Micafungin for injection, an antifungal medicine, expands the company's anti-infective portfolio.

Fresenius Medical Care, the world’s leading provider of dialysis products and services, is enhancing its home dialysis offering in the company’s Europe, Middle East and Africa (EMEA) region. The now-completed integration in EMEA of the NxStage home dialysis portfolio, following U.S.-based NxStage’s acquisition by Fresenius Medical Care, enables the company to offer even more patients at-home treatment and a wider choice of treatment methods.

Home dialysis offers a number of advantages to patients, above all the freedom to be treated on their own schedule and in the comfort of their own home. During the current difficult situation, this enables them to receive their lifesaving dialysis treatment without having to go out and risk a possible infection with COVID-19.

“Due to the integration of the NxStage portfolio in the EMEA region, we can offer lifesaving dialysis to a growing number of patients in their home environment,” said Dr. Katarzyna Mazur-Hofsäß, Fresenius Medical Care’s Chief Executive Officer for EMEA. “In this way we are expanding treatment options and contributing to continuous care. Our commitment is to be able to offer every person who needs dialysis the right therapy, at the right time, in the right place.”

With home dialysis, the therapy options include home hemodialysis (HHD) and peritoneal dialysis (PD).

The “NxStage SystemOne” from Fresenius Medical Care, an HHD system that is especially easy to operate, allows patients to dialyze more frequently but for shorter periods than in a dialysis clinic. This may bring improved treatment results: The increased dialysis frequency makes improved blood pressure control possible, is associated with faster recovery time after treatment, and helps patients feel better.

It is possible to carry out home dialysis overnight (nocturnal hemodialysis), while the patient sleeps. It can be a slower and longer treatment that more closely resembles healthy kidney function, and therefore can be gentler on the heart. In addition, the removal of toxic metabolic products from the blood is even more thorough (improved middle molecule clearance), which can allow patients to enjoy a less-restrictive diet.

Along with HHD, Fresenius Medical Care offers a broad range of products for continuous ambulatory peritoneal dialysis (CAPD) and automated peritoneal dialysis (APD), which use the body’s own abdominal membrane – the peritoneum – as a natural filter. The product range includes biocompatible dialysis fluids, bag systems, cyclers for automated peritoneal dialysis, and the related bag and tube systems.

Currently about 7 percent of dialysis patients in the EMEA region use home dialysis. Fresenius Medical Care supports both home and in-center dialysis equally, in order to provide the best and most suitable treatment for each individual patient.

Reference papers:
Pierratos A. et al. Nocturnal Hemodialysis: three-year experience. J Am Soc Nephrol 9: 859-868, 1998.

Walker R. et al. Home hemodialysis: a comprehensive review of patient-centered and economic considerations. ClinicoEconomics and Outcomes Research 9: 149-161, 2017.

Fagugli R. et al. Short daily hemodialysis: Blood pressure control and left ventricular mass reduction in hypertensive hemodialysis patients. Am J Kidney Dis 38: 371-376, 2001.

Jaber B. et al. Effect of daily hemodialysis on depressive symptoms and postdialysis recovery time: interim report from the FREEDOM (Following Rehabilitation, Economics and Everyday-Dialysis Outcome Measurements) Study. Am J Kidney Dis 56(3): 531-539, 2010.

Potassium Phosphates Injection is now available in the United States in three FDA-approved presentations. Fresenius Kabi offers the broadest portfolio of Potassium Phosphates Injection in the United States.

• Fresenius Medical Care with strong sales growth in Q1
• Fresenius Kabi with expected dip in China partially offset by spike in demand for drugs and devices for COVID-19 patients in Europe and the US
• Helios Germany supported by law to ease financial burden on hospitals
• Helios Spain’s significant contribution to combat COVID-19 faces reimbursement uncertainties
• Fresenius Vamed with solid Q1, however already marked by COVID-19 related post-acute patient losses and project delays
• Original guidance for 2020 excluding any effects of the COVID-19 pandemic maintained; Guidance update to include COVID-19 effects expected with Q2/20 financial results
• Group financial position remains strong

If no timeframe is specified, information refers to Q1/2020

2020 and 2019 according to IFRS 16

¹ Not comparable to FY/20 guidance as inclusive of COVID-19 effects

 

² Before special items

³ Net income attributable to shareholders of Fresenius SE & Co. KGaA

For a detailed overview of special items please see the reconciliation tables on pages 17-18 of the PDF document.

 

Stephan Sturm, CEO of Fresenius, said: “The COVID-19 pandemic has created unprecedented challenges for Fresenius. We are doing everything we can to continue providing the best possible care for our patients around the world. The last few weeks have shown that we have a crucial role to play in the health care systems around the world, and never more so than at a time of crisis. Our success to date is due, above all, to the tremendous dedication and commitment of our employees. Our solid first-quarter business results demonstrate the resilience of our operations and business models. It is, however, too early to say with any certainty what impact COVID-19 will have on the company’s full business year. What can be said with certainty is that we will keep working hard for our patients, and will continue to make an important contribution to overcoming this pandemic.”

Group guidance for FY/20 – Impact of COVID-19 on outlook cannot be reliably assessed at this time

Fresenius’ FY guidance published on February 20, 2020 did not take into account effects of the COVID-19 pandemic. It projected sales growth¹ of 4% to 7% in constant currency and net income growth^2,3 of 1% to 5% in constant currency. Fresenius anticipates that, following the solid start to the year, COVID-19 will continue to impact its business; at this time, however, a reliable assessment and quantification of the positive and negative effects is not possible. The Group hence maintains its original guidance, excluding any COVID-19 effects. Fresenius will revisit this guidance when communicating its Q2/20 results with the aim to incorporate a reliable assessment of COVID-19 effects.

This approach also applies for the Group’s net debt/EBITDA target. The original guidance, excluding effects of the COVID-19 pandemic, projects net debt/EBITDA⁴ to be towards the top-end of the self-imposed target corridor of 3.0x to 3.5x at the end of 2020.

Fresenius expects to see a more pronounced negative COVID-19 effect on its financial results in the second quarter than in the first quarter of 2020.

 

7% sales growth in constant currency

Group sales increased by 8% (7% in constant currency) to €9,135 million in Q1/20 (Q1/19: €8,495 million) driven by all business segments. COVID-19 had only a slight negative effect on sales growth. Organic sales growth was 5%. Acquisitions/divestitures contributed net 2% to growth. Positive currency translation effects of 1% were mainly driven by the U.S. dollar strengthening against the euro.

¹ FY/19 base: €35,409 million

² Net income attributable to shareholders of Fresenius SE & Co. KGaA

³ FY/19 base: €1,879 million; before special items (transaction-related expenses, revaluations of biosimilars contingent purchase price liabilities, gain related to divestitures of Care Coordination activities at FMC, expenses associated with the cost optimization program at FMC); FY/20: before special items

⁴ Both net debt and EBITDA calculated at expected annual average exchange rates; excluding further potential acquisitions

For a detailed overview of special items please see the reconciliation tables on pages 17-18 of the PDF document.

 

1% net income^1,2 growth in constant currency

Group EBITDA increased by 3% (2% in constant currency) to €1,755 million (Q1/191: €1,701 million).

Group EBIT remained on prior year’s level (-2% in constant currency) at €1,125 million (Q1/19¹: €1,130 million), impacted by negative COVID-19 effects. At Fresenius Kabi additional demand for drugs and devices to treat COVID-19 patients late in the quarter only partially offset the anticipated headwinds in China during most of the quarter. Helios Spain also faced very significant negative COVID-19 effects in March, mainly at its private hospital and ORP businesses. The EBIT margin was 12.3% (Q1/19¹: 13.3%).

Group net interest before special items improved to -€174 million in Q1/20 (Q1/19: -€181 million) mainly due to successful refinancing activities. Reported Group net interest improved to -€182 million (Q1/19: -€184 million).

The Group tax rate before special items was 22.6% (Q1/19: 23.3%). The reported Group tax rate was 22.6% (Q1/19: 23.3%).

Noncontrolling interest before special items was -€271 million (Q1/19: -€271 million), of which 96% was attributable to the noncontrolling interest in Fresenius Medical Care. Reported Group noncontrolling interest was -€271 million (Q1/19: -€261 million).

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 17-18 of the PDF document.

 

Group net income¹ before special items increased by 2% (1% in constant currency) to €465 million (Q1/19: €457 million). Reported Group net income¹ was €459 million (Q1/19: €453 million). COVID-19 had a significant negative effect on net income growth.

Earnings per share¹ before special items increased by 1% (1% in constant currency) to €0.83 (Q1/19: €0.82). Reported earnings per share¹ were €0.82 (Q1/19: €0.81).

 

Continued investment in growth

Spending on property, plant and equipment was €547 million corresponding to 6% of sales (Q1/19: €441 million; 5% of sales). The investments in Q1/20 served primarily for the modernization and expansion of dialysis clinics, production facilities as well as hospitals, and day clinics. Subject to duration and magnitude of the COVID-19 pandemic, Fresenius may face delays of investment projects planned for 2020.

Total acquisition spending was €412 million (Q1/19: €1,923 million), mainly for the acquisition of two hospitals in Colombia by Fresenius Helios.

 

Cash flow development

Group operating cash flow increased to €878 million (Q1/19: €289 million) with a margin of 9.6% (Q1/19: 3.4%). Growth was driven by a favorable working capital development at both Fresenius Medical Care and Fresenius Kabi. Free cash flow before acquisitions and dividends was €305 million (Q1/19: -€168 million). Free cash flow after acquisitions and dividends was -€40 million (Q1/19: -€2,111 million, driven by the acquisition of NxStage by Fresenius Medical Care).

¹ Net income attributable to shareholders of Fresenius SE & Co. KGaA

For a detailed overview of special items please see the reconciliation tables on pages 17-18 of the PDF document.

 

Solid balance sheet structure

Group total assets increased by 3% (3% in constant currency) to €68,972 million (Dec. 31, 2019: €67,006 million). Current assets increased by 7% (8% in constant currency) to €16,341 million (Dec. 31, 2019: €15,264 million). Non-current assets increased by 2% (1% in constant currency) to €52,631 million (Dec. 31, 2019: €51,742 million).

Total shareholders’ equity increased by 1% (1% in constant currency) to €26,956 million (Dec. 31, 2019: €26,580 million). The equity ratio was 39.1%.

Group debt increased by 5% (4% in constant currency) to €28,557 million (Dec. 31, 2019: € 27,258 million). Group net debt increased by 4% (3% in constant currency) to € 26,529 million (Dec. 31, 2019: € 25,604 million) driven by the closing of two hospital acquisitions in Colombia by Fresenius Helios and execution of the share buy-back program at Fresenius Medical Care as well as currency translation effects.

As of March 31, 2020, the net debt/EBITDA ratio increased to 3.68x^1,2 (Dec. 31, 2019: 3.61x^1,2) mainly due to the acquisitions made by Fresenius Helios, the share-buy back program at Fresenius Medical Care and negative COVID-19 effects on EBITDA.

¹ At LTM average exchange rates for both net debt and EBITDA; pro forma closed acquisitions/divestitures

² Before special items

For a detailed overview of special items please see the reconciliation tables on pages 17-18 of the PDF document.

 

Business Segments

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, 2020, Fresenius Medical Care was treating 348,703 patients in 4,002 dialysis clinics. Along with its core business, the company provides related medical services in the field of Care Coordination.

• 9% revenue increase supported by growth in all regions
• Solid cash-flow development
• Financial targets confirmed

Fresenius Medical Care increased sales by 9% (7% in constant currency) to €4,488 million (Q1/19: €4,133 million). Organic sales growth was 4%. Positive currency translation effects of 2% were mainly related to the U.S. dollar strengthening against the euro.

Reported EBIT increased by 3% (1% in constant currency) to €555 million (Q1/19: €537 million) mainly driven by a favorable impact from higher treatment volume and lower costs for pharmaceuticals. The reported EBIT margin was 12.4% (Q1/19: 13.0%). The decrease in margin was largely due to the unfavorable COVID-19 pandemic effect and the prior year reduction of a contingent consideration liability related to Xenios. EBIT on an adjusted basis was flat (decreased by 3% in constant currency) at €555 million (Q1/19: €557 million). The EBIT margin on an adjusted basis was 12.4% (Q1/19: 13.5%).

Reported net income² grew by 4% (2% in constant currency) to €283 million (Q1/19: 271 million) and decreased on an adjusted basis by 1% (-3% in constant currency) to €283 million (Q1/19: €286 million).

Operating cash flow was €584 million (Q1/19: €76 million) with a margin of 13.0% (Q1/19: 1.8%). The increase was largely driven by working capital improvement, including a positive effect from cash collections, timing of payments and change in year over year inventory levels.

Fresenius Medical Care’s FY guidance published on February 20, 2020 did not take into account COVID-19 effects. Since it is too early to reliably assess and quantify the positive and negative effects of the COVID-19 pandemic, the Company confirms its 2020 outlook of expected sales³ and net income^2,4 growth both within a mid to high single digit percentage range in constant currency. These targets are based on the adjusted results 2019 including the effects of the operations of the NxStage acquisition and the IFRS 16 implementation.

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

¹ Q1/19 before special

² Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA

³ FY/19 base: €17,477 million

⁴ FY/19 base: €1,236 million (FY/20: before special items)

For a detailed overview of special items please see the reconciliation tables on pages 17-18 of the PDF document.

 

Fresenius Kabi

Fresenius Kabi offers intravenously administered generic drugs, clinical nutrition and infusion therapies for seriously and chronically ill patients in the hospital and outpatient environments. The company is also a leading supplier of medical devices and transfusion technology products. In the biosimilars business, Fresenius Kabi develops products with a focus on oncology and autoimmune diseases.

• Insignificant COVID-19 effect on sales growth, moderate negative effect on EBIT growth
• Anticipated softer demand in China during most of Q1/20 due to fewer elective surgeries followed by gradual resumption towards normal operations late in the quarter
• Increased demand for essential drugs and devices for the treatment of COVID-19 patients in North America and Europe late in Q1/20
• No major interruption at any production site

Fresenius Kabi increased sales by 5% (6% in constant currency) to €1,789 million (Q1/19: €1,701 million). Organic sales growth was 6%. Negative currency translation effects of 1% were mainly related to weakness of the Argentinian peso and the Brazilian real.

Sales in North America increased by 7% (organic growth: 5%) to  €669 million (Q1/19: €623 million). Sales in Europe grew by 10% (organic growth: 10%) to €631 million (Q1/19: €573 million). In both regions, sales were driven by a spike of demand for sedation drugs, pain killers and infusion pumps starting late in Q1/20.

Sales in Asia-Pacific decreased by 6% (organic growth: -6%) to €319 million (Q1/19: €341 million). As anticipated, softer demand for clinical nutrition products and IV drugs in China was driven by the COVID-19 related postponement of elective treatments.

Sales in Latin America/Africa increased by 4% (organic growth: 16%) to €170 million (Q1/19: €164 million).

EBIT before special items decreased by 5% (-5% in constant currency) to €289 million (Q1/19¹: €304 million) with an EBIT margin of 16.2% (Q1/19¹: 17.9%). The COVID-19 pandemic had a moderate net negative effect on EBIT.

Net income^1,2 decreased by 2% (-3% in constant currency) to €197 million (Q1/19: €202 million).

Operating cash flow was €174 million (Q1/19: €145 million) with a margin of 9.7% (Q1/19: 8.5%), driven by an improved working capital position.

Since it is too early to reliably assess and quantify the positive and negative effects of the COVID-19 pandemic, Fresenius Kabi maintains its 2020 outlook of expected organic sales³ growth of 3% to 6% and an EBIT⁴ development of -4% to 0% in constant currency, excluding any effects from COVID-19.

¹ Before special items

² Net income attributable to shareholders of Fresenius SE & Co. KGaA

³ FY/19 base: €6,919 million

⁴ FY/19 base: €1,205 million, before special items, FY/20: before special items

For a detailed overview of special items please see the reconciliation tables on pages 17-18 of the PDF document.

 

Fresenius Helios

Fresenius Helios is Europe's leading private hospital operator. The company comprises Helios Germany and Helios Spain (Quirónsalud). Helios Germany operates 86 hospitals, ~125 outpatient centers and 7 prevention centers. Quirónsalud operates 46 hospitals, 72 outpatient centers and around 300 occupational risk prevention centers. In addition, the company is active in Latin America with 6 hospitals and as a provider of medical diagnostics.

• Strong business development in January and February; from March, postponement and cancellation of elective treatments
• Excluding slight negative COVID-19 effect, Q1/20 sales growth moderately above outlook range; significant negative COVID-19 effect on EBIT
• Law to ease financial burden on hospitals to offset large part of COVID-19 related sales losses and cost increases in Germany
• Some remaining uncertainties regarding the compensation of Spanish hospitals for their efforts to combat the COVID-19 pandemic

Fresenius Helios increased sales by 7% (organic growth: 5%) to €2,466 million (Q1/19: €2,311 million).

Sales of Helios Germany increased by 8% (organic growth: 8%) to €1,603 million (Q1/19: €1,485 million). Organic sales growth was positively influenced by pricing effects and admissions growth in January and February. From March, COVID-19 had an insignificant net effect as foregone sales from elective admissions were largely offset by the law to ease the financial burden on hospitals.

Sales of Helios Spain increased by 4% (organic growth: 1%) to €863 million (Q1/19: €826 million) driven by the recent hospital acquisitions in Colombia. COVID-19 related foregone elective surgeries significantly weighed on organic sales growth from March.

EBIT of Fresenius Helios increased by 2% to €274 million (Q1/19: €268 million) with an EBIT margin of 11.1% (Q1/19: 11.6%).

EBIT of Helios Germany increased by 11% to €165 million (Q1/19: €149 million) with an EBIT margin of 10.3% (Q1/19: 10.0%). EBIT was positively influenced by pricing effects and admissions growth in January and February. From March, COVID-19 had an insignificant net effect as foregone EBIT from elective admissions was largely offset by the law to ease the financial burden on hospitals.

EBIT of Helios Spain decreased by 7% to €112 million (Q1/19: €121 million) with an EBIT margin of 13.0% (Q1/19: 14.6%). January and February showed positive admission growth. From March, COVID-19 had a very significant negative effect on EBIT as foregone elective treatments met higher costs amidst the comprehensive efforts to combat the pandemic.

Net income¹ increased by 1% to €176 million (Q1/19: €174 million).

Operating cash flow increased to €145 million (Q1/19: €103 million) with a margin of 5.9% (Q1/19: 4.5%), driven by a good operating performance in both regions.

Since it is too early to reliably assess and quantify the positive and negative effects of the COVID-19 pandemic, Fresenius Helios maintains its 2020 outlook of expected organic sales² growth of 3% to 6% and EBIT³ growth of 3% to 7% in constant currency, excluding any effects from COVID-19.

¹ Net income attributable to shareholders of Fresenius SE & Co. KGaA

² FY/19 base: €9,234 million

³ FY/19 base: €1,025 million

 

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.

• Both project and service business contributing to organic sales growth of 10%
• Slight negative COVID-19 effect on sales, very significant negative effect on EBIT growth
• Post-acute care services impacted by COVID-19 related postponements of elective surgeries and health authority enforced closures of rehabilitation clinics; technical services insignificantly impacted by COVID-19
• Further COVID-19 related delays of project business orders and execution expected throughout 2020

Fresenius Vamed increased sales by 13% to €499 million (Q1/19: €440 million). Organic sales growth was 10%. Acquisitions contributed 3% to growth. Both service and project business showed strong growth momentum. COVID-19 had only a slight negative effect on sales.

Sales in the service business grew by 8% to €357 million (Q1/19: €332 million). Sales of the project business increased by 31% to €142 million (Q1/19: €108 million).

EBIT increased by 17% to €14 million (Q1/19: €12 million) with an EBIT margin of 2.8% (Q1/19: 2.7%). COVID-19 had a very significant negative effect on EBIT growth. Capacities in the post-acute care clinics were left idle given a generally lower intake of elective surgery patients from acute-care hospitals as well as authority-instigated restrictions or even closures of individual facilities.

Net income¹ increased by 17% to €7 million (Q1/19: €6 million).

Order intake was €124 million (Q1/19: €383 million). Order intake in the prior year was exceptionally strong. As of March 31, 2020, order backlog was at €2,846 million (December 31, 2019: €2,865 million) and already marked by COVID-19 related project delays.

Operating cash flow decreased to -€20 million (Q1/19: -€15 million) with a margin of
-4.0% (Q1/19: -3.4%), given continuing phasing effects, some delays in the international project business as well as working capital build-ups.

Since it is too early to reliably assess and quantify the positive and negative effects of the COVID-19 pandemic, Fresenius Vamed maintains its 2020 outlook of expected organic sales² growth of 4% to 7% and EBIT³ growth of 5% to 9% in constant currency, excluding any effects from COVID-19.

¹ Net income attributable to shareholders of VAMED AG

² FY/19 base: €2,206 million

³ FY/19 base: €134 million

 

Conference Call

As part of the publication of the results for Q1 2020, a conference call will be held on May 6, 2020 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 https://www.fresenius.com/alternative-performance-measures.

 

 

 

 

• Fresenius Medical Care with strong sales growth in Q1
• Fresenius Kabi with expected dip in China partially offset by spike in demand for drugs and devices for COVID-19 patients in Europe and the US
• Helios Germany supported by law to ease financial burden on hospitals
• Helios Spain’s significant contribution to combat COVID-19 faces reimbursement uncertainties
• Fresenius Vamed with solid Q1, however already marked by COVID-19 related post-acute patient losses and project delays
• Original guidance for 2020 excluding any effects of the COVID-19 pandemic maintained; Guidance update to include COVID-19 effects expected with Q2/20 financial results
• Group financial position remains strong

If no timeframe is specified, information refers to Q1/2020

2020 and 2019 according to IFRS 16

¹ Not comparable to FY/20 guidance as inclusive of COVID-19 effects

² Before special items

³ Net income attributable to shareholders of Fresenius SE & Co. KGaA

 

For a detailed overview of special items please see the reconciliation tables on pages 17-18 of the PDF document.

 

Stephan Sturm, CEO of Fresenius, said: “The COVID-19 pandemic has created unprecedented challenges for Fresenius. We are doing everything we can to continue providing the best possible care for our patients around the world. The last few weeks have shown that we have a crucial role to play in the health care systems around the world, and never more so than at a time of crisis. Our success to date is due, above all, to the tremendous dedication and commitment of our employees. Our solid first-quarter business results demonstrate the resilience of our operations and business models. It is, however, too early to say with any certainty what impact COVID-19 will have on the company’s full business year. What can be said with certainty is that we will keep working hard for our patients, and will continue to make an important contribution to overcoming this pandemic.”

Group guidance for FY/20 – Impact of COVID-19 on outlook cannot be reliably assessed at this time

Fresenius’ FY guidance published on February 20, 2020 did not take into account effects of the COVID-19 pandemic. It projected sales growth¹ of 4% to 7% in constant currency and net income growth^2,3 of 1% to 5% in constant currency. Fresenius anticipates that, following the solid start to the year, COVID-19 will continue to impact its business; at this time, however, a reliable assessment and quantification of the positive and negative effects is not possible. The Group hence maintains its original guidance, excluding any COVID-19 effects. Fresenius will revisit this guidance when communicating its Q2/20 results with the aim to incorporate a reliable assessment of COVID-19 effects.

This approach also applies for the Group’s net debt/EBITDA target. The original guidance, excluding effects of the COVID-19 pandemic, projects net debt/EBITDA⁴ to be towards the top-end of the self-imposed target corridor of 3.0x to 3.5x at the end of 2020.

Fresenius expects to see a more pronounced negative COVID-19 effect on its financial results in the second quarter than in the first quarter of 2020.

¹ FY/19 base: €35,409 million

² Net income attributable to shareholders of Fresenius SE & Co. KGaA

³ FY/19 base: €1,879 million; before special items (transaction-related expenses, revaluations of biosimilars contingent purchase price liabilities, gain related to divestitures of Care Coordination activities at FMC, expenses associated with the cost optimization program at FMC); FY/20: before special items

⁴ Both net debt and EBITDA calculated at expected annual average exchange rates; excluding further potential acquisitions

 

For a detailed overview of special items please see the reconciliation tables on pages 17-18 of the PDF document.

 

7% sales growth in constant currency

Group sales increased by 8% (7% in constant currency) to €9,135 million in Q1/20 (Q1/19: €8,495 million) driven by all business segments. COVID-19 had only a slight negative effect on sales growth. Organic sales growth was 5%. Acquisitions/divestitures contributed net 2% to growth. Positive currency translation effects of 1% were mainly driven by the U.S. dollar strengthening against the euro.

1% net income^1,2 growth in constant currency

Group EBITDA increased by 3% (2% in constant currency) to €1,755 million (Q1/191: €1,701 million).

Group EBIT remained on prior year’s level (-2% in constant currency) at €1,125 million (Q1/191: €1,130 million), impacted by negative COVID-19 effects. At Fresenius Kabi additional demand for drugs and devices to treat COVID-19 patients late in the quarter only partially offset the anticipated headwinds in China during most of the quarter. Helios Spain also faced very significant negative COVID-19 effects in March, mainly at its private hospital and ORP businesses. The EBIT margin was 12.3% (Q1/19¹: 13.3%).

Group net interest before special items improved to -€174 million in Q1/20 (Q1/19: -€181 million) mainly due to successful refinancing activities. Reported Group net interest improved to -€182 million (Q1/19: -€184 million).

The Group tax rate before special items was 22.6% (Q1/19: 23.3%). The reported Group tax rate was 22.6% (Q1/19: 23.3%).

Noncontrolling interest before special items was -€271 million (Q1/19: -€271 million), of which 96% was attributable to the noncontrolling interest in Fresenius Medical Care. Reported Group noncontrolling interest was -€271 million (Q1/19: -€261 million).

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 17-18 of the PDF document.

 

Group net income¹ before special items increased by 2% (1% in constant currency) to €465 million (Q1/19: €457 million). Reported Group net income¹ was €459 million (Q1/19: €453 million). COVID-19 had a significant negative effect on net income growth.

Earnings per share¹ before special items increased by 1% (1% in constant currency) to €0.83 (Q1/19: €0.82). Reported earnings per share¹ were €0.82 (Q1/19: €0.81).

 

Continued investment in growth

Spending on property, plant and equipment was €547 million corresponding to 6% of sales (Q1/19: €441 million; 5% of sales). The investments in Q1/20 served primarily for the modernization and expansion of dialysis clinics, production facilities as well as hospitals, and day clinics. Subject to duration and magnitude of the COVID-19 pandemic, Fresenius may face delays of investment projects planned for 2020.

Total acquisition spending was €412 million (Q1/19: €1,923 million), mainly for the acquisition of two hospitals in Colombia by Fresenius Helios.

 

Cash flow development

Group operating cash flow increased to €878 million (Q1/19: €289 million) with a margin of 9.6% (Q1/19: 3.4%). Growth was driven by a favorable working capital development at both Fresenius Medical Care and Fresenius Kabi. Free cash flow before acquisitions and dividends was €305 million (Q1/19: -€168 million). Free cash flow after acquisitions and dividends was -€40 million (Q1/19: -€2,111 million, driven by the acquisition of NxStage by Fresenius Medical Care).

¹ Net income attributable to shareholders of Fresenius SE & Co. KGaA

 

For a detailed overview of special items please see the reconciliation tables on pages 17-18 of the PDF document.

 

Solid balance sheet structure

Group total assets increased by 3% (3% in constant currency) to €68,972 million (Dec. 31, 2019: €67,006 million). Current assets increased by 7% (8% in constant currency) to €16,341 million (Dec. 31, 2019: €15,264 million). Non-current assets increased by 2% (1% in constant currency) to €52,631 million (Dec. 31, 2019: €51,742 million).

Total shareholders’ equity increased by 1% (1% in constant currency) to €26,956 million (Dec. 31, 2019: €26,580 million). The equity ratio was 39.1%.

Group debt increased by 5% (4% in constant currency) to €28,557 million (Dec. 31, 2019: €?27,258 million). Group net debt increased by 4% (3% in constant currency) to €?26,529 million (Dec. 31, 2019: €?25,604 million) driven by the closing of two hospital acquisitions in Colombia by Fresenius Helios and execution of the share buy-back program at Fresenius Medical Care as well as currency translation effects.

As of March 31, 2020, the net debt/EBITDA ratio increased to 3.68x^1,2 (Dec. 31, 2019: 3.61x1,2) mainly due to the acquisitions made by Fresenius Helios, the share-buy back program at Fresenius Medical Care and negative COVID-19 effects on EBITDA.

¹ At LTM average exchange rates for both net debt and EBITDA; pro forma closed acquisitions/divestitures

² Before special items

 

For a detailed overview of special items please see the reconciliation tables on pages 17-18 of the PDF document.
 

Increased number of employees
As of March 31, 2020, the number of employees was 299,594 (Dec. 31, 2019: 294,134).
 

Business Segments
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, 2020, Fresenius Medical Care was treating 348,703 patients in 4,002 dialysis clinics. Along with its core business, the company provides related medical services in the field of Care Coordination.

• 9% revenue increase supported by growth in all regions
• Solid cash-flow development
• Financial targets confirmed

Fresenius Medical Care increased sales by 9% (7% in constant currency) to €4,488 million (Q1/19: €4,133 million). Organic sales growth was 4%. Positive currency translation effects of 2% were mainly related to the U.S. dollar strengthening against the euro.

Reported EBIT increased by 3% (1% in constant currency) to €555 million (Q1/19: €537 million) mainly driven by a favorable impact from higher treatment volume and lower costs for pharmaceuticals. The reported EBIT margin was 12.4% (Q1/19: 13.0%). The decrease in margin was largely due to the unfavorable COVID-19 pandemic effect and the prior year reduction of a contingent consideration liability related to Xenios. EBIT on an adjusted basis was flat (decreased by 3% in constant currency) at €555 million (Q1/19: €557 million). The EBIT margin on an adjusted basis was 12.4% (Q1/19: 13.5%).

¹ Q1/19 before special

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 17-18 of the PDF document.

 

Reported net income¹ grew by 4% (2% in constant currency) to €283 million (Q1/19: 271 million) and decreased on an adjusted basis by 1% (-3% in constant currency) to €283 million (Q1/19: €286 million).

Operating cash flow was €584 million (Q1/19: €76 million) with a margin of 13.0% (Q1/19: 1.8%). The increase was largely driven by working capital improvement, including a positive effect from cash collections, timing of payments and change in year over year inventory levels.

Fresenius Medical Care’s FY guidance published on February 20, 2020 did not take into account COVID-19 effects. Since it is too early to reliably assess and quantify the positive and negative effects of the COVID-19 pandemic, the Company confirms its 2020 outlook of expected sales² and net income^1,3 growth both within a mid to high single digit percentage range in constant currency. These targets are based on the adjusted results 2019 including the effects of the operations of the NxStage acquisition and the IFRS 16 implementation.

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

¹ Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA

² FY/19 base: €17,477 million

³ FY/19 base: €1,236 million (FY/20: before special items)

 

For a detailed overview of special items please see the reconciliation tables on pages 17-18 of the PDF document.

 

Fresenius Kabi
Fresenius Kabi offers intravenously administered generic drugs, clinical nutrition and infusion therapies for seriously and chronically ill patients in the hospital and outpatient environments. The company is also a leading supplier of medical devices and transfusion technology products. In the biosimilars business, Fresenius Kabi develops products with a focus on oncology and autoimmune diseases.

• Insignificant COVID-19 effect on sales growth, moderate negative effect on EBIT growth
• Anticipated softer demand in China during most of Q1/20 due to fewer elective surgeries followed by gradual resumption towards normal operations late in the quarter
• Increased demand for essential drugs and devices for the treatment of COVID-19 patients in North America and Europe late in Q1/20
• No major interruption at any production site

Fresenius Kabi increased sales by 5% (6% in constant currency) to €1,789 million (Q1/19: €1,701 million). Organic sales growth was 6%. Negative currency translation effects of 1% were mainly related to weakness of the Argentinian peso and the Brazilian real.

Sales in North America increased by 7% (organic growth: 5%) to  €669 million (Q1/19: €623 million). Sales in Europe grew by 10% (organic growth: 10%) to €631 million (Q1/19: €573 million). In both regions, sales were driven by a spike of demand for sedation drugs, pain killers and infusion pumps starting late in Q1/20.

Sales in Asia-Pacific decreased by 6% (organic growth: -6%) to €319 million (Q1/19: €341 million). As anticipated, softer demand for clinical nutrition products and IV drugs in China was driven by the COVID-19 related postponement of elective treatments.

Sales in Latin America/Africa increased by 4% (organic growth: 16%) to €170 million (Q1/19: €164 million).

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 17-18 of the PDF document.

 

EBIT before special items decreased by 5% (-5% in constant currency) to €289 million (Q1/19¹: €304 million) with an EBIT margin of 16.2% (Q1/19¹: 17.9%). The COVID-19 pandemic had a moderate net negative effect on EBIT.

Net income^1,2 decreased by 2% (-3% in constant currency) to €197 million (Q1/19: €202 million).

Operating cash flow was €174 million (Q1/19: €145 million) with a margin of 9.7% (Q1/19: 8.5%), driven by an improved working capital position.

Since it is too early to reliably assess and quantify the positive and negative effects of the COVID-19 pandemic, Fresenius Kabi maintains its 2020 outlook of expected organic sales³ growth of 3% to 6% and an EBIT⁴ development of -4% to 0% in constant currency, excluding any effects from COVID-19.

¹ Before special items

² Net income attributable to shareholders of Fresenius SE & Co. KGaA

³ FY/19 base: €6,919 million

⁴ FY/19 base: €1,205 million, before special items, FY/20: before special items

 

For a detailed overview of special items please see the reconciliation tables on pages 17-18 of the PDF document.

 

Fresenius Helios
Fresenius Helios is Europe's leading private hospital operator. The company comprises Helios Germany and Helios Spain (Quirónsalud). Helios Germany operates 86 hospitals, ~125 outpatient centers and 7 prevention centers. Quirónsalud operates 46 hospitals, 72 outpatient centers and around 300 occupational risk prevention centers. In addition, the company is active in Latin America with 6 hospitals and as a provider of medical diagnostics.

• Strong business development in January and February; from March, postponement and cancellation of elective treatments
• Excluding slight negative COVID-19 effect, Q1/20 sales growth moderately above outlook range; significant negative COVID-19 effect on EBIT
• Law to ease financial burden on hospitals to offset large part of COVID-19 related sales losses and cost increases in Germany
• Some remaining uncertainties regarding the compensation of Spanish hospitals for their efforts to combat the COVID-19 pandemic

Fresenius Helios increased sales by 7% (organic growth: 5%) to €2,466 million (Q1/19: €2,311 million).

Sales of Helios Germany increased by 8% (organic growth: 8%) to €1,603 million (Q1/19: €1,485 million). Organic sales growth was positively influenced by pricing effects and admissions growth in January and February. From March, COVID-19 had an insignificant net effect as foregone sales from elective admissions were largely offset by the law to ease the financial burden on hospitals.

Sales of Helios Spain increased by 4% (organic growth: 1%) to €863 million (Q1/19: €826 million) driven by the recent hospital acquisitions in Colombia. COVID-19 related foregone elective surgeries significantly weighed on organic sales growth from March.

EBIT of Fresenius Helios increased by 2% to €274 million (Q1/19: €268 million) with an EBIT margin of 11.1% (Q1/19: 11.6%).

¹ Net income attributable to shareholders of Fresenius SE & Co. KGaA

 

EBIT of Helios Germany increased by 11% to €165 million (Q1/19: €149 million) with an EBIT margin of 10.3% (Q1/19: 10.0%). EBIT was positively influenced by pricing effects and admissions growth in January and February. From March, COVID-19 had an insignificant net effect as foregone EBIT from elective admissions was largely offset by the law to ease the financial burden on hospitals.

EBIT of Helios Spain decreased by 7% to €112 million (Q1/19: €121 million) with an EBIT margin of 13.0% (Q1/19: 14.6%). January and February showed positive admission growth. From March, COVID-19 had a very significant negative effect on EBIT as foregone elective treatments met higher costs amidst the comprehensive efforts to combat the pandemic.

Net income¹ increased by 1% to €176 million (Q1/19: €174 million).

Operating cash flow increased to €145 million (Q1/19: €103 million) with a margin of 5.9% (Q1/19: 4.5%), driven by a good operating performance in both regions.

Since it is too early to reliably assess and quantify the positive and negative effects of the COVID-19 pandemic, Fresenius Helios maintains its 2020 outlook of expected organic sales² growth of 3% to 6% and EBIT³ growth of 3% to 7% in constant currency, excluding any effects from COVID-19.

¹ Net income attributable to shareholders of Fresenius SE & Co. KGaA

² FY/19 base: €9,234 million

³ FY/19 base: €1,025 million

 

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.

• Both project and service business contributing to organic sales growth of 10%
• Slight negative COVID-19 effect on sales, very significant negative effect on EBIT growth
• Post-acute care services impacted by COVID-19 related postponements of elective surgeries and health authority enforced closures of rehabilitation clinics; technical services insignificantly impacted by COVID-19
• Further COVID-19 related delays of project business orders and execution expected throughout 2020

Fresenius Vamed increased sales by 13% to €499 million (Q1/19: €440 million). Organic sales growth was 10%. Acquisitions contributed 3% to growth. Both service and project business showed strong growth momentum. COVID-19 had only a slight negative effect on sales.

Sales in the service business grew by 8% to €357 million (Q1/19: €332 million). Sales of the project business increased by 31% to €142 million (Q1/19: €108 million).

EBIT increased by 17% to €14 million (Q1/19: €12 million) with an EBIT margin of 2.8% (Q1/19: 2.7%). COVID-19 had a very significant negative effect on EBIT growth. Capacities in the post-acute care clinics were left idle given a generally lower intake of elective surgery patients from acute-care hospitals as well as authority-instigated restrictions or even closures of individual facilities.

¹ Net income attributable to shareholders of VAMED AG

 

Net income¹ increased by 17% to €7 million (Q1/19: €6 million).

Order intake was €124 million (Q1/19: €383 million). Order intake in the prior year was exceptionally strong. As of March 31, 2020, order backlog was at €2,846 million (December 31, 2019: €2,865 million) and already marked by COVID-19 related project delays.

Operating cash flow decreased to -€20 million (Q1/19: -€15 million) with a margin of
-4.0% (Q1/19: -3.4%), given continuing phasing effects, some delays in the international project business as well as working capital build-ups.

Since it is too early to reliably assess and quantify the positive and negative effects of the COVID-19 pandemic, Fresenius Vamed maintains its 2020 outlook of expected organic sales² growth of 4% to 7% and EBIT³ growth of 5% to 9% in constant currency, excluding any effects from COVID-19.

¹ Net income attributable to shareholders of VAMED AG

² FY/19 base: €2,206 million

³ FY/19 base: €134 million

 

Conference Call

As part of the publication of the results for Q1 2020, a conference call will be held on May 6, 2020 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 https://www.fresenius.com/alternative-performance-measures.

 

 

 

 

 

• 9% revenue increase supported by growth in all regions
• Positive earnings growth despite negative impact from COVID-19 pandemic 
• Solid cash-flow development
• Financial targets for FY2020 confirmed

Rice Powell, Chief Executive Officer of Fresenius Medical Care, said: “In these unprecedented times, it is our first and foremost priority to maintain the continuity and high quality of care. For months now, our employees have been working tirelessly to ensure that our patients receive their life-saving dialysis treatments. I cannot thank them enough. We appreciate the financial commitment that the U.S. administration has given in April to support healthcare providers. The strong revenue growth in the first quarter shows that the underlying business development remains intact and that our business model is resilient. In a global pandemic that is redefining priorities in other areas of the healthcare system, dialysis remains essential for millions of patients worldwide.”
 

Fresenius Medical Care’s contribution in the fight against COVID-19
In order to ensure the continuity and high quality of care for dialysis patients during the COVID-19 pandemic and support its employees around the globe, Fresenius Medical Care has taken wide-ranging measures at a very early stage. The focus is on reducing the risk of infection in dialysis clinics for patients and employees.
 
Despite countries’ lockdown efforts to contain the COVID-19 pandemic, Fresenius Medical Care did not experience any major disruptions in its manufacturing facilities. As of today, all manufacturing plants worldwide are in operation and supply chains remain intact.

Costs in respect to the COVID-19 pandemic have been incurred for additional measures, like personal protective equipment, dedicated capacities for isolated treatments, additional personnel expense, patient transportation as well as increased distribution logistic costs.

Under the CARES Act (Coronavirus Aid, Relief, and Economic Security Act), the U.S. government initiated significant financial support for the health sector. This is intended, for example, to compensate for the increased costs for healthcare providers as a result of the COVID-19 pandemic and the corresponding protective measures. While Fresenius Medical Care had to adsorb a sizable negative impact in Q1, there is no benefit from the CARES Act included in the reported results.

In the U.S., Fresenius Medical Care is cooperating with other dialysis providers, to create isolation clinics and dedicated shifts for patients who are or may be infected with COVID-19. A critical aim of this collaboration is to keep dialysis patients out of the hospital whenever possible, freeing up limited hospital resources. In doing so, Fresenius Medical Care not only fulfils its responsibility towards patients, employees and families, but also makes an important contribution to the healthcare system and society as a whole.
 

Key figures (IFRS)

2020 targets confirmed: mid to high single digit growth rates
On the basis of the guidance given in February, which excludes the impact from the COVID-19 pandemic, Fresenius Medical Care expects both revenue and net income to grow at a mid to high single digit rate in 2020. These targets are in constant currency, exclude special items³  and are based on the adjusted results 2019 including the effects of the operations of the NxStage acquisition and the IFRS 16 implementation.

Patients, Clinics and Employees
As of March 31, 2020, Fresenius Medical Care treated 348,703 patients in 4,002 dialysis clinics worldwide. At the end of the first quarter, the Company had 121,403 employees (full-time equivalents) worldwide, compared to 118,308 employees as of March 31, 2019.
 

Strong revenue growth in the first quarter
Revenue increased by 9% to EUR 4,488 million (+7% at constant currency), with organic growth of 4%. Health Care Services revenue rose by 8% to EUR 3,595 million (+7% at constant currency), driven by growth in same market treatments, contributions from acquisitions and an increase in dialysis days. Health Care Products revenue grew by 10% and amounted to EUR 893 million (+9% at constant currency). This increase was mainly due to higher sales of products for acute care treatments, renal pharmaceuticals and bloodlines partially offset by lower sales of dialysis machines.

Operating income increased by 3% to EUR 555 million (+1% at constant currency), mainly driven by a favorable impact from higher treatment volume and lower costs for pharmaceuticals. The operating income margin amounted to 12.4% (Q1 2019: 13.0%). The decrease in margin was largely due to the unfavorable COVID-19 pandemic effect and the prior year reduction of a contingent consideration liability related to Xenios.
 
Despite the negative impact from the COVID-19 pandemic net income¹ grew by 4% to EUR 283 million (+2% at constant currency) and declined on an adjusted basis by only 1% (-3% at constant currency). On the defined basis of the 2020 targets - excluding the negative impact from the COVID-19 pandemic - net income growth in the first quarter is at the top end of the target range for 2020.
 
Basic earnings per share (EPS) increased by 8% to EUR 0.95 (+5% at constant currency) driven by the earnings effects described above coupled with a decrease in the average weighted shares outstanding.


Solid cash-flow development
Fresenius Medical Care generated EUR 584 million of operating cash flow (Q1 2019: EUR 76 million) resulting in a margin of 13.0% (Q1 2019: 1.8%). The increase was largely driven by working capital improvement, including a positive effect from cash collections, timing of payments and change in year over year inventory levels. 
Free cash flow (net cash used in operating activities, after capital expenditures, before acquisitions and investments) amounted to EUR 304 million (Q1 2019: EUR -123 million), resulting in a margin of 6.8% (Q1 2019: -3.0%).

Regional developments
In North America, revenue increased by 10% to EUR 3,186 million (+7% at constant currency, +3% organic). Operating income grew by 24% to EUR 463 million (+21% at constant currency), resulting in a margin of 14.5 % (Q1 2019: 12.9%). Despite the negative impact from the COVID-19 pandemic, the operating income margin increased mainly due to lower costs for pharmaceuticals and gains from divestitures.

EMEA revenue increased by 4% to EUR 679 million (+4% at constant currency, +3% organic). Operating income decreased by 27% to EUR 101 million (-27% at constant currency), resulting in a margin of 14.9% (Q1 2019: 21.1%). The decrease in operating income margin was mainly due to the prior year reduction of a contingent consideration liability related to Xenios.

In Asia-Pacific, revenue grew by 4% to EUR 443 million (+3% at constant currency, +2% organic). Operating income decreased by 19% to EUR 77 million (-20% at constant currency), resulting in a margin of 17.3 % (Q1 2019: 22.1). The decrease in operating income margin was mainly due to impacts from unfavorable foreign currency transaction effects, lower product sales as well as expansion into in-center dialysis services.
 
Latin America revenue increased by 4% to EUR 168 million (+24% at constant currency, +17% organic). Operating income decreased by 40% to EUR 7 million (-40% at constant currency), resulting in a margin of 4.1% (Q1 2019: 7.1%). The decrease in operating income margin was mainly due to unfavorable foreign currency impacts.

 

¹ Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
² For a reconciliation of adjusted figures, please refer to the table at the end of the press release
³ Special items are effects that are unusual in nature and have not been foreseeable or not
   foreseeable in size or impact at the time of giving guidance.

 

Conference call
Fresenius Medical Care will host a conference call to discuss the results of the first quarter 2020 on May 6, 2020 at 3:30 p.m. CEDT (UTC +2) / 09:30 a.m. EDT (UTC -4). Details will be available on the company’s website www.freseniusmedicalcare.com 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 for the first quarter 2020. Our 6-K disclosure provides more details.
 

Fresenius Medical Care North America is making 150 additional dialysis machines available to U.S. hospitals for the emergency treatment of COVID-19 patients, under the company’s newly established National Intensive Renal Care Reserve. The reserve creates a pool of dialysis machines that can be sent to hospitals on short notice, and nearly doubles the volume of consumables available to perform treatments. The increased demand is a result of many COVID-19 patients requiring renal replacement therapy due to acute kidney injury, and not all hospitals having enough dialysis machines to treat them.

Fresenius Helios has developed a secure and highly effective process for purifying medical protective masks so they can be safely reused. It is being employed for FFP2- and FFP3-type masks, which help protect medical and care personnel who are treating COVID-19 patients. Going well beyond the safety standard set out by the Robert Koch Institute, Germany’s government agency responsible for disease control and prevention, the process allows the purified masks to be used by any staff member – not just the previous user. Starting immediately, Helios Germany’s hospitals can purify 8,000 masks daily using the process, which was developed with the support of Fresenius Vamed and Fresenius Medical Care. The company has chosen not to commercialize the process and is making complete information about it available online, free of charge.