After recording its best revenue outrun of $624.22 million for its 2022 financial year (FY), medical imaging company Elite Diagnostic Limited has set a new target of $1 billion to be achieved by the end of June 2024.

The company currently offers a range of imaging services including X-rays, ultrasounds, MRIs (magnetic resonance imaging) and CT (computed tomography) scans at its Holborn and Liguanea locations in St Andrew and Drax Hall location in St Ann. It recently announced in its annual report that it has selected Montego Bay, the second city, as the location for its fourth branch.

Elite had commissioned market surveys across the country to find underserved areas where it could setup its newest location. This also included Mandeville and St Catherine. While it had outlined a 12-month timeline for the new branch, the company is currently at the financing stage related to the location before it signs off on a lease which will result in six to seven months of expenses on the location.

“Drax Hall is growing, but Montego Bay having a higher population and underserved in some of the modalities, we see it fit to go there next. That was one of the attributes of going to Montego Bay, but even prior to that, when Drax Hall opened, we sought to have alliances with the major hotels down there. The hotels are the bigger source of the health tourism market,” said recently appointed Elite Chief Executive Officer Harvey Levers at the company’s annual general meeting (AGM) held last Thursday.

As part of the move to reach that $1-billion revenue target, the company is looking at the opportunities which exist from public-private partnerships (PPPs) with the Ministry of Health and Wellness (MOHW) and other public bodies such as the Jamaica Constabulary Force (JCF) and Jamaica Defence Force (JDF).

However, Levers cautioned that the company would be selective about how this is executed due to the extended time it takes for government entities to render payment. To this end, he mentioned the possibility of selling the receivables for the MOHW which is much longer than the JCF and JDF which are past the standard 30-day payment window, but less than that of the MOHW.

“We see public patients at our locations when the Government hospitals do not have those instruments to do those scans and I see significant growth in that area. However, those payments are protracted and slow, but we recently came across a model in which we could grow and sell those receivables at a very lucrative rate,” Levers added.

Elite’s first quarter (July to September) revenue grew by a third to $187.95 million as the company was not impacted by lockdowns nor curfews which were present in the comparative period. However, the downtime from MRI and CT machines at its Holborn and Liguanea locations over five weeks resulted in the company losing an estimated $25 to $30 million in potential revenue.

When asked about the new measures implemented during the quarter, Levers said, “The local representative of the manufacturers have now started to keep an inventory of smaller parts. If the machine goes down for a million-dollar part, they’ll have it in stock. They have recognised the repeat occurrence of certain parts going bad not just with us, but with other entities that they support. We have gone beyond the manufacturers recommended service schedule so that we try and catch some of these glitches before.”

The company is currently in the process of purchasing a CT scanning machine for its Liguanea location, which should be commissioned in the new year, that will provide an alternative option for clients in the corporate area.

Elite had mentioned at its last AGM the possibility of a joint venture to bring in medical supplies with another company in sharing container space for distribution across Jamaica. When asked if the option will be seeing any progress, Levers said, “It’s an idea that we still have on the table, but it’s not at the top of the list. We want to expand the branch network first, have all the branches operating with backup equipment and then we’ll look at diversifying within the medical services industry.”

The company is currently in talks with a solar panel provider in a bid to cut its $54.48-million utility costs in half. These solar panels would be installed at its Liguanea and Drax Hall locations, but Levers cautioned that if they can’t save at least 50 per cent on its electricity costs, it would be better to invest directly in equipment to increase revenue. He stated that the company would be able to provide some better context by the end of its third quarter which ends in March 2023.

Total expenses for Q1 increased by 40 per cent to $79.76 million as repair and maintenance costs were incurred along with inflationary pressures. Levers mentioned that the company is currently focused on cost-cutting measures and doing bulk purchases to ensure that branches such as its Drax Hall location don’t end up spending more money in the higher costing St Ann area.

Despite its financing costs almost doubling to $8.01 million, Elite was able to rake in a net profit of $5.81 million compared to the net loss of $514,678. This resulted in an earnings per share of $0.02.

Elite’s total assets increased 52 per cent year over year to $1.02 billion which was largely driven by non-current assets which stand at $884.86 million. Total liabilities grew 143 per cent to $936.11 million due to the additional long-term debt for additional equipment while shareholders equity was up 12 per cent to $484.36 million.

Elite’s stock price is up 11 per cent year to date to $3.16 which leaves it with a market capitalisation of $1.12 billion. Shareholders will receive a $0.02 dividend payment on Wednesday with Chairman Steven Gooden mentioning that the company will focus on expansion and that dividend payments won’t expand rapidly. All resolutions were approved at the AGM with Sagicor Group Jamaica Chief Financial Officer Andre Ho Long resigning since he did not offer himself for re-election.

“The outlook is positive once we overcome the downtime, concentrate on our customer service and grow our image,” Levers closed.