FOLLOWING two consecutive years of net losses, Medical Disposables and Supplies Limited (MDS) has set out a strategic initiative to produce profits again or “return to black”.

MDS’s main business is that of a distributor of pharmaceutical and medical supplies (medical division) with its consumer division involved in the distribution of cleaning brands, confectionaries, pet food, and food products. The company has been listed for nearly 12 years on the Jamaica Stock Exchange (JSE) and has quadrupled revenue, tripled assets and doubled its capital base since then.

However, the company is now faced with a difficult battle after writing down its COVID-19 backlog of products in its March 2024 financial year (FY) and fighting rising operational financing costs in its 2025 FY.

This has pushed MDS to execute four strategic responses as per its chairman Winston Boothe. These include aggressive cost reduction and cost management efforts, restoration of gross margin levels, engagement of a debt reduction strategy and an expanded product offering in the medical and consumer divisions.

“This past year saw revenue growth, expanded product offerings, and stronger gross margins. It also saw hard decisions, tighter controls, and sharper focus across our operations. Though not yet in the black, we are far closer to balance, and the signs of progress are real and encouraging,” the company’s 2025 annual report stated.

MDS’s consolidated revenue base grew five per cent to $3.88 billion, a $174.79 million increase, as it increased volumes sold and diversified its market share under its consumer division. Although gross profit grew 22 per cent or $162.52 million to $876.43 million, the company highlighted that it only increased by $76 million or 10.64 per cent in real terms after accounting for the write-down of inventory in the 2024 period.

While MDS saw an eight per cent increase in administrative expenses to $510.05 million due to one-time emergency repairs and higher security and insurance costs, it saw a four per cent cut in selling and promotional costs to $357.30 million as the company reduced its marketing spend.

However, the group was impacted by a jump in impairment charges on its financial assets from $14.97 million to $129.17 million. A closer review revealed that this increase was largely attributed to the auditors effectively increasing the provisioning for related party balances owed to the company. This means that the company’s auditors have a view that the ability for these sums to be repaid are lower than previously expected and that the company needs to write down these sums to better reflect the ability to collect.

In this instance, $111.47 million in amounts due from directors and $14.93 million in due from CMDS were effectively written down to nil with a combined provision amount of $126.41 million. The group also had a $2.77 million trade receivables balance that was deemed impaired. If these sums were to be repaid by the referenced parties, then this balance would be reversed and added back to the income statement as a credit.

These one-time charges effectively erased any gains the company made from its increased gross profit. As a result, MDS’s consolidated operating loss moved from $175.27 million to $151.66 million. After accounting for lower finance costs and a higher foreign exchange gain, MDS’s loss before tax improved from $320.51 million to $284.33 million. MDS’s consolidated net loss moved from $315.96 million to $281.06 million, with $201.83 million attributable to owners.

Its 60 per cent controlled subsidiary Cornwall Enterprises Limited saw its net loss move from $59.68 million to $198.09 million. However, $79.23 million was apportioned to non-controlling interests for the 2025 FY. Cornwall Enterprises acquired the assets and liabilities of Cornwall Medical and Dental Supplies Limited in March 2025 for a consideration of $274.99 million.

MDS previously reported a consolidated net profit of $80.20 million in the 2023 FY and $105.43 million in the 2022 FY.

“Throughout the year, we implemented cost-containment measures, renegotiated with suppliers tightened inventory management, and improved positions in critical areas. We also placed renewed emphasis on customer relationships and operational efficiency,” said MDS Chief Executive Officer (CEO) Kurt Boothe on initiatives taken in the 2025 FY.

His CEO’s message highlighted that underperforming SKUs (stock keeping unit) were rationalised, executed an internal restructuring to better align the leadership structure with strategic priorities and had deeper integration for sales, finance, operations, and business development.

MDS’s core business had better fortunes as revenue grew nine per cent to $3.52 billion with gross profit rising 38 per cent to $787.29 million. The improvement in gross profit allowed the company to swing from an operating loss of $129.09 million to an operating profit of $29.16 million. However, the company’s relatively high finance costs left it nursing a loss before tax of $85.49 million, an improvement over the $259.28 million. The net loss moved from $256.29 million to $82.98 million.

The core MDS business has an asset base of $2.26 billion with $872.05 million in inventories and $640.72 million in trade and other receivables. Yet, the company’s liabilities stand at $1.66 billion with $758.25 million in long-term debt and $203.03 million in bank overdrafts.

“One of the more visible shifts this year has been our growing presence in the general consumer market. Our distribution of confectionery, beauty and household lines have transitioned from a launch phase to a growing stream of revenue and an exciting complement to our healthcare base. We are adapting and building a more diversified business that remains relevant to today’s consumer,” the CEO added.

MDS’s first quarter (April to June) saw the group reporting a three per cent rise in consolidated revenue to $998.74 million, but a swing from a consolidated net profit of $2.16 million to a consolidated net loss of $16.42 million. Despite this reported figure, MDS’s operating expenses increased five per cent to $214.50 million which included the company spending more on manpower to support its new business developments, one of which is MDS Cayman.

The company also benefited from a $15.61 million gain on the sale of property, plant and equipment (PP&E) which helped to offset the higher finance costs incurred from short term financing. MDS expects its finance costs to decline in the coming months as it optimizes its inventory levels and enhances collections performance.

Its subsidiary Cornwall Enterprises Limited reported a net loss of $13.06 million, slightly higher than the $9.41 million recorded in the prior period.

MDS’s consolidated asset base stood at $2.49 billion with the group’s inventory at $1.04 billion and trade and other receivables at $626.19 million. MDS collected $94.21 million from the sale of property during the first quarter with the PP&E balance at $644.54 million. Total liabilities and equity attributable to shareholders was $1.91 billion and $556.10 million, respectively.

MDS last paid a dividend of $0.09 or $23.68 million in January 2023. It has not paid a dividend since then, as it focuses on turning around the ship.

MDS closed Tuesday at $1.72, which left it up four per cent year-to-date with a market capitalisation of $452.63 million. However, the company is still trading below its initial public offering (IPO) price of $1.83 with the stock having a 52-week range of $1.15 to $2.30.

MDS will host its annual general meeting at 11:00 am on November 20 at its head office at 83 Hagley Park Road.