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A major healthcare industry distributor has been caught off guard by the surprise appointments of administrators and receivers to 54 pharmacies under the Infinity Pharmacy Group (IPG), most of which operate under the Priceline brand and reportedly owe $46.9 million to Melbourne-based Paragon Care (ASX: PGC).
The action will affect a substantial chunk of Infinity's business, given its website shows more than 120 locations within its network out of approximately 470 Priceline and Priceline Pharmacy outlets around the country.
With this footprint, Infinity claims to be Priceline's largest franchisee in Australia.
In a statement, a spokesperson for Wesfarmers Health - which has owned the Priceline chain since acquiring Australian Pharmaceutical Industries (API) for $764 million in 2022 - notes that API has "provided substantial financial support to IPG over a multi-year period with a view to assisting IPG to trade through complex and significant financial challenges and explore options".
"API’s financial support relates primarily to the wholesale supply of pharmaceutical and other products to IPG pharmacies," the spokesperson clarifies.
"Regrettably IPG’s financial position has deteriorated further in recent months, and it is unable to meet its financial obligations to various creditors, including API.
"In view of this, API considers the appointment of receivers and managers is now unavoidable. It is the most prudent approach to enable affected pharmacies to continue to trade, providing customers in the community with a consistent level of service."
In its annual report Paragon Care revealed an expected credit loss (ECL) allowance for trade and other receivables relating to Infinity of $57 million by the end of June, but an agreed payment plan reduced this figure to $46.9 million when the annual report was released on 30 September.
Paragon reported that historical payment delays and concentration risks prompted a decision to cease supplying to Infinity in March this year.
"The recovery of these balances depends on certain transactions beyond the group’s control, creating an uncertainty that may impact the recoverability of the carrying amount," Paragon stated at the time.
At Paragon's annual general meeting (AGM) last month, chair and substantial shareholder Peter Lacaze said the non-payment by Infinity and a conscious decision to operate with high stock levels meant that debt levels at year end were higher than desired by the end of the financial year.
Today the company has reiterated the confidence it held at the time of the AGM that a proposed payment and debt restructure plan it had been working on with Infinity and other parties "would be agreed and executed upon in due course".
"The company is therefore surprised and disappointed in the decision to appoint receivers and administrators to certain pharmacies in the Infinity Group, which has occurred without prior notice," the company stated in a release to the ASX this morning.
"The company will work with the appointed receivers and administrators and other key stakeholders to support an orderly sale and/or recapitalisation process with respect to the Infinity Group, so as to maximise the return to creditors."
KPMG Australia’s George Georges, David Hardy, Gayle Dickerson and Will Colwell are now the administrators and receivers of the 54 pharmacy stores concerned, and have assumed day-to-day control of their operations.
In a statement KPMG notes the stores will continue to operate as normal while the receivers undertake an assessment of the business, with all employees currently retained and to be paid normally through the receivership process.
"These pharmacies provide essential goods and services to communities across Australia which is why we will be focussed on ensuring they continue to trade with minimal disruption to customers," says KPMG Australia’s turnaround and restructuring services partner and receiver, David Hardy.
"As well as stabilising the operations of these pharmacies, we will be commencing an orderly sale process in the New Year.
"We will be working with all stakeholders, including pharmacists, employees, suppliers, and customers, to maximise the outcome for all parties."
Meanwhile, Daniel Bryant, Stephen Longley, Martin Ford and Mahala Hazell from Teneo are acting as voluntary administrators over the 54 pharmacies.
PGC shares are down 9.6 per cent at $0.235 in early trading, and have lost more than half their value since the start of 2025.
Business News Australia has sought comment Infinity Group, but is yet to receive a response at the time of publication. This story will be updated in due course.
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