Menu
 
 
 

Breath of new life for Ascendis

Breath of new life for Ascendis

Fast growing health care conglomerate Ascendis – which holds a market value of R3.3bn - is making a strong move into the profitable medical devices market. The Steenberg-based company recently acquired 100% of Respiratory Care Africa (RCA) for a maximum price consideration of R145m.

The company looks a strong addition to Ascendis’ health care offering, and has achieved an average compound annual growth in revenue of around 18% over the last five years. RCA imports, distributes, repairs and maintains and supports a variety of capital equipment for the medical sector - including ventilators and other respiratory care devices and theatre lights as well as anaesthetics, patient monitoring, imaging, theatre tables and hospital beds.

The deal should benefit Ascendis almost immediately as RCA is highly cash generative, achieves a fat trading margin from its low volume/high value product mix and has the added benefit of being able to latch onto annuity income from maintaining and servicing the product lines sold. New hospital builds and improvements should drive longerterm growth to existing infrastructure in the public hospital sector. RCA is Ascendis’ second major deal in the medical devices market following the acquisition by Ascendis of Surgical Innovations (SI) in January this year. With SI already established as the platform company for the medical devices business, RCA should be able to slot into the fledgling division easily. The larger medical devices platform should allow Ascendis to hunt for new bolt-on acquisitions.

But the beauty of fitting RCA together with SI is that the respective product lines are complementary – allowing potential warehousing and procurement synergies as well as the consolidation of sales and marketing functions. Technical services could also probably be merged over time. What’s more complementary products could be grouped together so Ascendis could in future provide customers with turnkey solutions. Interestingly SI is mainly involved in private hospitals and has only recently shifted focus onto public hospitals. On the other hand RCA’s business is spread roughly equally across both private and public health sectors.

There also appears to be an opportunity for cross-border expansion. RCA currently operates predominantly in South Africa with project based sales strategies in Botswana and Namibia. But the company also supplies projects in Mozambique and Zimbabwe on an opportunistic basis and has made sales as far afield as Malawi. RCA’s international sales comprise only 3% of total sales, which gives Ascendis a chance to increase this percentage many fold in the next few years.

back to top

Industries

About us

Follow us

Follow us @BusinessNewsCT

BusinessNewsCT High-tech connection solutions by Lapp https://t.co/wsFIY9V0aU https://t.co/KK9JPncbeT
BusinessNewsCT Competition time! Don't forget to sign up for @ConnexionZone's competion where you stand a chance to win a R45 000.… https://t.co/4lwc62Px5q
BusinessNewsCT Load-shedding risk increases as coal stockpiles drop https://t.co/sTK9wQy98q https://t.co/Tp07CCbpes