Ascendis Health sees signs of growth
DURBAN – Struggling JSE-listed Ascendis Health sees signs of organic growth for the six months to December with a revenue boost from its international units Remedica in Cyprus and Sun Wave Pharma in Romania.
The South African-based global healthcare company said on Tuesday that it expected its earnings before interest, tax, depreciation and amortisation (Ebitda) from continuing operations to be between R575 million and R635m from R579m in the corresponding period last year.
The group said that the growth in international revenue and normalised Ebitda compared to the prior period was driven primarily by higher sales in Europe due to new tender business secured by Remedica and new product launches by Sun Wave Pharma.
“This was partially offset by increased market competition in Scitec’s core markets and lower licence fee revenue in Farmalider,” it said.
Ascendis’s international division was expected to contribute more on the upside of between R394m and R436 in Ebitda from R405m, International revenue was expected to rise by between 11 and 17 percent.
The Remedica business unit in Cyprus was classified as a discontinued operation for the year to end June 2019, but now has been classified as a continuing operation after negotiations for the sale of the business were terminated in December as a result of failure to agree on key terms for the transaction.
The group still plans to dispose of Remedica as it battles to contain its high debt levels. The company said that at the end of June its current liabilities of R8.6bn exceeded its current assets of R8.2bn.
Ascendis in May had negotiated an Interim Stability Agreement with its lender consortium to allow the Remedica disposal to be completed, but after that fell through the consortium had granted Ascendis more time to either restructure its existing debt and allow Ascendis to disposal of Remedica and other non-core assets in the group.
The group acquired the pharmaceutical manufacturer in 2016 for €260m (R4.25bn) and it valued the business around $400m (R5.91bn) last year, and the proceeds would have helped the group to reduce its debt.
The group said yesterday that it had incurred extensive legal and adviser fees associated with the restructuring of the senior lender debt and other once-off costs related to the disposal of Biosciences and the Remedica negotiations as well as a considerable increase in finance expenses associated with the interim stability agreements with the senior lenders.
Ascendis, which lost more than a third of its market capitalisation since the beginning of the year to R479bn, has seen its share price declining by around 40 percent compared with the opening price of R1.60 on January 2.
In a 12-month period, its shares has tumbled more than 80 percent.
Ascendis Health shares closed 5 percent higher at R1.05 on the JSE on Wednesday.
In South Africa, its operations were likely to see a decline in Ebitda of between R237m and R261m from R290m.
South African revenue was also expected to be lower at between R1.83bn and R1.93bn, a decline of between 6 and 11 percent from R2.05bn last year.
The group said revenue in South Africa benefited from improved supply in Pharma, new agency contracts in Medical Devices and new tender awards in Animal Health.
Total revenue from continuing operations is expected to increase by between 9 and 15 percent, to be between R3.76bn and R3.95bn, up from last year's restated amount of R3.44bn.
The group expected to release its interim results on March 11.