GWest loses third boss in the span of one year - Looks to newly accredited facilities to help turn around loss-making operation
Medical centre operator GWest Corporation, which is grappling with the concerns of its auditors about its losses and financial health, has received accreditation for two of its service units, which it expects will serve to bring in new business.
The Montego Bay-based company, which went public and listed on the junior stock market in December 2017, recently lost its CEO, Marce Hayles, who only served in the position for six months. She was the third in a line of managers to pass through the facility since 2018.
Hayles joined the company in January, a month and a half after the resignation of Joy Clark as general manager last November. Clark served in the position for four months, having replaced Richard Barrow in July 2018. Barrow had served for six months, having been appointed in January 2018.
Calls to GWestwere not returned but the company said in a market filing that Hayles’ resignation on July 5 was in keeping with its “staff rationalisation strategy”, but did not name a replacement.
For the year ending March 2019, GWest doubled sales from $66 million to $130 million, but the cost of running the business nearly tripled to $197 million, leading to further losses at the medical complex. Since the report’s July 1 filing, the market has largely reacted by punishing the stock which traded at its lowest, 71 cents, on Monday. Since then, the stock has regained some of its momentum to close at 91 cents on Thursday, but is still well shy of its July 1 price of $1.21.
GWest reported yearly losses of $136 million, after tax credits, which comes atop the $88 million of losses booked in 2018 –nall of which served to wipe out GWest’s surplus and left it with an accumulated deficit of nearly $19 million. Its auditor, Calvert Gordon Associates, raised the issue of GWest’s consecutive years of net losses and while not qualifying its opinion, said that there are matters which cast “doubt about the company’s ability to continue as a going concern”.
The medical facility is now looking to the accreditations of its General Practice and Urgent Care facility in May to give the business a boost. It will allow GWest to begin accepting all major health cards, which it sees as a means of attracting clients.
“The accreditation of our laboratory remains outstanding and as such, we are not able to accept health cards at this facility. We are nonetheless working with the Ministry of Health assiduously to achieve this milestone, which is expected to significantly increase the income of the laboratory,” the company added in a statement appended to its year-end report.
GWest is also in discussions with “interested purchasers” of office space, and is making plans to refinance its loans.
“We are currently in advanced discussions with our bankers with respect to restructuring an existing deck and providing additional financing to carry out our projected expansion plans ... and we are confident that the company will continue as a growing concern,” GWest said.
GWest’s borrowings totalled $644 million as at March 2019.
The auditor said that GWest’s deficit indicated that its continuation as a going concern was dependent on the availability of third-party financing and future, sustained, profitable operations.
The medical company said in response that it was committed to continuing the operation, and that measures under consideration to inject new life into the business included the sale of investment property units, commencement of operations of a planned new surgery centre, promotion of new services, cost-cutting, and improved working capital.
The company said that despite a slight reduction in its total assets, from $1.6 billion to $1.53 billion, for the financial year, the value of its prime real estate property at Fairview in Montego Bay remains strong.
“We expect that we will see an increase in our rental income and future sales,” said the directors report, which acknowledged the auditors’ concerns.
The largest individual owners of GWest are Konrad Kirlew with 19 per cent, Dennis Samuels and Denise Crichton-Samuels with 14 per cent, and Leyford Doonquah with 12.7 per cent.