Ascendis Health fell 77% in 2018, one of the worst-performing shares on the JSE. Were there signs of impending trouble? If so, what were they? Ascendis Health is an SA-based international health and wellness company. Founded in 2008 and listed on the JSE in November 2013, the group has supplemented its organic growth by buying complementary businesses. Since 2015 it has acquired four businesses in Europe: Farmalider in Spain (pharmaceuticals and over-the-counter medicine); Remedica in Cyprus (generic pharmaceuticals); Scitec in Hungary (sports nutrition); and Sun Wave Pharma in Romania (nutraceuticals). The largest European acquisitions were Remedica and Scitec, costing about €500m. This analysis of Ascendis relies on return on assets managed (Roam), the capital structure of the group and the returns generated thereon. Roam is derived from two ratios: Earnings before interest and tax (Ebit) margin; and asset turnover (ATO). Roam has almost halved, to 6% from 11% at its peak in 2015 ...

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