- Organic growth accelerated in the second quarter in Care
Enablement and Care Delivery including sequentially stable
treatment volumes in the U.S.
- Execution on turnaround plan translates into visible
productivity improvements in Care Delivery achieving a Q2 margin at
the lower end of the 2025 target margin band
- Savings resulting from FME25 transformation program fully on
track
- Successful execution on portfolio optimization strategy
- Legal form conversion to a German Stock Corporation approved by
shareholders
- FY 2023 operating income guidance range narrowed
WALTHAM,
Mass., Aug. 2, 2023 /PRNewswire/ -- Helen Giza, Chief Executive Officer of Fresenius
Medical Care, said: "The second quarter makes evident that the
execution against our strategic plan is fully on track. We are
executing on our portfolio optimization, continuing to deliver on
our FME25 program and are accelerating our turnaround activities.
As expected, we have seen a stabilization of the labor market and
of the inflationary environment. Our measures to increase
productivity, supported by the targeted clinic closures, are
driving a positive development. This gives us the confidence to
narrow our operating income guidance range to the upper part for
the year."
Key figures (IFRS®, unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q2 2023
|
Q2 2022
|
Growth
|
Growth
|
H1 2023
|
H1 2022
|
Growth
|
Growth
|
|
EUR m
|
EUR m
|
yoy
|
yoy, cc
|
EUR m
|
EUR m
|
yoy
|
yoy, cc
|
Revenue
|
4,825
|
4,757
|
+1 %
|
+6 %
|
9,529
|
9,305
|
+2 %
|
+4 %
|
|
|
|
|
|
|
|
|
|
Operating income
|
357
|
341
|
+5 %
|
+5 %
|
618
|
688
|
-10 %
|
-11 %
|
excl. special items and
PRF1
|
401
|
284
|
+41 %
|
+44 %
|
755
|
675
|
+12 %
|
+11 %
|
|
|
|
|
|
|
|
|
|
Net income2
|
140
|
147
|
-5 %
|
-4 %
|
227
|
305
|
-26 %
|
-26 %
|
excl. special items and
PRF1
|
175
|
116
|
+51 %
|
+54 %
|
329
|
313
|
+5 %
|
+5 %
|
|
|
|
|
|
|
|
|
|
Basic EPS (EUR)
|
0.48
|
0.50
|
-5 %
|
-4 %
|
0.77
|
1.04
|
-26 %
|
-26 %
|
excl. special items and
PRF1
|
0.59
|
0.39
|
+51 %
|
+54 %
|
1.12
|
1.07
|
+5 %
|
+4 %
|
|
|
|
|
|
|
|
|
|
|
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. At the beginning of the year the new operating model was
implemented along with the corresponding new financial reporting.
The simplification of the governance structure with the change of
the legal form is thus the remaining structural adjustment to be
realized. An important milestone has been achieved in this respect
at the Extraordinary General Meeting on July
14, 2023, where 99.88% of the voting shareholders approved
the conversion of Fresenius Medical Care from the legal form of a
partnership limited by shares (Kommanditgesellschaft auf Aktien,
KGaA) into a German stock corporation (Aktiengesellschaft, AG).
In parallel, the Company continuously executes on its
operational efficiency and turnaround plans. In the second quarter,
the FME25 transformation program delivered EUR 75 million of additional savings. Fresenius
Medical Care 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.
In addition to generating efficiencies and improving
productivity, Fresenius Medical Care is advancing the optimization
of its portfolio. The announced strategic divestments of clinic
networks in Sub-Saharan Africa and Hungary demonstrate progress against the
Company's execution plan. The outlined examples are part of the
overall portfolio optimization strategy to exit non-core and
dilutive assets, against which Fresenius Medical Care executes. The
resulting cash proceeds will be used towards deleveraging – in line
with Fresenius Medical Care's disciplined financial policy.
Earnings development excluding special items driven by FME25
savings and productivity improvements
Revenue increased by 1% to EUR
4,825 million in the second quarter (+6% at constant
currency, +6% organic).
Care Delivery revenue increased by 1% to EUR 3,873 million (+6% at constant currency, +6%
organic).
In Care Delivery U.S., revenue growth of 2% (+4% at constant
currency, +4% organic) was mainly driven by organic growth, which
was supported by a favorable impact from the value-based care
business, reimbursement rate increases and a favorable payor mix.
This was partially offset by a negative exchange rate effect. 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 (-0.1%) – corresponding to the mid-point of the Company's
outlined expectations.
In Care Delivery International, revenue remained stable (+14% at
constant currency, +15% organic). Organic growth, which was
supported by the effect of hyperinflation in various markets, was
offset by a negative exchange rate effect and the impact of closed
or sold clinics. Despite the annualization effect of
COVID-19-related excess mortality, same market treatment growth was
positive at 0.9%.
Care Enablement revenue remained stable and amounted to
EUR 1,325 million (+6% at constant
currency, +6% organic). Higher sales of machines for chronic
treatment, critical care products and home hemodialysis products as
well as increased average sales prices were mostly offset by a
negative exchange rate effect.
Within Inter-segment eliminations, revenue for products
transferred between the operating segments at fair market value
decreased by 3% to EUR 373 million
(+3% at constant currency; Q2 2022: EUR 383
million).3
In the first half, revenue increased by 2% to EUR 9,529 million (+4% at constant currency, +4%
organic). Care Delivery revenue increased by 2% to 7,628 million
(+3% at constant currency, +4% organic), with both Care Delivery
U.S. and Care Delivery International growing by 2% (U.S.: +1% at
constant currency, +2% organic; International: +13% at constant
currency, +14% organic). Care Enablement revenue increased by 2%
to
EUR 2,635 million (+5% at constant
currency, +5% organic). Inter-segment eliminations decreased by 2%
and amounted to EUR 734 million
(stable at constant currency; H1 2022: EUR
750 million).
Operating income increased by 5% to EUR 357 million (+5% at constant currency),
resulting in a margin of 7.4% (Q2 2022: 7.2%). Operating income
excluding special items and U.S. Provider Relief Funding
(PRF)1 increased by 41% to EUR
401 million (+44% at constant currency), resulting in a
margin of 8.3% (Q2 2022: 6.0%).
Operating income in Care Delivery decreased by 11% to
EUR 384 million (-10% at constant
currency), resulting in a margin of 9.9% (Q2 2022: 11.3%).
Operating income excluding special items and PRF1
increased by 40% to EUR 402 million
(+42% at constant currency), resulting in a margin of 10.4% (Q2
2022: 7.5%). This was mainly driven by business growth, lower
personnel expenses resulting from improved productivity, and
savings from the FME25 program.
Operating income in Care Enablement amounted to
EUR 2 million (Q2 2022:
EUR -11 million), resulting in a
margin of 0.1% (Q2 2022: -0.8%). Operating income excluding special
items increased by 533% to EUR 19
million (+601% at constant currency), resulting in a margin
of 1.4% (Q2 2022: 0.2%). 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 a negative
impact from foreign currency transaction.
Operating income for Corporate amounted to EUR -25 million (Q2 2022: EUR -84 million). Excluding special items,
operating income amounted to EUR -16
million (Q2 2022:
EUR -9 million).
In the first half, operating income decreased by 10% to
EUR 618 million (-11% at constant
currency), resulting in a margin of 6.5% (H1 2022: 7.4%). Excluding
special items and PRF1, operating income increased by
12% to EUR 755 million (+11% at
constant currency), resulting in a margin of 7.9% (H1 2022: 7.2%).
In Care Delivery, operating income declined by 8% to EUR 669 million (-10% at constant currency),
resulting in a margin of 8.8% (H1 2022: 9.8%). In Care Enablement,
operating income decreased to
EUR -23 million (H1 2022:
EUR 59 million), resulting in a
margin of -0.9% (H1 2022: 2.3%). Operating income for Corporate
amounted to EUR -15 million (H1 2022:
-94 million).
Net income2 decreased by 5% to
EUR 140 million (-4% at constant
currency). Excluding special items and PRF1, net income2
increased by 51% to EUR 175 million
(+54% at constant currency).
In the first half, net income2 declined by 26% to
EUR 227 million (-26% at constant
currency). Excluding special items and PRF1, net
income2 increased by 5% to
EUR 329 million (+5% at constant
currency).
Basic earnings per share (EPS) decreased by 5% to
EUR 0.48 (-4% at constant currency).
EPS excluding special items and PRF1 increased by 51% to
EUR 0.59 (+54% at constant
currency).
In the first half, EPS declined by 26% to EUR 0.77 (-26% at constant currency). Excluding
special items and PRF1, EPS increased by 5% to
EUR 1.12 (+4% at constant
currency).
Strong cash flow development
In the second quarter, Fresenius Medical Care generated
EUR 1,007 million of operating
cash flow (Q2 2022: EUR 751
million), resulting in a margin of 20.9% (Q2 2022: 15.8%).
The increase was mainly driven by the recoupment of advanced
payments during 2022, which had been received in the U.S. under the
Medicare Accelerated and Advance Payment Program in 2020, as well
as by seasonality of invoicing.
In the first half, operating cashflow amounted to EUR 1,150 million (H1 2022: EUR 910 million), resulting in a margin of 12.1%
(H1 2022: 9.8%).
Free cash flow4 amounted to
EUR 852 million in the second quarter
(Q2 2022:
EUR 582 million), resulting in a
margin of 17.7% (Q2 2022: 12.2%). In the first half, Fresenius
Medical Care generated free cash flow of EUR
854 million (H1 2022: EUR 581
million), resulting in a margin of 9.0% (H1 2022: 6.2%).
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 half of the
year, Fresenius Medical Care narrows its operating income target
range for 2023. The Company now expects operating income to remain
flat or decline by up to a low-single digit percentage rate (2022
basis: EUR 1,540 million; previous
target: remain flat or decline by up to a high-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 June 30, 2023, Fresenius
Medical Care treated 344,086 patients in 4,050 dialysis
clinics worldwide and had 124,295 employees
(headcount) globally, compared to 130,448 employees as of
June 30, 2022.
Conference call
Fresenius Medical Care will host a conference call to discuss
the results of the second quarter and first half of 2023 on
August 2, 2023 at 3:30 p.m. CEST / 9:30 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 second quarter and first
half 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 4,050 dialysis clinics, Fresenius
Medical Care provides dialysis treatments for approximately 344,000
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 June
30,
|
|
2023
|
2022
|
Change
|
Change
at cc
|
|
|
|
|
|
Revenue
|
4,825
|
4,757
|
1.4 %
|
6.0 %
|
|
|
|
|
|
Costs of
revenue
|
3,628
|
3,511
|
3.3 %
|
8.2 %
|
Selling, general and
administrative expenses
|
775
|
758
|
2.3 %
|
5.7 %
|
Research and
development expenses
|
57
|
55
|
3.2 %
|
4.2 %
|
Income from equity
method investees
|
(48)
|
(19)
|
149.2 %
|
149.4 %
|
Other operating
income
|
(76)
|
(110)
|
-31.3 %
|
-23.3 %
|
Other operating
expense
|
132
|
221
|
-40.3 %
|
-29.2 %
|
Operating income
|
357
|
341
|
4.7 %
|
5.5 %
|
Operating income excl.
special items and PRF
|
401
|
284
|
41.3 %
|
43.5 %
|
|
|
|
|
|
Interest expense,
net
|
81
|
72
|
12.5 %
|
14.1 %
|
Income before taxes
|
276
|
269
|
2.7 %
|
3.2 %
|
Income tax
expense
|
81
|
63
|
28.9 %
|
29.1 %
|
Net income
|
195
|
206
|
-5.4 %
|
-4.8 %
|
Net income attributable
to noncontrolling interests
|
55
|
59
|
-7.3 %
|
-6.2 %
|
Net income1
|
140
|
147
|
-4.6 %
|
-4.2 %
|
Net income1
excl. special items and PRF
|
175
|
116
|
50.9 %
|
53.6 %
|
|
|
|
|
|
Weighted average number
of shares
|
293,413,449
|
293,145,413
|
|
|
|
|
|
|
|
Basic earnings per share
|
€0.48
|
€0.50
|
-4.7 %
|
-4.3 %
|
Basic earnings per
share excl. special items and PRF
|
€0.59
|
€0.39
|
50.7 %
|
53.5 %
|
|
|
|
|
|
In percent of revenue
|
|
|
|
|
Operating income margin
|
7.4 %
|
7.2 %
|
|
|
Operating income margin
excl. special items and PRF
|
8.3 %
|
6.0 %
|
|
|
|
|
|
|
|
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
|
Six months ended June
30,
|
|
2023
|
2022
|
Change
|
Change
at cc
|
|
|
|
|
|
Revenue
|
9,529
|
9,305
|
2.4 %
|
3.9 %
|
|
|
|
|
|
Costs of
revenue
|
7,183
|
6,886
|
4.3 %
|
5.9 %
|
Selling, general and
administrative expenses
|
1,557
|
1,548
|
0.6 %
|
1.2 %
|
Research and
development expenses
|
113
|
105
|
7.5 %
|
7.1 %
|
Income from equity
method investees
|
(76)
|
(30)
|
153.8 %
|
153.6 %
|
Other operating
income
|
(193)
|
(239)
|
-19.2 %
|
-5.9 %
|
Other operating
expense
|
327
|
347
|
-5.7 %
|
10.9 %
|
Operating income
|
618
|
688
|
-10.3 %
|
-11.4 %
|
Operating income excl.
special items and PRF
|
755
|
675
|
11.9 %
|
11.0 %
|
|
|
|
|
|
Interest expense,
net
|
163
|
141
|
16.0 %
|
14.4 %
|
Income before taxes
|
455
|
547
|
-17.0 %
|
-18.0 %
|
Income tax
expense
|
126
|
130
|
-3.1 %
|
-4.3 %
|
Net income
|
329
|
417
|
-21.3 %
|
-22.2 %
|
Net income attributable
to noncontrolling interests
|
102
|
112
|
-9.9 %
|
-11.1 %
|
Net income1
|
227
|
305
|
-25.5 %
|
-26.4 %
|
Net income1
excl. special items and PRF
|
329
|
313
|
5.2 %
|
4.6 %
|
|
|
|
|
|
Weighted average number
of shares
|
293,413,449
|
293,076,643
|
|
|
|
|
|
|
|
Basic earnings per share
|
€0.77
|
€1.04
|
-25.6 %
|
-26.5 %
|
Basic earnings per
share excl. special items and PRF
|
€1.12
|
€1.07
|
5.1 %
|
4.5 %
|
|
|
|
|
|
In percent of revenue
|
|
|
|
|
Operating income margin
|
6.5 %
|
7.4 %
|
|
|
Operating income margin
excl. special items and PRF
|
7.9 %
|
7.2 %
|
|
|
|
|
|
|
|
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 financial
measures for comparability with the Company´s
outlook
|
in € million,
unaudited
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
Six months ended June
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
|
4,825
|
4,757
|
9,529
|
9,305
|
|
|
|
|
|
Operating income
|
357
|
341
|
618
|
688
|
Special
items:
|
|
|
|
|
FME25
Program
|
25
|
21
|
51
|
57
|
Legal Form Conversion
Costs
|
5
|
—
|
7
|
—
|
Legacy Portfolio
Optimization 1
|
10
|
—
|
94
|
—
|
Humacyte Investment
Remeasurement
|
4
|
75
|
(15)
|
78
|
Ukraine War
2
|
—
|
2
|
—
|
23
|
Hyperinflation in
Turkiye
|
—
|
6
|
—
|
6
|
Provider Relief Funding
(PRF)
|
—
|
(161)
|
—
|
(177)
|
Sum of special items
and PRF
|
44
|
(57)
|
137
|
(13)
|
Operating income excl.
special items and PRF
|
401
|
284
|
755
|
675
|
|
|
|
|
|
Net income3
|
140
|
147
|
227
|
305
|
Special
items:
|
|
|
|
|
FME25
Program
|
20
|
15
|
40
|
40
|
Legal Form Conversion
Costs
|
4
|
—
|
5
|
—
|
Legacy Portfolio
Optimization 1
|
8
|
—
|
68
|
—
|
Humacyte Investment
Remeasurement
|
3
|
55
|
(11)
|
57
|
Ukraine War
2
|
—
|
2
|
—
|
20
|
Hyperinflation in
Turkiye
|
—
|
6
|
—
|
6
|
Provider Relief
Funding
|
—
|
(109)
|
—
|
(115)
|
Sum of special items
and PRF
|
35
|
(31)
|
102
|
8
|
Net income3
excl. special items and PRF
|
175
|
116
|
329
|
313
|
|
|
|
|
|
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 Q1 2023 and other expenses related to a
divestiture agreed upon in Q2 2023.
|
2 Bad debt expense in Russia and Ukraine
and accruals for certain risks associated with allowances on
inventories related to the Ukraine War.
|
3 Attributable to shareholders of FMC AG
& Co. KGaA
|
|
|
|
|
|
|
|
View original content to download
multimedia:https://www.prnewswire.com/news-releases/fresenius-medical-care-successfully-executes-strategic-plan-and-narrows-guidance-range-due-to-strong-operational-performance-in-the-first-half-of-2023-301891627.html
SOURCE Fresenius Medical Care Holdings, Inc.