Ascendis unit Remedica grows revenue and earnings
The growth has been ‘driven by the launch of products in new markets and the improvement in raw material supply’
Ascendis Health said on Friday that its subsidiary, Remedica, had delivered revenue growth of 18% in the year to November driven by the launch of new products.
The update comes after the debt-laden health and wellness company announced on Tuesday that it had terminated talks to sell Remedica.
CEO Mark Sardi said the group had called off the talks to sell Remedica and instead resolved to engage with lenders about restructuring its debt before disposing of the Cyprus-based pharmaceutical maker
It said on Friday that Remedica “forms a material part of the company’s de-gearing strategy and continues to perform well and in line with management’s expectations”.
In the 12 months to November, Remedica’s growth in normalised earnings before interest, tax, depreciation and amortisation (ebitda) was 21.3%.
The growth in revenue and normalised ebitda in comparison to the prior period is “driven by the launch of products in new markets and the improvement in raw material supply,” it said in a statement.
Sardi said potential buyers may have sought to take advantage of weakness in the group’s balance sheet to extract value, but Ascendis was intent on getting a fair deal.
The company is relying on the sale of Remedica to deal with its crippling debt-burden, with its current liability of R8.6bn as of the end of June exceeding its current assets of R400m, an insufficient solvency ratio.
The company acquired Remedica for R4.4bn in 2016, and while it is a major source of earnings, Ascendis has acknowledged that it has little choice but to sell the unit.
Sardi said the company would push the process back to 2020, which would give the market sight of the company’s full-year numbers.
“We would have breathing room from the lenders with a debt profile that gives us time to sell the asset, and extract full value,” Sardi said.
Small Talk Daily’s analyst Anthony Clark said this week that the sale of Remedica is “absolutely crucial” to stabilise the company, and was needed to meet debt repayment terms coming up in 2020/2021.