Gross profit was up by $44.52 million to $169.12 million

Medical Disposables & Supplies Limited (MDS) like many other companies have been grappling with the disastrous effects of the COVID pandemic but have increased its efficiency while maintaining its profitability in its third quarter.

Like many businesses, MDS has had to streamline, digitise and improve efficiencies to survive and better serve customers, which is paying off based on the results of its December 2030 third quarter performance. The company has managed to perform relatively well in spite of the difficulties faced in the past year.

Kurt Boothe, MDS chief executive officer, credits the positive performance to the fact that the company had begun the revamping of internal processes in 2019 and was fortunate enough to have been in a strong position when the pandemic hit.

“We are counting ourselves blessed that we had the foresight to act when we did. We acknowledged that we were expanding the business at a rapid pace, but the existing systems had to also be improved and expanded, so those were the initiatives that we undertook,” Boothe explains.

For the third quarter ended December 31, 2020, MDS generated sales revenue of $626.08 million, which represents a $22.7million climb or 3.78 per cent increase when compared to the corresponding period in the previous year. The growth in sales was primarily driven by increases in the performance of the pharmaceutical and medical divisions. 

Full impact of COVID felt by consumer goods category

Consumer goods felt the full impact of the COVID-19 pandemic with consumers opting for necessities such as healthcare related products rather than discretionary items. 

According to the MDS CEO, “despite lessened consumer goods activity, shorter opening hours in some pharmacies and doctors’ offices, combined with a reduction in sales of some major brands, MDS still managed to increase overall sales, which speaks to the strength in its diversified portfolio and the relative defensive nature of the healthcare industry, which typically demonstrates consistent market demand over time”.

Continuing, Booth pointed to “improvements in our business efficiencies allowed us to have quick responses to demand for prescription drugs particularly for chronic illnesses, which provided the catalyst for growth in Pharmaceuticals. The growth in the hospital related items was attributable to the company’s ability to efficiently respond to the market demand for disposables as well as its ability to satisfy covid related opportunities”.

Gross profit of $169.12 million improved by $44.52 million over the previous year. Notably, while year over year total revenues increased by 3.8 per cent, gross profit increased exponentially beyond this rate by 35.7 per cent.

This is significant because it highlights the efficiencies achieved as a result of internal strategic improvements. Similarly, gross profit percentage for the period grew from 20.65 per cent in Q3 of 2019 to 27.01 per cent in Q3 of the current year, driven by the increase in sales of pharmaceutical and medical disposable products, coupled with a targeted reduction in cost of sales by management.

Total operational expenses increased by $22.92 million up from $106.27 million in the second quarter of 2019 to $129.18 million in Q3 of 2020. This represents an increase of 21.57 per cent.

This movement was due to increases in marketing and promotion expenses, which were required to support the expansion in business activities. Operational expenses accounted for 20.63 per cent of sales revenue for the current period, up from 17.61 per cent of sales revenue for the corresponding period in the previous year.

Negative side of the financials

On the negative side total non-operational expenses increased marginally from $11.38 million in Q3 of 2019 to $12.78 million in Q3 of 2020. There were marginal increases in Finance Costs and Foreign exchange losses. 

This was offset by slightly lower revenues from non-operating activities during the third quarter of 2020 compared to the same period last year. MDS produced a 288 per cent increase in after tax profit to $25.40 million for the quarter, an increase of $18.87 million when compared to the previous year. 

MDS continues to improve its profitability after two consecutive quarters of losses following the onset of the COVID-19 pandemic. Year to date sales revenue for the nine months ended December 31, 2020 was $1.77 million, an increase of $40.69 million or 2.36 per cent when compared to the prior year. 

Gross profit of $432.54 million for the nine-month period, reflects a 7.8 per cent or $33.65 million increase over the previous year.  This increase resulted from a reduction in cost of sales.