Around the world, initial public offerings (IPOs) of shares in public companies are popular among investors because they present the potential for high returns, especially if the IPO is priced at a discount to its intrinsic value. IPOs also present an opportunity to invest in companies that are doing different things or doing things differently. And thirdly, IPOs allow for the diversification of an investor’s portfolio.
For most individual local investors, an IPO at this time is particularly useful, given the decline in the local stock market for the last three years.
Last year, according to the Trinidad and Tobago Stock Exchange’s latest annual report, “the local equity market faced a challenging environment, with most listed securities recording year-on-year price declines. This broad-based decline weighed heavily on the market indices.
“The Composite Index fell by 11.60 per cent, closing at 1,073.23, while the All T&T Index declined by 12.74 per cent, ending the year at 1,580.25. The Cross-Listed Index also saw a contraction of 7.74 per cent, closing at 74.28. Notably, however, the SME Index continued its upward trajectory for a third consecutive year, increasing by 30.91 per cent to end at 92.58.”
Given the performance of the SME Index last year, it is notable that the first IPO for 2025 is Medcorp, which proposes to be listed on the SME market.
Medcorp is an operator of private healthcare facilities located in north-west Trinidad, comprising:
* St. Clair Medical Centre (for acute care and specialised facilities);
* Goodhealth Medical Centre (for preventative and ambulatory care);
* The Brian Lara Cancer Treatment Centre (for oncology, radiotherapy and chemotherapy); and
* Doctors Radiology Centre (for diagnostic imaging).
There are several key features to the Medcorp offering of which potential investors in the company’s IPO should be aware:
1) Medcorp is a profitable company.
For the year ended December 31, 2024, the company declared profit before tax of $48.17 million, its taxation charge was $6.82 million (which is 14.24 per cent of its profit before tax) and its after-tax profit was $41.30 million.
According to the Medcorp prospectus, its net profit margin in its last four financial years was: 33.8 per cent—2024; 44.9 per cent—2023; 19.7 per cent—2022 and 21.4 per cent in 2021.
Medcorp’s net profit margin was adjusted in 2023 because “major shareholders elected to waive their dividend entitlements as part of the strategic preparation for Medcorp’s SME listing. When normalised for this non-recurring event, FY2023’s adjusted net profit margin was 20.8 per cent, consistent with historical performance.”
There was also an adjustment to the net profit margin in Medcorp’s 2024 financial year as the company amalgamated with its 100 per cent owned subsidiaries. That led to the company reducing its stated capital to improve the flexibility of the company’s capital structure and facilitate future capital needs and returns to shareholders.
“The shareholders subsequently waived their right to receive the full amount by which the stated capital was reduced and agreed to have this amount credited to the amalgamated company’s profit or loss,” according to the prospectus. The adjusted margin in 2024 was 12.6 per cent.
2) Healthy dividends
For the year ended December 31, 2023, certain shareholders to whom dividends were owed amounting to $30,694,185, irrevocably waived their right to receive the outstanding dividends. That means the company declared $30.69 million in dividends and “certain shareholders” decided to waive their right to receive the outstanding dividends thereafter.
The company also declared dividends of $29.92 million in 2024.
In its prospectus, Medcorp states that it will pay a dividend twice a year and the payout would be between 30 and 70 per cent of its after-tax profit.
3) Good ratios
Based on Medcorp’s $41.30 million after-tax profit in the financial year ended December 31, 2024, and with 7,479,977 shares in issue, the company’s earnings per share was $5.52 and its price to earnings (P/E) ratio for that period was 8.69X. That would be $48/$5.52.
If there is full subscription of the 350,000 shares on offer in the IPO at $48 per share, the earnings per share would be $5.28 and the PE ratio would be 9.10X.
Medcorp speaks
In a statement to the Business Guardian last Friday, Medcorp said the company has been the pioneer in healthcare delivery for years and is seeking to provide a unique opportunity for investors to diversify their portfolios into an essential sector that has historically demonstrated resilience during economic fluctuations.
“The way we see it, this IPO is simply extending that leadership into the financial markets. We’re offering something truly distinctive—the chance to own a stake in healthcare delivery without the enormous capital requirements of building hospitals or buying expensive medical equipment.
“Regarding the timing, we’re at an inflection point in our growth journey. The expansion of our new wing at Goodhealth Medical Centre and continuing investments in cutting-edge technology require capital, and this IPO provides that while positioning us for continued expansion. Additionally, we will remain vigilant regarding potential acquisition opportunities that align with our strategic objectives and value-creation criteria. Beyond our domestic initiatives, we will continue to develop medical tourism opportunities, strategic relationships, and satellite opportunities within the Caribbean region. The TTSE has provided us with additional capacity within our approved cap for future issuances, giving us flexibility as we grow.
“The initial offering may be perceived as a limited number of shares, but our approach is deliberate. Our valuation reflects our market leadership, unique positioning, and comprehensive service offering. We’ve structured our issuance this way to ensure strong performance upon market entry.
“The tax incentives available to companies that list on the TTSE SME market (the market on which Medcorp’s shares will be listed) should enhance our profitability beyond what historical financials might suggest. Additionally, being publicly traded brings three key benefits that directly impact our bottom line:
“First, enhanced brand recognition. When we become a publicly traded entity, our institutional profile is elevated substantially. This strengthens patient trust and stakeholder confidence, which we expect to translate directly into increased patient volume and revenue.
“Second, talent acquisition. As a public company, we can attract and retain the best professionals who want to deliver both clinical excellence and organizational stability. Having the best healthcare professionals means better care, better outcomes, and ultimately, better financial performance.
“Third, innovation funding. Ongoing access to capital markets ensures we can continue investing in medical innovations that improve patient outcomes. When we provide cutting-edge treatments not available elsewhere in T&T, we become the destination of choice for specialised care, expanding our market share and revenue streams.
“We’re particularly excited about creating opportunities for health professionals and others in the healthcare industry to build valuable relationship networks through investment. By becoming shareholders, industry professionals can strengthen connections while participating in our financial success.
“This is also an investment that resonates on a personal level. Healthcare touches everyone’s lives—we all require medical services, and these needs only increase as we age. By investing in Medcorp, shareholders are supporting an institution that has significantly reduced the need for citizens to seek medical care abroad. Quality healthcare is now available right here at home.
“Furthermore, Medcorp represents institutional stability and continuity. We are here for the long term. Our success doesn’t depend on any single individual or small group of people. We’ve established robust management structures and a sustainable operational model that will continue as a legacy for generations to come. This institutional strength is precisely what makes us an attractive market opportunity.
“This IPO represents a story of legacy, growth, and innovation. We refuse to rest on our laurels. To advance healthcare in Trinidad and Tobago, we must expand our capabilities and embrace new approaches. This public offering allows us to pursue exciting initiatives while embracing the transparency and accountability that come with being a public company.
“As good corporate citizens, we recognise our role extends beyond business operations. We’re proud to contribute to the national investment landscape, creating opportunities for citizens to build wealth while supporting vital healthcare services. This IPO isn’t just about Medcorp growing—it’s about expanding the opportunities for T&T’s investors and healthcare community to grow alongside us.
Disclosure: The author of this commentary is not a financial analyst. Nothing in this piece should be construed as providing financial advice to any potential investors, who are urged to seek such advice from professionals.