Medical equipment provider Paragon Care has foreshadowed a profit downgrade thanks to the underperformance of its legacy capital equipment business.

Paragon Care (ASX:PGC) said its first-half 2019 results, which it hopes to release on February 26, would be “negatively impacted” by the division, which it is planning to jettison.

PGC shares fell as much 13 per cent to 50c, their lowest point in four years.

The company announced in November last year a strategic review of its capital equipment business, saying at the time that it represented about 10 per cent of the company’s forecast FY19 revenue of $260 million.

But in this morning’s announcement that figure had been wound back to $240 million.

Paragon Care (ASX:PGC) shares over the past year.

It says half-year revenue will be $119 million, which would be a 126 per cent improvement on the previous half-year and not far short of its 2018 full-year revenue of $136 million.

“The continuing business is performing at or above expectations,” the company told investors. “We are very pleased with sales growth and a stabilised gross profit margin during the first half, with organic growth now tracking at 9 per cent from the continuing business.

“The strong organic growth reflects improved sales performance following actions in 2018 to strengthen sales leadership, transform sales culture and improve accountability”.

There is no update yet on the status of the strategic review of the capital equipment business.

The company received a $45 million investment from Hong Kong-listed healthcare group China Pioneer last year, and has been busy buying up companies of its own in the past year.

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