After listing on the JSE in 2013, Ascendis Health set off on an ambitious but ultimately ill-fated acquisition spree, snapping up a patchwork of health-care and wellness companies in South Africa and abroad. The goal was to build a diversified, vertically integrated health and wellness group.
The problem was that many of the businesses lacked synergies, and the entire strategy was propped up by excessive debt. It didn’t help that its second-largest offshore acquisition, Scitec Nutrition in Hungary, failed to deliver the returns hoped for.
Other deals, like the Cypriot generics manufacturer Remedica, performed well, but when debt levels are stretched, just one misstep can be fatal. Ultimately, the pressure of servicing the debt proved too much, and Ascendis was forced to cede control of its offshore assets to lenders in a debt restructuring that marked a low point for investors.
What remains today is a much smaller, South Africa-focused operation structured around two main divisions: consumer health and medical devices. Run by fund manager ACN Capital — whose founder, Carl Neethling, is both a major Ascendis shareholder and its CEO — the group recently repositioned itself as an investment holding company, with NAV now serving as the key measure of performance.
But it’s been a torrid turnaround. Not too long ago — with leadership turmoil, a share price in free fall, a debt burden of more than R600m and running at a loss — Ascendis’s collapse seemed imminent. Neethling reminds us that a journalist even dubbed the company “Descendis” — reflecting market sentiment that the stock may plummet to zero.
He points out that Ascendis is now debt free and profitable, albeit smaller in size.
But Neethling notes Ascendis was still teetering on the brink as recently as late 2022 when it came close to losing its medical devices business — the group’s most valued division — as lenders required immediate payment of R600m.
Emergency funding was secured just hours before the division was forfeited. This was just the start of a long and arduous restructuring process
— Carl Neethling
“Emergency funding was secured just 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.”
Neethling says the turnaround team wasted no time in reining in spending. “Ascendis’s financials were bleeding, with head office salaries exceeding R60m while the firm posted losses of R250m annually before tax.”
He says the first order of business was dismantling the bloated corporate structure. Head office rent — previously 70% above market rates — was renegotiated; eventually the office was shut down altogether. Business-class travel was prohibited, and a salary review and reduction of a handful of top executives resulted in a R38m annualised cost saving. Neethling adds that the bonus structure was also overhauled to reward financial performance and metrics such as free cash flow.
He says reliance on external consultants and advisory firms was reduced, saving an additional R38m a year. “The organisation had been weighed down by a senior management structure at head office that managed operations across vastly different businesses — from surgical implants sold to hospitals to vitamins sold at retail stores. The transition team dismantled this top layer of leadership, granting the different businesses greater autonomy and promoting positive and constructive collaboration between head office and portfolio companies.”
More publicised was the success in renegotiating the sale of Ascendis Pharma. At one stage, this division was set to be offloaded to Imperial Group, but a revised deal with Austell Pharmaceuticals was secured. Neethling says this extracted an additional R57m for shareholders in 2022 for an overall sale price of R410m. He adds that a crucial step in restoring Ascendis’s credibility was when the company, once deemed “unbankable”, secured a banking facility from RMB.
As of December 31 2024, the company’s NAV was R659m, a 2.6% increase from the previous year. Consumer health accounted for 65% of this value, while medical devices made up the remaining 35%. At a share price of 83c, the company trades at a discount to NAV of about 20%, within the normal range for an investment holding company on the JSE.
The consumer health segment includes Ascendis Consumer Brands, Chempure, and the Compounding Pharmacy of South Africa.
Ascendis Consumer Brands supplies a wide range of vitamins, minerals and supplements to the retail market, with brands such as Solal, Vitaforce, Bettaway, MenaCal7 and Junglevite. In the interim 2025 period, a weak South African consumer environment, pricing pressure and reduced foot traffic in retail all weighed on performance. Nevertheless, the business held its market share through strategic realignment. An acquisition to strengthen the weight management portfolio is also a sign that the company is still targeting growth despite the tough environment.
The Compounding Pharmacy of South Africa delivered a stable financial performance while continuing to build its geographic footprint and market share. Regulatory constraints remain a hurdle in expanding product offerings, but management has been successful in defending existing market share. Chempure, the speciality chemicals importer and distributor, has done well through strong forecasting and demand planning, allowing it to deliver consistent inventory and pricing to customers in competitive sectors such as food, pharma and cosmetics. Its success has been underpinned by tight supplier relationships and agility in meeting shifting customer demands.
The medical devices segment, though smaller in contribution, has been a source of encouraging developments. The portfolio includes The Scientific Group, Surgical Innovations, InterV-Med, Cardio Tech and Ortho-Xact. After the period ended, InterV-Med and Cardio Tech merged, leveraging synergies to streamline operations. Surgical Innovations, which previously went through a business rescue process, remains under pressure — especially in terms of cash flow — but supplier support has helped keep the wheels turning. The Scientific Group picked up new agencies after others exited, and that added momentum to its recovery. Cardio Tech has launched new cardiology projects with strong early outcomes. Ortho-Xact, meanwhile, has made strategic acquisitions in orthopaedics, supported by the group’s improved cash position.
What’s clear is that while the medical devices division still faces some operational friction, particularly in Surgical Innovations, the broader momentum is positive. New partnerships have been formed, new technologies are being introduced, and the segment is expanding its service offerings — an important shift in a competitive, margin-sensitive industry.
Neethling was happy with the overall half-year showing. “We’ve had a decent first half, consistently putting points on the board. With such a cohesive team who have consistently demonstrated their grit, determination and some fancy footwork, I am not surprised by the positive outcomes we’ve seen. 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 shareholders.”
Investors certainly have some points to ponder. Last year, management attempted to delist the company, arguing that listing costs were an unnecessary burden for a business of Ascendis’s size. A consortium led by ACN Capital offered to buy out minority shareholders at 80c a share, but the deal fell through due to legal complications in the delisting process that caused the offer to lapse. Since then, directors have been steadily increasing their holdings, now controlling 47% of the company — up from 30.9% in June 2024. With control tightening, the question is whether a new buyout offer is on the horizon. Given the backlash the last offer sparked on social media, any new bid may need to come with a more generous premium to win support.
From an investment perspective, Ascendis is no longer a story of outsized ambition. The current model is more conservative, focused on protecting value and driving incremental growth across two solid health-care segments. After operating debt free for some time, the company has taken on modest leverage to support expansion and gain market share. Notably, a substantial assessed tax loss means any uplift in revenue could translate into meaningful gains in net profit after tax. While the current discount to NAV isn’t deep enough to make it a clear-cut value play, it could offer an upside if management launches another delisting bid.
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