was $21.590 million in the second quarter of fiscal 2008, an increase of 33.2% or $5.381 million over the same period last year. For the six month period, revenue was $39.267 million in 2008, an increase of 22.2% or $7.145 million over 2007. These increases were a result of a 5.7% and 4.4% growth in same store revenue for the 3 month and six month periods respectively, and new revenue from the acquisition of two independent pharmacies and three central fill pharmacies.

Operating income in the second quarter was $1.927 million, an increase of $0.638 million or 49.4% over the same period last year. For the six month period, operating income was $3.187 million in 2008, an increase of $0.576 million or 22.0% over 2007. Operating income grew from $1.259 million in the first quarter (7.1% of sales) to $1.927 million in the second quarter (8.9% of sales). Operating income is defined as income generated from store and pharmacy operations before corporate expenses, amortization, interest expense, stock-based compensation, and other items as defined in the Company's interim consolidated financial statements.

The net loss in the second quarter was $1.797 million compared to a net gain of $0.096 million for the same period last year. For the six month period, the net loss was $3.690 million in 2008 compared to a net loss of $0.004 million in 2007. The net losses are primarily attributed to the non-cash financing costs related to the convertible debenture issued in May 2007 which accounted for $1.895 million and $3.516 million of the three and six month losses respectively.

Commenting on the three and six month periods, Craig Cameron, President and CEO stated, "We are pleased with our sales and operating income growth this year resulting from the successful acquisitions in November, December and January. 2008 continues to be a very busy year for Paragon as we integrate our recent acquisitions in both the retail pharmacy and central fill pharmacy sectors and expand the reach of our Paragon Community Pharmacy brand into the Alberta and Manitoba markets."

The Company's interim unaudited consolidated financial statements, Management's Discussion and Analysis, and President's Message for the three and six month periods ended February 29, 2008 are available in the Investor Relations section of the Company's website at, or under the Company's profile on SEDAR at

Craig Cameron commented, "We are confident at this time that the on-going negotiations with the convertible debenture holder, as is fully described in the financial statements, will result in successful retention of the unspent funds which will allow for continued growth of Paragon. The Company is continuing to identify and review acquisition opportunities in our target markets and, subject to successfully concluding its current negotiations on the convertible debenture, the Company intends to continue to pursue its strategy of growing its operations through acquisitions while at the same time continuing its focus on the integration and operation of its existing pharmacy operations."

Paragon is headquartered in Kelowna, British Columbia and currently employs over 500 full and part time staff in its stores and offices. The Corporation owns and operates 18.5 retail pharmacies, 3 central fill pharmacies, and 2 home healthcare stores in BC, Alberta, and Manitoba.

The TSX Venture Exchange does not accept responsibility for the adequacy or accuracy of this release.

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