Pharmaceutical company Ascendis Health has initiated a strategic business review to create a sustainable market position for itself and to accelerate organic growth following the completion of several acquisitions locally and offshore since the company's listing in 2013.
The review is expected to be completed late in the 2018 financial year, the company said on Thursday.
The company also released its financial results for the six months ended December 31, with normalised headline earnings up 20% year-on-year to R535-million and normalised headline earnings a share 7% higher year-on-year at 75.8c.
The weighted average number of shares in issue increased by 12% during the six months under review, mainly in relation to the rights issue and vendor placements in November and December 2017.
Normalised operating profit for the six months rose by 28% to R602-million.
Normalised earnings before interest, taxes, depreciation and amortisation (Ebitda) increased by 28% to R653-million, the company said.
The Ebitda margin improved by ten basis points to 16.5%, despite increased investment in marketing and new markets.
In addition, the group is reporting normalised results from continuing operations which have been adjusted for one-off transaction costs in the current and prior financial years.
The company further said a cash flow of R327-million was generated from operations, with a cash conversion rate of 50%, which was mainly impacted on by strong growth in the cash intensive businesses, like Remedica and Medical Devices.
The group’s revenue for the six months increased by 27% to R4-billion, with revenue generated outside of South Africa having increased by 50% to R1.9-billion.
The group's gross margin strengthened by 160 basis points to 44.2%. This, the company said, was driven by the acquisitions of Sun Wave Pharma, Cipla Vet and Cipla Agrimed in June 2017.
Vendor debt of R1.1-billion was settled during the reporting period, which included an accelerated payment of €50-million to the sellers of Remedica to reduce the group's overall debt position.
However, the directors have elected not to declare an interim dividend and to retain the cash to settle debt obligations, the company said.
Looking ahead, the group plans to continue pursuing organic and more focused synergistic growth strategies across the South African and international businesses to increase revenue growth and profitability.
After synergy benefits realised Ebitda of R190-million in the past six months, the group is targeting accelerating synergy savings in the next 12 to 18 months, mainly in the South African pharmaceutical and Medical Devices businesses.
In addition, management is targeting an improvement in its Ebitda margin to between 17% and 18% in the short to medium term.