Paragon Pharmacies Limited
TSX VENTURE : PGN

Paragon Pharmacies Limited

January 27, 2011 18:03 ET

Paragon Pharmacies Limited Reports Improved Store Operating Income

KELOWNA, BRITISH COLUMBIA--(Marketwire - Jan. 27, 2011) - Paragon Pharmacies Limited ("Paragon" or "the Company") (TSX VENTURE:PGN) today reported its financial results for the first quarter ended November 30, 2010.

Revenue for the three-month period was $19.668 million compared to $20.926 million in the same period last year. This 6.0% decrease was the result of a decline in comparable front store and pharmacy revenue. Pharmacy revenue was impacted by the continuing shift to lower priced generic drugs from brand products as well as reductions to generic pricing offset by increases in dispensing fees. Front store sales were inhibited by the deferral of category management initiatives to the second quarter in order to allow the management team to complete the transition of promotional programs from third parties back into Company control.

R. Gordon Gooding, Chief Executive Officer, said "The first quarter provided mixed results. While revenues declined, gross margin increased over the previous year both in actual dollars, and in percentage of revenues. Operating income also increased slightly in actual dollars, and increased significantly as a percentage of revenues. We recently strengthened the Company's senior executive team, and with the addition of a VP of Operations and VP of Merchandising, we will have a stronger and more focused approach to business strategies designed to support revenue growth, build customer loyalty and expand brand awareness." Gooding continued by stating, "To improve profitability the Company has put significant effort into improving its supply chain process and relationships in order to maximize gross margin rates. We expect to see a steady climb in gross margin rates over the next four quarters."

Operating income, as defined, was $2.163 million in the first quarter compared to $2.012 million in the same period last year, an increase of 7.5%. This increase is a result of improved gross margin and cost containment initiatives.

EBITDA, as defined, was $0.802 million in the first quarter compared to $1.061 million in the same period last year, a decrease of $0.259 million or 24.4%. The decrease in EBITDA was primarily a result of decreased revenue and increased corporate costs offset by a stronger gross margin over the same period last year. 

The net loss for the first quarter was $0.765 million compared to a net loss of $0.483 million in the same period last year, an increase in net loss of $0.282 million or 58.4%. This change is primarily due to the reasons noted in EBITDA above along with an increase in amortization. 

The pharmacy industry continues to face ongoing regulatory change which will alter the way generic drugs are priced and pharmacy allowances are charged. The Company's assessment of these changes is more fully described in Management's Discussion & Analysis for the three month period ended November 30, 2010 in the section entitled Regulatory Changes That Impact the Company's Industry

The Company's unaudited consolidated financial statements and Management's Discussion and Analysis for the three month period ended November 30, 2010 are available at the Investor Relations section of Paragon's website at www.helloparagon.com or under the Company's profile on SEDAR at www.sedar.com.

Paragon Pharmacies Limited is building a pharmacy with our customers in mind. Headquartered in Kelowna, BC and employing over 400 staff, Paragon currently owns and operates 19 retail pharmacies and three central fill pharmacies throughout British Columbia, Alberta and Manitoba. Paragon is a leading mid-market pharmacy, providing premier pharmacy services in a friendly, community-focused environment.

FORWARD LOOKING STATEMENTS

This press release contains forward-looking statements regarding, among other things, the Company's beliefs, plans, objectives, strategies, estimates, intentions and expectations, including as they relate to its operating and financial results, capital expenditures and the ability to execute on its operating, investing and financing strategies. Consequently, actual results and events may differ materially from those included in, contemplated or implied by such forward looking statements for a variety of reasons. Forward-looking statements are subject to inherent risks and uncertainties including, but not limited to, market and general economic conditions, certain property and casualty risks, the ability to attract and retain pharmacists, the availability and terms of financing, changes in the Company's relationship with its key suppliers, competitive factors, changes in regulatory environments affecting the Company's business, and the accuracy in management's assumptions (see "RISKS AND RISK MANAGEMENT" as noted in the Company's Management's Discussion & Analysis posted on SEDAR at www.sedar.com). This list is not exhaustive of the factors that may affect any of the Company's forward-looking statements. Investors and others should carefully consider these and other factors and not place undue reliance on these forward-looking statements. In addition, these forward-looking statements relate to the date on which they were made and the Company disclaims and has no intention or obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise.

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Contact Information

  • Paragon Pharmacies Limited
    R. Gordon Gooding, CA
    Chief Executive Officer
    (250) 868-8400
    (250) 868-8402 (FAX)
    www.helloparagon.com