The Tribune

• Investors will gain details in 2022 Q3

• Equity raise ‘very much part of plans’

• Work starts on $20-$24m GB hospital

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Doctors Hospital says investors will “hear from us in the next quarter” on plans to finance its multi-million dollar Bahamian healthcare expansion via an equity share offering.

Dennis Deveaux, the BISX-listed healthcare provider’s chief financial officer, told Tribune Business the amount of capital it is seeking to raise as well as the nature of the offering were still being determined in discussions with its financial adviser, RF Bank & Trust.

Suggesting it was likely to be “a more common equity raise”, he explained that market demand was likely to dictate whether Doctors Hospital seeks new investors, embarks on a rights offering to existing shareholders, or employs a combination of the two.

Speaking as construction work on Doctors Hospital’s $20m-$24m Grand Bahama hospital, located at Freeport’s former First Commercial Centre, began last week, Mr Deveaux told this newspaper that the company’s “very aggressive expansion plan” will take it wherever there is “critical mass and it is economically viable” to establish private healthcare facilities in The Bahamas.

“We are still planning to have a share offering to fund our strategic growth more broadly, which already includes the Grand Bahama hospital,” he affirmed. “We have actually finalised an engagement with RF Bank & Trust to manage and co-ordinate that. We are putting together the overall schedule for that.

“We’ve seen a significant amount of interest from the market in buying into the future growth mandate of Doctors Hospital, which exists beyond Grand Bahama. While we’re breaking ground on a new hospital in Freeport, we’re completing the check-list for the clinic in Eight Mile Rock.

“We’re doing the final safety, quality and risk inspection for the brand new Eight Mile Rock clinic. That final inspection is being done today [last Thursday], and we’ll be opening the clinic shortly thereafter in the month of June, and breaking ground on our new clinic in Exuma,” Mr Deveaux continued.

“An equity raise is still very much part of our plan, and we’re very excited to let the Bahamian public and institutional investors know of our plans. They can expect to hear from us very shortly. It’s likely to be a more common equity raise, and clearly one of the projects we will fund is the Grand Bahama hospital.”

Declining to provide specifics, on the basis that the “finer details” are still being discussed with RF Bank & Trust, Mr Deveaux said it has “yet to be determined” whether a rights offering to existing Doctors Hospital shareholders will be part of the capital raising mix.

The BISX-listed healthcare provider had initially mulled spinning-off its Grand Bahama health facilities via a share offering to new investors, with residents on that island and in the wider northern Bahamas allowed the first opportunity to buy-in. 

However, Mr Deveaux added: “A rights offering is something we have discussed and it would have to be segmented appropriately with a common market offering. We haven’t finalised that yet. A lot of that is going to depend on demand... We obviously have a quantum target, but the definitive details will come out in the next quarter with respect to the raise.

“I think folks should definitely expect to hear from us in the next quarter, what our plans are for private healthcare moving forward. There’s a clinic about to imminently open in Eight Mile Rock, we’re about to start construction on a new clinic in Exuma.

“We’re opening a quality care centre and clinic in Carmichael, and putting some infrastructure into the Meldon Plaza in Palmdale. We’ve got a very aggressive expansion strategy, and we’re very excited over the next quarter to talk about what that means for the expansion of healthcare services in the country.”

Acknowledging that the “deficits in healthcare” across The Bahamas were well-known, Mr Deveaux said: “Our president, Dr Charles Diggiss, has been very clear on his vision for healthcare. Where there’s critical mass, and it’s economically viable, that’s where we’ll be, and we’re committed to executing that over the next three to four years.

“We know the people of Grand Bahama have long sought additional choice, and while the public healthcare system continues to be there as a support network, people that seek choice too often have to fly to south Florida.” With the First Commercial Centre’s purchase having now closed, Doctors Hospital is moving swiftly to improve both care quality and accessibility to private medical treatment on the island.

“I’m on the ground now in Grand Bahama, and we’re in the demolition phase,” Mr Deveaux told Tribune Business. “We’re actually demolishing the ground floor right now, and doing a bit of mold remediation and testing. It’s fair to say construction has begun. We’ve started with demolition, and we expect that process to take four to six weeks before we jump right into exterior and interior based construction.”

Asked when construction will be completed, he replied: “We’re targeting the first quarter of next year. We had some challenges getting the regulatory approvals, so that’s our target. Our biggest challenge is long lead-time equipment, but if the supply chain co-operates our target is the first quarter of next year.”

Doctors Hospital invested $425,000 in acquiring all the medical and equipment-related assets that formerly belonged to Okyanos, the stem cell therapy provider that formerly occupied the First Commercial Centre, and which is now in Supreme Court-supervised liquidation. This included a catheterisation laboratory.

“We purchased everything they left in there. We expect to repurpose not so much the medical equipment, but the furniture and fixtures, which have great value to us,” Mr Deveaux added. “There was a semi-functional catheterisation laboratory that we are retooling and putting back into operation. There are some very fine assets that we have acquired, and are going to leverage that for the benefit of healthcare for the people of Grand Bahama.

“That’s a big part of our investment. We think it’s likely to be a $20m project. We know with the supply chain being the way it is we are going to carry contingencies, but it’s safe to say it will be between $20m-$24m.” He added that much of the construction work is required on the First Commercial Centre’s third floor, suggesting that the investment here will be “probably north of $20m” alone.

Noting that Doctors Hospital has been “heavily reinvesting based on the success of the business over the last four years”, Mr Deveaux said the healthcare provider had largely reached its present position using existing cash flows.

It has not had to deploy the $13.5m equity injection received in 2021 from Toronto-based Fairfax Financial Holdings in exchange for a 16.7 percent stake in the business. “It’s actually matured off a short-term investment, and we will probably put it back into a medium-term investment,” Mr Deveaux explained of the Fairfax funds, saying there was no rush to put them to use.