- The health and wellness company is eyeing SA's planned National Health Insurance and expansion into Africa for growth.
- Ascendis is also working on reducing its R6.5 billion debt.
- CEO Mark Sardi says the Covid-19 showed that a partnerships between the state and private healthcare companies could work.
Health and wellness company Ascendis Health is eyeing SA's planned National Health Insurance and expansion into Africa for growth as its new CEO Mark Sardi continues to chip away at its R6.5 billion debt pile.
Sardi has been at the helm of the health company for 11 months after his predecessor, Germany-based CEO Thomas Thomsen, was fired last year.
The heart of the company’s long-term strategy under Sardi will be its medical device and its pharmaceutical businesses.
“So [there’ll be a] big medical technology business and … a mini-Adcock. So it will be a longer-term build but you will have a business that can be sort of be NHI ready,” said Sardi on Tuesday.
- READ | Debt-laden Ascendis Health expects rise in earnings as it continues to restructure its business
South Africa is planning to have fully implemented its NHI by 2026, which will allow free access to healthcare funded by the state. For private healthcare companies, this will mean a new way of doing business where partnerships with the state will be vital. For Sardi, the Covid-19 pandemic has proven that such partnerships are possible.
“[Covid-19] got the public and the government working together a lot sooner than perhaps people would have thought. There is a lot more connectivity between the private and the government sector, because we were forced into that environment and I think to everyone’s surprise, things work,” Sardi said in an interview.
Ascendis, which provides ventilators and nasal high flow devices that help patients breathe, and has seen its medical device business grow by 16% over the past year due to Covid-19, according to its results for the year ended 30 June 2020, reported on Tuesday. The company is also focusing on producing niche cancer, anti-malarial and Aids drugs for the continent. It produces consumer, pet and pharmaceutical brands such as Nimue skin products, Vitaforce supplements and pet deworming product Triworm.
Ascendis’s results also showed that its revenue had increased by 19% to R6.9 billion from R5.8 billion in 2018, while its gross profit jumped by 23%. However, the good news was overshadowed by its R6.5 billion debt, which grew from R5.4 billion last year, and its R155 million debt restructuring costs.
The debt has been a thorn in the company's side since its ambitious growth strategy that saw it venture into Europe, Hungary, Romania and Spain between 2015 and 2017.
Since Sardi became CEO, the company has disposed of a number of its non-core businesses, including Scitec, its Hungary-based sports nutrition business it sold earlier this year to Atlast invest for €5 million (R99.45 million at the current exchange rate).
In South Africa, the company is disposing of its Dezzo Trading business, which buys and sells over the counter products and generic pharmaceuticals, for about R25 million and Ascendis Direct Selling for R10.5 million. It has pinned its hopes on the sale of its Cyprus-based pharmaceuticals business, Remedica, to help deal with its debt. The health and wellness group acquired Remedia in 2016 for R4.4 billion.
However, the sale that was meant to happen last year was scrapped and the company is currently preparing to sell it again.
Anthony Clark, an analyst at Small Talk Daily Research said Ascendis’ issue was that it had bought too much for too little during its acquisition spree, which resulted in the debt it is dealing with.
“The key to Ascendis’s rejuvenation is the sale of Remedica. If Remedica is sold, finance costs are obliterated overnight,” Clark said