- Continued solid organic growth in Care Enablement and Care
Delivery including sequentially stable same market treatment growth
in the U.S.
- Successful execution on turnaround plan driving productivity
improvements in Care Delivery and pricing in Care Enablement
- FME25 transformation savings fully on track
- Continued execution on portfolio optimization strategy
- FY 2023 earnings outlook raised
WALTHAM,
Mass., Nov. 1, 2023 /PRNewswire/ -- Helen Giza, Chief Executive Officer of Fresenius
Medical Care, said: "Our unwavering focus on executing against
our strategic plan and the successful implementation of turnaround
measures to date, continue to translate into improved operating
performance. Notably in the third quarter, we continued to unlock
sustainable savings with our FME25 program, further improved our
labor productivity and continued to execute on our portfolio
optimization plan. Given our improving performance for the first
nine months of the year and solid expectations for the remainder of
the year, we confidently upgrade our full year earnings
outlook."
|
Key figures (IFRS,
unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q3 2023
|
Q3 2022
|
Growth
|
Growth
|
9M 2023
|
9M 2022
|
Growth
|
Growth
|
|
EUR m
|
EUR m
|
yoy
|
yoy, cc
|
EUR m
|
EUR m
|
yoy
|
yoy, cc
|
|
Revenue
|
4,936
|
5,096
|
-3 %
|
+7 %
|
14,466
|
14,401
|
0 %
|
+5 %
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
324
|
472
|
-31 %
|
-28 %
|
942
|
1,160
|
-19 %
|
-18 %
|
|
excl. special items and
PRF1
|
431
|
377
|
+14 %
|
+20 %
|
1,186
|
1,052
|
+13 %
|
+14 %
|
|
|
|
|
|
|
|
|
|
|
Net
income2
|
84
|
230
|
-63 %
|
-61 %
|
311
|
535
|
-42 %
|
-41 %
|
|
excl. special items and
PRF1
|
168
|
168
|
0 %
|
+5 %
|
497
|
481
|
+3 %
|
+5 %
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
(EUR)
|
0.29
|
0.78
|
-63 %
|
-61 %
|
1.06
|
1.82
|
-42 %
|
-41 %
|
|
excl. special items and
PRF1
|
0.57
|
0.57
|
0 %
|
+5 %
|
1.69
|
1.64
|
+3 %
|
+5 %
|
|
|
|
|
|
|
|
|
|
|
|
yoy = year-on-year, cc
= at constant currency, EPS = earnings per share
|
|
Successful execution against the strategic plan
Fresenius Medical Care has continuously advanced its structural
change. After implementing the new operating model along with the
corresponding new financial reporting, the simplification of the
governance structure through a legal form conversion remains on
track to be completed by 1 December
2023.
Fresenius Medical Care continues to successfully execute on its
operational efficiency and turnaround plans. In the third quarter,
the FME25 transformation program delivered EUR 97 million of savings, resulting in
EUR 232 million for the first nine
months of the year. The Company is fully on track to achieve
sustainable savings of EUR 250 to 300
million by year end 2023 and EUR 650
million by year end 2025.
Moreover, Fresenius Medical Care is executing its portfolio
optimization plan to exit non-core and dilutive assets. In the
third quarter, the Company entered into an agreement to sell
National Cardiovascular Partners (NCP) with 21 facilities providing
outpatient cardiac catheterization and vascular laboratory
services, which are included in the U.S. Care Delivery business, in
connection with its Legacy Portfolio Optimization program.
In line with the Company's disciplined financial policy,
Fresenius Medical Care has already refinanced a bond of
EUR 650 million, maturing in
November 2023. The Company is using a
mix of long-term bank financing at very attractive financing
conditions as well as cash and short-term debt. Upcoming
extraordinary cash inflows will enable the Company to further
delever.
Revenue development supported by solid organic growth
Revenue decreased by 3% to EUR
4,936 million in the third quarter (+7% at constant
currency, +7% organic).
Care Delivery revenue decreased by 4% to EUR 3,974 million (+6% at constant currency, +7%
organic).
In Care Delivery U.S., revenue declined by 3% (+4% at constant
currency, +5% organic). A negative exchange rate effect and a
decrease in dialysis days was partially offset by organic growth,
which was supported by a favorable impact from the value-based care
business, reimbursement rate increases and a favorable payor mix.
The annualization effect of COVID-19-related excess mortality in
the late-stage CKD (Chronic Kidney Disease) and ESRD (End-Stage
Renal Disease) population continues to weigh on same market
treatment growth (-0.4%). Adjusted for the exit from less
profitable acute care contracts same market treatment growth was at
+0.2%.
In Care Delivery International, revenue declined by 7% (+14% at
constant currency, +16% organic). A negative exchange rate effect
and the impact of closed or sold clinics was partially offset by
organic growth, which was driven by a significant effect of
hyperinflation in various markets. Despite the annualization effect
of COVID-19-related excess mortality, same market treatment growth
was positive at 1.6%.
Care Enablement revenue declined by 3% to EUR 1,330 million (+5% at constant currency, +5%
organic). The negative exchange rate effects have been partly
offset by higher sales of in-center disposables, machines for
chronic treatment and home hemodialysis products as well as higher
average sales prices.
Within Inter-segment eliminations, revenue for products
transferred between the operating segments at fair market value
declined by 10% to EUR 368 million
(-1% at constant currency).3
In the first nine months, revenue was stable at EUR 14,466 million (+5% at constant currency, +5%
organic). Care Delivery revenue was stable at EUR 11,602 million (+4% at constant currency, +5%
organic), with stable revenue for Care Delivery U.S. (+2% at
constant currency, +3% organic), and a revenue decline of 1% for
Care Delivery International (+13% at constant currency, +14%
organic). Care Enablement revenue was stable at EUR 3,965 million (+5% at constant currency, +5%
organic). Inter-segment eliminations declined by 5% and amounted to
EUR 1,101 million (stable at constant
currency).
Earnings development driven by productivity improvements and
FME25 savings
Operating income decreased by 31% to EUR
324 million (-28% at constant currency), resulting in a
margin of 6.6% (Q3 2022: 9.3%). Operating income
excluding special items and U.S. Provider Relief Funding
(PRF)1 increased by 14% to EUR
431 million (+20% at constant currency), resulting in a
margin of 8.7% (Q3 2022: 7.4%).
Operating income in Care Delivery decreased by 34% to
EUR 332 million (-29% at constant
currency), resulting in a margin of 8.4% (Q3 2022: 12.1%).
Operating income excluding special items and PRF1
increased by 11% to EUR 410 million
(+17% at constant currency), resulting in a margin of 10.3% (Q3
2022: 9.0%). This was mainly driven by business growth, savings
from the FME25 program and lower personnel expenses resulting from
improved productivity. The operating income development was
negatively impacted by lower income attributable to a non-recurring
consent payment for certain pharmaceuticals, inflationary cost
increases as well as by foreign currency translation.
Operating income in Care Enablement amounted to
EUR -1 million (Q3 2022:
EUR -26 million), resulting in a
margin of -0.1% (Q3 2022: -1.9%). Operating income excluding
special items increased by 197% to EUR 22
million (+217% at constant currency), resulting in a margin
of 1.7% (Q3 2022: 0.5%). The improvement compared to the previous
year's quarter was mainly driven by increased volumes, improved
pricing and savings from the FME25 program. These effects were
partially offset by inflationary cost increases and negative
foreign currency transaction effects.
Operating income for Corporate amounted to EUR -8 million (Q3 2022: EUR -7 million). Excluding special items,
operating income amounted to EUR -2
million (Q3 2022: EUR -6
million).
In the first nine months, operating income decreased by 19% to
EUR 942 million (-18% at constant
currency), resulting in a margin of 6.5% (9M 2022: 8.1%). Excluding special items and
PRF1, operating income increased by 13% to EUR 1,186 million (+14% at constant currency),
resulting in a margin of 8.2% (9M
2022: 7.3%). In Care Delivery, operating income declined by 19% to
EUR 1,001 million (-18% at constant
currency), resulting in a margin of 8.6% (9M 2022: 10.6%). In Care Enablement, operating
income decreased to EUR -24 million
(9M 2022: EUR
33 million), resulting in a margin of -0.6% (9M 2022: 0.8%). Operating income for Corporate
amounted to EUR -23 million
(9M 2022: EUR
-101 million).
Net income2 decreased by 63% to EUR
84 million (-61% at constant currency). Excluding special
items and PRF1, net income2 remained stable at
EUR 168 million (+5% at constant
currency).
In the first nine months, net income2 declined by 42%
to EUR 311 million (-41% at constant
currency). Excluding special items and PRF1, net
income2 increased by 3% to EUR
497 million (+5% at constant currency).
Basic earnings per share (EPS) decreased by 63% to
EUR 0.29 (-61% at constant currency).
EPS excluding special items and PRF1 remained stable at
EUR 0.57 (+5% at constant
currency).
In the first nine months, EPS declined by 42% to EUR 1.06 (-41% at constant currency). Excluding
special items and PRF1, EPS increased by 3% to
EUR 1.69 (+5% at constant
currency).
Strong cash flow development
In the third quarter, Fresenius Medical Care generated
EUR 760 million of operating cash
flow (Q3 2022: EUR 658 million),
resulting in a margin of 15.4% (Q3 2022: 12.9%). The increase in
net cash provided by operating activities is the result of the
change in certain working capital items, in particular due to the
recoupment of advanced payments during 2022, which had been
received under the U. S. Medicare Accelerated and Advance Payment
Program in 2020.
In the first nine months, operating cashflow amounted to
EUR 1,910 million (9M 2022: EUR 1,568
million), resulting in a margin of 13.2% (9M 2022: 10.9%).
Free cash flow4 amounted to
EUR 626 million in the third quarter
(Q3 2022:
EUR 501 million), resulting in a
margin of 12.7% (Q3 2022: 9.8%). In the first nine months,
Fresenius Medical Care generated free cash flow of EUR 1,480 million (9M 2022: EUR 1,082
million), resulting in a margin of 10.2% (9M 2022: 7.5%).
Outlook
The Company continues to expect for 2023 revenue to grow at a
low to mid-single digit percentage rate (2022 basis: EUR 19,398 million).
Based on the earnings development for the first nine months of
the year and solid business expectations for the remainder of the
year, Fresenius Medical Care raises its earnings outlook for 2023.
The Company now expects operating income to grow at a low-single
digit percentage rate (2022 basis: EUR 1,540
million; previous target: remain flat or decline by up to a
low-single digit percentage rate)5.
The Company's target to achieve an operating income margin of 10
to 14% by 2025 remains unchanged.
Patients, clinics and employees
As of September 30, 2023,
Fresenius Medical Care treated 341,793 patients in 4,014
dialysis clinics worldwide and had 123,106 employees
(headcount) globally, compared to 130,295 employees as of
September 30, 2022.
Conference call
Fresenius Medical Care will host a conference call to discuss
the results of the third quarter on November
2, 2023 at 3:30 p.m. CET /
10:30 a.m. EDT. Details will be
available on the Fresenius Medical Care website in the "Investors"
section. A replay will be available shortly after the call.
Please refer to our statement of earnings included at the end
of this news and to the attachments as separate PDF files for a
complete overview of the results of the third quarter and first
nine months of 2023. Our 6-K disclosure provides more
details.
Fresenius Medical Care is the world's leading provider of
products and services for individuals with renal diseases of which
around 3.9 million patients worldwide regularly undergo dialysis
treatment. Through its network of 4,014 dialysis clinics, Fresenius
Medical Care provides dialysis treatments for approximately 342,000
patients around the globe. Fresenius Medical Care is also the
leading provider of dialysis products such as dialysis machines or
dialyzers. Fresenius Medical Care is listed on the Frankfurt Stock
Exchange (FME) and on the New York Stock Exchange (FMS).
For more information visit the Company's website
at www.freseniusmedicalcare.com.
Disclaimer:
This release contains forward-looking statements that are
subject to various risks and uncertainties. Actual results could
differ materially from those described in these forward-looking
statements due to various factors, including, but not limited to,
changes in business, economic and competitive conditions, legal
changes, regulatory approvals, impacts related to COVID-19, results
of clinical studies, foreign exchange rate fluctuations,
uncertainties in litigation or investigative proceedings, and the
availability of financing. These and other risks and uncertainties
are detailed in Fresenius Medical Care AG & Co. KGaA's reports
filed with the U.S. Securities and Exchange Commission. Fresenius
Medical Care AG & Co. KGaA does not undertake any
responsibility to update the forward-looking statements in this
release.
Implementation of measures as presented herein may be subject to
information and consultation procedures with works councils and
other employee representative bodies, as per local laws and
practice. Consultation procedures may lead to changes on proposed
measures.
|
|
|
|
|
|
|
|
|
|
|
|
1
|
For FY 2022, special
items included costs related to the FME25 program, the impact of
the war in Ukraine, the impact of hyperinflation in Turkiye, the
Humacyte investment remeasurement and the net gain related to
InterWell Health. Additionally, the FY 2022 basis for the 2023
outlook was adjusted for U.S. Provider Relief Funding. For FY 2023,
special items include costs related to the FME25 program, the
Humacyte investment remeasurement, the costs associated with the
legal form conversion and effects from legacy portfolio
optimization. For further details please see the reconciliation
attached to the Press Release.
|
|
2
|
Net income attributable
to shareholders of Fresenius Medical Care AG & Co.
KGaA
|
|
3
|
The Company transfers
products between segments at fair market value. The associated
internal revenues and expenses and any remaining internally
generated profit or loss for the product transfers are recorded
within the operating segments initially, are eliminated upon
consolidation and are included within "Inter-segment
eliminations".
|
|
4
|
Net cash provided by /
used in operating activities, after capital expenditures, before
acquisitions, investments, and dividends
|
|
5
|
Revenue and operating
income, as referred to in the outlook, are both on a constant
currency basis and excluding special items. Special items will be
provided as separate KPI ("Revenue excluding special items",
"Operating income excluding special items") to capture effects that
are unusual in nature and have not been foreseeable or not
foreseeable in size or impact at the time of giving guidance. These
items are excluded to ensure comparability of the figures presented
with the Company's financial targets which have been defined
excluding special items.
For FY 2022, special items included costs related to the FME25
program, the impact of the war in Ukraine, the impact of
hyperinflation in Turkiye, the Humacyte investment remeasurement,
and the net gain related to InterWell Health. Additionally, the
basis (FY 2022) for the 2023 outlook was adjusted for Provider
Relief Funding. For FY 2023, special items include costs related to
the FME25 program, the Humacyte investment remeasurement, the costs
associated with the legal form conversion and effects from legacy
portfolio optimization. For further details please see the
reconciliation attached to the Press Release.
|
|
|
Media contact
Leif
Heussen
T +49 6172 608-4030
leif.heussen@fresenius.com
Contact for analysts
and investors
Dr. Dominik
Heger
T +49 6172 609-2601
dominik.heger@fmc-ag.com
www.freseniusmedicalcare.com
|
Fresenius
Medical Care
|
|
|
Statement of
earnings
|
|
|
in € million,
except share data, unaudited
|
Three months ended
September 30,
|
|
2023
|
2022
|
Change
|
Change
at cc
|
|
|
|
|
|
|
Revenue
|
4,936
|
5,096
|
-3.1 %
|
6.6 %
|
|
|
|
|
|
|
Costs of
revenue
|
3,707
|
3,853
|
-3.8 %
|
6.4 %
|
|
Selling, general and
administrative expenses
|
794
|
817
|
-2.9 %
|
4.6 %
|
|
Research and
development expenses
|
53
|
61
|
-13.7 %
|
-10.8 %
|
|
Income from equity
method investees
|
(23)
|
(17)
|
29.7 %
|
30.5 %
|
|
Other operating
income
|
(65)
|
(158)
|
-78.8 %
|
-74.5 %
|
|
Other operating
expense
|
146
|
215
|
-32.6 %
|
-14.4 %
|
|
Remeasurement Gain from
InterWell Health
|
—
|
(147)
|
|
|
|
Operating
income
|
324
|
472
|
-31.3 %
|
-27.8 %
|
|
Operating income excl.
special items and PRF
|
431
|
377
|
14.2 %
|
19.7 %
|
|
|
|
|
|
|
Interest expense,
net
|
89
|
76
|
16.0 %
|
19.4 %
|
|
Income before
taxes
|
235
|
396
|
-40.4 %
|
-36.9 %
|
|
Income tax
expense
|
88
|
112
|
-21.2 %
|
-17.8 %
|
|
Net
income
|
147
|
284
|
-48.0 %
|
-44.5 %
|
|
Net income attributable
to noncontrolling interests
|
63
|
54
|
18.7 %
|
26.8 %
|
|
Net
income1
|
84
|
230
|
-63.3 %
|
-60.9 %
|
|
Net
income1
excl. special items and PRF
|
168
|
168
|
-0.2 %
|
4.8 %
|
|
|
|
|
|
|
Weighted average number
of shares
|
293,413,449
|
293,413,449
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
€0.29
|
€0.78
|
-63.3 %
|
-60.9 %
|
|
Basic earnings per
share excl. special items and PRF
|
€0.57
|
€0.57
|
-0.2 %
|
4.8 %
|
|
|
|
|
|
|
In percent of
revenue
|
|
|
|
|
|
Operating income
margin
|
6.6 %
|
9.3 %
|
|
|
|
Operating income margin
excl. special items and PRF
|
8.7 %
|
7.4 %
|
|
|
|
|
|
|
|
|
1
Attributable to shareholders of FMC AG
& Co. KGaA.
|
|
|
|
|
|
|
|
|
|
|
For a reconciliation
of special items, please refer to the table at the end of the press
release.
|
|
Fresenius
Medical Care
|
|
|
Statement of
earnings
|
|
|
in € million,
except share data, unaudited
|
Nine months ended
September 30,
|
|
2023
|
2022
|
Change
|
Change
at cc
|
|
|
|
|
|
|
Revenue
|
14,466
|
14,401
|
0.4 %
|
4.9 %
|
|
|
|
|
|
|
Costs of
revenue
|
10,890
|
10,738
|
1.4 %
|
6.1 %
|
|
Selling, general and
administrative expenses
|
2,351
|
2,365
|
-0.6 %
|
2.4 %
|
|
Research and
development expenses
|
166
|
167
|
-0.4 %
|
0.5 %
|
|
Income from equity
method investees
|
(98)
|
(47)
|
108.1 %
|
108.2 %
|
|
Other operating
income
|
(258)
|
(397)
|
-52.6 %
|
-44.4 %
|
|
Other operating
expense
|
473
|
562
|
-16.0 %
|
1.2 %
|
|
Remeasurement Gain from
InterWell Health
|
—
|
(147)
|
|
|
|
Operating
income
|
942
|
1,160
|
-18.8 %
|
-18.0 %
|
|
Operating income excl.
special items and PRF
|
1,186
|
1,052
|
12.8 %
|
14.1 %
|
|
|
|
|
|
|
Interest expense,
net
|
252
|
217
|
16.0 %
|
16.2 %
|
|
Income before
taxes
|
690
|
943
|
-26.8 %
|
-25.9 %
|
|
Income tax
expense
|
214
|
242
|
-11.5 %
|
-10.5 %
|
|
Net
income
|
476
|
701
|
-32.1 %
|
-31.2 %
|
|
Net income attributable
to noncontrolling interests
|
165
|
166
|
-0.8 %
|
1.0 %
|
|
Net
income1
|
311
|
535
|
-41.8 %
|
-41.2 %
|
|
Net
income1
excl. special items and PRF
|
497
|
481
|
3.3 %
|
4.7 %
|
|
|
|
|
|
|
Weighted average number
of shares
|
293,413,449
|
293,190,145
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
€1.06
|
€1.82
|
-41.9 %
|
-41.3 %
|
|
Basic earnings per
share excl. special items and PRF
|
€1.69
|
€1.64
|
3.2 %
|
4.6 %
|
|
|
|
|
|
|
In percent of
revenue
|
|
|
|
|
|
Operating income
margin
|
6.5 %
|
8.1 %
|
|
|
|
Operating income margin
excl. special items and PRF
|
8.2 %
|
7.3 %
|
|
|
|
|
|
|
|
|
1
Attributable to shareholders of FMC AG
& Co. KGaA.
|
|
|
|
|
|
|
|
|
|
|
For a reconciliation
of special items, please refer to the table at the end of the press
release.
|
|
Fresenius
Medical Care
|
|
Reconciliation
of non-IFRS financial
measures to the most directly comparable IFRS
Accounting
Standards
financial measures for comparability with
the Company´soutlook
|
|
in € million,
unaudited
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
Nine months ended
September 30,
|
|
2023
|
2022
|
2023
|
2022
|
|
|
|
|
|
|
Operating
performance excl. special items
|
|
|
|
|
|
These items are
excluded to ensure comparability of the figures
presented with the Company's financial targets which have been
defined excluding special items.
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
4,936
|
5,096
|
14,466
|
14,401
|
|
|
|
|
|
|
Operating
income
|
324
|
472
|
942
|
1,160
|
|
Special
items:
|
|
|
|
|
|
FME25
Program
|
49
|
53
|
100
|
109
|
|
Legal Form Conversion
Costs
|
6
|
—
|
13
|
—
|
|
Legacy Portfolio
Optimization1
|
53
|
—
|
147
|
—
|
|
Humacyte Investment
Remeasurement
|
(1)
|
1
|
(16)
|
79
|
|
Net Gain Related to
InterWell Health2
|
—
|
(56)
|
—
|
(56)
|
|
Ukraine
War3
|
—
|
0
|
—
|
24
|
|
Hyperinflation in
Turkiye
|
—
|
0
|
—
|
6
|
|
Provider Relief Funding
(PRF)
|
—
|
(93)
|
—
|
(270)
|
|
Sum of special items
and PRF
|
107
|
(95)
|
244
|
(108)
|
|
Operating income excl.
special items and PRF
|
431
|
377
|
1,186
|
1,052
|
|
|
|
|
|
|
Net
income4
|
84
|
230
|
311
|
535
|
|
Special
items:
|
|
|
|
|
|
FME25
Program
|
31
|
38
|
71
|
78
|
|
Legal Form Conversion
Costs
|
4
|
—
|
9
|
—
|
|
Legacy Portfolio
Optimization1
|
50
|
—
|
118
|
—
|
|
Humacyte Investment
Remeasurement
|
(1)
|
1
|
(12)
|
58
|
|
Net Gain Related to
InterWell Health2
|
—
|
(38)
|
—
|
(38)
|
|
Ukraine
War3
|
—
|
0
|
—
|
21
|
|
Hyperinflation in
Turkiye
|
—
|
0
|
—
|
6
|
|
Provider Relief
Funding
|
—
|
(63)
|
—
|
(179)
|
|
Sum of special items
and PRF
|
84
|
(62)
|
186
|
(54)
|
|
Net
income4
excl. special items and PRF
|
168
|
168
|
497
|
481
|
|
|
|
|
|
|
1
Costs mainly comprise the derecognition
of capitalized development costs and the impairment of intangible
assets (licenses and distribution rights) as well as termination
costs (including certain contractual obligation expenses) related
to a dialysis cycler development program which was discontinued
in the first quarter of
2023 and other expenses related to
divestitures agreed upon
in the second and third quarters
of 2023.
|
|
2
Remeasurement gain of the investment,
prior to the transaction, in InterWell Health LLC, the impairment
of certain long-lived assets belonging to Acumen Physician
Solutions, LLC which was transferred to InterWell Health as part of
the transaction and certain transaction-related costs.
|
|
3
Bad debt expense in Russia and Ukraine
and accruals for certain risks associated with allowances on
inventories related to the Ukraine War.
|
|
4
Attributable to shareholders of FMC AG
& Co. KGaA
|
|
|
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SOURCE Fresenius Medical Care Holdings, Inc.