Our opinion on the current state of ASCAscendis Health (ASC) is a South African company with operations in health products for animals, plants, and humans. Over recent years, the company has undergone significant restructuring efforts to address its financial challenges and refocus on its core businesses.
In January 2020, Ascendis Health emphasized the importance of its asset Remedica to the group's earnings and margin growth. However, by January 2021, negotiations began with L1 Health and Blantyre Capital for a recapitalization deal to address the company's debt. This deal, finalized in May 2021, involved the exchange of debt for ownership of various assets, including Remedica.
Subsequent to shareholder approval in October 2021, Ascendis Health sold its animal health division in July 2021, generating proceeds to reduce its debt burden. Following these recapitalization efforts, the company is contemplating delisting from the JSE.
In its financial results for the six months ending December 31, 2023, Ascendis Health reported a decrease in revenue but a significant improvement in headline earnings per share (HEPS) compared to the previous period, indicating progress in its financial performance. Notably, the reduction in interest paid was attributed to the repayment of outstanding term loan debt.
From a technical standpoint, Ascendis Health's share price has been relatively flat since its peak in October 2016, showing no clear signs of a new upward trend. However, the announcement of a firm intention by a consortium to acquire all shares of the company at 80c per share and delist from the JSE caused a spike in the share price to match the offer price.
Overall, Ascendis Health's recent initiatives aimed at reducing debt and refocusing its operations signal efforts to stabilize the company's financial position. However, the potential delisting and the volatile nature of its share price make it a risky investment, subject to the success of its restructuring efforts and the terms of any acquisition deal.
