Ascendis Health's tangible net asset value a share increased 11.7% following a strong performance in the medical portfollio complemented by three aqcuisitions.
The investment company that distributes a range of health supplements, wellness products, and medical devices said Thursday that tangible net asset value increased to 105 cents by the end of the six months to December 31, compared with the same period a year before, which management said reflected a "resilient performance under challenging conditions."
Ascendis has transitioned from a conglomerate to a decentralised investment holding company, effective from July 1, 2024. This has required it to cease consolidating its subsidiaries (other than those providing services related to Ascendis' investment activities) and to instead carry such subsidiary investments at fair value.
The changes were not applied retrospectively.
Ascendis' board said Thursday in a JSE notice that an investment company offers a cost-effective way to align management's decisions and actions with shareholder interests, by proactively evaluating the return on investment for each business within the group's portfolio.
Additionally, it would enable the group to bring in equity partners at the portfolio company level and provide equity incentives for management at the investment level with relative ease.
On December 31, 2024, Ascendis' net asset value was R659m (December 31, 2023: R642m), with the Medical portfolio representing 35% of the value and the Consumer portfolio representing 65%.
The Medical portfolio consists of five investee entities: The Scientific Group, Surgical Innovations, InterV Med, Cardio Tech, and Ortho Xact. These provide medical devices to the private and government sectors.
The net asset value of this portfolio grew 16.5% from July 1, 2024, until December 31, 2024, to R252m.
Surgical Innovations exited business rescue in 2023 but remained under pressure operationally and from a cash flow perspective. The Scientific Group was able to onboard new agencies and was a growing business. Ortho Xact acquired two strategic agencies in the orthopaedic division.
Through assessment of the entities, an opportunity arose from synergies between InterV Med and Cardio Tech to create one investee company. The process involved aligning with agency partners and customers to ensure a smooth transition and no interruption in supply. The merger was effctive from January 1, 2025.
The consumer portfolio is made up of three investee companies: Ascendis Consumer Brands, Chempure, and The Compounding Pharmacy of SA.
Ascendis' board said this portfolio faced subdued consumer demand and retail pricing pressure and grew only 1% from July 1, 2024, until December 31, 2024, increasing its net asset value to R467m from R463m.
“Good cash management and improvement in working capital means the portfolio is now in a position to launch new products to the market, including in weight management (where a strategic acquisition has been made),” they said.
“The future outlook of the group remains positive, driven by the focus on capitalising on market opportunities to grow its businesses, through new product offerings, new customers and geographies, new agencies, capacity expansion, and potential acquisitions within the group,” the board said.
Continued efforts to improve demand planning, inventory management, revenue models, and streamline commercial and sales functions would be prioritised. Cost control and managing cash flow remained priorities.
The group had worked hard to reduce and restructure expenses, which led to significant savings, and this focus on cost efficiency would continue, the board said.
“While the company has done well in handling its finances, challenges in the broader economy mean careful budgeting and smart investment decisions will remain essential,” the board said.
Ascenis’ share price fell 3.5% to 83 cents on the JSE Thursday afternoon.
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