Full Press Release Details
Fresenius Medical Care reports first quarter results in line with
its expectations despite significant headwinds
Rice Powell, Chief Executive Officer of Fresenius
Medical Care, said: "When we see what is happening in Ukraine, it is again above all the human tragedy that leaves us deeply
saddened. I am incredibly thankful and proud of all who continue to work tirelessly to ensure patient care and the holding up of our
local operations under these outstandingly difficult circumstances. Although it is difficult to talk about numbers with these images
in mind, I have to say that in addition, Omicron has affected the quarter heavily. This resulted in high excess mortality among
our patients and significantly elevated labor costs in the U.S. to manage isolation clinics and shifts. We were able to compensate this
and delivered the quarter in line with our expectations. Based on a strong decline in excess mortality in February and March, we
confirm our financial targets for 2022."
| Q1 2022 EUR m | Q1 2021 EUR m | Growth yoy | Growth yoy, cc | |||||||||||||
| Revenue | 4,548 | 4,210 | +8% | +3% | ||||||||||||
| Operating income excl. special items 1 | 348 403 | 474 477 | -27% -15% | -30% -19% | ||||||||||||
| Net income 2 excl. special items 1 | 157 200 | 249 251 | -37% -20% | -39% -23% | ||||||||||||
| Basic EPS (EUR) excl. special items 1 | 0.54 0.68 | 0.85 0.86 | -37% -20% | -39% -23% |
yoy = year-on-year, cc = at constant currency,
EPS = earnings per share
Higher than expected COVID-19-related
excess mortality at the beginning of the year
excess mortality among Fresenius Medical Care's patients amounted to approximately 2,310 in the first quarter of 2022 (Q1
2021: ~3,200; Q2 2021: ~1,900;
Q3 2021: ~2,900; Q4 2021: ~2,0003). It significantly declined in February and
March in line with infection rates, but on a quarterly basis still exceeded the originally anticipated level. This resulted in an
increased need for isolation clinics and shifts and limited the Company's ability to mitigate the impacts from labor shortage and
wage inflation in the U.S. market.
excess mortality accumulated to approximately 9,000 patients over the past twelve months and to approximately 22,600 since the
start of the pandemic.
The overall estimated adverse effect of accumulated
COVID-19-related excess mortality on organic growth in the Health Care Services business amounted to around 290 basis points in the first
2021: costs related to the FME25 program; 2022: costs related to the FME25 program and impacts related to the war in Ukraine
Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
Historical excess mortality updated for late entries
War in Ukraine impacting business development
The war in Ukraine is affecting Fresenius Medical
Cares' dialysis operations and patient care in the country itself, but also caused higher bad debt expenses in Russia and Ukraine. The
direct adverse effect of the war in Ukraine amounted to EUR 22 million at operating income level in the first quarter and is treated
as a special item. Fresenius Medical Care will continue to monitor closely the potential effects of the war as well as the general impact
of the challenging inflationary macroeconomic environment.
First quarter earnings development
in line with expectations
increased by 8% to EUR 4,548 million (+3% at constant currency, +2% organic).
Health Care Services revenue increased by 8%
to EUR 3,607 million (+3% at constant currency, +1% organic). At constant currency, this was mainly driven by organic growth, which was
achieved despite the adverse impact of COVID-19, the partial reversal of an accrual related to a revenue recognition adjustment for accounts
receivable in legal dispute and contributions from acquisitions.
Health Care Products revenue increased by 6%
to EUR 941 million (+3% at constant currency, +3% organic). Constant currency growth was mainly driven by higher sales of in-center disposables
and renal pharmaceuticals. This was partially offset by lower sales of machines for chronic treatment.
decreased by 27% to EUR 348 million (-30% at constant currency), resulting in a margin of 7.6% (Q1 2021: 11.3%). Operating
income excluding special items, i.e. costs incurred for FME25 and the impacts related to the war in Ukraine, declined by 15% to EUR 403
million (-19% at constant currency), resulting in a margin of 8.9% (Q1 2021: 11.3%). At constant currency, the decline was mainly due
to higher labor costs, adverse COVID-19-related effects, as well as inflationary and supply chain cost increases. These effects were
only partially mitigated by the partial reversal of an accrual related to a revenue recognition adjustment for accounts receivable in
decreased by 37% to EUR 157 million (-39% at constant currency). Excluding special items, net income declined by 20%
to EUR 200 million (-23% at constant currency), mainly due to the mentioned negative effects on operating income.
per share (EPS) decreased by 37% to EUR 0.54 (-39% at constant currency). EPS excluding special items declined by 20% to EUR
0.68 (-23% at constant currency).
Cash flow development
In the first quarter,
Fresenius Medical Care generated EUR 159 million of operating cash flow (Q1 2021: EUR 208 million), resulting in a margin
of 3.5% (Q1 2021: 4.9%). The decrease was mainly due to continued recoupment of the U.S. government's payments received in 2020
under the CARES Act and a decrease in net income, partially offset by a favorable impact from trade accounts and other receivables.
amounted to EUR -1 million (Q1 2021: EUR 29 million) in the first quarter, resulting in a margin of 0.0% (Q1 2021: 0.7%).
Regional developments
revenue increased by 9% to EUR 3,171 million (+2% at constant currency, +0% organic). At constant currency, this was mainly driven by
organic growth in the Health Care Product business and the reversal of an accrual related to a revenue recognition adjustment for accounts
receivable in legal dispute. This was partially offset by the adverse COVID-19 impact on the Health Care Services business.
in North America decreased by 24% to EUR 304 million (-29% at constant currency), resulting in a margin of 9.6% (Q1 2021: 13.7%). At
constant currency, the decline in operating income was mainly due to higher labor costs, the adverse impact of COVID-19, inflationary
and supply chain cost increases as well as costs related to FME25. This was only partially offset by the partial reversal of an
accrual related to a revenue recognition adjustment for accounts receivable in legal dispute.
EMEA region increased by 1% to EUR 674 million in the first quarter (+3% at constant currency, +2% organic). At constant
currency, this was mainly due to organic growth in the Health Care Services business, which was achieved despite the negative impact
Operating income in EMEA decreased by 23% to
EUR 61 million (-19% at constant currency), resulting in a margin of 9.1% (Q1 2021: 11.9%). The decline was mainly due to the impact
related to the war in Ukraine.
revenue increased by 8% to EUR 507 million (+4% at constant currency, +4% organic). At constant currency, this was mainly driven
by organic growth in the Health Care Products business.
Operating income increased by 16% to EUR 99 million
(+14% at constant currency), resulting in a margin of 19.5% (Q1 2021: 18.1%). At constant currency, this was mainly due to a gain from
the sale of clinics, favorable currency transaction effects and growth in the Health Care Products business.
Net cash provided by / used in operating activities, after capital expenditures, before acquisitions, investments, and dividends
revenue increased by 15% to EUR 183 million (+15% at constant currency, +16% organic), mainly driven by strong organic growth in
both the Health Care Services and Health Care Products business.
income improved by 68% to EUR 11 million (+51% at constant currency), resulting in a margin of 6.1% (Q1 2021: 4.2%). This was mainly
due to a favorable currency transaction effect, which was partially offset by inflationary cost increases.
Patients, clinics and employees
2022, Fresenius Medical Care treated 343,493 patients in 4,153 dialysis clinics worldwide and had 122,635 employees
(full-time equivalents) globally, compared to 124,995 employees as of March 31, 2021.
Based on the results for the first quarter, which
were in line with the Company's expectations, Fresenius Medical Care confirms its financial targets for 2022. The earnings improvement
will be driven by expected business growth, PPE cost reduction and FME25 savings. The Company expects revenue and net income to grow
at low to mid-single digit percentage rates in FY 2022.5
Care will host a conference call to discuss the results of the first quarter 2022 on May 4, 2022 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 first quarter
2022. Our 6-K disclosure provides more details.
5 These targets are based on the 2021 results excluding
the costs related to FME25 of EUR 49 million (for Net Income). They are based on the assumptions outlined in the Press Release on the
Q4 and FY 2021 results (Feb. 22, 2022), in constant currency and exclude special items. Special items include further costs related to
FME25, the impacts related to the war in Ukraine, and other effects that are unusual in nature and have not been foreseeable or not foreseeable
in size or impact at the time of giving guidance.