Medical Disposables and Supplies Limited (MDS) is set to enter the Cayman Islands within the coming months through a joint venture called MDS Cayman in which MDS will own a 30 per cent stake.

MDS Cayman will be involved distribution of pharmaceutical and medical products to hospitals, clinics and other healthcare-related facilities in Cayman and the Caribbean region, according to a Jamaica Stock Exchange (JSE) disclosure. The company formation was stated to have begun in October 2024 and should be completed by March 31, the end of MDS’ financial year (FY). This business should be operational by April.

“We’re always looking for opportunities and looking to capitalise on any blue ocean strategy. It’s a market that we saw areas that appear to be a fit for us. After familiarising ourselves with the market for some time, we decided to make a strategic move,” said Kurt Boothe, Chief Executive Officer (CEO) of MDS in a call with the Jamaica Observer on Tuesday.

When Boothe was asked about the capital outlay for this joint venture and who was the other party, he said that he couldn’t go into those details until the business formation is complete. However, he responded, “For us, it’s not any major capital outlay at all, and we’re not beginning on a large scale. Part of our calculated risk would see us entering with a small footprint and ensuring we are able to cover our bases before talking about any type of expansion.”

Boothe noted that this capital light strategy would mean it would contain costs on staffing and not have too much capital outlay on infrastructure.

This business will be accounted for as an associate company in MDS’ financial statements. The Cayman Islands requires any business domiciled in the British overseas territory be at least 60 per cent owned by a Caymanian if it’s not issued with a Local Companies Control Law Licence.

This would be MDS’ second expansionary move after its 60 per cent subsidiary Cornwall Enterprises Limited acquired the assets and liabilities of Cornwall Medical and Dental Supplies Limited in March 2021. Cornwall Medical operated three pharmacies split between St James and Westmoreland along with the distribution of medical disposables products.

MDS also got another win under its consumer segment as it was recently appointed the distributor of True Pet Food in Jamaica. The True Pet Food brand is owned by Caribbean Broilers Group and is geared towards Caribbean dogs.

That partnership later gained more traction as the company hosted its sixth Mpowered continuing education conference for pharmacists at its 83 Hagley Park Road head office on the weekend. True Pet Food sponsored the conference which was held under the theme ‘Gone with the Dogs’. Apart from having Jamaican pharmacists in attendance virtually, the company also had numerous pharmacists from the Cayman Islands in attendance.

“The domestic and companion side of animal care has seen some amount of growth in Jamaica. Our focus on it to the pharmacists is commensurate with the growth in that segment. We sought to enlighten different aspects of care that was relevant to pharmacists,” Boothe added on the Mpowered conference.

MDS has had a tough past two years with the 2024 financial year (FY) ending March 31 seeing the pharmaceutical distribution company recording a $315.96 million consolidated net loss due to its decision to write-down its COVID-19 backlog of products.

The company noted in its second quarter (July to September) report that its consumer and pharmaceutical divisions, along with its 60 per cent subsidiary Cornwall Enterprises Limited, had lower comparative sales due to the unavailability of some key products in those portfolios and recovery efforts from Hurricane Beryl which hit Jamaica last July.

However, due to the introduction of new products and onboarding new customers, MDS was able to improve its consolidated revenue by five per cent to $907.74 million. Despite this top line improvement — a 10 per cent increase in cost of sales — the company’s gross profit dipped 10 per cent to $198.38 million. The company’s gross profit margin decreased from 25.36 per cent to 21.85 per cent which it attributed to the competitive landscape and efforts to liquidate some inventory items at discounted prices.

Although operating expenses marginally increased to $220.53 million, the company swung from an operating profit of $8.87 million to an operating loss of $22.15 million. After accounting for lower finance costs, MDS’ consolidated net loss increased from $38.28 million to $49.89 million.

For the overall sixth months, MDS’ consolidated revenue was up five per cent to $1.88 billion, but the company’s operating profit contracted 78 per cent to $7.20 million. The consolidated net loss increased from $38.39 million to $47.73 million.

MDS’ total assets grew two per cent over the six months to $2.80 billion but is down six per cent on a comparative year over year basis. The company’s total liabilities increased six per cent to $1.97 billion as the business made further taps on its bank overdraft facility. Equity was down five per cent to $836.45 million, with $731.92 million attributable to shareholders.

MDS closed at $1.86 on Monday which left it up 13 per cent in January with a market capitalisation of $489.47 million. However, this doesn’t make up for the 39 per cent dip in the stock price during 2024 with the stock trading below the IPO price of $1.83.

MDS will have its 10th annual general meeting at 11:00 am on February 20 at its head office. This is a couple days after the company is scheduled to release its third quarter report.