South African health company achieves remarkable turnaround

Ascendis Health reported strong interim results, showing that the company is clawing its way back from the brink.

Ascendis is a health and wellness investment holding company that markets and distributes a portfolio of leading brands, products and medical devices.

The company operates in two segments – Consumer Health and Medical Devices – through seven operating companies.

Acendis has faced a significant battle in the past few years that saw the company face potential bankruptcy in 2023.

This time was characterised by leadership instability, a share price in freefall, and a debt burden of over R600 million while the company was running at a loss.

Aside from its financial woes, much of the controversy surrounding Ascendis currently stems from a proposed takeover of the company.

In September 2023, the company announced that it had initiated a process to investigate and progress a potential delisting of Ascendis from the JSE.

It described this move as the next step in its strategy to unlock value and return capital to Ascendis shareholders.

Furthermore, the company announced that it has entered into discussions with a consortium led by ACN Capital IHC, owned and controlled by Neethling.

In November 2023, the consortium sent a letter to the Ascendis board confirming its intention to acquire the company’s ordinary shares from shareholders who do not wish to remain invested.

However, in April 2024, South Africa’s Takeover Regulation Panel (TRP) announced that it had received complaints about this takeover.

The complaints concerned other shareholders who were alleged to be acting in concert with the consortium because of their relationship with a member of the consortium.

There were also other allegations relating to instances of non-compliance.

The TRP said it had received approximately 20 complaints since announcing the offer described in the offer documents. 

On 19 June 2024, Ascendis Health informed shareholders that the TRP issued a ruling finding the consortium to have contravened certain provisions of South Africa’s Takeover Provisions. 

The panel also required the consortium to supplement its firm intention announcement and circular in the Exit Offer to fully disclose its concert party relationship to all Ascendis Health shareholders.

Ascendis and the consortium said they strongly disagreed with the panel’s findings and were assessing their legal options to oppose them in the appropriate forum.

Following legal advice, Ascendis and the consortium applied to the High Court urgently to review and set aside the TRP’s Ruling and the subsequent compliance notice the panel issued.

On 15 July 2024, the High Court made an order reviewing and setting aside the TRP’s ruling and the compliance notice on the basis that the panel’s findings were “unlawful for lack of procedural fairness”.

However, following this ruling, Neethling told News24 that the long-stop date for the transaction was 20 July 2024, and the consortium would not be looking for an extension, and the offer fell away.

Turnaround

Ascendis has been working to fix the damage created by this fallout while also turning the company around from a financial and operations perspective.

In Neethling’s opinion piece recently published on IOL, the CEO said Ascendis’ turnaround is solidly on track and already bearing fruit.

“In 2023, with leadership turmoil, a share price in freefall, and a debt burden of over R600 million, while running at a loss, Ascendis’s collapse was imminent,” he said.

“Yet, unusually for businesses that stared down bankruptcy, Ascendis is now a debt-free, profitable, albeit smaller, entity, trading at around 90 cents per share.”

He explained that the root of Ascendis’s initial troubles lay in a combination of bad management and the speed and intensity of its expansion as it bought up multiple firms.

This left the company with unmanageable debt of R8 billion and to stay afloat, it was forced into an aggressive asset sell-off of all its international assets. 

“Still, by late 2022, it teetered on the brink of losing its Medical Devices business – its most valued division – as lenders required immediate payment of R600 million,” Neethling explained.

Acendis managed to secure emergency funding hours before the division was forfeited. 

“This was just the start of a long and arduous restructuring process, fraught with boardroom battles, relentless media scrutiny, and persistent and unfair criticism from a handful of activists on social media throughout 2024,” he said.

However, in the company’s interim results released on Thursday, 27 March 2025, it seems that Ascendis managed to turn its fortunes around despite these setbacks.

Interim results

For the six months ended 31 December 2024, Ascendis reported a solid performance driven by organic growth and leveraging its team’s strengths.  

It reported that, over the past year, the group’s value has grown by approximately 12%, reaching a net asset value of around R660 million. 

“This achievement is particularly significant given that not long ago, the group was insolvent, largely written off as a lost cause, and trading at a market capitalisation of less than R370 million,” the company said.

“All signs are there that Ascendis is back in the game following the successful turnaround of the company over the last two years.” 

The company said it plans to introduce new business lines to capitalise on the strong momentum created by its team.  

“Our game plan is finally starting to take shape, and with some fresh legs joining the Ascendis playing field, we’re set for a full-year finish that would be considered a well-deserved victory for our people and our shareholders,” Neethling said.

“With a strong focus on positive cash flow, minimal debt, and efficient working capital management, Ascendis is well-positioned to deliver a strong set of full-year financial results.”

The company’s Medical portfolio, which includes The Scientific Group, Surgical Innovations, InterV Med, Cardio Tech and Ortho Xact, was a standout performer in the six-month period.

This division grew 16.5% to R252 million, which is especially impressive considering the increasing problem of delayed government payments. 

Ascendis’ Medical portfolio is expecting further growth in the second half as new services and products are introduced and its client base is increased through new partnerships.  

The company’s Consumer portfolio experienced subdued consumer demand in the six months but is already seeing an improved performance after a successful reconfiguration of its operational structure. 

This portfolio includes Ascendis Consumer Brands, Chempure and The Compounding Pharmacy of SA. 

The company explained that, because of subdued consumer spending, the portfolio only grew by 1% in the six months.

However, it said the acquisition of a weight loss-focused brand and the relaunch of multiple lines is set to boost this division in the second half of the financial year.  

Despite its strides, Ascendis Health’s profitability continues to struggle. In its interim results, the company reported that its earnings per share had fallen to 6.4 cents from 12.7 cents per share in the comparative period.

Ascendis’ profit for the period also declined to R40.32 million from R79.53 million the year prior. However, headline earnings per share grew to 5 cents from 3.4 cents.

It is important to note that this is the first financial reporting period under Ascendis’s new accounting principles. 

In prior years, Ascendis reported its results as a conglomerate, which combines the financial statements of all subsidiaries. 

Now, as of July 2024, Ascendis is reporting as an investment holding company, which means that the company’s investments in subsidiaries are reported at fair value through profit or loss.   

This was done to simplify the internal group and operating structure. It will eliminate unnecessary overhead costs and allow the group to increase management ownership at the investee company level. 

In addition, the company explained that this new reporting structure helps it make smart financial decisions by assessing how profitable each business in its portfolio is. 

It also makes it easier to bring in investment partners for specific businesses and could offer managers a share in the success of the companies they help grow. 

“While some tough battles still lie ahead, smart plays – such as new product offerings, territory gains and key talent acquisitions – will keep us moving forward,” Neethling said. 

“Furthermore, with ACN Capital appointed as Fund Manager, their strategic guidance, sophisticated capital allocation, and adept execution of financial projects further strengthen our prospects for long-term success.”

The company added that previous interventions, which focused on cash flow, cost efficiencies, and careful debt management, will continue.  

“Leaving behind a past of unfettered expansion and social media lies, Ascendis is now an example of an improbable but remarkable turnaround from near-bankruptcy to profitability,” Neethling said.