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FRESENIUS MEDICAL CARE HOLDINGS, INC.
Consolidated Financial Statements
December 31, 2020 and 2019
FRESENIUS MEDICAL CARE HOLDINGS, INC.
| Page(s) | ||||
| Reports of Independent Auditors | 1-2 | |||
| Consolidated Balance Sheets as of December 31, 2020 and 2019 | 3 | |||
| Consolidated Statements of Income for the years ended December 31, 2020 and 2019 | 4 | |||
| Consolidated Statements of Comprehensive Income for the years ended December 31, 2020 and 2019 | 5 | |||
| Consolidated Statements of Changes in Equity for the years ended December 31, 2020 and 2019 | 6 | |||
| Consolidated Statements of Cash Flows for the years ended December 31, 2020 and 2019 | 7 | |||
| Notes to Consolidated Financial Statements | 8-44 |
Report of Independent Auditors
the Board of Directors of Fresenius Medical Care Holdings, Inc.
have audited the accompanying consolidated financial statements of Fresenius Medical Care Holdings, Inc. and its subsidiaries (the "Company"), which comprise the consolidated balance sheet
as of December 31, 2020, and the related consolidated statements of income, of comprehensive income, of changes in equity and of cash flows for the year then ended.
Management's Responsibility for the Consolidated Financial Statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with accounting principles
generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated
financial statements that are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on the consolidated financial statements based on our audit. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on our judgment, including
the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to
the Company's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on the effectiveness of the Company's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used
and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Fresenius Medical
Care Holdings, Inc. and its subsidiaries as of December 31, 2020, and the results of their operations and their cash flows for the year then ended in accordance with accounting
principles generally accepted in the United States of America.
As discussed in Notes 4 and 7 to the consolidated financial statements, the Company has entered into significant transactions with Fresenius Medical
Care AG & Co. KGaA and affiliates. Our opinion is not modified with respect to this matter.
PricewaterhouseCoopers LLP
Boston, Massachusetts
PricewaterhouseCoopers LLP,
101 Seaport Boulevard, Suite 500 Boston, MA 02210
T: 617 530 5000, www.pwc.com/us
Independent Auditors' Report
Fresenius Medical Care Holdings, Inc.:
have audited the accompanying consolidated financial statements of Fresenius Medical Care Holdings, Inc. and its subsidiaries, which comprise the consolidated balance sheet as of
2019, and the related consolidated statements of income, comprehensive income, changes in equity, and cash flows for the year then ended, and the related notes to the consolidated financial
Management's Responsibility for the Financial Statements
Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with U.S. generally accepted
accounting principles; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are
free from material misstatement, whether due to fraud or error.
Auditors' Responsibility
Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with auditing
standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial
statements are free from material misstatement.
audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors' judgment,
including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal
control relevant to the entity's preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for
the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
In our opinion, the consolidated financial statements referred to above present fairly in all material respects, the financial position of Fresenius Medical
Care Holdings, Inc. and its
subsidiaries as of December 31, 2019, and the results of their operations and their cash flows for the year then ended, in accordance with U.S. generally accepted accounting principles.
As discussed in Note 2(r) to the consolidated financial statements, on January 1, 2019, the Company adopted Accounting Standards Update 2016-02, Leases (Topic 842) and
Accounting Standards Update 2018-11, Leases; Targeted Improvements. Our opinion
is not modified with respect to this matter.
FRESENIUS MEDICAL CARE HOLDINGS, INC.
Consolidated Balance Sheets
December 31, 2020 and 2019
(Dollars in thousands, except share data)
| 2020 | 2019 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 672,382 | $ | 446,405 | |||
| Restricted cash and cash equivalents | 6,577 | 20,735 | |||||
| Trade accounts receivable, net | 1,764,314 | 1,844,550 | |||||
| Receivables from affiliates | 1,102,715 | 50,598 | |||||
| Inventories | 1,172,167 | 936,307 | |||||
| Income tax receivables | 60,813 | 126,709 | |||||
| Short-term investments | 192,923 | 149,774 | |||||
| Other current assets | 707,346 | 509,033 | |||||
| Total current assets | 5,679,237 | 4,084,111 | |||||
| Property, plant and equipment, net | 2,880,151 | 2,766,092 | |||||
| Other assets: | |||||||
| Right-of-use assets, net | 3,939,842 | 3,794,566 | |||||
| Goodwill | 13,373,538 | 13,200,862 | |||||
| Other intangible assets, net | 1,248,560 | 1,257,725 | |||||
| Long-term investments | 166,112 | 169,790 | |||||
| Equity method investments | 190,355 | 183,236 | |||||
| Other assets and deferred charges | 157,290 | 121,412 | |||||
| Total other assets | 19,075,697 | 18,727,591 | |||||
| Total assets | $ | 27,635,085 | $ | 25,577,794 | |||
| Liabilities, Noncontrolling Interests, and Equity | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 495,866 | $ | 501,443 | |||
| Accounts payable to related parties | 74,198 | 38,287 | |||||
| Current borrowings from affiliates | 766,047 | 539,038 | |||||
| Current portion of lease liabilities | 566,373 | 558,894 | |||||
| Accrued liabilities | 2,434,968 | 1,582,294 | |||||
| Short-term borrowings | 19,653 | 15,625 | |||||
| Current portion of long-term debt | 148,607 | 143,775 | |||||
| Total current liabilities | 4,505,712 | 3,379,356 | |||||
| Long-term debt | 1,128,945 | 1,781,816 | |||||
| Long-term borrowings from affiliates | 4,708,220 | 4,228,770 | |||||
| Long-term lease liabilities | 3,606,203 | 3,471,821 | |||||
| Other liabilities | 788,549 | 359,484 | |||||
| Deferred income taxes | 923,147 | 790,563 | |||||
| Total liabilities | 15,660,776 | 14,011,810 | |||||
| Noncontrolling interests subject to put provisions | 1,246,007 | 1,102,279 | |||||
| Equity: | |||||||
| Common stock, $1 par value | 83,985 | 83,985 | |||||
| Authorized shares 300,000,000 as of December 31, 2020 and 90,000,000 as of December 31, 2019 | |||||||
| Outstanding shares 83,985,000 as of December 31, 2020 and 2019 | |||||||
| Additional paid-in capital | 1,826,374 | 1,927,283 | |||||
| Retained earnings | 8,187,849 | 7,801,768 | |||||
| Accumulated other comprehensive loss | (55,145 | ) | (71,209 | ) | |||
| Total Fresenius Medical Care Holdings Inc. equity | 10,043,063 | 9,741,827 | |||||
| Noncontrolling interests not subject to put provisions | 685,239 | 721,878 | |||||
| Total equity | 10,728,302 | 10,463,705 | |||||
| Total liabilities, noncontrolling interests, and equity | $ | 27,635,085 | $ | 25,577,794 |
See accompanying notes to consolidated financial statements.
FRESENIUS MEDICAL CARE HOLDINGS, INC.
Consolidated Statements of Income
Years ended December 31, 2020 and
(Dollars in thousands)
| 2020 | 2019 | ||||||
| Net revenues: | |||||||
| Health care services | $ | 12,956,170 | $ | 12,531,113 | |||
| Medical supplies | 1,279,118 | 1,124,148 | |||||
| 14,235,288 | 13,655,261 | ||||||
| Health care services expense | 8,714,480 | 8,431,090 | |||||
| Medical supplies expense | 637,324 | 658,641 | |||||
| Selling, general and administrative expenses | 2,125,471 | 2,275,354 | |||||
| Depreciation and amortization | 718,265 | 704,116 | |||||
| Research and development | 85,484 | 81,586 | |||||
| Income from equity investment income | (2,948 | ) | (5,506 | ) | |||
| Interest expense, net, and related financing costs (including $252,964 and $199,887of interest with affiliates, respectively) | 301,520 | 289,681 | |||||
| 12,579,596 | 12,434,962 | ||||||
| Income before income taxes | 1,655,692 | 1,220,299 | |||||
| Provision for income taxes | 368,930 | 247,034 | |||||
| Net income | 1,286,762 | 973,265 | |||||
| Less net income attributable to noncontrolling interests | 300,221 | 264,229 | |||||
| Net income attributable to Fresenius Medical Care Holdings, Inc. | $ | 986,541 | $ | 709,036 |
See accompanying notes to consolidated financial statements.
FRESENIUS MEDICAL CARE HOLDINGS, INC.
Consolidated Statements of Comprehensive Income
December 31, 2020 and 2019
(Dollars in thousands)
| 2020 | 2019 | ||||||
| Net income | $ | 1,286,762 | $ | 973,265 | |||
| Gain related to foreign currency translation | 1,909 | 6,527 | |||||
| Gain on investments, (net of deferred tax of $2,928 and $2,536, respectively) | 6,123 | 7,207 | |||||
| Actuarial gains on defined benefit plans, (net of deferred tax of $2,355 and $5,716 respectively) | 6,332 | 16,091 | |||||
| Gain/(Loss) related to derivative instruments, (net of deferred tax $3 and $31, respectively) | 1,778 | 90 | |||||
| Other comprehensive income, net of tax | 16,142 | 29,915 | |||||
| Total comprehensive income | 1,302,904 | 1,003,180 | |||||
| Comprehensive income attributable to noncontrolling interests | 300,221 | 264,229 | |||||
| Comprehensive income attributable to Fresenius Medical Care Holdings, Inc. | $ | 1,002,683 | $ | 738,951 |
See accompanying notes to consolidated financial statements.
FRESENIUS MEDICAL CARE HOLDINGS, INC.
Consolidated Statements of Changes in Equity
Years ended December 31, 2020 and 2019
(Dollars in thousands, except share data)
| Noncontrolling interests not subject to put provisions | |||||||||||||||||||||||||||||||
| Preferred stock | Common stock | Accumulated other comprehensive loss | Total FMCH, Inc. shareholders' equity | ||||||||||||||||||||||||||||
| Additional paid-in capital | Retained earnings | Total equity | |||||||||||||||||||||||||||||
| Shares | Amount | Shares | Amount | ||||||||||||||||||||||||||||
| Balance, December 31, 2018 | 3,404,500 | $ | 851,125 | 83,985,000 | $ | 83,985 | 1,782,930 | 7,845,435 | (101,110 | ) | 10,462,365 | 689,030 | 11,151,395 | ||||||||||||||||||
| Lease transition | 93,126 | 93,126 | 11,623 | 104,749 | |||||||||||||||||||||||||||
| Net income | 709,036 | 709,036 | 91,704 | 800,740 | |||||||||||||||||||||||||||
| Other comprehensive income | 29,915 | 29,915 | 29,915 | ||||||||||||||||||||||||||||
| Stock-based compensation expense | 177 | 177 | 177 | ||||||||||||||||||||||||||||
| Cash contributions noncontrolling interests | 16,762 | 16,762 | |||||||||||||||||||||||||||||
| Dividends paid noncontrolling interests | (110,846 | ) | (110,846 | ) | |||||||||||||||||||||||||||
| Purchase/Sale of noncontrolling interests | (20,008 | ) | (20,008 | ) | 19,379 | (629 | ) | ||||||||||||||||||||||||
| Changes in fair value of noncontrolling interests subject to put provisions | (46,053 | ) | (46,053 | ) | (46,053 | ) | |||||||||||||||||||||||||
| Repurchase and retirement of preferred stock | (3,404,500 | ) | (851,125 | ) | (190,199 | ) | (1,041,324 | ) | (1,041,324 | ) | |||||||||||||||||||||
| DLP deemed distribution | (3,060 | ) | (3,060 | ) | (3,060 | ) | |||||||||||||||||||||||||
| Deemed distribution | (655,083 | ) | (655,083 | ) | (655,083 | ) | |||||||||||||||||||||||||
| Contributions from shareholder | 212,928 | 212,928 | 212,928 | ||||||||||||||||||||||||||||
| Other reclassifications | 369 | (547 | ) | (14 | ) | (192 | ) | 4,226 | 4,034 | ||||||||||||||||||||||
| Balance, December 31, 2019 | $ | 83,985,000 | $ | 83,985 | $ | 1,927,283 | $ | 7,801,768 | $ | (71,209 | ) | $ | 9,741,827 | $ | 721,878 | $ | 10,463,705 | ||||||||||||||
| Net income | 986,541 | 986,541 | 136,676 | 1,123,217 | |||||||||||||||||||||||||||
| Other comprehensive income | 16,142 | 16,142 | 16,142 | ||||||||||||||||||||||||||||
| Stock-based compensation expense | 742 | 742 | 742 | ||||||||||||||||||||||||||||
| Cash contributions noncontrolling interests | 11,384 | 11,384 | |||||||||||||||||||||||||||||
| Dividends paid noncontrolling interests | (124,912 | ) | (124,912 | ) | |||||||||||||||||||||||||||
| Purchase/Sale of noncontrolling interests | 11,891 | 11,891 | (60,058 | ) | (48,167 | ) | |||||||||||||||||||||||||
| Changes in fair value of noncontrolling interests subject to put provisions | (123,742 | ) | (123,742 | ) | (123,742 | ) | |||||||||||||||||||||||||
| Dividend to shareholders | (600,000 | ) | (600,000 | ) | (600,000 | ) | |||||||||||||||||||||||||
| Other | 10,200 | (460 | ) | (78 | ) | 9,662 | 271 | 9,933 | |||||||||||||||||||||||
| Balance, December 31, 2020 | $ | 83,985,000 | $ | 83,985 | $ | 1,826,374 | $ | 8,187,849 | $ | (55,145 | ) | $ | 10,043,063 | $ | 685,239 | $ | 10,728,302 |
See accompanying notes to consolidated financial statements.
FRESENIUS MEDICAL CARE HOLDINGS, INC.
Consolidated Statements of Cash Flows
Years ended December 31, 2020
(Dollars in thousands)
| 2020 | 2019 | ||||||
| Cash flows from operating activities: | |||||||
| Net income | $ | 1,286,762 | $ | 973,265 | |||
| Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
| Depreciation and amortization | 718,265 | 704,116 | |||||
| Impairment of right of use assets | 797 | 43,846 | |||||
| Gain on divestitures | (37,009 | ) | (28,315 | ) | |||
| Change in deferred income taxes | 135,003 | 33,332 | |||||
| Equity investment loss | (636 | ) | (5,506 | ) | |||
| (Gain)Loss on disposal of properties and equipment and ROU | (592 | ) | 33,413 | ||||
| Loss (Gain) on disposal of marketable securities, net | 1,921 | (23,498 | ) | ||||
| Amortization of deferred financing cost | 4,560 | 3,372 | |||||
| Stock-based compensation expense | 177 | ||||||
| Unrealized currency transaction loss | 55,223 | 51,523 | |||||
| (Gain) loss on forward sale and currency exchange agreements | (40,929 | ) | 108,807 | ||||
| Changes in operating assets and liabilities, net of effects of purchase acquisitions and divestitures: | |||||||
| Decrease in trade accounts receivable, net | 70,836 | 52,653 | |||||
| Increase in inventories | (237,317 | ) | (38,897 | ) | |||
| (Increase) decrease in other current assets | (250,992 | ) | 110,750 | ||||
| (Increase) decrease in other assets and deferred charges | (22,145 | ) | 6,886 | ||||
| Increase in accounts payable | 51,335 | 69,520 | |||||
| Increase (decrease) in accrued income taxes | 64,686 | (62,348 | ) | ||||
| Increase (decrease) in accrued liabilities | 1,315,421 | (150,870 | ) | ||||
| Decrease in other long-term liabilities | (8,273 | ) | (348,892 | ) | |||
| Net (decrease) increase in lease liabilities | (93,747 | ) | 92,518 | ||||
| Net changes due to/from affiliates | 35,398 | (127,930 | ) | ||||
| Distributions received on equity investments | 4,463 | 6,482 | |||||
| Other, net | (3,796 | ) | 65 | ||||
| Net cash provided by operating activities | 3,049,234 | 1,504,469 | |||||
| Cash flows from investing activities: | |||||||
| Capital expenditures | (722,981 | ) | (786,963 | ) | |||
| Acquisitions and investments, net of cash acquired | (153,982 | ) | (2,306,099 | ) | |||
| Sale of property and equipment | 1,254 | ||||||
| Proceeds from divestitures | 382 | 48,418 | |||||
| Purchases of available for sale securities | (59,504 | ) | (7,106 | ) | |||
| Proceeds from sales of available for sale securities | 29,234 | 11,645 | |||||
| Equity contributions | (1,172 | ) | (25,719 | ) | |||
| Net increase in loans to affiliates | (1,052,118 | ) | (50,274 | ) | |||
| Net cash used in investing activities | (1,958,887 | ) | (3,116,098 | ) | |||
| Cash flows from financing activities: | |||||||
| Net increase (decrease) in borrowings from affiliate | 654,794 | (68,335 | ) | ||||
| Net (decrease) increase from receivable financing facility | (427,000 | ) | 427,000 | ||||
| Net (decrease) increase in debt | (221,987 | ) | 125,902 | ||||
| Debt issuance costs | (7,394 | ) | (3,133 | ) | |||
| Dividends paid | (600,000 | ) | |||||
| Distributions to noncontrolling interests | (307,230 | ) | (278,986 | ) | |||
| Contributions from noncontrolling interests | 26,531 | 40,859 | |||||
| Proceeds from sale of noncontrolling interests | 26,438 | 31,933 | |||||
| Purchases of noncontrolling interests | (19,803 | ) | (37,770 | ) | |||
| Other, net | (2,417 | ) | |||||
| Net cash (used in) provided by financing activities | (878,068 | ) | 237,470 | ||||
| Effects of changes in foreign exchange rates | (460 | ) | (6,743 | ) | |||
| Change in cash, cash equivalents and restricted cash | 211,819 | (1,380,902 | ) | ||||
| Cash, cash equivalents and restricted cash at beginning of year | 467,140 | 1,848,042 | |||||
| Cash, cash equivalents and restricted cash at end of year | $ | 678,959 | $ | 467,140 | |||
| Supplemental disclosures of cash flow information: | |||||||
| Cash paid for interest | $ | 267,237 | $ | 235,756 | |||
| Cash paid for income taxes, net of tax refund | 188,067 | 281,044 | |||||
| Details for acquisitions: | |||||||
| Assets acquired | $ | (210,730 | ) | $ | (2,743,990 | ) | |
| Liabilities assumed | 12,116 | 249,314 | |||||
| Noncontrolling interests | 40,956 | 131,290 | |||||
| Cash paid | (157,658 | ) | (2,363,386 | ) | |||
| Less cash acquired | 3,676 | 57,287 | |||||
| Net cash paid for acquisitions | $ | (153,982 | ) | $ | (2,306,099 | ) | |
| Supplemental dislosures of non-cash activity from financing activities: | |||||||
| Settlement of borrowings from affiliates | $ | $ | 267,622 | ||||
| Settlement of currency exchange agreement | 595,809 | ||||||
| Capital contribution | 177,893 | ||||||
| Issuance of promisory note in lieu of cash dividend | 655,083 |
See accompanying notes to consolidated financial statements.
FRESENIUS MEDICAL CARE HOLDINGS, INC.
Notes to Consolidated Financial Statements
December 31, 2020 and 2019
(Dollars in thousands, except share data)
Fresenius Medical Care Holdings, Inc., a New York corporation (the Company or FMCH) is a subsidiary of Fresenius Medical Care AG & Co. KGaA, a German partnership limited by shares
(FMCAG & KGaA or the Parent Company). The General Partner refers to Fresenius Medical Care Management AG, FMC-AG & Co. KGaA's general partner and a wholly owned subsidiary of
Fresenius SE. Management Board and our Management Board refer to the members of the management board of Fresenius Medical Care Management AG (Management AG) and, except as otherwise specified,
Supervisory Board and our Supervisory Board refer to the supervisory board of FMC-AG & Co. KGaA. The Company conducts its operations through seven principal subsidiaries, National
Medical Care, Inc. (NMC), Fresenius USA Marketing, Inc., Fresenius USA Manufacturing, Inc., National Cardiovascular Partners, LP, Colorado River Group, LLC and SRC
Holding Company, Inc., all Delaware corporations and Fresenius USA, Inc., a Massachusetts corporation.
Company provides dialysis treatment and related dialysis care services to persons who suffer from end-stage renal disease (ESRD), as well as other health care services. The Company also develops
and manufactures a wide variety of health care products, which includes dialysis and non-dialysis products. The Company's dialysis products include hemodialysis machines, peritoneal cyclers,