Ascendis shares keep descending
The share price of Ascendis Health was heading for a second session of double-digit losses on Wednesday, after it announced on Tuesday it had accelerated its asset disposal programme to battle a debt pile that is about 20 times its R313m market capitalisation.
The share price of Ascendis Health was heading for a second session of double-digit losses on Wednesday, after the group announced on Tuesday it had accelerated its asset-disposal programme to battle a debt pile that is about 20 times its R313m market capitalisation.
Ascendis reported that debt had risen more than a fifth in its year to end-June on Tuesday, when its share price had its worst day in five months. Losses were extended on Wednesday, with the group’s share price falling 11.9% to close at 59c — its lowest since April.
The group, which has businesses in the consumer health, pharmaceutical and animal health categories, is battling with debt after a series of offshore acquisitions in recent years.
It said on Tuesday it had launched an open-auction process for selling its prized Cyprus-based Remedica unit, which generated almost a third of group revenue in its year to end-June. The disposal process is expected to be completed in the next 12 months.
Ascendis has admitted it has to sell Remedica, but negotiations with a buyer for the company fell through at the end of 2019. Ascendis said at the time that it would not settle for less than the business was worth.
The group is also looking to sell its Animal Health business, which generated about 7%, or R489m in revenue, to end-June. This is also expected to be completed in a year.
Net debt increased about 22% to R7.96bn in the group’s year to end-June, due partially to accounting changes, while Ascendis also refinanced its debt during the year and secured additional facilities of R464m.
After the reporting period, the disposal of Scitec International in Hungary was completed for R100m, and this has been applied to debt.
The group’s share has fallen more than 60% so far in 2020, and about 94% over the past two years.
The reaction from the market was not surprising, said Small Talk Daily’s Anthony Clark, given the group’s debt level and market expectations of asset sales taking place soon.
Ascendis had to restore its credibility, but given Remedica’s astonishing ” performance during the year the sale of that asset might ultimately solve the group’s debt issues and help with a recovery in the Ascendis share price, Clark said.
“All in all, the market wants too much too soon,” he said.
Group revenue increased 19% to R6.96bn to end-June, with international revenue growing 28%, and accounting for just more than half of group revenue.
Remedica revenue surged 40% to R2.1bn, with that business benefiting from the successful awarding of an antiretroviral tender in Mexico, and the introduction of a national health insurance scheme in Cyprus.
Revenue generated in SA grew 10% to R3.28bn, while the group wrote down its business by R965m to reflect weaker economic conditions due to Covid-19. This is less than the R4.4bn in writedowns in the prior matching period, when Ascendis conducted an extensive evaluation of its businesses.
The group reported a headline loss per share of 49.3c, from a loss of 41.2c previously.