Full Press Release Details
Fresenius Medical Care successfully executes strategic plan and
narrows guidance range due to strong operational performance in the first half of 2023
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."
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 PRF 1 | 401 | 284 | +41 | % | +44 | % | 755 | 675 | +12 | % | +11 | % | ||||||||||||||||||||
| Net income 2 | 140 | 147 | -5 | % | -4 | % | 227 | 305 | -26 | % | -26 | % | ||||||||||||||||||||
| excl. special items and PRF 1 | 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 PRF 1 | 0.59 | 0.39 | +51 | % | +54 | % | 1.12 | 1.07 | +5 | % | +4 | % |
yoy = year-on-year, cc = at constant currency, EPS = earnings per
Successful execution against the strategic
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).
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.
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.
Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
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
increased by 1% to EUR 4,825 million in the second quarter (+6% at constant currency, +6% organic).
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%.
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).
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
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.
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".
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
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).
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).
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).
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).
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%).
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%).
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).