Medical Disposables and Supplies

Big recovery for Medical Disposables profit

The financial performance saw a marked about turn for Medical Disposables & Supplies in the June quarter this year from a loss after tax of $7 million in 2020, into the black, with profit after taxation hitting $25.5 million, after with taxation amounting to $3.6 million, from an increase of 33.8 percent in sales revenue to $683 million, from $511 million in 2020.

The 2021 revenue performance not only beat that of 2020 but also the $557 million as well as the $16 million in profit in the June 2019 quarters and appears to be fully back on track from the dislocation experienced last year with the advent of Covid-19. The operations of the new subsidiary have not commenced a note to the financials states. Kurt Boothe Managing Director explained that MDS acquired the assets of the former company and at the time of the quarter end had not yet started trading as they were in the process of focussing on various systems to ensure a smooth and efficient running of the operations once they get started, which should be during the course of the second quarter ending September.“This increase in sales is the result of increased consumer demand for pharmaceutical and medical disposable items,” Kurt Boothe, General Manager stated in his commentary on the financials.
Gross profit was up 56.4 percent to $177 million from $113 million over the previous year “mostly attributable to the increase in sales of pharmaceutical and medical disposable products,” Boothe stated. Growth in gross profit also was the impact of better margins which moved up to 25.9 percent from just 22.1 percent in 2020.
Total operating expenses increased by 13.2 percent from $113.4 million in 2020 to $128.4 million in 2021. Administrative expenses rose 24.5 percent to $63 million in the quarter from $50 million. Although sales shot up sharply selling and promotional expenses increased by a mere 4.5 percent to $58.6 million, the cost is this area is mostly for distribution and delivery of goods Botyhe indicated as such increased volume sales do not necessarily mean increased cost as vehicles may be able to transport more goods per trip than before as such they benefit from economies of scale. Finance cost jumped to $17 million from $12 million in 2020, partially due to the funding of the acquisition of the subsidiary.

Kurk Boothe – Medical Disposables Managing Director

The company operations generated a gross cash flow of $36 million but growth in receivables, inventories offset by increased payables saw inflows just balancing out. Net borrowings and investment in its new subsidiary resulted in a $37 million cash surplus for the period.
At the end of the quarter, Current assets ended at $1.63 billion including, inventories $910 million, trade and other receivables of $424 million, cash and bank balances of $111 million. Current liabilities ended the period at $1.09 billion. Net current assets ended the period at $540 million. Shareholders’ equity stood at $1.04 billion with long term borrowings at $324 million and short term at $402 million. Boothe indicated that he is optimistic that the trend seen so far will continue for the rest of the financial year.
Earnings per share came out at 10 cents for the quarter, with a loss of 3 cents for the 2020 period. IC Insider.com forecast is 80 cents per share for the fiscal year. The stock traded at $4.98 on the Junior Market of the Jamaica Stock Exchange on Friday, with a PE of 6 times the current year’s earnings and compares favourably, with the market average of 12.7. Net asset value is $3.96 with the stock selling at a 26 percent premium to the book value, well below the average for the rest of the market.

Medical Disposables Q1 profit jumps

Medical Disposables in IC TOP 10

Profit after tax at Medical Disposables and Supplies increased 22.7 percent to $19.2 million for first quarter to June, up from $15.7 million in the 2017 quarter.
Importantly, profit excluding foreign exchange loss of $4.2 million, rose a strong 49 percent to $23 million. The impressive increase in operating profit flowed from a 12.6 percent increase in sales in the quarter to $541 million, from $481 million in 2017. “This performance was mainly attributable to growth in the consumer business segment and price increases, Kirk Boothe, Managing Director, stated in commenting on the sales performance for the 2018 quarter. The increase is at a slower pace than sales for the December quarter of 21 percent and 19 percent for the 2018 fiscal year.
Gross profit increased $14.3 million or 14 percent to $117 million for the quarter, representing 23 percent of sales, up from 21 percent in 2017.
Sales and distribution cost slipped slightly from $33 million to $32 million, depreciation inched to $6.1 from $5.9 million while administrative expenses rose to $49 million from $41.4 million in 2017, as salaries and commissions increased by $3.35 million or 8 percent, General insurance rose by $800,000 or 47 percent following increased inventories and other assets and Professional fees and Information Technology Consultancy fees increased by $1.74 million or 36 percent for infrastructural improvements.
Cash flow generated $25 million and after changes in working capital, ended at $23 million with cash on hand ending at $29 million. Inventories fell to $421 million from $544 million at the end of March as a direct result of the increase in business opportunities, but receivables remained over $300 million at $318 million, a bit on the high side and trade payables fell to $292 million. Borrowed funds stood at $331 million. Shareholders’ equity rose $19 million to $692 million.
Earnings per share for the quarter was 7 cents, IC Insider.com projects 65 cents for the full year on the basis that the loss of exchange will remain substantially at the June quarter level and $1 per share for the next fiscal year. The PE ratio based on forecast earnings, is 9 at Fridays’ closing price of $5.80.