Medical Disposables and Supplies Limited (MDS) said it lost an estimated $100 million in sales last year as supply chain issues impacted its ability to source certain products for distribution.

The medical, pharmaceutical and consumer distributor has managed to keep pace with the reopening of the economy as its sales grew seven per cent for the third quarter (October to December) to $940.54 million, with sales for the first nine months up 11 per cent to $2.76 billion.

However, this growth has been constrained by shortages which have led to some key products, such as vaccines and oncology products, being out of stock.

“Supply chain issues have caused disruptions in different ways. In some cases it has left you out of stock and left you overstocked with some items. Where we’re most affected is the medical segment, where we’re still feeling effects from supply chain shortages,” Chief Executive Officer Kurt Boothe told Jamaica Observer in a call on Tuesday.

“We’ve been experiencing shortages in the most profitable area, then the effect can be material. However, we are told that possibilities exist for normalcy to return halfway through the year,” he continued.

“During the course of the year, as we deplete the stock, we should also be expecting to return to normal levels. The challenges that we’re having are still controlled and it’s for us to continue to build out. In the upcoming [2024] financial year, we anticipate that we will be able to iron out these creases,” Boothe added.

At the October annual general meeting, the CEO mentioned how a product that was ordered with a three-month window for delivery in August and September would have arrived in November. These were all rescheduled for arrival all at once, just before Christmas.

MDS’s inventory has risen by 35 per cent for the nine-month period from $1.14 billion to $1.53 billion, with the company using external financing to purchase the increased stock.

MDS represents core brands such as GlaxoSmithKline and has 60 per cent control of subsidiary Cornwall Enterprises Limited, which also sells dental supplies. MDS also distributes more than 14 brands in its consumer portfolio, which includes complementary products and confectionaries as well.

Boothe mentioned that the pharmaceutical and consumer divisions have grown, despite the logistical issues that have plagued the medical and hospital supplies segment.

When asked by the Business Observer why MDS doesn’t find an alternative source for the absent products, Boothe responded, “You wouldn’t find any alternatives sources to those [goods] because those would be things you’d be contractually obligated to sell. Finding alternatives would conflict with your contractual obligations, which is why you find yourself in a little dilemma. So, you have to ride out the storm.”

While MDS waits on things to settle down, it is expanding its talent base to manage its projected expansion. Employee costs, therefore, contributed to a 13 per cent increase in total expenses of $198.69 million for the third quarter. After accounting for its finance costs, which doubled to $31.51 million, MDS’s third-quarter net profit attributable to shareholders rose 40 per cent to $28.12 million.

“The truth is that we’re looking for additional items. In the area that we’re down, we have added expertise that should assist us with deeper penetration. We have strategies that we’re going for to have a deeper market share and we have a better client engagement strategy,” Boothe added.

However, the overall nine-month profit attributable to shareholders is down 11 per cent to $57.96 million with earnings per share moving from $0.25 to $0.22. MDS paid its shareholders a $0.09 dividend on January 30 totalling $23.68 million.

Total assets for the company grew 18 per cent during the period to $3.15 billion with non-current assets at $829.54 million. Total liabilities increased 26 per cent to $1.98 billion as the company’s debt increased by a net amount of $55.39 million.

Equity attributable to shareholders stood at $1.03 billion with the book value at $3.92. MDS’s stock price is marginally up in 2023 at $4.85, which leaves it with a market capitalisation of $1.28 billion.

The company is currently working on completing the integration of Cornwall Enterprises, which is expected to derive additional benefits to sales and group operations. The quarterly report mentioned that the objective of the alignment is to ensure deeper market penetration and strengthening relationships.