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Cape Town - High growth health and care firm Ascendis Health [JSE:ASC] posted a 34% increase in half-year profit as it announced three acquisitions this month that will cost about R1bn.
Ascendis said on Wednesday its headline earnings per share for the six months ended December 31 2016 were 74.9 cents per share, up 34%.
It also on Wednesday announced its intention to buy Romanian-based Sunwave Pharma for €16.35m (R223.8m), as well as Cyprus-based NHP Natural Health Pharma for between €26.1m (R357m) and €49.1m (R672m). On March 6, it announced it would buy two Cipla companies in South Africa, valued at R375m.
In August 2016, Ascendis’ acquisition of international firms Remedica and Scitec became effective. Remedica was acquired for €170m with a deferred payment of €90m over three years, while Scitec was purchased for €150m, plus a payment of €20m deferred for one year.
The share price in the firm reached a high of R29/share in mid-September 2016, but has since dipped by 27% to R21 on close of business on Tuesday. Its market cap is R9.15bn and it has a PE ratio of 38.
“Ascendis’ strategy is to complement its growth in the domestic market through international expansion achieved organically and through acquisitions of market-leading complementary brands in attractive regions, specifically emerging markets,” the firm said in a statement on Wednesday.
“Management aims to focus on creating production efficiencies across the pharma manufacturing facilities in South Africa and Europe, launch several export initiatives from South Africa and enter new high growth markets from its three European platform companies,” it said.
“New product development and innovation will continue to be key to driving organic growth in the health and care markets locally and internationally.”
Explaining a drop in gross margin from 43.5% in the first half of 2016 to 42.6% in the second half, Ascendis said this was “impacted partially by currency fluctuations, growth in the state hospital business in Medical Devices and by a change in product mix”.
It said group revenue for the six months increased by 66% to R3.1bn, benefiting from acquisitive growth of R940m from Remedica and Scitec, which were only consolidated for five months of the period.
Foreign revenue increased by 270% to R1.3bn, accounting for 43% of the group's total sales. “This includes sales by the group's international businesses as well as exports from local operations which were predominantly to other African countries and Europe. Products are currently exported to 109 countries globally.”
