UP­DAT­ED

Med­corp Ltd, one of T&T’s largest pri­vate health­care providers, is seek­ing to be­come the fourth small and medi­um-sized en­ter­prise (SME) to be list­ed on the Trinidad and To­ba­go Stock Ex­change (TTSE) by is­su­ing an ini­tial pub­lic of­fer­ing (IPO) of 350,000 shares at a price of $48 per share.

If the IPO is ful­ly sub­scribed, Med­corp would raise a to­tal of $16.8 mil­lion and the com­pa­ny’s new share­hold­ers would own 4.47 per cent of its to­tal is­sued shares.

The IPO opened on May 27, clos­es on June 13 and the ex­pect­ed list­ing date is Ju­ly 7.

Med­corp’s prin­ci­pal ac­tiv­i­ty is the op­er­a­tion of pri­vate health­care fa­cil­i­ties in T&T that pro­vide a com­pre­hen­sive range of med­ical ser­vices at:

* St Clair Med­ical Cen­tre, which pro­vides acute care and spe­cialised ser­vices;

* Good­health Med­ical Cen­tre, for pre­ven­ta­tive and am­bu­la­to­ry care;

* The Bri­an Lara Can­cer Treat­ment Cen­tre, for on­col­o­gy, ra­dio­ther­a­py and chemother­a­py; and

* Dco­tors Ra­di­ol­o­gy Cen­tre, for di­ag­nos­tic imag­ing.

Med­corp is al­so a 50 per cent share­hold­er in a joint ven­ture, Caribbean Heart Care-Med­corp Ltd, which pro­vides full-ser­vice car­dio­vas­cu­lar care cen­tre.

Asked why Med­corp de­cid­ed to is­sue the IPO, the di­rec­tors of the com­pa­ny said: "Go­ing pub­lic rep­re­sents a strate­gic evo­lu­tion for our or­gan­i­sa­tion. When you look at the T&T stock mar­ket to­day, what do you see? Bank­ing in­sti­tu­tions, fi­nan­cial ser­vices com­pa­nies, con­glom­er­ates, and man­u­fac­tur­ing en­ti­ties. What’s miss­ing is health­care. We are cre­at­ing a unique op­por­tu­ni­ty for in­vestors to di­ver­si­fy their port­fo­lios in­to an es­sen­tial sec­tor that has his­tor­i­cal­ly demon­strat­ed re­silience dur­ing eco­nom­ic fluc­tu­a­tions.

"We have been the pi­o­neer in health­care de­liv­ery for years. The way we see it, this IPO is sim­ply ex­tend­ing that lead­er­ship in­to the fi­nan­cial mar­kets. We are 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."

Use of funds

The prospec­tus states that af­ter de­duct­ing ex­pens­es re­lat­ed to the dis­tri­b­u­tion and com­mis­sions and bro­ker­age fees, “Med­corp in­tends to uti­lize the es­ti­mat­ed net cash pro­ceeds of the dis­tri­b­u­tion of $15 mil­lion to fu­el its strate­gic growth ini­tia­tives and en­hance its mar­ket po­si­tion.” The com­pa­ny said the pro­ceeds from the dis­tri­b­u­tion will be ful­ly utilised with­in 18 months.

Look­ing ahead, Med­corp said it is com­mit­ted to sus­tain­ing its growth tra­jec­to­ry through strate­gic ini­tia­tives and mar­ket ex­pan­sion.

The health­care provider’s ex­pan­sion plans in­clude in­fra­struc­ture en­hance­ment, such as the ver­ti­cal ex­pan­sion of the new wing at Good­health Med­ical Cen­tre, by con­struct­ing three ad­di­tion­al storeys on the re­cent­ly com­plet­ed ground floor, sub­ject to reg­u­la­to­ry ap­proval.

“The ex­pan­sion will in­crease ca­pac­i­ty, al­low­ing for the in­tro­duc­tion of new ser­vices and state-of-the-art fa­cil­i­ties,” ac­cord­ing to the prospec­tus.

The prospec­tive list­ed com­pa­ny is al­so fo­cussing on po­ten­tial ge­o­graph­ic ex­pan­sion, with “plans to ex­plore and to en­ter new mar­kets/strate­gic re­la­tion­ships by es­tab­lish­ing satel­lite cam­pus­es and telemed­ical ser­vices in un­der­served re­gions, lo­cal­ly and Caribbean­wide, with con­sid­er­a­tion for med­ical tourism op­por­tu­ni­ties.”

The com­pa­ny says while its pri­ma­ry fo­cus is on or­gan­ic growth, “should vi­able ac­qui­si­tion op­por­tu­ni­ties arise that align with its strate­gic ob­jec­tives and val­ue-cre­ation cri­te­ria, the com­pa­ny will eval­u­ate them on their mer­its.”

Med­corp said it is, as well, aim­ing to fur­ther di­ver­si­fy its ser­vice of­fer­ings by en­hanc­ing its in­fra­struc­ture to sup­port spe­cialised med­ical care and it plans to con­tin­ue in­vest­ment in cut­ting-edge tech­nol­o­gy to in­te­grate ad­vanced tech­nolo­gies in its ad­min­is­tra­tion sys­tem and in the de­liv­ery of health­care ser­vices.

Fi­nan­cial per­for­mance

As­sum­ing the IPO is suc­cess­ful, with 7,829,977 shares in is­sue, Med­corp’s earn­ings per share would be $5.58, based on af­ter-tax prof­it of $41.31 mil­lion for 2024, ac­cord­ing to in­for­ma­tion Re­pub­lic Wealth Man­age­ment, the lead stock­bro­ker to the IPO. Med­corp would start trad­ing on the lo­cal stock mar­ket at a price to earn­ings ra­tio (PE) of 9.10X.

The af­ter-tax prof­it of $41.31 mil­lion for its fi­nan­cial year end­ed De­cem­ber 31, 2024, was 27.6 per cent less that the $57.06 mil­lion Med­corp re­port­ed in 2023.

The re­duc­tion in prof­itabil­i­ty in 2024 com­pared to 2023, ac­cord­ing to the prospec­tus, “re­flects a non-re­cur­ring fi­nan­cial event (in 2023) where ma­jor share­hold­ers elect­ed to waive their div­i­dend en­ti­tle­ments as part of the strate­gic prepa­ra­tion for Med­corp’s SME list­ing.” The waiv­er of div­i­dends in 2023 amount­ed to $30.69 mil­lion and that mon­ey was treat­ed as in­come in the con­sol­i­dat­ed state­ment of com­pre­hen­sive in­come.

For the year end­ed De­cem­ber 31, 2022, the board of di­rec­tors de­clared div­i­dends of $33.37 mil­lion. How­ev­er, the prospec­tus states that cer­tain share­hold­ers ir­rev­o­ca­bly waived their rights to a por­tion of their div­i­dends amount­ing to $4.48 ml­lion. As such, div­i­dends paid of $28.89 mil­lion have been record­ed in the state­ment of changes in eq­ui­ty.

Med­corp said the sig­nif­i­cant in­crease in 2023’s re­port­ed prof­itabil­i­ty, com­pared to 2022, was at­trib­ut­able to sev­er­al oth­er fac­tors in­clud­ing rev­enue growth, ef­fec­tive cost man­age­ment, and the im­ple­men­ta­tion of ad­vanced health­care tech­nolo­gies.

The com­pa­ny re­port­ed rev­enue of $122.23 mil­lion in its 2024 fi­nan­cial year, which was 3.9 per cent less than in 2023.

For the fi­nan­cial year end­ing De­cem­ber 31, 2024, the com­pa­ny de­clared a to­tal div­i­dend of $29.9 mil­lion, which was equal to 72.4 per cent of its prof­it for that year. Each share­hold­er re­ceived $4 per share on a pre-IPO ba­sis.

Med­corp said its an­nu­al tar­get­ted di­vid­ed pay­out ranges from 30 per cent to 70 per cent of net prof­it af­ter tax. The com­pa­ny in­tends to de­clare div­i­dends twice a year and “an in­ter­im div­i­dend for the fi­nan­cial year is in­tend­ed to be paid based on the six months fi­nan­cial re­sults to 30th June, with the fi­nal div­i­dend be­ing paid fol­low­ing the ap­proval of the au­dit­ed Fi­nan­cial State­ments of that fi­nan­cial year.”

For its 2024 fi­nan­cial year, the key dri­vers of Med­corp’s rev­enue were:

* In­pa­tient ser­vices—$74.9 mil­lion (61 per cent of rev­enue)

* Out­pa­tient ser­vices—$25.9 mil­lion (21 per cent of rev­enue)

* Ra­di­a­tion/chemother­a­py—$21.4 mil­lion (18 per cent of rev­enue)

Cur­rent share­hold­ers

Ac­cord­ing to the prospec­tus, Med­corp is now owned by a group of 70 share­hold­ers. Of Med­corp’s 70 share­hold­ers, four share­hold­ers joint­ly con­trol 65.51 per cent of the com­pa­ny’s 7,479,977 is­sued or­di­nary shares and are con­sid­ered con­nect­ed share­hold­ers.

Be­fore the IPO, Med­corp’s ex­ist­ing mi­nor­i­ty share­hold­ers owned 34.49 per cent of the com­pa­ny.

Af­ter the IPO, it is ex­pect­ed that the per­cent­age hold­ings in the com­pa­ny by the con­nect­ed share­hold­ers would de­cline from 65.51 per cent of Med­corp to 62.58 per cent.

Post-IPO, and as­sum­ing full sub­scrip­tion of the of­fer, the share­hold­ing of the com­pa­ny’s ex­ist­ing mi­nor­i­ty share­hold­ers is ex­pect­ed to de­cline from 34.49 per cent of the com­pa­ny to 32.95 per cent. Pub­lic in­vestors, who pur­chase share in the IPO, are ex­pect­ed to own 4.47 per cent of the com­pa­ny.

The four con­nect­ed share­hold­ers are:

* Dr Boris Yufe, with 1,747,137 shares, equal to 23.36 per cent of the com­pa­ny;

* Dr Kong­shiek Achong Low, with 1,328,164 shares, equal to 17.76 per cent

* Dr Di­nesh Mor, with 1,165,416 shares, or 15.58 per cent of the com­pa­ny; and

* Alyssa Achong Low, with 658,225 shares, or 8.81 per cent of the com­pa­ny

The four con­nect­ed share­hold­ers are al­so di­rec­tors of the com­pa­ny.

Re­lat­ed par­ty

Med­corp op­er­ates its health­care ser­vices from three cam­pus­es lo­cat­ed at St Clair, Wood­brook and Pem­broke Street in Port-of-Spain. The com­pa­ny, as well, of­fers liv­ing quar­ters to cer­tain non-na­tion­al nurs­ing staff at a house lo­cat­ed in St. James.

The prospec­tus states: "Med­corp has en­tered in­to an oc­cu­pan­cy agree­ment with a com­pa­ny that shares com­mon con­trol—that is, a com­pa­ny the shares of which are held by

sub­stan­tive­ly sim­i­lar share­hold­ers as Med­corp (the re­lat­ed par­ty).

"The re­lat­ed par­ty is the ul­ti­mate par­ent of the en­ti­ties that own these four prop­er­ties oc­cu­pied by Med­corp. Un­der the terms of the oc­cu­pan­cy agree­ment, Med­corp ser­vices cer­tain lend­ing fa­cil­i­ties made avail­able to the re­lat­ed par­ty and pays all costs re­lat­ed to the oc­cu­pan­cy of the prop­er­ties, in­clud­ing util­i­ties, in­sur­ance, and main­te­nance."

As of the date of the prospec­tus, May 22, the prospec­tus in­di­cates that the month­ly loan in­stal­ment paid by Med­corp, pur­suant to the oc­cu­pan­cy agree­ment, to­tals $1,087,866, which amounts to $13.05 mil­lion a year. The cur­rent term of the oc­cu­pan­cy agree­ment ex­tends un­til Au­gust 2035, align­ing with the end of the last loan fa­cil­i­ty re­lat­ed to the agree­ment.

Un­der the head­er lease li­a­bil­i­ty, the prospec­tus ex­plains that Med­corp, the com­pa­ny, en­tered in­to an agree­ment with an en­ti­ty with com­mon con­trol for the oc­cu­pan­cy of prop­er­ties lo­cat­ed in St James, Wood­brook, St Clair and Pem­broke Street.

“The said en­ti­ty with com­mon con­trol took a loan to the val­ue of $100 mil­lion and the com­pa­ny (Med­corp) pays the loan in­stal­ments in lieu of rental pay­ments. The com­pa­ny (Med­corp) is a guar­an­tor of this loan.

"Dur­ing the year end­ed De­cem­ber 31, 2023, the said agree­ment be­tween the com­pa­ny (Med­corp) and the com­pa­ny with com­mon con­trol was mod­i­fied where­by the month­ly pay­ments in­creased by $890,168 and the term was ex­tend­ed to Au­gust 2035,” ac­cord­ing to the prospec­tus.

This ar­ti­cle has been up­dat­ed main­ly to re­flect in­for­ma­tion that was made avail­able to the Sun­day Busi­ness Guardian af­ter the ed­i­to­r­i­al dead­line of the news­pa­per.