Medical Disposables and Supplies Limited (MDS), a Jamaican-based distributor of healthcare and consumer products, is set to increase its Caribbean footprint through a new business known as MDS Cayman. This joint venture, in which MDS will hold a 30 percent stake, is designed to distribute pharmaceutical and medical items to hospitals, clinics, and other healthcare facilities in the Cayman Islands and the wider region. Here’s a closer look at the upcoming move and how it ties into MDS’s broader strategy.
Targeted Entry into Cayman
- Formation Timeline: MDS Cayman’s creation began in October 2024, with full establishment expected by March 31 (the end of MDS’s financial year). The new operation is slated to become functional by April 2025.
- Rationale: MDS recognizes the Cayman Islands as an area of growth potential, identifying an opportunity to offer its product lines and distribution capabilities. Given local regulations requiring majority ownership by Cayman nationals or special licensing, the company opted for a joint venture structure.
- Investment Approach: Although no exact figures have been shared, MDS indicates the initial capital outlay will be modest. The company intends to begin with a relatively lean operation to minimize risk.
Building on Previous Expansions
- Second Major Expansion: MDS Cayman follows the company’s earlier venture into new territories. In 2021, MDS, through its 60 percent-owned subsidiary Cornwall Enterprises Limited, acquired Cornwall Medical and Dental Supplies Limited, adding several pharmacies in western Jamaica to its network.
- Consumer Segment Boost: MDS’s portfolio diversification also includes the distribution of True Pet Food in Jamaica, which is owned by Caribbean Broilers Group. This arrangement has strengthened MDS’s position in the fast-growing pet care segment.
Financial Context
- Recent Losses: For the fiscal year ending March 31, 2024, MDS reported a consolidated net loss of $315.96 million, largely due to COVID-19-related inventory write-downs.
- Revenue and Margins: In its latest quarter, MDS increased consolidated revenue by 5 percent to $907.74 million. However, cost of sales also rose by 10 percent, squeezing profit margins.
- Operating Results: Higher operating expenses and a competitive market environment contributed to an operating loss of $22.15 million in the quarter, compared to an operating profit of $8.87 million a year earlier. Net loss for the period climbed to $49.89 million, up from $38.28 million previously.
- Six-Month Overview: Though sales rose to $1.88 billion over six months, operating profit dropped 78 percent to $7.20 million, with the net loss expanding to $47.73 million.
Shareholder Updates
- Market Performance: Despite a 39 percent slide in its share price throughout 2024, MDS has rebounded by 13 percent in January, closing at $1.86 and pushing its market capitalization to nearly $490 million.
- Upcoming AGM: MDS will hold its 10th annual general meeting on February 20, just after it releases third-quarter financials. Investors are eager to learn more details on the Cayman venture, as well as other initiatives aimed at improving the company’s growth trajectory.
MDS’s measured approach in the Cayman Islands reflects a desire to expand methodically while keeping costs under control. By leveraging its experience in both retail pharmacy and product distribution, the company hopes to capture a share of the Cayman healthcare market and potentially open doors to even broader regional opportunities.
