Our opinion on the current state of ASCENDIS(ASC)Ascendis Health (ASC) is a South African company that manufactures products aimed at promoting health in animals, plants, and people. On 30th January 2020, the company stated, "As Remedica continues to be a high performing asset that delivers considerable earnings and margin growth to the Ascendis group, the Board is not supportive of the disposal of Remedica at a price that is not reflective of its market value." The company's strategy is to focus on four core businesses: pharmaceuticals, medical, consumer health, and animal health.
On 25th January 2021, Ascendis announced that it was negotiating with two companies, L1 Health and Blantyre Capital, to recapitalize the company rather than selling off Remedica. These two companies acquired 75% of Ascendis' debt, and on 12th May 2021, they struck a deal in which they exchanged €447 million of debt, a €20 million draw-down facility, and a €15 million loan for 100% of Remedica and Sunwave, 49% of Farmalider, and the proceeds from the sale of Animal Health, Biosciences, and Respiratory Care Africa. The company stated, "The Proposed Transaction represents the best opportunity to protect the business and is also considered better than placing the Group in Business Rescue, the likely result if an agreement was not reached. An important part of the Group Recapitalisation framework is Ascendis Health’s access to sufficient liquidity to operate in the future."
Following the approval by 98% of shareholders on 4th October 2021 of the recapitalization scheme, Ascendis Health now only has assets within South Africa. On 19th July 2021, the company announced the sale of its Animal Health division, valued at approximately R770 million, with the proceeds used to reduce debt. After the recapitalization, the company is considering de-listing from the JSE.
In its results for the year ended 30th June 2024, Ascendis reported revenue of R1.472 billion, down from the previous year's R1.535 billion. The company made a headline loss of 1.4 cents per share, compared with a loss of 41.5 cents in the previous year. The company stated, "The Group's balance sheet remains robust, with tangible net asset value growing by 15.8% to R571 million (R493 million in the prior year)."
Technically, Ascendis' share price peaked at 2,880 cents in October 2016 and subsequently fell to as low as 36 cents in March 2020. Since then, the share has moved more or less sideways, showing no signs of a new upward trend. Now trading at around 71 cents following the debt agreement, the stock remains a risky penny stock, moving sideways on relatively thin volumes.
