Fresenius Completes IDC Buy - Analyst Blog
July 05 2011 - 10:15AM
Zacks
Fresenius Medical
Care (FMS), the largest provider of dialysis products and
services on the planet, has wrapped up its acquisition of Euromedic
International’s (“Euromedic”) dialysis service division
International Dialysis Centers (“IDC”) for €485 million (roughly
$648 million). This follows the regulatory approvals of the deal
(announced in January 2011) by the anti-trust authorities.
IDC provides treatment to over
8,200 hemodialysis patients mainly in Central and Eastern Europe
and runs 70 clinics in nine nations. The acquisition enables
Fresenius to expand its role in the dialysis care business, mainly
in the fast-growing Eastern European markets, where IDC has a major
presence. For its part, Euromedic will focus on cancer treatment
and diagnostic arenas.
The newly acquired business
is expected to contribute about $180 million in annual
revenues for Fresenius. Moreover, the acquisition is expected to be
accretive to its earnings in the very first year following the
transaction closure. Fresenius financed the acquisition with its
internal cash flows and available borrowing capacity.
Fresenius operates a network of
about 2,769 dialysis clinics across North America and overseas
markets to provide dialysis treatment to 216,942 patients
worldwide. Dialysis treatment is required by victims of chronic
kidney failure, a condition that affects over 2 million people
globally each year. Fresenius’ principal competitor in the U.S. is
DaVita Inc. (DVA), which provides dialysis
services for patients suffering from chronic kidney failure or
end-stage renal disease.
Fresenius’ first-quarter 2011
profit rose 4.5% year over year on the back of higher sales which
climbed roughly 5%. Its international sales were boosted by higher
dialysis services revenues while domestic sales were hit by the
unfavorable impact of the implementation of the new Medicare
end-stage renal disease prospective payment system (the “bundled
rate” system), which resulted in a cap in reimbursement.
During the quarter the company
provided roughly 8.17 million dialysis treatments globally.
Encouraged by its reasonably healthy first quarter results and
factoring in the favorable impact of Medicare’s elimination of fees
related to the new bundled system, Fresenius has raised its
revenues and earnings guidance for fiscal 2011.
DAVITA INC (DVA): Free Stock Analysis Report
FRESENIUS MED (FMS): Free Stock Analysis Report
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