Fresenius executing on #FutureFresenius: Strong performance of Operating Companies in Q1/23 and structural simplification on track

• Deconsolidation of Fresenius Medical Care moving ahead as planned
• Group Revenue increased by 5% to €10.2 billion driven by a broad-based positive performance across the Group
• Group EBIT in constant currency decreased by 10%¹ to €908 million in line with expectations. EBIT development of Operating Companies was broadly flat despite negative effects from inflation; Investment Companies clearly dilutive
• Fresenius Kabi with EBIT margin of 14.5% already within structural band 
• Enhanced transparency with change of Fresenius Kabi’s financial disclosure from a geographic to a product segment view
• Fresenius Helios with healthy organic revenue growth driven by increasing admissions 
• Structural productivity savings ramping up, ~€130 million already achieved in Q1/23
• Group outlook confirmed

If no timeframe is specified, information refers to Q1/2023.

  ¹ According to FY/23 guidance, excluding Provider Relief Fund (PRF) at Fresenius Medical Care
  ² Before special items, Q1/22 restated following remeasurement Humacyte investment
  ³ Before special items For a detailed overview of special items please see the reconciliation tables on pages 18-23 in the PDF.

“With a simplified Group structure, improved performance, and a clear focus, Fresenius’s course is set. Productivity measures are gaining traction and we’ve started the new year with good growth momentum,” said Michael Sen, Fresenius CEO. “Our Operating Companies Fresenius Kabi and Fresenius Helios both had strong first quarter performance. The deconsolidation of Fresenius Medical Care is on track and the turnaround is also progressing. We want to accelerate this momentum. This requires contributions from all business segments.”

Deconsolidation of Fresenius Medical Care
The deconsolidation of Fresenius Medical Care is moving ahead as planned. The separation concept has been finalized and the relevant agreements are currently being drafted. The date of the Extraordinary General Meeting (EGM) of Fresenius Medical Care has been scheduled for July 14, 2023. Subject to the necessary shareholder approvals and the registration with the commercial register, the conversion is expected to become effective latest by the end of the 2023 financial year.

Moreover, starting in Q1/23, selected financials of the Fresenius Group are reported excluding Fresenius Medical Care to better reflect #FutureFresenius. 

Structural productivity improvements
Under the cost and efficiency program, ~€130 million of structural cost savings at EBIT level were already achieved in Q1/23, that is around 25% of the planned savings for 2023. In the same period, one-time costs of ~€50 million incurred to achieve these savings. These are treated as special items. Thereof, Fresenius Medical Care invested €26 million and realized ~€60 million of cost savings.

FY/23 Group guidance confirmed
For 2023, Fresenius expects Group organic revenue¹ to grow in a low- to mid-single-digit percentage range. Group constant currency EBIT² is expected to remain broadly flat or decline up to a high-single-digit percentage rate. 

Excluding Fresenius Medical Care constant currency EBIT³ is expected to remain broadly flat or decline up to a mid-single-digit percentage rate.

Fresenius expects the net debt/EBITDA⁴ ratio to be slightly above the 2023 level by the end of 2022 (December 31, 2022: 3.65x⁵), depending on divestment activities. The self-imposed target corridor for the leverage ratio remains unchanged at 3.0x to 3.5x.

 ¹ FY/22 base: €40,840 million
 ² FY/22 base: €3,727 million, before special items, excl. PRF; FY/23: before special items 
 ³ FY/22 base: €2,187 million, before special items; FY/23: before special items
 ⁴ At LTM average exchange rates for both net debt and EBITDA; pro forma closed acquisitions/divestitures; excluding further potential acquisitions/divestitures; before special items; including lease liabilities
 ⁵ At LTM average exchange rates for both net debt and EBITDA; pro forma closed acquisitions/divestitures; before special items; including lease liabilities
For a detailed overview of special items please see the reconciliation tables on pages 18-23 in the PDF.
Assumptions for guidance FY/23
For 2023, Fresenius assumes no further escalations of geopolitical tensions and challenges from COVID-19, and supply chain constraints continuing to ease. Fresenius expects that the general cost inflation and labor shortages will have a more significant negative effect on its business than in 2022 due to the annualization effect of cost increases occurred in H2/2022. 

Fresenius will continue to closely monitor the potential further consequences of the overall heightened volatility and muted visibility, including balance sheet valuations. 

For Fresenius Medical Care’s contribution to the Group’s financial figures, the assumptions for Fresenius Medical Care’s FY/23 guidance are also fully applicable to Fresenius Group’s FY/23 guidance. In 2022, Fresenius Medical Care’s EBIT was supported by €277 million of Provider Relief Funding from the U.S. government (at current currency). There is no additional governmental support assumed for 2023. 

All of these assumptions are subject to considerable uncertainty.

5% revenue increase in constant currency 
Group revenue increased by 5% (5% in constant currency) to €10,225 million (Q1/22: €9,720 million). Organic growth was 5%. Acquisitions/divestitures contributed net 0% to growth. In total, currency translation had no effect on revenue growth. Excluding Fresenius Medical Care, Group revenue increased by 7% (7% in constant currency) to €5,546 million (Q1/22: €5,192 million).

10 %¹  EBIT² decline in constant currency – in line with expectations 
Group EBITDA before special items decreased by 5% (-6% in constant currency) to €1,585 million (Q1/22²: €1,662 million). Reported Group EBITDA was €1,491 million (Q1/22: €1,595 million).

Group EBIT before special items decreased by 9% (-11%/-10%¹ in constant currency) to €908 million (Q1/22²: €1,000 million). The decrease was mainly driven by the expected annualization of inflationary effects such as cost increases for personnel, material, logistics, and energy. This is due to the fact that H2/2022 showed stronger cost inflation compared to H1/2022. Moreover, a very negative performance at Fresenius Vamed weighed on Group EBIT. The EBIT margin before special items was 8.9% (Q1/22²: 10.3%). Reported Group EBIT was €787 million (Q1/22: €902 million). Excluding Fresenius Medical Care, Group EBIT before special items decreased by 7% (-7% in constant currency) to €554 million (Q1/22²: €593 million). The EBIT margin excluding Fresenius Medical Care before special items was 10.0% (Q1/22²: 11.4%).

Group net interest before special items was -€170 million (Q1/22²: -€119 million) mainly due to financing activities in a higher interest rate environment. Reported Group net interest was -€170 million (Q1/22: -€118 million). 

Group tax rate before special items increased to 24.9% (Q1/22²: 22.7%) mainly due to an increase in the proportionate share of non-tax-deductible expenses compared to taxable income at Fresenius Medical Care as well as the non-recognition of increased tax loss carryforwards. Reported Group tax rate was 25.0% (Q1/22: 23.6%). 

Noncontrolling interests before special items were -€165 million (Q1/22²: -€218 million) of which 93% were attributable to the noncontrolling interests in Fresenius Medical Care. Reported noncontrolling interests were -€117 million (Q1/22: -€186 million). 

 ¹ According to FY/23 guidance, excluding Provider Relief Fund (PRF) at Fresenius Medical Care
 ² Before special items
For a detailed overview of special items please see the reconciliation tables on pages 18-23 in the PDF.
Group net income¹ before special items decreased by 16% (-17% in constant currency) to €389 million (Q1/22²: €463 million). The decrease was driven by cost inflation and the negative earnings development at Fresenius Vamed. Moreover, rising interest costs and a higher tax rate weighed on the net income development. Reported Group net income¹ before special items decreased to €346 million (Q1/22: €413 million). Excluding Fresenius Medical Care, Group net income¹ before special items decreased by 14% (-16% in constant currency) to €341 million (Q1/22²: €397 million).

Earnings per share¹ before special items decreased by 17% (-18% in constant currency) to €0.69 (Q1/22²: €0.83). Reported earnings per share¹ were €0.61 (Q1/22: €0.74).

 ¹ Net income attributable to shareholders of Fresenius SE & Co. KGaA
 ² Before special items

Investments 
Spending on property, plant and equipment was €353 million corresponding to 3% of revenue (Q1/22: €338 million; 3% of revenue). These investments served primarily for the modernization and expansion of dialysis clinics, production facilities as well as hospitals and day clinics. Excluding Fresenius Medical Care, spending on property, plant and equipment was €211 million corresponding to 4% of revenue (Q1/22: €176 million; 3% of revenue). 

Total acquisition spending was €68 million (Q1/22: €162 million) mainly for investments in debt instruments and the purchase of dialysis clinics.at Fresenius Medical Care. Excluding Fresenius Medical Care, total acquisition spending was €18 million (Q1/22: €79 million).

Cash flow development 
Group operating cash flow increased to €175 million (Q1/22: €101 million) driven by the governmental support on energy costs at Fresenius Helios in Germany. Significantly higher working capital at Fresenius Kabi in particular receivables and inventory weighed on cash flow. Furthermore, the earnings development at Fresenius Vamed had a negative impact. The first quarter is traditionally a softer cash flow quarter due to phasing effects with catch-up effects over the course of the year. Group operating cash flow margin was 1.7% (Q1/22: 1.0%). Free cash flow before acquisitions and dividends increased to -€177 million (Q1/22: -€255 million). Free cash flow after acquisitions and dividends increased to -€281 million (Q1/22: -€403 million).

The cash conversion rate (CCR), which is defined as the ratio of adjusted free cash flow¹ to EBIT before special items, was 0.3 (LTM: 1.1). As the first quarter is traditionally a softer cash flow quarter due to phasing effects a catch-up over the course of the year is expected.

 ¹ Cash flow before acquisitions and dividends; before interest, tax, and special items
Solid balance sheet structure 
Group total assets remained nearly unchanged compared to FY/22 (1% in constant currency) at €76,553 million (Dec. 31, 2022: €76,415 million) given the expansion of business activities which, however, was offset by currency translation effects. Current assets increased by 5% (6% in constant currency) to €19,102 million (Dec. 31, 2022: €18,279 million), mainly driven by the increase of trade account receivables. Non-current assets decreased by 1% (0% in constant currency) to €57,451 million (Dec. 31, 2022: €58,136 million).

Total shareholders’ equity decreased by 0% (2% in constant currency) to €32,173 million (Dec. 31, 2022: €32,218 million). The equity ratio was 42.0% (Dec. 31, 2022: 42.2%). 

Group debt increased by 0% (1% in constant currency) to €27,765 million (Dec. 31, 2022: € 27,763 million). Group net debt increased by 2% (2% in constant currency) to € 25,444 million (Dec. 31, 2022: € 25,014 million).

As of March 31, 2023, the net debt/EBITDA ratio was 3.79x^2,3 (Dec. 31, 2022: 3.65x^1,2) mainly driven by lower EBITDA contribution and higher net debt. Excluding Fresenius Medical Care, the net debt/EBITDA ratio was 3.96x^1,2 (Dec. 31, 2022: 3.80x^1,2).

In Q1/23, ROIC was 4.8% due to the lower EBIT (Q4/22: 5.1%). Excluding Fresenius Medical Care, the ROIC was 5.2% (Q4/22: 5.6%).

 ¹ Cash flow before acquisitions and dividends; before interest, tax, and special items
 ² At LTM average exchange rates for both net debt and EBITDA; pro forma closed acquisitions/divestitures
 ³ Before special items
For a detailed overview of special items please see the reconciliation tables on pages 18-23 in the PDF.

Business Segments – Operating Companies

Fresenius Kabi
Fresenius Kabi specializes in products for the therapy and care of critically and chronically ill patients. The portfolio includes biopharmaceuticals, clinical nutrition, MedTech products, intravenously administered generic drugs (generic IV drugs), and IV fluids. 

• Strong organic revenue growth in all three growth vectors
• Biopharma with ongoing strong momentum
• EBIT margin¹ within structural margin band despite significantly increased year-over-year inflationary headwinds
• Enhanced transparency by change of financial disclosure from a geographic to a product segment view

 ¹ Before special items
 ² Net income attributable to shareholders of Fresenius SE & Co. KGaA
For a detailed overview of special items please see the reconciliation tables on pages 18-23 in the PDF.
Revenue increased by 8% (8% in constant currency) to €1,991 million (Q1/22: €1,847 million) mainly driven by the strong business development of all growth vectors. Organic growth was 7%. 

Revenue in MedTech increased by 11% (organic growth: 9%) to €378 million (Q1/22: €342 million) mainly driven by the good business development in Latin America.

Revenue in Nutrition increased by 4% (organic growth: 8%) to €602 million (Q1/22: €577 million) mainly driven by the good business development in Latin America and Europe.

Revenue in Biopharma increased by 207% (organic growth: 57%) to €71 million (Q1/22: €23 million) mainly driven by the good business development in Latin America.

Revenue of the Growth Vectors (MedTech, Nutrition and Biopharma) increased by 12% (organic growth: 10%) to €1,051 million (Q1/22: €942 million). 

Revenue in the Pharma (IV Drugs & Fluids) business increased by 4% (organic growth: 3%) to €940 million (Q1/22: €905 million). The good business development in Europe and North America was dampened by offsetting effects in China. 

EBIT¹ decreased by 1% (-4% in constant currency) to €289 million (Q1/22: €293 million) due to the annualization of cost inflation effects. EBIT margin¹ was 14.5% (Q1/22: 15.9%) and thus within the structural EBIT margin band. The positive sequential development is driven by the well progressing cost savings program as well as targeted pricing initiatives. 

EBIT¹ of the Growth Vectors (MedTech, Nutrition and Biopharma) decreased by 14% (-17% in constant currency) to €96 million (Q1/22: €112 million) due to the annualization of cost inflation effects. EBIT1 margin was 9.2% (Q1/22: 11.9%).

EBIT¹ in the Pharma (IV Drugs & Fluids) business increased by 7% (4% in constant currency) to €197 million (Q1/22: €185 million) due to positive development in the North American region. EBIT¹ margin was 21.0% (Q1/22: 20.4%).

Net income^1,2 decreased by 5% (-7% in constant currency) to €191 million (Q1/22: €201 million). 

Operating cash flow decreased to €21 million (Q1/22: €133 million) with a margin of 1.1% (Q1/22: 7.2%) mainly driven by phasing effects and working capital build-ups, in particular higher inventories. 

For FY/23, Fresenius Kabi expects organic revenue³ growth in a low- to mid-single-digit percentage range. The EBIT margin⁴ is expected to be around one percentage point (pp) below the structural margin band of 14% to 17%. 

 ¹ Before special items
 ² Net income attributable to shareholders of Fresenius SE & Co. KGaA.
 ³ FY/22 base: €7,850 million
 ⁴ FY/22 base: EBIT margin: 13.8%, before special items; FY/23 before special items 
For a detailed overview of special items please see the reconciliation tables on pages 18-23 in the PDF.

Fresenius Helios
Fresenius Helios is Europe's leading private health care provider. The company comprises Helios Germany, Helios Spain and Helios Fertility. Helios Germany operates 87 hospitals, around 240 outpatient centers, 22 occupational health centers and 6 prevention centers. Helios Spain operates 50 hospitals, around 100 outpatient centers and around 300 occupational risk prevention centers. In addition, the company is active in Latin America with 8 hospitals and as a provider of medical diagnostics. Helios Fertility offers a wide spectrum of state-of-the-art services in the field of fertility treatments.

• Fresenius Helios with healthy organic revenue growth driven by ongoing admissions increase across all areas
• EBIT margin¹ solid following successful measures to counter inflationary headwinds 
• Helios Fertility recovering with increasing volumes 

 ¹ Before special items
 ² Net income attributable to shareholders of Fresenius SE & Co. KGaA
For a detailed overview of special items please see the reconciliation tables on pages 18-23 in the PDF.

Revenue increased by 5% (5% in constant currency) to €3,066 million (Q1/22: €2,931 million). Organic growth was 5%. Acquisitions contributed 0% to revenue growth. 

Revenue of Helios Germany increased by 3% (organic growth: 3%) to €1,828 million (Q1/22: €1,783 million), mainly driven by increasing admissions and positive mix effects.

Revenue of Helios Spain increased by 7% (9% in constant currency) to €1,170 million (Q1/22: €1,089 million). Organic growth of 8% was driven by ongoing patient demand. The clinics in Latin America also showed a good performance. 

Revenue of Helios Fertility increased by 16% (18% in constant currency) to €66 million (Q1/22: €57 million) as patients are returning to demand fertility treatments.

EBIT¹ increased by 2% (2% in constant currency) to €311 million (Q1/22: €306 million) with an EBIT margin¹ of 10.1% (Q1/22: 10.4%). 

EBIT¹ of Helios Germany increased despite cost inflation by 1% to €155 million (Q1/22: €154 million) with an EBIT margin1 of 8.5% (Q1/22: 8.6%). 

EBIT¹ of Helios Spain increased due to the strong revenue growth and despite cost inflation by 3% (4% in constant currency) to €157 million (Q1/22: €153 million). The EBIT margin¹ was 13.4% (Q1/22: 14.0%). 

EBIT¹ of Helios Fertility was €4 million (Q1/22: €4 million) with an EBIT margin1 of 6.1% (Q1/22: 7.0%). 

Net income^1,2 decreased by 3% (-2% in constant currency) to €190 million (Q1/22: €195 million). 

Operating cash flow increased to €108 million (Q1/22: -€136 million) mainly due to governmental support measures to mitigate higher energy costs in Germany and an improved working capital management. The operating cash flow margin was 3.5% (Q1/22: -4.6%). 

For FY/23, Fresenius Helios expects organic revenue³ growth in a mid-single-digit percentage range. The EBIT margin⁴ is expected to be within the structural margin band of 9% to 11%.

 ¹ Before special items
 ² Net income attributable to shareholders of Fresenius SE & Co. KGaA
 ³ FY/22 base: €11,716 million
 ⁴ FY/22 base: EBIT margin: 10.1%, before special items, FY/23 before special items
For a detailed overview of special items please see the reconciliation tables on pages 18-23 in the PDF.

Business Segments – Investment Companies

Fresenius Medical Care
(Financial data according to Fresenius Medical Care press release)
Fresenius Medical Care is the world's largest provider of products and services for individuals with renal diseases. As of March 31, 2023, Fresenius Medical Care was treating approximately 343,000 patients in 4,060 dialysis clinics. Dialyzers and dialysis machines are among the most important product lines. In addition, Fresenius Medical Care offers dialysis-related services. 

• Both segments contributed to organic growth with improving volume trends in Care Delivery and strong critical care business in Care Enablement 
• More moderate decline in operating income due to phasing, continued improvement in organic growth in line with expectations, easing labor shortage in the U.S., and progressing FME25 transformation
• First measures of legacy portfolio optimization delivered

Revenue increased by 3% to €4,704 million (+2% in constant currency, organic: +2%).

EBIT decreased by 25% to €261 million (-28% in constant currency), resulting in a margin of 5.5% (Q1/22: 7.6%). EBIT excluding special items and U.S. Provider Relief Funding (PRF) decreased by 9% to €354 million (-13% in constant currency), resulting in a margin of 7.5% (Q1/22: 8.6%).

Net income² decreased by 45% to €86 million (-47% in constant currency). Excluding special items and PRF, net income decreased by 22% to €154 million ( 24% in constant currency). 

In the first quarter, Fresenius Medical Care generated €143 million of operating cash flow (Q1/22: €159 million), resulting in a margin of 3.0% (Q1/22: 3.5%). The reduction was mainly due to the decrease in net income.

 ¹ Before special items
 ² Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
For a detailed overview of special items please see the reconciliation tables on pages 18-23 in the PDF.

Based on the results for the first quarter, Fresenius Medical Care confirms its financial targets for 2023. Fresenius Medical Care expects for 2023 revenue¹ to grow at a low to mid-single digit percentage rate and EBIT²  to remain flat or decline by up to a high-single digit percentage rate³. 

 ¹ FY/22 base: €19,398 million
 ² FY/22 base: €1,540 million
 ³ Revenue and EBIT, 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”, “EBIT 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.
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, FY 2022 basis for Outlook 2023 and 2025 was adjusted for 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 conversion and effects from legacy portfolio optimization.

For further information, please see Fresenius Medical Care’s press release at www.freseniusmedicalcare.com.
 

Fresenius Vamed
Fresenius Vamed manages projects and provides services for hospitals and other health care facilities worldwide and is a leading post-acute care provider in Central Europe. The portfolio ranges along the entire value chain: from project development, planning, and turnkey construction, via maintenance and technical management to total operational management.  

• Revenue growth driven by the technical services business and the European project business
• EBIT¹ negatively impacted by project business and negative one-time effects
• Major restructuring program initiated

Revenue increased by 14% (13% in constant currency) to €583 million (Q1/22: €513 million). Organic growth was 13%. 

Revenue in the service business increased by 8% (7% in constant currency) to €436 million (Q1/22: €405 million) due to better performance of technical services in Germany, Italy and United Kingdom. Revenue in the project business increased by 36% (36% in constant currency) to €147 million (Q1/22: €108 million). The good revenue performance is mainly attributable to higher revenue in European project business. 

EBIT¹ decreased to -€27 million (Q1/22: €8 million) with an EBIT margin¹ of -4.6% (Q1/22: 1.6%). The weak development was related to the project business that partially did not have a contribution margin. Moreover, certain international business initiations did not materialize as planned. Significant negative one-time effects in the service business also impacted the EBIT development. To counteract the negative EBIT development, a major restructuring program was initiated.

Net income^1,2 decreased to -€36 million (Q1/22: €4 million).

Order intake was €43 million (Q1/22: €263 million). As of March 31, 2023, order backlog was at €3,580 million (December 31, 2022: €3,689 million).

Operating cash flow decreased to -€68 million (Q1/22: -€45 million) with a margin of
-11.7% (Q1/22: -8.8%), due to the negative earnings and higher working capital.

For FY/2023, Fresenius Vamed expects organic revenue³ to grow in a low-to mid-single digit percentage range. The EBIT margin⁴ is expected to be clearly below the structural margin band of 4% to 6%. 

 ¹ Before special items 
 ² Net income attributable to shareholders of VAMED AG
 ³ FY/22 base: €2,359 million
 ⁴ FY/22 base: EBIT margin: 0.8%, before special items; FY/23 before special items
For a detailed overview of special items please see the reconciliation tables on pages 18-23 in the PDF.

Conference Call and Webcast
As part of the publication of the results for Q1/23, a conference call will be held on May 9, 2023 at 1:30 p.m. CEDT (7:30 a.m. EDT). All investors are cordially invited to follow the conference call in a live broadcast over the Internet at www.fresenius.com/investors. Following the call, a replay will be available on our website.

For additional information on the performance indicators used please refer to our website www.fresenius.com/alternative-performance-measures.