Profits at Medical Disposables and Supplies (MDS) turned positive in the first quarter of its current financial year, as demand for pharmaceutical and medical disposable items grew during the period. The company recorded a $25.5-million profit during the April to June period of this year, compared to $7 million in losses recorded in the same period a year ago.
Kurt Boothe, chief executive officer (CEO) of Medical Disposables and Supplies, told the Jamaica Observer that, “The results are fruits that are bearing as a result of the investments that the company made. We planted well over the last two years and coming out of a very rocky period, we managed to sustain and hold the fort, and things are looking good as we move forward.”
Boothe noted that the first quarter of his company’s 2020 financial year (April to June) was characterised by Government restrictions and measures aimed at decelerating the spread of the novel coronavirus disease. “COVID -19 was in March (2020), and then April (2020) was the start of our first quarter and we were affected over the three months (April to June 2020)…and we were in very unfamiliar territory, we were in the red for the very first time in company history”, Boothe told the Caribbean Business Report as he reflected on last year’s performance. Sales during the April to June quarter last year fell eight per cent. The fallout on the bottom line was worse. The $7-million loss recorded in that quarter was a reversal of the $15.9-million profit made in the same period of the prior year.
The MDS CEO told the Caribbean Business Report that, “the fortunate thing for us in our business is that we are selling more needs than wants. We were affected by the lockdown, not a lack of demand.”
But he said the pandemic was not the only thing affecting MDS. “Over the past two years, we had some issues. They were internal issues that came with company growth. We recognised that we were growing at a rate that was faster than the rate at which we could put in the support systems. In some cases they were beyond our control.”
Boothe said that led to an overhaul of the company’s internal structure, including retooling and the implementation of a new IT system to drive greater efficiency. He said the change resulted in the company becoming “more analytical and granular and as a result increased our gross margins”. The company’s gross profit — its revenue minus the cost of selling its products — grew 56 per cent in its first quarter to $176.4 million. As part of the restructuring, he said additional staff were also recruited “in preparation for post-COVID success.”
However, Boothe was quick to point out that the Kingston-based entity, which distributes pharmaceutical, medical disposables and consumables, now sees its growth beyond just the current product lines it carries.
The company which was incorporated in November 1998, first as a “medical company, then a medical and pharmaceutical company, then a distribution company”, recently announced it acquired a 60 per cent stake in St James-based Cornwall Medical and Dental Supplies — adding dental products to its line of distribution while expanding the line of medical supplies and disposables.
The company has also expanded into additional product lines — MDS announced last Thursday that it has been appointed as the distributor for the True & Natural Face & Body Soap and the Naked Care Face & Body Soap, manufactured by Miracle Corporation Limited. Both brands of organic, premium-grade plant-based face and body soap bars are locally produced and do not contain any chemicals, colourants or animal fat.
For Boothe, the expansion — both the acquisition and the new product line— puts the company on a path for added growth, but he said he’s managing expectations.
The acquisition cost for Cornwall Medical and Dental Supplies was not disclosed. It has, however, created a group structure, though the financials are yet to start reflecting group results. Instead, the financials released to the Jamaica Stock Exchange disclosed, “the operation of the subsidiary has not commenced”. Boothe in clarifying that comment outlined, “in the integration, there is a lot more to take place in terms of staffing, structuring and the like. We had to make some short term investments in terms of inventory…but there have been some delays in the plans, but we think we will be onstream in terms of the plans by the end of the second quarter (to) the turn of the third quarter”. Medical Disposables and Supplies’ second quarter ends September 30 while its third quarter begins October 1.
He continued, “The initial plans are to get properly aligned, not necessarily to re-invent the wheel. The main thing right now is to get structured and get (Cornwall Medical and Dental Supplies) aligned within the group and achieve certain synergies, definitely in the first year”. He said work is also being done on cutting back on costs while adding we “have a two-year roll-out plan and will see a lot more of its significance by the end of year two…but the contribution will be positive.”
Commenting on the distribution agreement for the Miracle Corporation face and body soaps, Boothe said it fits well with the strategic direction of MDS and the restructuring it underwent in adding new products.
“There is MDS beauty brands, there is homecare and there is confectionary & snacks. The areas in which we have reaped success, we have decided to concentrate on and stay focused. The Miracle brands fall under our homecare side of things in our Consumer Division portfolio. It is a fit. We are proud that it is a Jamaican company, Jamaican manufactured products and I was pleasantly surprised from day one…When we actually rolled it out, I was pleasantly surprised at the success. I can tell you, by day two we were out of products…as a matter of the fact, within the first week we had to order three times”. He said the immediate aim is to create greater awareness around the products which he posits “will contribute to the bottom line.”
Even though expanding, Boothe said he doesn’t want the company to venture “too far outside the areas of focus…We see more upside within the areas in which we operate…we see other items, other products, other areas that we can expand into and I think we want to capitalise on that before we start going outside…we don’t want to take that word focus lightly and spread ourselves thin.”
He revealed that some of those “other items” the company is targeting is the distribution of cancer treatment products. “We are focused on oncology. Cancer is a big issue and we see a lot of opportunities to provide solutions, offering more products and more affordable products…there’s nothing pleasant about cancer and included in that is the bill that you get, so the focus will be to offer more quality products that are more affordable as well.”
Medical Disposables and Supplies is divided in three divisions — pharmaceutical which is its largest, medical disposables and consumer items.