Designs For Vision being sold to Paragon Care for $25.5m

Paragon Care is an integrated service provider to Australia’s health and aged care markets and has entered into conditional term sheets to acquire, in addition to Designs For Vision, Western Biomedical Pty Ltd and Meditron Pty Ltd, with all-up, upfront consideration of $66.1m for the three companies.
Sydney-based Designs For Vision was founded by Mr Richard Grills and has been a provider of diagnostic and surgical products to the ophthalmology and optometry segments for over 40 years.
According to Paragon, Designs For Vision’s unaudited profit and loss statents, reviewed by Paragon’s accounting advisors, show 2015 financial year revenue of $31.8m and EBITDA of $4.0m, meaning the acquisition multiple is 6.4x.They also show costs of goods sold by Designs For Vision in 2014 was $16.4m and $20.5m in 2015, to give gross profit of $10.1m and 11.3m respectively, operating expenses of $6.3m and $7.3m and EBITDA of $3.8m and $4.0m.
Designs For Vision’s $31.8m pro forma revenue in FY2015 represents 30 per cent of Paragon’s total revenue for the year, as does its $4.0m of EBITDA.
There is a slight but unconnected commonality between Paragon and Vision Eye Institute in their reverse roles as a bidder and as the subject of a bid – the same person (Mr Shane Tanner) being chairman of both companies.
Designs For Vision has 55 ployees with offices throughout Australia and New Zealand. Its products include ophthalmic lasers, surgical instruments, consumables and equipment, intraocular lenses, accessories, retinal cameras, magnification and illumination equipment and professional services.
Paragon says its (Paragon’s) customer base will be expanded by providing access to the ophthalmic market where there will be growth opportunities for some of its existing products.
Also, that Designs For Vision currently has opportunities in other medical specialties which are yet to be explored.
Furthermore, that ongoing growth opportunities exist in the cataract surgery market with about 250,000 cataract operations per year in Australia.
According to Paragon, the acquisitions will establish “a truly national footprint” for the company and “materially expands and diversifies its product platform – taking it further into the medical consumables market”.
Paragon says the acquisitions will triple its revenue from $32.2m to $106m, its EBITDA to more than triple from $3.7m to $13.5m, earnings per share to increase 50 per cent from 3.2c to 4.8c, and balance sheet strengthened with net debt to EBITDA falling from 2.3x to 1.7x.
The acquisition will be funded by a combination of debt??and a capital raising at $0.53 per share comprising a $5m placent to vendors, a $3.5m underwritten placent to professionals and sophisticated investors [assets of more than $2.5 million and/or earnings of $250,000 a year for past two years], a $7.2m underwritten rights issue to existing shareholders, and a $19.0m new bank debt facility.