PGN Pgnx Capital Corporation

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.

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