Fresenius Medical Care delivers continued operating income improvements in the second quarter of 2024
Fresenius Medical Care reported improved financial performance in Q2 2024, with organic revenue growth of 2.3% and increased operating income and margins. Key highlights include:
- Revenue decreased 1% to €4,766 million (-2% at constant currency, +2% organic)
- Operating income increased 19% to €425 million, with margin expanding to 8.9%
- Net income grew 33% to €187 million
- FME25 program delivered €57 million in additional savings
- Portfolio optimization progressing with several divestitures closed
- Net leverage ratio improved to 3.1x
- Full year 2024 outlook confirmed
The company remains focused on its operational turnaround and strategic plan execution, with Care Enablement driving profitability improvements. Fresenius Medical Care reaffirmed its 2025 target of 10-14% operating income margin.
Fresenius Medical Care ha registrato un miglioramento delle performance finanziarie nel secondo trimestre del 2024, con una crescita del fatturato organico del 2,3% e un aumento dell'utile operativo e dei margini. I punti salienti includono:
- Fatturato diminuito dell'1% a €4.766 milioni (-2% a valuta costante, +2% organico)
- Utile operativo aumentato del 19% a €425 milioni, con un margine che si espande all'8,9%
- Utile netto cresciuto del 33% a €187 milioni
- Programma FME25 ha generato €57 milioni di risparmi aggiuntivi
- Ottimizzazione del portafoglio in corso con diverse dismissioni concluse
- Rapporto di leva netta migliorato a 3,1x
- Prospettive per l'intero anno 2024 confermate
La società rimane concentrata sulla sua ristrutturazione operativa e sull'esecuzione del piano strategico, con il Care Enablement che guida i miglioramenti della redditività. Fresenius Medical Care ha ribadito il proprio obiettivo per il 2025 di un margine operativo del 10-14%.
Fresenius Medical Care reportó una mejora en su desempeño financiero en el segundo trimestre de 2024, con un crecimiento de ingresos orgánicos del 2.3% y un aumento en el ingreso operativo y los márgenes. Los puntos destacados incluyen:
- Ingresos disminuyeron un 1% a €4,766 millones (-2% a moneda constante, +2% orgánico)
- Ingreso operativo aumentó un 19% a €425 millones, con un margen que se amplía al 8.9%
- Ingreso neto creció un 33% a €187 millones
- Programa FME25 generó €57 millones en ahorros adicionales
- Optimización de la cartera avanzando con varias desinversiones cerradas
- Ratio de apalancamiento neto mejorado a 3.1x
- Perspectivas para todo el año 2024 confirmadas
La empresa se mantiene enfocada en su recuperación operativa y en la ejecución de su plan estratégico, con Care Enablement impulsando mejoras en la rentabilidad. Fresenius Medical Care reafirmó su objetivo de un margen de ingreso operativo del 10-14% para 2025.
프레제니우스 메디컬 케어(Fresenius Medical Care)는 2024년 2분기 재무 성과가 개선되었으며, 유기적 수익이 2.3% 증가하고 운영 수익과 마진이 증가했다고 보고했습니다. 주요 내용은 다음과 같습니다:
- 수익이 1% 감소하여 €4,766백만 (-2% 고정 환율, +2% 유기적)
- 운영 수익은 19% 증가하여 €425백만이며, 마진은 8.9%로 확대되었습니다.
- 순이익이 33% 증가하여 €187백만에 달했습니다.
- FME25 프로그램이 추가로 €57백만의 절감을 달성했습니다.
- 포트폴리오 최적화가 여러 매각을 통해 진행되고 있습니다.
- 순 레버리지 비율이 3.1배로 개선되었습니다.
- 2024년 전체 전망이 확정되었습니다.
회사는 운영 회복 및 전략적 계획 이행에 집중하고 있으며, Care Enablement을 통해 수익성 개선이 이루어지고 있습니다. 프레제니우스 메디컬 케어는 2025년 10-14%의 운영 수익 마진 목표를 재확인했습니다.
Fresenius Medical Care a rapporté une amélioration de sa performance financière au cours du deuxième trimestre 2024, avec une croissance des revenus organiques de 2,3 % et une augmentation du résultat d'exploitation et des marges. Les faits saillants incluent :
- Revenu en baisse de 1 % à 4 766 millions d'euros (-2 % à taux de change constant, +2 % organique)
- Résultat opérationnel en hausse de 19 % à 425 millions d'euros, avec une marge qui s'élève à 8,9 %
- Résultat net en croissance de 33 % à 187 millions d'euros
- Programme FME25 a généré 57 millions d'euros d'économies supplémentaires
- Optimisation du portefeuille en cours avec plusieurs cessions réalisées
- Ratio d'endettement net amélioré à 3,1x
- Prévisions pour l'année entière 2024 confirmées
L'entreprise reste concentrée sur son redressement opérationnel et l'exécution de son plan stratégique, avec le Care Enablement qui stimule les améliorations de rentabilité. Fresenius Medical Care a réaffirmé son objectif de marge d'exploitation de 10-14 % pour 2025.
Fresenius Medical Care hat im 2. Quartal 2024 eine Verbesserung der finanziellen Leistung gemeldet, mit einem organischen Umsatzwachstum von 2,3% und höheren Betriebsgewinnen und Margen. Wichtige Highlights sind:
- Umsatz sank um 1% auf €4.766 Millionen (-2% bei konstanten Währungen, +2% organisch)
- Betriebsergebnis stieg um 19% auf €425 Millionen, die Marge erweiterte sich auf 8,9%
- Nettoergebnis wuchs um 33% auf €187 Millionen
- FME25-Programm erbrachte zusätzliche Einsparungen von €57 Millionen
- Portfolio-Optimierung schreitet voran mit mehreren abgeschlossenen Veräußerungen
- Netto-Verschuldungsquote verbesserte sich auf 3,1x
- Ausblick für das Gesamtjahr 2024 bestätigt
Das Unternehmen bleibt auf die operative Wende und die Umsetzung des strategischen Plans fokussiert, wobei Care Enablement die Verbesserung der Rentabilität vorantreibt. Fresenius Medical Care hat das Ziel eines Betriebsgewinns von 10-14% für 2025 bekräftigt.
- Organic revenue growth of 2.3% across both Care Delivery and Care Enablement segments
- Operating income increased 19% to €425 million, with margin expanding from 7.4% to 8.9%
- Net income grew 33% to €187 million
- FME25 program delivered €57 million in additional savings, on track to reach upper end of full year target
- Care Enablement operating income strongly increased to €68 million from €2 million last year
- Net leverage ratio improved to 3.1x, approaching lower end of target range
- Full year 2024 outlook confirmed, expecting low- to mid-single digit revenue growth and mid- to high-teens operating income growth
- Reported revenue decreased 1% to €4,766 million due to divestitures
- Care Delivery operating income decreased 14% to €332 million, with margin declining from 9.9% to 8.8%
- U.S. same market treatment growth remained flat, still impacted by elevated mortality
- Operating cash flow decreased to €442 million from €1,007 million last year, impacted by vendor changes and tax payment timing
Insights
Fresenius Medical Care's Q2 2024 results demonstrate continued progress in the company's operational turnaround efforts. The 2.3% organic revenue growth and 19% increase in operating income to
The Care Enablement segment showed particularly strong improvement, with operating income margin increasing to
While the Care Delivery segment saw a decrease in operating income, this was largely expected due to higher personnel expenses and inflationary pressures. The slight improvement in U.S. same market treatment growth is encouraging, though still impacted by elevated mortality rates.
The reduction in net debt and improved leverage ratio to 3.1x EBITDA is a positive development, indicating better financial health. However, the significant drop in operating cash flow to
Overall, while Fresenius Medical Care is making progress on its strategic initiatives, challenges remain, particularly in the Care Delivery segment and cash flow management. The confirmation of the full-year outlook suggests management's confidence in the company's trajectory, but investors should closely monitor the execution of the transformation plan and the recovery of cash flow in the coming quarters.
Fresenius Medical Care's Q2 results reflect the ongoing challenges and opportunities in the global dialysis market. The company's ability to achieve
The divergent performance between Care Delivery and Care Enablement segments is intriguing. While Care Delivery faces headwinds from higher costs and lingering pandemic effects, Care Enablement's strong margin improvement suggests potential for future growth in this area. This could indicate a shift in the company's long-term strategy towards emphasizing technology and services over direct patient care.
The company's portfolio optimization efforts, including divestitures in several international markets, align with industry trends of focusing on core, profitable operations. However, these divestitures are expected to negatively impact operating income by around
The slight improvement in U.S. same market treatment growth is a positive sign, but the flat growth when adjusted for the exit from less profitable acute care contracts suggests that patient volume recovery remains sluggish. This could be a broader industry issue worth monitoring.
Fresenius Medical Care's confirmation of its 2024 outlook and 2025 margin targets demonstrates confidence in its turnaround strategy. However, achieving these goals will require continued execution of cost-saving initiatives and successful navigation of ongoing industry challenges, including labor shortages and inflationary pressures.
The dialysis industry's gradual shift towards home-based and value-based care models is not explicitly addressed in these results, but could be an important factor in the company's future performance and strategy.
- Organic revenue growth of +
2.3% supported by both segments Care Delivery and Care Enablement - Operating income1 and operating income margin1 increase driven by Care Enablement
- Additional FME25 savings of
EUR 57 million achieved and on track to reach the upper end of the full year savings target range - Further divestitures closed as execution of portfolio optimization program continues
- Net financial debt and net leverage ratio further improved
- FY 2024 outlook confirmed
BAD HOMBURG,
Key figures (unaudited) | ||||||||
Q2 2024 | Q2 2023 | Growth | Growth | H1 2024 | H1 2023 | Growth | Growth | |
EUR m | EUR m | yoy | yoy, cc | EUR m | EUR m | yoy | yoy, cc | |
Revenue | 4,766 | 4,825 | -1 % | -2 % | 9,491 | 9,529 | 0 % | 0 % |
on outlook base1 | 4,743 | 4,741 | 0 % | 9,565 | 9,360 | +2 % | ||
Operating income | 425 | 357 | +19 % | +21 % | 671 | 618 | +9 % | +10 % |
on outlook base1 | 433 | 400 | +8 % | 849 | 738 | +15 % | ||
Net income2 | 187 | 140 | +33 % | +34 % | 258 | 227 | +14 % | +15 % |
on outlook base1 | 207 | 176 | +18 % | 405 | 322 | +26 % | ||
Basic EPS (EUR) | 0.64 | 0.48 | +33 % | +34 % | 0.88 | 0.77 | +14 % | +15 % |
on outlook base1 | 0.70 | 0.60 | +18 % | 1.38 | 1.10 | +26 % | ||
yoy = year-on-year, cc = at constant currency, EPS = earnings per share | ||||||||
Focused execution against the strategic plan
In the second quarter, the FME25 transformation program continued its momentum, delivering
Moreover, Fresenius Medical Care is executing its portfolio optimization plan to exit non-core and dilutive assets. During the second quarter, the company closed the divestment of Cura Day Hospitals Group,
All transactions that are currently signed as part of Fresenius Medical Care's portfolio optimization plan are estimated to negatively impact operating income by around
Revenue development impacted by execution against portfolio optimization plan
Revenue decreased by
Care Delivery revenue decreased by
In Care Delivery
In Care Delivery International, revenue decreased by
Care Enablement revenue grew by
Within Inter-segment eliminations, revenue for products transferred between the operating segments at fair market value decreased by
In the first half, revenue remained virtually unchanged at
Operating margin improvement driven by Care Enablement
Operating income increased by
Operating income in Care Delivery decreased by
Operating income in Care Enablement strongly increased to
Operating income for Corporate amounted to
In the first half, operating income increased by
Net income2 increased by
In the first half, net income2 increased by
Basic earnings per share (EPS) increased by
In the first half, EPS increased by
Lower net financial debt and further improved net leverage ratio
In the second quarter, Fresenius Medical Care generated
In the first half, operating cashflow amounted to
Free cash flow4 amounted to
Total net debt and lease liabilities were further reduced to
Outlook
Fresenius Medical Care confirms its outlook for fiscal 2024 and expects revenue to grow by a low- to mid-single digit percent rate compared to prior year. The company expects operating income to grow by a mid- to high-teens percent rate compared to prior year.
The expected growth rates for 2024 are at constant currency, excluding special items as well as the business impacts from closed divestitures in 2023 and the settlement agreement with the
The company also reconfirms its targets to achieve an operating income margin of
Patients, clinics and employees
As of June 30, 2024, Fresenius Medical Care treated 311,037 patients in 3,757 dialysis clinics worldwide and had 113,639 employees (headcount) globally, compared to 117,128 employees as of March 31, 2024.
Media conference call
Fresenius Medical Care will host a media conference call to discuss the results of the second quarter and first half of 2024 earnings today, July 30, 2024, at 09:30 a.m. CEST / 3:30 a.m. EDT. The media conference call is for journalists who can register vial the following link: Registration. Details on the media conference call are also available on the Fresenius Medical Care website in the "Media" section: media call. Attendees who would like to follow the presentation parallel to the conference call, you can register here for the webcast. The webcast will only be broadcasted in "listen only" mode.
Investor conference call
Fresenius Medical Care will host a conference call to discuss the results of the second quarter and first half of 2024 today, July 30, 2024, at 2:00 p.m. CEST / 8:00 a.m. EDT. Details are 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 2024. Our 6-K disclosure provides more details.
About Fresenius Medical Care:
Fresenius Medical Care is the world's leading provider of products and services for individuals with renal diseases of which around 4.1 million patients worldwide regularly undergo dialysis treatment. Through its network of 3,757 dialysis clinics, Fresenius Medical Care provides dialysis treatments for approx. 311,000 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 the COVID-19 pandemic 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's reports filed with the
1 Revenue and operating income outlook, as referred to in the 2024 outlook, are both at constant currency, excluding special items as well as the business impact from closed divestitures in 2023 and the settlement agreement with the U.S. government (Tricare) in Q4 2023. For FY 2023 and 2024, special items include costs related to the FME25 program, the Humacyte remeasurements, the legal form conversion costs 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 |
3 The company transfers products between segments at fair market value. The associated internal revenues and expenses and all other consolidation of transactions are included within "Inter-segment eliminations". |
4 Net cash provided by / used in operating activities, after capital expenditures, before acquisitions/divestitures, investments, and dividends |
Statement of earnings | ||||
Three months ended June 30, | ||||
in € million, except share data, unaudited | 2024 | 2023 | Change | Change |
Revenue | 4,766 | 4,825 | -1.2 % | -1.7 % |
Revenue (outlook base)1 | 4,743 | 4,741 | 0.1 % | |
Costs of revenue | 3,600 | 3,628 | -0.8 % | -1.3 % |
Selling, general and administrative expense | 771 | 775 | -0.5 % | -1.0 % |
Research and development expense | 46 | 57 | -20.3 % | -20.7 % |
Income from equity method investees | (33) | (48) | -32.4 % | -32.4 % |
Other operating income | (228) | (76) | 200.6 % | 201.2 % |
Other operating expense | 185 | 132 | 40.0 % | 35.3 % |
Operating income | 425 | 357 | 19.1 % | 20.5 % |
Operating income (outlook base)1 | 433 | 400 | 8.3 % | |
Interest expense, net | 85 | 81 | 5.9 % | 4.5 % |
Income before taxes | 340 | 276 | 23.0 % | 25.2 % |
Income tax expense | 99 | 81 | 22.0 % | 28.1 % |
Net income | 241 | 195 | 23.3 % | 24.0 % |
Net income attributable to noncontrolling interests | 54 | 55 | -2.1 % | -2.8 % |
Net income2 | 187 | 140 | 33.2 % | 34.4 % |
Net income2 (outlook base)1 | 207 | 176 | 17.5 % | |
Weighted average number of shares | 293,413,449 | 293,413,449 | ||
Basic earnings per share | 33.2 % | 34.4 % | ||
Basic earnings per share (outlook base)1 | 17.5 % | |||
In percent of revenue | ||||
Operating income margin | 8.9 % | 7.4 % | ||
Operating income margin (outlook base)1 | 9.1 % | 8.4 % | ||
1 Outlook base as referred to the 2024 outlook, presented at constant currency, excluding special items, business impacts from closed divestitures in 2023 and the Tricare settlement in Q4 2023. For a reconciliation, please refer to the table at the end of the press release. | ||||
2 Attributable to shareholders of FME AG. |
Statement of earnings | ||||
Six months ended June 30, | ||||
in € million, except share data, unaudited | 2024 | 2023 | Change | Change |
Revenue | 9,491 | 9,529 | -0.4 % | 0.4 % |
Revenue (outlook base)1 | 9,565 | 9,360 | 2.2 % | |
Costs of revenue | 7,151 | 7,183 | -0.4 % | 0.3 % |
Selling, general and administrative expense | 1,547 | 1,557 | -0.7 % | -0.2 % |
Research and development expense | 93 | 113 | -17.3 % | -17.3 % |
Income from equity method investees | (61) | (76) | -18.9 % | -18.9 % |
Other operating income | (341) | (193) | 76.6 % | 76.5 % |
Other operating expense | 431 | 327 | 31.8 % | 32.4 % |
Operating income | 671 | 618 | 8.6 % | 10.0 % |
Operating income (outlook base)1 | 849 | 738 | 15.1 % | |
Interest expense, net | 174 | 163 | 6.4 % | 6.8 % |
Income before taxes | 497 | 455 | 9.4 % | 11.1 % |
Income tax expense | 139 | 126 | 10.2 % | 14.3 % |
Net income | 358 | 329 | 9.1 % | 9.9 % |
Net income attributable to noncontrolling interests | 100 | 102 | -1.3 % | -1.1 % |
Net income2 | 258 | 227 | 13.8 % | 14.9 % |
Net income2 (outlook base)1 | 405 | 322 | 25.6 % | |
Weighted average number of shares | 293,413,449 | 293,413,449 | ||
Basic earnings per share | 13.8 % | 14.9 % | ||
Basic earnings per share (outlook base)1 | 25.6 % | |||
In percent of revenue | ||||
Operating income margin | 7.1 % | 6.5 % | ||
Operating income margin (outlook base)1 | 8.9 % | 7.9 % | ||
1 Outlook base as referred to the 2024 outlook, presented at constant currency, excluding special items, business impacts from closed divestitures in 2023 and the Tricare settlement in Q4 2023. For a reconciliation, please refer to the table at the end of the press release. | ||||
2 Attributable to shareholders of FME AG. |
Reconciliation of non-IFRS financial measures to the most directly comparable IFRS Accounting Standards financial measures for comparability with the Company´s outlook (outlook base) | ||||
Three months ended June 30, | Six months ended June 30, | |||
in € million, unaudited | 2024 | 2023 | 2024 | 2023 |
Operating performance (outlook base) | ||||
These items are excluded to ensure comparability of the figures presented with the Company's financial targets which have been defined excluding special items and at constant currency. | ||||
Revenue | 4,766 | 4,825 | 9,491 | 9,529 |
Divestitures1 | — | (84) | — | (169) |
Revenue excl. 2023 divestitures | 4,766 | 4,741 | 9,491 | 9,360 |
Currency translation effects | (23) | — | 74 | — |
Revenue (outlook base) | 4,743 | 4,741 | 9,565 | 9,360 |
Operating income | 425 | 357 | 671 | 618 |
FME25 Program | 40 | 25 | 67 | 51 |
Legal Form Conversion Costs | 2 | 5 | 3 | 7 |
Legacy Portfolio Optimization2 | 15 | 10 | 158 | 94 |
Humacyte Remeasurements | (46) | 4 | (61) | (15) |
Sum of special items | 11 | 44 | 167 | 137 |
Divestitures1 | — | (1) | — | (17) |
Sum of special items and 2023 divestitures | 11 | 43 | 167 | 120 |
Operating income excl. special items and 2023 divestitures | 436 | 400 | 838 | 738 |
Currency translation effects | (3) | — | 11 | — |
Operating income (outlook base) | 433 | 400 | 849 | 738 |
Net income3 | 187 | 140 | 258 | 227 |
FME25 Program | 29 | 20 | 49 | 40 |
Legal Form Conversion Costs | 1 | 4 | 2 | 5 |
Legacy Portfolio Optimization2 | 29 | 8 | 136 | 68 |
Humacyte Remeasurements | (34) | 3 | (45) | (11) |
Sum of special items | 25 | 35 | 142 | 102 |
Divestitures1 | — | 1 | — | (7) |
Sum of special items and 2023 divestitures | 25 | 36 | 142 | 95 |
Net income3 excl. special items and 2023 divestitures | 212 | 176 | 400 | 322 |
Currency translation effects | (5) | — | 5 | — |
Net income3 (outlook base) | 207 | 176 | 405 | 322 |
1 Business impacts from closed divestitures in 2023. | ||||
2 2024: mainly comprise the impairment of intangible and tangible assets resulting from the measurement of assets held for sale as well as losses from divestitures; 2023: 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 the first quarter of 2023 and other impacts related to agreed-upon divestitures in 2023. | ||||
3 Attributable to shareholders of FME AG. | ||||
Media contact
Christine Peters
T +49 160 60 66 770
christine.peters@freseniusmedicalcare.com
Contact for analysts and investors
Dr. Dominik Heger
T +49 6172 609-2601
dominik.heger@freseniusmedicalcare.com
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SOURCE Fresenius Medical Care Holdings, Inc.
FAQ
What was Fresenius Medical Care's (FMS) organic revenue growth in Q2 2024?
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