Fresenius Medical Care successfully executes strategic plan and narrows guidance range due to strong operational performance in the first half of 2023
- None.
- None.
- 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
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
In parallel, the Company continuously executes on its operational efficiency and turnaround plans. In the second quarter, the FME25 transformation program delivered
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
Earnings development excluding special items driven by FME25 savings and productivity improvements
Revenue increased by
Care Delivery revenue increased by
In Care Delivery
In Care Delivery International, revenue remained stable (+
Care Enablement revenue remained stable and amounted to
Within Inter-segment eliminations, revenue for products transferred between the operating segments at fair market value decreased by
In the first half, revenue increased by
Operating income increased by
Operating income in Care Delivery decreased by
Operating income in Care Enablement amounted to
Operating income for Corporate amounted to
In the first half, operating income decreased by
Net income2 decreased by
In the first half, net income2 declined by
Basic earnings per share (EPS) decreased by
In the first half, EPS declined by
Strong cash flow development
In the second quarter, Fresenius Medical Care generated
In the first half, operating cashflow amounted to
Free cash flow4 amounted to
Outlook
The Company continues to expect for 2023 revenue to grow at a low to mid-single digit percentage rate (2022 basis:
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:
The Company's target to achieve an operating income margin of 10 to
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
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 |
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. |
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
Fresenius Medical Care | ||||
Statement of earnings | ||||
in € million, except share data, unaudited | Three months ended June 30, | |||
2023 | 2022 | Change | Change | |
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 | -4.7 % | -4.3 % | ||
Basic earnings per share excl. special items and PRF | 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 | |
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 | -25.6 % | -26.5 % | ||
Basic earnings per share excl. special items and PRF | 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 | ||||
3 Attributable to shareholders of FMC AG & Co. KGaA | ||||
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SOURCE Fresenius Medical Care Holdings, Inc.
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