- Solid revenue1 growth of 4% driven by both segments
Care Delivery and Care Enablement
- Operating income1 margin improved in both segments
- Care Enablement delivered strong sequential margin improvement
with significant progress towards the 2025 target margin band
- Execution of transformation continues at pace, contributing
additional FME25 savings of EUR 52
million
- Portfolio optimization program progresses in Care Delivery with
signed or closed divestments in all our Latin American markets, and
closed divestments in Turkiye and of Cura Day Hospitals Group in
Australia
- FY 2024 outlook confirmed
BAD HOMBURG, Germany, May 7, 2024
/PRNewswire/ -- Helen Giza, Chief Executive Officer of
Fresenius Medical Care, said:
"The first quarter of this year demonstrates that we are
executing on our strategy as planned. Both segments expanded their
respective margins compared to the prior year. Especially for Care
Enablement, the first quarter was an inflection point as our
transformation efforts, higher pricing and FME25 savings drove a
solid margin improvement. We are also executing with speed our
strategic portfolio optimization program. We have started the year
with a slightly more favorable operating income phasing than
planned and confirm our financial outlook for the full year 2024.
We would not be here without the great work of our employees, whom
I would like to thank for their hard work and dedication."
|
Key figures
(unaudited)
|
|
|
|
|
|
|
|
Q1 2024
|
Q1 2023
|
Growth
|
Growth
|
|
EUR m
|
EUR m
|
yoy
|
yoy, cc
|
|
Revenue
|
4,725
|
4,704
|
0 %
|
+2 %
|
|
on outlook
base1
|
4,822
|
4,619
|
|
+4 %
|
|
|
|
|
|
|
Operating
income
|
246
|
261
|
-6 %
|
-4 %
|
|
on outlook
base1
|
416
|
338
|
|
+23 %
|
|
|
|
|
|
|
Net
income2
|
71
|
86
|
-18 %
|
-17 %
|
|
on outlook
base1
|
198
|
146
|
|
+35 %
|
|
|
|
|
|
|
Basic EPS
(EUR)
|
0.24
|
0.29
|
-18 %
|
-17 %
|
|
on outlook
base1
|
0.67
|
0.50
|
|
+35 %
|
|
|
|
|
|
|
|
|
|
|
|
|
yoy = year-on-year, cc
= at constant currency, EPS = earnings per share
|
Focused execution against the strategic plan continues into
2024
Fresenius Medical Care successfully executed on its operational
efficiency and turnaround plans. In the first quarter, the FME25
transformation program continued its momentum, delivering
EUR 52 million additional sustainable
savings while related one-time costs amounted to EUR 28 million. The Company is well on track to
achieve the targeted additional sustainable savings of EUR 100 to 150 million by year end 2024, totaling
to EUR 650 million by year end
2025.
Moreover, Fresenius Medical Care is executing its portfolio
optimization plan to exit non-core and dilutive assets. As
announced during the first quarter, the Company entered into
agreements to divest its dialysis clinic networks in Brazil, Colombia, Chile and Ecuador. Special items associated with
portfolio optimization amounted to negative EUR 143 million in the first quarter. Subject to
regulatory approvals in Brazil,
Colombia and Ecuador, the transactions represent another
milestone in Fresenius Medical Care's portfolio optimization
program, with each expected to close throughout 2024.
After further signing the divestments of its dialysis clinic
networks in Guatemala,
Peru and Curacao, Fresenius
Medical Care has now signed or closed the exit from all of its
dialysis clinics operations in Latin
America. The Company moreover closed the divestment of its
dialysis clinic network in Turkiye and the Cura Day Hospitals
Group, Australia, during April.
All transactions that are currently signed as part of the Company's
portfolio optimization plan are estimated to negatively impact
Fresenius Medical Care by around EUR 250
million in the full year 2024 and will be treated as special
items in operating income. The transactions listed above are
expected to generate cash proceeds of around EUR 650 million upon closing.
Revenue development driven by solid organic growth
Revenue remained almost unchanged with EUR 4,725 million in the first quarter (+2% at
constant currency, +5% organic). Revenue on outlook
base1, i.e. at constant currency, excluding special
items and the business impacts from closed divestitures during
2023, increased by 4%.
Care Delivery revenue increased by 1% (+3% at
constant currency, +6% organic) and by 5% on outlook
base1.
In Care Delivery U.S., revenue increased by 3% (+5% at constant
currency, +6% organic) and by 6% on outlook base1. A
growing value-based care business, reimbursement rate increases and
a favorable payor mix had a positive impact, compensating negative
exchange rate effects and the effect of closed or sold operations.
In line with expectations, elevated missed treatments growth
compared unfavorably to last year, in part due to adverse Q1 2024
weather events and an unusually mild 2023 flu season, capacity
constraints in clinics in some metropolitan areas, and the
remaining annualization effects from excess mortality, that weigh
on U.S. same market treatment growth. Adjusted for the exit from
less profitable acute care contracts (-0.4%), U.S. same market
treatment growth came in as expected at -0.3%.
In Care Delivery International, revenue declined by 9% (-4% at
constant currency, +4% organic), while they grew by 2% on outlook
base1. The effect of closed or sold operations and a
negative exchange rate effect were partially offset by organic
growth. Same market treatment growth was positive at 1.4%.
Care Enablement revenue declined by 1% (+1% at
constant currency, +2% organic), while they grew by 2% on outlook
base1. Positive impacts from pricing were offset by
negative exchange rate effects and negative volume growth compared
to prior year, in the absence of sales of critical care products in
China as part of a Covid-related
government initiative in the first quarter 2023.
Within Inter-segment eliminations, revenue for products
transferred between the operating segments at fair market value
remained stable at negative EUR 360
million (+1% at constant currency).3
Better than expected earnings development driven by phasing
of value-based care business
Operating income decreased by 6% to EUR
246 million (-4% at constant currency), resulting in a
margin of 5.2% (Q1 2023: 5.5%). Operating income on
outlook base1, i.e. at constant currency, excluding
special items and the business impacts from closed divestitures
during 2023, increased by 23% to EUR 416
million, resulting in a margin of 8.6% (Q1 2023: 7.3%).
Operating income in Care Delivery decreased by 34% (-34%
at constant currency), resulting in a margin of 5.0% (Q1 2023:
7.6%). Operating income on outlook base1 increased
by 25%, resulting in a margin of 9.3% (Q1 2023: 7.8%). The
operating income development was driven by positive effects from
pricing, the value-based care business and FME25 savings, while
expected labor and inflationary cost increases impacted the
earnings development.
Operating income in Care Enablement amounted to
EUR 70 million (Q1 2023: EUR -24 million), resulting in a margin of 5.4%
(Q1 2023: -1.9%). Operating income on outlook base1
increased by 23%, resulting in a margin of 6.0% (Q1 2023: 5.0%).
The improvement compared to the previous year's quarter was mainly
driven by savings from the FME25 program and improved pricing.
These positive effects were partially offset by inflationary cost
increases and unfavorable foreign currency transaction effects.
Operating income for Corporate amounted to EUR -14 million (Q1 2023: EUR 10 million). Operating income on outlook
base1 amounted to EUR -19
million (Q1 2023: EUR -5
million), mainly due to higher costs related to certain
global functions.
Net income2 decreased by 18%
to EUR 71 million (-17% at constant currency). Net income on
outlook base1 increased by 35%.
Basic earnings per share (EPS) decreased by 18% to
EUR 0.24 (-17% at constant currency).
EPS on outlook base1 increased by 35%.
Strong cash flow development
In the first quarter, Fresenius Medical Care generated
EUR 127 million of operating cash
flow (Q1 2023: EUR 143 million),
resulting in a margin of 2.7% (Q1 2023: 3.0%). The operating cash
flow development was negatively impacted by EUR 58 million resulting from a cyber incident at
Change Healthcare, one of our U.S. service providers, in
February.
Free cash flow4 amounted to
EUR -2 million in the first quarter
(Q1 2023:
EUR 2 million).
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 U.S.
government (Tricare) in Q4 2023. The 2023 basis for the revenue
outlook is EUR 19,049 million and for
the operating income outlook is EUR 1,540
million.
The Company also reconfirms its targets to achieve an operating
income margin of 10% to 14% by 2025. This excludes impacts from
portfolio changes.
Patients, clinics and employees
As of March 31, 2024, Fresenius
Medical Care treated 324,884 patients in 3,862 dialysis
clinics worldwide and had 117,128 employees
(headcount) globally, compared to 119,845 employees as of
December 31, 2023.
Conference call
Fresenius Medical Care will host a conference call to discuss
the results of the first quarter on May 7,
2024, at 2:00 p.m. CEST /
8:00 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 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 3,862 dialysis clinics, Fresenius
Medical Care provides dialysis treatments for approx. 325,000
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 U.S. Securities and Exchange
Commission. Fresenius Medical Care does not undertake any
responsibility to update the forward-looking statements in this
release.
|
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, investments, and dividends
|
|
Statement of
earnings
|
|
|
Three months ended
March 31,
|
|
in € million, except
share data, unaudited
|
2024
|
2023
|
Change
|
Change
at cc
|
|
|
|
|
|
|
Revenue
|
4,725
|
4,704
|
0.4 %
|
2.5 %
|
|
Revenue (outlook
base)1
|
4,822
|
4,619
|
|
4.4 %
|
|
|
|
|
|
|
Costs of
revenue
|
3,551
|
3,555
|
-0.1 %
|
1.9 %
|
|
Selling, general and
administrative expense
|
776
|
782
|
-0.8 %
|
0.7 %
|
|
Research and
development expense
|
48
|
56
|
-14.3 %
|
-13.9 %
|
|
Income from equity
method investees
|
(29)
|
(28)
|
4.8 %
|
4.8 %
|
|
Other operating
income
|
(113)
|
(117)
|
-3.4 %
|
-3.9 %
|
|
Other operating
expense
|
246
|
195
|
26.2 %
|
30.5 %
|
|
Operating
income
|
246
|
261
|
-5.7 %
|
-4.4 %
|
|
Operating income
(outlook base)1
|
416
|
338
|
|
23.0 %
|
|
|
|
|
|
|
Interest expense,
net
|
88
|
83
|
6.8 %
|
9.1 %
|
|
Income before
taxes
|
158
|
178
|
-11.5 %
|
-10.6 %
|
|
Income tax
expense
|
40
|
45
|
-11.2 %
|
-10.8 %
|
|
Net
income
|
118
|
133
|
-11.6 %
|
-10.6 %
|
|
Net income attributable
to noncontrolling interests
|
47
|
47
|
-0.3 %
|
0.9 %
|
|
Net
income2
|
71
|
86
|
-17.8 %
|
-16.9 %
|
|
Net income2
(outlook base)1
|
198
|
146
|
|
35.3 %
|
|
|
|
|
|
|
Weighted average number
of shares
|
293,413,449
|
293,413,449
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
€0.24
|
€0.29
|
-17.8 %
|
-16.9 %
|
|
Basic earnings per
share (outlook base)1
|
€0.67
|
€0.50
|
|
35.3 %
|
|
|
|
|
|
|
In percent of
revenue
|
|
|
|
|
|
Operating income
margin
|
5.2 %
|
5.5 %
|
|
|
|
Operating income margin
(outlook base)1
|
8.6 %
|
7.3 %
|
|
|
|
|
|
|
|
|
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
March 31,
|
|
in € million,
unaudited
|
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
|
4,725
|
4,704
|
|
Divestitures1
|
—
|
(85)
|
|
Revenue excl. 2023
divestitures
|
4,725
|
4,619
|
|
Currency translation
effects
|
97
|
—
|
|
Revenue (outlook
base)
|
4,822
|
4,619
|
|
|
|
|
Operating
income
|
246
|
261
|
|
FME25
Program
|
28
|
26
|
|
Legal Form Conversion
Costs
|
1
|
2
|
|
Legacy Portfolio
Optimization2
|
143
|
84
|
|
Humacyte
Remeasurements
|
(15)
|
(19)
|
|
Sum of special
items
|
157
|
93
|
|
Divestitures1
|
—
|
(16)
|
|
Sum of special items
and 2023 divestitures
|
157
|
77
|
|
Operating income excl.
special items and 2023 divestitures
|
403
|
338
|
|
Currency translation
effects
|
13
|
—
|
|
Operating income
(outlook base)
|
416
|
338
|
|
|
|
|
Net
income3
|
71
|
86
|
|
FME25
Program
|
20
|
20
|
|
Legal Form Conversion
Costs
|
1
|
1
|
|
Legacy Portfolio
Optimization2
|
107
|
61
|
|
Humacyte
Remeasurements
|
(11)
|
(14)
|
|
Sum of special
items
|
117
|
68
|
|
Divestitures1
|
—
|
(8)
|
|
Sum of special items
and 2023 divestitures
|
117
|
60
|
|
Net income3
excl. special items and 2023 divestitures
|
188
|
146
|
|
Currency translation
effects
|
10
|
—
|
|
Net
income3
(outlook base)
|
198
|
146
|
|
|
|
|
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 (primarily Brazil, Colombia, Ecuador, Turkiye)
as well as losses from divestitures (driven by the divestment of
Chile renal dialysis operations); 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.
|
|
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
www.freseniusmedicalcare.com
View original content to download
multimedia:https://www.prnewswire.com/news-releases/fresenius-medical-care-starts-the-year-with-strong-earnings-growth-302137798.html
SOURCE Fresenius Medical Care Holdings, Inc.
