Ascendis Health reduces losses and cuts its debt
Ascendis Health’s headline loss per share improved 75% to -29.4 cents in the six months to December 31, a period that marked the first time since listing in 2013 that it has an unleveraged balance sheet.
Further signs of being restored to financial health included the operating loss more than halving to R123 million, while net finance costs reduced by R354m. Revenue maintained at R777m. Gross profit fell 9% to R312m.
Net asset value per share increased by 34% since June 30, 2022, following the disposal of Ascendis Pharma for R444m.
During the period R101.5m was raised in an oversubscribed rights offer. The senior debt was fully repaid post-period end.
“Ascendis and its subsidiaries have undergone fundamental change across the business and the team has worked to stabilise the balance sheet, optimise operating structures and enhance shareholder value,” its directors said yesterday.
A new CEO and portfolio management team (transition team) had been appointed from August, 2022, together with a new independent non-executive chairman from December, 2022.
The directors said the shareholder base had been strengthened and consolidated, with 59% of issued shares now held by six investors and about 45% owned by new shareholders who had affirmed their commitment to the group’s strategy and management team.
“The new management has dedicated significant time and energy over a short period to stabilise the group’s balance sheet and underlying operations in a challenging macroeconomic environment… The team has made material progress in turning around underperforming businesses and optimising the group’s cost structures through decisive actions,” they said.
Due to near-term liquidity pressure in some businesses as a result of transaction-related costs and delayed collections on government debtors, a working capital facility had been negotiated with banks.
The R444m sale of Pharma from October 31, 2022, saw an additional R57m negotiated on the original purchase price and ultimately realised R69m more than the initially proposed transaction.
The rights offer had been oversubscribed and evidenced strong support from the new shareholders, the directors said in a statement.
The head office cost-reduction programme had not progressed as anticipated by August, 2022, and remained an area of focus. The core head office payroll headcount had been reduced from 34 individuals on June 30, 2022, to 14 by March, 2023. This remained an area of continued focus.
“Management is confident its operational interventions have salvaged material value for shareholders and are delivering promising early signs of improvement,” the board said.
The medical devices businesses increased revenue by 13% to R541m, supported by promising growth from the Surgical Innovations, CardaXes and Ortho-Xact businesses.
The consumer health businesses were impacted by several external and internal factors that contributed to revenue declining by 21% to R236m.
The group realised operating cost savings of R74.3m due to the reduction in payroll costs, operating efficiencies and reduced expenditure on advisers and other professional fees.
These savings were offset by a provision for a VAT dispute between Surgical Innovations and Sars, which the group is actively challenging.
Finance costs fell from R402m to R51m for the half year due mainly to a R355m reduction in interest payments on the term debt facilities, as well as more favourable interest terms from the group’s lenders.
Further material cost savings were anticipated as transaction and restructuring costs were expected to normalise following a long period of divestments that were required by historically excessive debt.
BUSINESS REPORT