Medilines Distributors Inc. on Thursday filed its registration statement with the Securities and Exchange Commission (SEC) for its initial public offering (IPO) later this year from which it hopes to raise some P2.02 billion.
In its prospectus the company will list up to 825 million common shares at an offer price of up to P2.45 per share. Of the shares that will be sold, some 550 million are composed of primary shares while the 275 million secondary shares are owned by Virgilio B. Villar.
PNB Capital and Investment Corp. has been appointed as issue manager, lead underwriter and bookrunner.
Its shares will be listed on the main board of the Philippine Stock Exchange under the trading symbol “MD.”
Net proceeds from the offer will be used to fund the company’s initial working capital for its product portfolio expansion and for debt repayment.
“We are excited to work with Medilines in drawing out another opportunity to bring to the capital market an essential and pandemic-resilient business. We envision this to be the first pure-play healthcare IPO in the Philippines,” Gerry Valenciano, president of PNB Capital, said.
A pure-play is a company that focuses on only one line of business, unlike a diversified company which has a wide-ranging product line and sources of revenue. Catering to a niche market, pure-plays have easy-to-understand cash flows and revenues, the company said.
About P541.5 million of the P1.35 billion proceeds from the primary shares sale will go to working capital to expand its product portfolio to include medical consumables such as low-cost yet high-margin products that are regularly used for the medical equipment that Medilines sell.
The remaining P743.1 million will be used to retire the debts used to fund the company’s working capital requirements.
Medilines has an outstanding debt of P573.7 million from Bank of the Philippines Islands, and another P169.4 million from the Rizal Commercial Banking Corp.
“These loans carry interest rates of 4.5 percent to 5.25 percent. These loans were obtained to fund the company’s working capital requirements. We believe that pursuing this strategy will increase the overall shareholder value of the company as this will decrease our financing cost. We believe that we will still be able to access debt funding from our various relationship banks as the need arises,” the company said.
Medilines is an essential distributor of critical equipment from medical device companies, such as Siemens, B. Braun and Varian.
Its portfolio primarily caters to the categories of specialized medicine in the Philippines, such as diagnostic imaging, dialysis and cancer therapy. Combined sales from these items amounted to P17 billion in 2020.
These categories, in turn, address some of the top causes of mortality among Filipinos—cardiovascular diseases, cancer, chronic obstructive pulmonary disease, diabetes, pneumonia and tuberculosis.
The medical devices market, composed of medical equipment and consumables and accessories, is expected to hit P127.8 billion by 2025 from last year’s P77 billion, a compounded growth of more than 10 percent.