Intravenous Infusions sweats under GHC10m NHIA debt

Pharmaceuticals producer Intravenous Infusions Plc has said it faces an existential threat from unpaid bills to the tune of over GH¢10m by the National Health Insurance Authority (NHIA).

The company supplies a lot of medical facilities that are signed onto the National Health Insurance Scheme with IV medications – but says payment delays by the NHIA have made banks wary of providing it with credit.

“The company has been challenged with adequate working capital due to challenges with the National Health Insurance Authority (NHIA) making good its payment in a timely manner to the hospitals and other facilities,” its Managing Director, David Kafui Klutse, told shareholders at their Annual General Meeting in Accra.

David Klutse, who was appointed a little over a year ago to turn around the ailing company’s fortunes, noted that its exposure to government or the NHIA alone is in excess of GH¢10million.

“We have a product that is sold only to hospitals, and in this country the biggest and majority of hospitals are owned by government. We have a situation where the delay can be up to one year and over. When I go to the banks, they do not want to lend because they are not sure when NHIA is going to pay hospitals.

“We have a big challenge in the country. The present administration is making huge strides to address the issue by making significant payments, but every day people are going to hospitals and using infusions – so the debt keeps piling up,” he said.

Due to these challenges, Mr. Klutse said the company has taken some measures – including applying for funding under government’s business assistance fund and private placement to raise capital to sustain production.

Databank and Cal Brokers are acting as transaction advisors for the private placement, which seeks to raise a total of GH¢5.94million to finance remaining capital and non-capital items while funds from the business assistance fund will go into clearing current overdrafts with banks.

Health insurance, according to Mr. Klutse, is the biggest social intervention by government because it touches on babies to pensioners, and Intravenous Infusions is ready to play its part in sustaining the scheme.

He added that the company employed 60 people in 2017, which led to the increment in turnover; but it has the capacity to do more. “We can do more in terms of expansion. I want to order machinery and employ more personnel, but we have to get paid – then the banks can have confidence in us to extend credit,” he stressed.

Financial performance

In spite of the challenges, the company posted an impressive statement of profit and loss account – with revenues alone seeing a 55 percent growth from GH¢10.6million in 2016 to GH¢16.6million in 2017.

After undertaking a strategic review of the business, it posted a profit before tax of GH¢3.3million in 2017 from GH¢1.2million in 2016 – representing an increment of 178.2 percent.

The company also recorded a growth of 307.1 percent in terms of earnings per share from GH¢0.00296 in 2016 to GH¢0.01205.

On its statement of financial position, the company’s assets grew from GH¢12.3million to GH¢20.5million due to increments in inventory, trade and other receivables, and cash and cash equivalent.

Board Chair’s remarks

The company’s board chairman, Isaac Osei, noted that the growth in revenue was also on the back of the ability to bring new products onto the market, which will also guarantee growth in the long-term.

The company has formed a strategic collaboration with the School of Pharmacy at the Kwame Nkrumah University of Science and Technology for the formulation of generic products.

“We are confident this arrangement will deliver new products in the coming years as we seek to grow our revenues and product offerings.”

In line with its three-year forecast, which ended last year, the company has not declared dividend but given assurance of an appropriate dividend policy for 2018 and beyond.