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Services
October 19, 2019
Orlando, Florida, USA
Anesthesiology Annual Meeting, October 19 - 23 2019
August 31, 2019
Paris, France
Congress of the European Society of Cardiology (ESC), August 31 - September 4 2019
Underlying business development in line with expectation
Continued strong organic revenue growth
Healthy growth in the U.S. dialysis business
Negative effect from ESCOs, based on recent reports for prior plan years
Increasing earnings growth momentum expected
Outlook 2019 confirmed
Rice Powell, Chief Executive Officer of Fresenius Medical Care, said: “We have delivered a solid second quarter with continued strong organic revenue growth. Net income in our underlying dialysis business developed in line with our expectations. We are confident to accelerate earnings growth over the second half of the year toward achieving our full-year targets. Due to ongoing delays in reconciliation of generated savings in the value-based ESCO pilot program and differing views with regard to the measurement mechanisms, it is prudent to adjust the rate of savings we applied to accrue revenues and earnings. While views differ on the magnitude of savings generated, it is clear that we have realized meaningful savings in the ESCO pilot as well as other value-based arrangements. We moved quickly and maintained tremendous focus since 2014. We are uniquely positioned with our vast experience to impact cost and quality of care in kidney disease. We remain committed to value-based care.”
1 For a detailed reconciliation, please refer to the table at the end of the press release
2 Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
Home dialysis strategy reinforced by President Trump’s Executive Order
Fresenius Medical Care continues to achieve an increase in the number of treatments being carried out in the home setting in North America. The investments in training facilities, education and distribution are important areas of investments this year. Concurrently, the company is investing around EUR 100 million in 2019 as part of the Cost Optimization Program to optimize its US services footprint. The company´s execution of its home strategy is additionally supported by the Executive Order on Advancing Kidney Health. Fresenius Medical Care has intensified its initiatives to promote home dialysis, improve access to transplants, and develop value-based care models for chronic kidney disease patients.
Continued strong organic growth
Revenue in the second quarter 2019 increased by 3% to EUR 4,345 million (stable at constant currency). Organic growth continued to be strong at 4%. Adjusted for the Q2 2018 revenue contribution from Sound Inpatient Physicians (“Sound”, divested effective end of Q2 2018) as well as the impact from the IFRS 16 implementation and the revenue contribution from NxStage, revenue increased by 8% (+5% at constant currency).
Health Care Services revenue increased by 2% to EUR 3,455 million ( 2% at constant currency). Growth was constrained by missing revenue from the divested Sound activities and closed or sold clinics. Growth in same market treatments (volume growth), acquisitions and increases in organic revenue per treatment had a positive impact. Health Care Products revenue increased by 7% to EUR 890 million (+6% at constant currency), mainly driven by higher sales of home hemodialysis products (supported by the acquisition of NxStage), products for acute care treatments, peritoneal dialysis products, and renal pharmaceuticals, partially offset by lower sales of machines as a result of changes in the accounting treatment for sale-leaseback transactions due to the IFRS 16 implementation and in EMEA lower sales of dialyzers.
In the first half 2019, revenue increased by 4% to EUR 8,478 million (-1% at constant currency). Excluding the effects from Sound, the IFRS 16 implementation and NxStage, revenue was up by 9% (+5% at constant currency). Organic growth was 5%. Health Care Services revenue grew by 3% (-2% at constant currency). Health Care Products revenue increased by 7% (+5% at constant currency).
In the second quarter 2019 total EBIT decreased by 63% to EUR 521 million (-65% at constant currency), resulting in an operating income margin of 12.0% (compared to 33.3% in the previous year). The strong result in the previous year was driven by the gain related to divestitures of Care Coordination activities. On an adjusted basis, EBIT decreased by 12% to EUR 491 million (-17% at constant currency) and operating income margin decreased from 14.1% to 11.5% driven by higher personnel expense and the reduction in patient attribution and a decreasing savings rate for ESCOs, based on recent reports for prior plan years (“ESCO effect”).
In the first half 2019, EBIT decreased by 44% to EUR 1,058 million (-47% at constant currency). Adjusted for the effects described above, EBIT decreased by 2% (-7% at constant currency).
Net income2 decreased by 74% to EUR 254 million (-76% at constant currency) in the second quarter 2019. On an adjusted basis, net income2 decreased by 9% (-14% at constant currency).
Based on approximately 303.5 million shares (weighted average number of shares outstanding), basic earnings per share (EPS) decreased by 74% to EUR 0.84 ( 76% at constant currency). On an adjusted basis, basic EPS amounted to EUR 0.92, representing a decrease of 9% (-14% at constant currency).
Strong Dialysis Care Growth
In the second quarter 2019 North America revenue, which represents 70% of total revenue, increased by 3% to EUR 3,061 million (-3% at constant currency). Organic growth in North America was 4%. Health Care Services revenue increased by 1% to EUR 2,789 million (-5% at constant currency). Dialysis Care revenue increased by 13% (6% at constant currency) to EUR 2,511 million. The growth was mainly due to increases in same market treatments (volume growth), increases in organic revenue per treatment, and contributions from acquisitions, partially offset by the effect of closed or sold clinics. Same-market treatment growth in the US again accelerated and reached 4.1%. Care Coordination revenue decreased by 47% to EUR 278 million (-50% at constant currency), mainly due to the divestiture of Sound in the previous year.
In the U.S., the average revenue per treatment increased by USD 4 to 358 USD (+1%). The development was mainly attributable to higher utilization of oral based ancillaries and an increase in the ESRD PPS base rate, partially offset by lower revenue from commercial payors.
Cost per treatment in the U.S., adjusted for the implementation of IFRS 16, increased from USD 289 to USD 297. This increase was largely driven by higher personnel expense as well as increased costs for occupancy and health care supplies.
Health care product revenue increased by 29% to EUR 272 million (+21% at constant currency), driven by higher sales of home hemodialysis products supported by the NxStage acquisition, renal pharmaceuticals and peritoneal dialysis products, partially offset by lower sales of machines as a result of changes in the accounting treatment for sale-leaseback transactions due to the IFRS 16 implementation.
Total EBIT of the North America segment decreased by 67% to EUR 429 million (-68% at constant currency). The strong results in the previous year were mainly driven by the gain related to the divestiture of Care Coordination activities. The operating income margin sequentially improved from 12.9% in the first quarter 2019 to 14.0% in the second quarter of 2019. The dialysis operating income margin decreased period over period by 1.7 percentage points to 15.4%. This was driven by higher personnel expense, the integration and operational costs associated with NxStage and the prior year income attributable to a consent agreement on certain pharmaceuticals, partially offset by higher utilization of oral based ancillaries with favorable margins and a positive effect from the IFRS 16 implementation.
In the first half 2019, North America revenue increased by 4% to EUR 5,948 million (-3% at constant currency). Adjusted for the H1 2018 revenue contribution from Sound as well as the impact from IFRS 16 and NxStage, revenue grew by 12% (5% at constant currency). Mainly driven by the gain related to divestitures of Care Coordination activities in the previous year as well as higher personnel expenses, integration and operational costs associated with NxStage and the ESCO effect, partially offset by higher utilization of oral based ancillaries with favorable margins, the operating income margin decreased from 28.7% in the first half 2018 to 13.5% in the first half 2019.
As of the end of June 2019, the company was treating 208,019 patients (+4%) at its 2,583 clinics (+6%) in North America. Dialysis treatments increased by 4%.
In the second quarter 2019 EMEA revenue decreased by 1% to EUR 648 million (stable at constant currency), driven by a positive business development in Health Care Services, offset by lower sales of Health Care Products. Health Care Service revenue increased by 6% (+7% at constant currency) as a result of growth in same market treatments, contributions from acquisitions, and increases in organic revenue per treatment, partially offset by the effect of closed or sold clinics. Health Care Product revenue decreased by 7% (-7% at constant currency). Dialysis product revenue decreased by 7% (-7% at constant currency) due to lower sales of dialyzers, bloodlines, hemodialysis solutions and concentrates and machines mainly in North Africa and the Middle East.
Non-Dialysis product revenue decreased by 8% to EUR 17 million (-8% at constant currency) from EUR 18 million.
EBIT decreased by 8% to EUR 96 million (-8% at constant currency). The operating income margin was 14.9% in the second quarter 2019, a decrease of 1.2% from the second quarter 2018, mainly driven by lower product sales, an unfavorable impact from an inventory revaluation, higher personnel expense in certain countries and unfavorable foreign currency transaction effects, partially offset by higher other income related to a favorable outcome in a legal proceeding, a favorable impact from acquisitions and a positive effect from the IFRS 16 implementation.
In the first half 2019, EMEA revenue increased by 1% (+2% at constant currency) to EUR 1,301 million, while EBIT of EUR 235 million was up by 9% (+10% at constant currency). The improved profitability was mainly driven by a reduction of a contingent consideration liability related to Xenios in the first quarter of 2019.
As of the end of June 2019, the company was treating 65,871 patients (+4%) at its 783 dialysis clinics (+3%) in the EMEA region. Dialysis treatments increased by 4%.
In the second quarter 2019 Asia-Pacific revenue increased by 8% to EUR 458 million (+7% at constant currency), driven by a positive business development in both Health Care Services and Health Care Products. Organic growth was 7%. Health Care Services revenue increased by 10% to EUR 210 million (+7% at constant currency). Dialysis Care revenue increased by 8% to EUR 153 million (+4% at constant currency), mainly as a result of growth in same market treatments and contributions from acquisitions, partially offset by missing contributions from closed or sold clinics and a decrease in organic revenue per treatment. Care Coordination revenue increased by 16% to EUR 57 million (+15% at constant currency). The revenue growth was driven by contributions from acquisitions and organic revenue growth. Health Care Product revenue increased by 7% (+7% at constant currency) resulting from increased sales of dialyzers, products for acute care treatments, bloodlines, hemodialysis solutions and concentrates as well as machines.
An important area of investments of Fresenius Medical Care in 2019 is the expansion of production capacities and the ramp up of the dialysis services business in China to capture the growing demand in the country with the most dialysis patients worldwide. As part of the 2019 investment initiatives this impacts, as expected, the earnings growth in the region.
EBIT decreased by 11% (-12% at constant currency) to EUR 69 million. The resulting operating income margin was 15.1% (Q2 2018: 18.4%) due to an unfavorable impact from growth in lower margin businesses and unfavorable foreign currency transaction effects, partially offset by a positive effect from the IFRS 16 implementation.
In the first half 2019, Asia-Pacific revenue increased by 9% to EUR 886 million (+6% at constant currency). Operating income increased by 8% to EUR 164 million (+6% at constant currency).
As of the end of June 2019, the company was treating 31,845 patients (+4%) at its 399 clinics (+4%) in the Asia-Pacific region. Dialysis treatments increased by 4%.
In the second quarter 2019 Latin America revenue increased by 5% to EUR 172 million (+26% at constant currency). Organic growth was 24%. Health Care Services revenue increased by 2% to EUR 121 million (+28% at constant currency). The increase at constant currency was mainly a result of increases in organic revenue per treatment, contributions from acquisitions and growth in same market treatments, partially offset by the effect of closed or sold clinics.
Health Care Product revenue increased by 14% (20% at constant currency), mainly driven by increased sales of machines, peritoneal dialysis products, hemodialysis solutions and concentrates.
EBIT decreased by 47% to EUR 6 million (-81% at constant currency). The operating income margin was 3.4% (Q2 2018: 6.8%). The decline was mainly driven by hyperinflation in Argentina.
In the first half 2019, Latin America revenue was stable at EUR 334 million (an increase of 20% at constant currency). Operating income decreased by 32% (-49% at constant currency) to EUR 17 million. The operating income margin decreased from 6.8% to 3.4%, mainly driven by hyperinflation in Argentina.
As of the end of June 2019, the company was treating 33,815 patients (+7%) at its 231 clinics (-1%) in the Latin America region. Dialysis treatments increased by 5%.
Net interest expense increased in the second quarter by 35% to EUR 114 million (+30% at constant currency). The increase was primarily due to the IFRS 16 implementation and a higher debt level, partially offset by the replacement of high interest bearing senior notes repaid in 2018 by debt instruments at lower interest rates. Income tax expense significantly decreased by 65% to EUR 92 million for the second quarter of 2019, which translates into an effective tax rate of 22.7% (Q2 2018: 19.8%), driven by the prior year impacts from the gain related to the divestiture of Care Coordination activities as well as favorable implications of the US Tax Reform.
Strong cash-flow development
In the second quarter 2019 the company generated EUR 852 million of operating cash flow (Q2 2018: EUR 656 million). This corresponds to 19.6% of revenue (Q2 2018: 15.6%). The increase was largely driven by the IFRS 16 implementation leading to a reclassification of the repayment portion of rent to financing activities. The number of days sales outstanding (DSOs) improved to 77 days (June 30, 2018: 82 days). Free cash flow (net cash used in operating activities, after capital expenditures, before acquisitions and investments) amounted to EUR 559 million (Q2 2018: EUR 429 million). Free cash flow was 12.9% of revenue (Q2 2018: 10.2%).
Outlook confirmed3,4
For 2019, Fresenius Medical Care expects adjusted revenue to grow between 3% and 7% and adjusted net income2 to develop in the range of -2% to 2%.
For 2020, Fresenius Medical Care expects adjusted revenue as well as adjusted net income to grow at a mid to high single digit rate.
In order to make the business performance in the respective periods comparable these targets as well as the 2018 base are and will be adjusted for items such as: FCPA related charges, the IFRS 16 implementation, the contributions from Sound in the first half 2018, the gain (loss) related to divestitures of Care Coordination activities and expenses for the implementation of the cost optimization program. All effects from the acquisition of NxStage Medical Inc. are excluded from the targets for 2019 and 2020.
3 Numbers at constant currency
4 Reported revenue 2018 of EUR 16,547 million adjusted for Sound H1 2018; reported net income 2018 of EUR 1,982 million adjusted for Sound H1 2018, the gain (loss) related to divestitures of Care Coordination activities and the 2018 FCPA related charge
Number of employees increased
As of June 30, 2019, Fresenius Medical Care had 119,631 employees (full-time equivalents) worldwide, compared to 111,263 employees as of June 30, 2018. This increase of 8% was mainly attributable to the NxStage acquisition.
Conference call
Fresenius Medical Care will host a conference call to discuss the results of the second quarter today at 3:30 p.m. CEDT / 9:30 a.m. EDT. Details will be available on the company’s website. A replay will be available shortly after the call.
Please refer to the PDF for a complete overview of the results for the second quarter 2019.
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, results of clinical studies, foreign exchange rate fluctuations, uncertainties in litigation or investigative proceedings, and the availability of financing. These and other risks and uncertainties are detailed in Fresenius Medical Care AG & Co. KGaA's reports filed with the U.S. Securities and Exchange Commission. Fresenius Medical Care AG & Co. KGaA does not undertake any responsibility to update the forward-looking statements in this release.
If no timeframe is specified, information refers to Q2/2019
1 Adjusted for IFRS 16 effect
2 Q2/18 and H1/18 adjusted for divestitures of Care Coordination activities at Fresenius Medical Care (FMC)
3 Net income attributable to shareholders of Fresenius SE & Co. KGaA
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32 of the PDF document.
Stephan Sturm, CEO of Fresenius, said: “We are reporting a good second quarter 2019, with healthy organic growth in all four business segments. Our investments in future growth are moving ahead according to plan, as we further strengthen the foundations for the long-term, successful development of Fresenius. So we are very confident about the second half and the coming years.”
Group sales growth guidance for 2019 raised
Based on the Group’s good H1/19 results and good prospects for the remainder of the year, Fresenius raises its 2019 Group sales growth guidance. Fresenius now projects sales growth1 of 4% to 7% in constant currency. Previously, Fresenius expected sales growth1 of 3% to 6% in constant currency. The company confirms its earnings guidance. Net income2,3 growth is expected to be ~0% in constant currency. The guidance for 2019 includes the related sales and dilutive earnings contributions of the NxStage acquisition.
Fresenius expects net debt/EBITDA4 at year-end to be around the upper-end of the original self-imposed target corridor of 2.5x to 3.0x. This includes the NxStage acquisition which is increasing the net debt/EBITDA ratio in 2019 by ~30 basis points and excludes IFRS 16 effects.
Due to the adoption of the IFRS 16 accounting standard (“IFRS 16 effect”), Fresenius’ self-imposed target corridor has shifted to 3.0x to 3.5x net debt/EBITDA on a reported basis.
1 On a comparable basis: FY/18 base: €33,009 million; FY/18 adjusted for divestitures of Care Coordination activities at FMC (H1/18); FY/19: adjusted for IFRS 16 effect
2 Net income attributable to shareholders of Fresenius SE & Co. KGaA
3 On a comparable basis: FY/18 base: €1,872 million; FY/18 before special items and adjusted for divestitures of Care Coordination activities at FMC (H1/18); FY/19: before special items (transaction-related expenses, revaluations of biosimilars contingent liabilities, gain related to divestitures of Care Coordination activities at FMC, expenses associated with the cost optimization program at FMC), adjusted for IFRS 16 effect
4 Both net debt and EBITDA calculated at expected annual average exchange rates; excluding further potential acquisitions
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32 of the PDF document.
6% sales growth1 in constant currency
Group sales were €8,761 million including an IFRS 16 effect of -€18 million. Group sales1 on a comparable basis increased by 8% (6% in constant currency) to €8,779 million (Q2/18: €8,124 million). Organic sales growth was 5%. Acquisitions/divestitures contributed net 1% to growth. In H1/19, Group sales were €17,256 million including an IFRS 16 effect of -€40 million. Group sales1 on a comparable basis increased by 8% (6% in constant currency) to €17,296 million (H1/18: €15,994 million). Organic sales growth was 5%. Acquisitions/divestitures contributed net 1% to growth. Positive currency translation effects of 2% were mainly driven by the U.S. dollar strengthening against the euro.
Net income2,3 growth in constant currency
Group EBITDA before special items was €1,703 million including an IFRS 16 effect of €242 million. Group EBITDA2 on a comparable basis decreased by 2% (-5% in constant currency) to €1,461 million (Q2/18: €1,495 million). In H1/19, Group EBITDA before special items was €3,404 million including an IFRS 16 effect of €462 million. Group EBITDA2 on a comparable basis increased by 2% (-1% in constant currency) to €2,942 million (H1/18: €2,889 million).
Group EBIT before special items was €1,118 million including an IFRS 16 effect of €37 million. Group EBIT2 on a comparable basis decreased by 5% (-7% in constant currency) to €1,081 million (Q2/18: €1,135 million). The EBIT margin2 on a comparable basis was 12.3% (Q2/18: 14.0%). A significant contributor was the reduction in patient attribution and a decreasing savings rate for ESCOs, based on recent reports for prior plan years (“ESCO effect”). Reported Group EBIT4 was €1,118 million. In H1/19, Group EBIT before special items was €2,248 million including an IFRS 16 effect of €56 million. Group EBIT2 on a comparable basis remained at previous year’s level (-3% in constant currency) at €2,192 million (H1/18: €2,185 million). The EBIT margin2 on a comparable basis was 12.7% (H1/18: 13.7%). Reported Group EBIT4 was €2,233 million.
Group net interest before special items was -€180 million including an IFRS 16 effect of -€58 million. On a comparable basis, net interest2 improved to -€122 million (Q2/18: -€140 million) mainly due to successful refinancing activities and lower interest rates. Reported Group net interest4 was -€179 million. In H1/19, Group net interest before special items was -€361 million including an IFRS 16 effect of -€106 million. On a comparable basis, net interest1 improved to -€255 million (H1/18: -€279 million). Reported Group net interest3 was -€363 million.
1 On a comparable basis: Q2/18 and H1/18 adjusted for divestitures of Care Coordination activities at FMC;
Q2/19 and H1/19 adjusted for IFRS 16 effect
2 On a comparable basis: Q2/19 and H1/19 before special items and adjusted for IFRS 16 effect;
Q2/18 and H1/18 adjusted for divestitures of Care Coordination activities at FMC
3 Net income attributable to shareholders of Fresenius SE & Co. KGaA
4 After special items and including IFRS 16 effect
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32 of the PDF document.
The Group tax rate before special items and adopting IFRS 16 was 22.8%. Group tax rate1 on a comparable basis was 22.8% (Q2/18: 23.3%). In H1/19, the Group tax rate before special items and adopting IFRS 16 was 23.1%. In H1/19, Group tax rate1 on a comparable basis was 23.1% (H1/18: 22.1%).
Noncontrolling interest before special items was €253 million including an IFRS 16 effect of €7 million. Noncontrolling interest1 on a comparable basis was €260 million (Q2/18:
€290 million). In H1/19, Noncontrolling interest before special items was €524 million including an IFRS 16 effect of €20 million. Noncontrolling interest1 on a comparable basis was €544 million (H1/18: €560 million), of which 93% was attributable to the Noncontrolling interest in Fresenius Medical Care.
Group net income2 before special items was €471 million including an IFRS 16 effect of -€9 million. Group net income1,2 on a comparable basis increased by 1% (0% in constant currency) to €480 million (Q2/18: €473 million). Reported Group net income2,3 was €471 million. Earnings per share2 before special items were €0.85 including an IFRS 16 effect of -€0.01. Earnings per share1,2 on a comparable basis increased by 1% (0% in constant currency) to €0.86 (Q2/18: €0.85). Reported Earnings per share2,3 were €0.85.
In H1/19, Group net income2 before special items was €928 million including an IFRS 16 effect of -€17 million. Group net income1,2 on a comparable basis increased by 2% (0% in constant currency) to €945 million (H1/18: €924 million). Reported Group net income2,3 was €924 million. In H1/19, Earnings per share2 before special items were €1.67 including an IFRS 16 effect of -€0.03. Earnings per share1,2 on a comparable basis increased by 2% (0% in constant currency) to €1.70 (H1/18: €1.66). Reported Earnings per share2,3 were €1.66.
Continued investment in growth
2019 is an investment year for the Fresenius Group. Fresenius is making good progress in all of its investment initiatives to secure long-term sustainable growth. Spending on property, plant and equipment was €565 million (Q2/18: €451 million). This corresponds to 6% of sales. In H1/19, spending on property, plant and equipment was €1,006 million (H1/18: €831 million), primarily for the modernization and expansion of dialysis clinics, production facilities as well as hospitals and day clinics. This corresponds to 6% of sales.
Total acquisition spending was €234 million (Q2/18: €194 million) including the acquisition of Clínica Medellín in Colombia by Fresenius Helios, among others. In H1/19, total acquisition spending was €2,157 million (H1/18: €386 million), mainly for the acquisition of NxStage by Fresenius Medical Care.
1 On a comparable basis: Q2/19 and H1/19 before special items and adjusted for IFRS 16 effect;
Q2/18 and H1/18 adjusted for divestitures of Care Coordination activities at FMC
2 Net income attributable to shareholders of Fresenius SE & Co. KGaA
3 After special items and including IFRS 16 effect
Cash flow development
Group operating cash flow was €1,205 million including an IFRS 16 effect of €182 million. On a comparable basis, Group operating cash flow was €1,023 million (Q2/18: €1,020 million) with a margin of 11.7% (Q2/18: 12.2%). Free cash flow before acquisitions and dividends adjusted for IFRS 16 was €467 million (Q2/18: €580 million). Free cash flow after acquisitions and dividends adjusted for IFRS 16 was -€437 million (Q2/18: €1,331 million). The IFRS 16 effect amounts to €182 million respectively. Correspondingly, cash flow from financing activities decreased by €182 million.
In H1/19, Group operating cash flow was €1,494 million including an IFRS 16 effect of €353 million. On a comparable basis, Group operating cash flow was €1,141 million (H1/18: €1,256 million) with a margin of 6.6% (H1/18: 7.6%). Free cash flow before acquisitions and dividends adjusted for IFRS 16 was €128 million (H1/18: €425 million) mainly due to increasing investments. Free cash flow after acquisitions and dividends adjusted for IFRS 16 was -€2,719 million (H1/18: €942 million). The IFRS 16 effect amounts to €353 million respectively. Correspondingly, cash flow from financing activities decreased by €353 million.
Solid balance sheet structure
The Group’s total assets were €64,929 million including an IFRS 16 effect of €5,587 million. Adjusted for IFRS 16, Group total assets1 increased by 5% (4% in constant currency) to €59,342 million (Dec. 31, 2018: €56,703 million). Current assets1 remained flat (remained flat in constant currency) to €14,851 million (Dec. 31, 2018: €14,790 million). Non-current assets1 increased by 6% (6% in constant currency) to €44,491 million (Dec. 31, 2018: € 41,913 million).
Total shareholders’ equity was €25,382 million including an IFRS 16 effect of -€186 million. Adjusted for IFRS 16, total shareholders’ equity increased by 2% (2% in constant currency) to €25,568 million (Dec. 31, 2018: €25,008 million). The equity ratio was 39.1%. Adjusted for IFRS 16, the equity ratio was 43.1% (Dec. 31, 2018: 44.1%).
Group debt was €26,879 million including an IFRS 16 effect of €5,773 million. Adjusted for IFRS 16, Group debt increased by 11% to €21,106 million (11% in constant currency) (Dec. 31, 2018: € 18,984 million). Group net debt was €25,416 million including an IFRS 16 effect of €5,773 million. Adjusted for IFRS 16, Group net debt increased by 21% (21% in constant currency) to € 19,643 million (Dec. 31, 2018: € 16,275 million) mainly due to the acquisition of NxStage by Fresenius Medical Care.
As of June 30, 2019, the net debt/EBITDA ratio increased to 3.21x1,2,3,4 (December 31, 2018: 2.71x2,4). Including the IFRS 16 effect, the reported net debt/EBITDA ratio increased to 3.64x2,3,4.
1 Adjusted for IFRS 16 effect
2 At LTM average exchange rates for both net debt and EBITDA; pro forma closed acquisitions/divestitures
3 Including acquisition of NxStage
4 Before special items
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32.
Increased number of employees
As of June 30, 2019, the number of employees was 288,459 (Dec. 31, 2018: 276,750).
Business Segments
Fresenius Medical Care (Figures 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 June 30, 2019, Fresenius Medical Care was treating 339,550 patients in 3,996 dialysis clinics. Along with its core business, the company provides related medical services in the field of Care Coordination.
Adjusted for the Q2/18 contribution from the divested Care Coordination activities, the IFRS 16 effect and the contribution from NxStage, sales of Fresenius Medical Care increased by 8% (5% at constant currency) to €4,284 million (Q2/18: €3,956 million). Organic sales growth was 4%. Positive currency translation effects of 3% were mainly related to the U.S. dollar strengthening against the euro. In H1/19, sales adjusted for the H1/18 contribution from the divested Care Coordination activities, the IFRS 16 effect and the contribution from NxStage increased by 9% (5% at constant currency) to €8,409 million (H1/18: €7,680 million). Organic sales growth was 5%.
EBIT4 decreased by 12% (-17% in constant currency) to €491 million (Q2/19: €558 million) The EBIT margin4 decreased to 11.5% (Q2/18: 14.1%). A significant contributor was the reduction in patient attribution and a decreasing savings rate for ESCOs, based on recent reports for prior plan years (“ESCO effect”).
1 On an adjusted basis: before special items (transaction-related expenses, gain related to divestitures of Care Coordination activities, expenses associated with the cost optimization program), adjusted for IFRS 16 effect, excluding effects from NxStage transaction
2 Q2/18 and H1/18 adjusted for divestitures of Care Coordination activities
3 Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
4 Q2/18 and H1/18 before special items and after adjustments; Q2/19 and H1/19 before special items (transaction-related expenses, gain related to divestitures of Care Coordination activities, expenses associated with the cost optimization program), adjusted for IFRS 16 effect, excluding effects from NxStage transaction
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32.
In H1/19, EBIT6 decreased by 2% (-7% in constant currency) to €1,042 million (H1/18: €1,064 million). The EBIT margin4 decreased to 12.4% (H1/18: 13.9%).
Net income1,2 decreased by 9% (-14% in constant currency) to €279 million (Q2/18: €308 million). A significant contributor was the ESCO effect. In H1/19, net income1,2 decreased by 1% (-6% in constant currency) to €597 million (H1/18: €604 million).
Operating cash flow was €700 million3 (Q2/18: €656 million) with a margin of 16.0% (Q2/18: 15.6%). In H1/19, operating cash flow was €635 million (H1/18: €611 million) with a margin of 7.6% (H1/18: 7.5%).
For FY/19, Fresenius Medical Care expects adjusted sales to grow by 3% to 7%5,6 in constant currency. Adjusted net income1 is expected to develop in the range of -2% to +2%5,7 in constant currency.
For further information on the IFRS 16 reconciliation of Fresenius Medical Care, please see page 18 in the PDF document.
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 Q2/18 and H1/18 before special items and after adjustments; Q2/19 and H1/19 before special items (transaction-related expenses, gain related to divestitures of care coordination activities, expenses associated with the cost optimization program), adjusted for IFRS 16 effect, excluding effects from NxStage transaction
3 €852 million including an IFRS 16 effect of €152 million
4 €928 million including an IFRS 16 effect of €293 million
5 FY/18 before special items, Q2/18 and H1/18 adjusted for divestitures of Care Coordination activities;
FY/19 before special items (transaction-related expenses, gain related to divestitures of care coordination activities, expenses associated with the cost optimization program), adjusted for IFRS 16 effects, excluding effects from NxStage transaction
6 FY/18 base: €16,026 million
7 FY/18 base: €1,341 million
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32 in 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.
Sales of Fresenius Kabi increased by 5% (5% in constant currency) to €1,691 million (Q2/18: €1,604 million). Organic sales growth was 4%. In H1/19, sales increased by 6% (4% in constant currency) to €3,392 million (H1/18: €3,207 million). Organic sales growth was 4%. Positive currency translation effects of 2% were mainly related to the U.S. dollar strengthening against the euro.
Sales in North America increased by 4% (organic growth: -1%) to €573 million (Q2/18: €549 million). In H1/19, sales in North America increased by 5% (organic growth:
-1%) to €1,196 million (H1/18: €1,140 million). The anticipated easing of shortage situations, intensified competition in individual molecules, and a prescribing trend towards non-opioids pain management were the main headwinds.
Sales in Europe grew by 2% (organic growth: 1%) to €572 million (Q2/18: €563 million). In H1/19, sales in Europe increased by 2% (organic growth: 2%) to €1,145 million (H1/18: €1,120 million).
Sales in Asia-Pacific increased by 15% (organic growth: 15%) to €374 million (Q2/18: €326 million). In H1/19, sales in Asia-Pacific increased by 14% (organic growth: 13%) to €715 million (H1/18: €627 million).
Sales in Latin America/Africa increased by 4% (organic growth: 13%) to €172 million (Q2/18: €166 million). In H1/19, sales in Latin America/Africa increased by 5% (organic growth: 15%) to €336 million (H1/18: €320 million).
EBIT1 increased by 7% (4% in constant currency) to €308 million (Q2/18: €289 million) with an EBIT margin1 of 18.2% (Q2/18: 18.0%). In H1/19, EBIT1 increased by 10% (6% in constant currency) to €611 million (H1/18: €557 million) with an EBIT margin1 of 18.0% (H1/18: 17.4%).
Net income1,2 increased by 14% (12% in constant currency) to €211 million (Q2/18: €185 million). In H1/19, net income1,2 increased by 17% (12% in constant currency) to €414 million (H1/18: €355 million).
Operating cash flow3 was €201 million (Q2/18: €228 million). The cash flow margin was 11.9% (Q2/18: 14.2%). In H1/19, operating cash flow3 was €333 million (H1/18: €454 million). The cash flow margin was 9.8% (H1/18: 14.2%).
Fresenius Kabi confirms its outlook for FY/19 and expects organic sales growth4 of 3% to 6% and EBIT growth5 in constant currency of 3% to 6%.
For further information on the IFRS 16 reconciliation of Fresenius Kabi, please see page 18 of the PDF document.
1 On a comparable basis: before special items and adjusted for IFRS 16 effect
2 Net income attributable to shareholders of Fresenius SE & Co. KGaA
3 Adjusted for IFRS 16 effect (operating cash flow after special items)
4 On a comparable basis: FY/18 base: €6,544 million; FY/19 before special items (acquisition-related expenses, revaluations of biosimilars contingent liabilities) and adjusted for IFRS 16 effect
5 On a comparable basis: FY/18 base: €1,139 million; FY/18 before special items; FY/19 before special items (acquisition-related expenses, revaluations of biosimilars contingent liabilities) and adjusted for IFRS 16 effect.
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32 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 treats approximately 5.3 million patients annually. Quirónsalud operates 50 hospitals, 62 outpatient centers and around 300 occupational risk prevention centers, and treats approximately 13.3 million patients annually.
Sales of Fresenius Helios remained at previous year’s level (increased by 6%1 organic growth: 5%) to €2,349 million (Q2/18: €2,343 million). In H1/19, sales also remained at previous year’s level (increased by 5%1; organic growth: 4%) to €4,660 million (H1/18: €4,674 million).
Sales of Helios Germany decreased by 3% (increased by 5%1; organic growth: 5%) to €1,506 million (Q2/18: €1,547 million). Organic sales growth was positively influenced by pricing effects and a strong case mix. In H1/19, sales of Helios Germany decreased by 4% (increased by 3%1; organic growth: 3%) to €2,991 million (H1/18: €3,121 million).
Sales of Helios Spain increased by 6% (organic growth: 4%) to €842 million (Q2/18: €796 million) despite the negative effect related to the Easter holidays. In H1/19, sales of Helios Spain increased by 7% (organic growth: 6%) to €1,668 million (H1/18: €1,553 million).
1 Adjusted for the post-acute care business transferred to Fresenius Vamed as of July 1, 2018
2 Adjusted for IFRS 16 effect
3 Net income attributable to shareholders of Fresenius SE & Co. KGaA
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32 of the PDF document.
EBIT1 of Fresenius Helios decreased by 6% (-4% ) to €274 million (Q2/18: €293 million) with an EBIT margin of 11.7% (Q2/18: 12.5%). In H1/19, EBIT1 of Fresenius Helios decreased by 5% (-4%2) to €540 million (H1/18: €571 million) with an EBIT margin of 11.6% (H1/18: 12.2%).
EBIT1 of Helios Germany decreased by 8% (-4%2) to €154 million (Q2/18: €168 million) with an EBIT margin of 10.2% (Q2/18: 10.9%). In H1/19, EBIT1 of Helios Germany decreased by 12% (-10%2) to €303 million (H1/18: €345 million) with an EBIT margin of 10.1% (H1/18: 11.1%). Whilst EBIT and margin have further stabilized, investments for preparatory structural measures continue to weigh on Helios Germany’s financial performance.
Despite the negative Easter effect, EBIT1 of Helios Spain increased by 1% to €125 million (Q2/18: €124 million) with an EBIT margin of 14.8% (Q2/18: 15.6%). In H1/19, EBIT1 of Helios Spain increased by 7% to €244 million (H1/18: €227 million).
Net income1,3 decreased by 7% to €183 million (Q2/18: €197 million). In H1/19, net income1,3 also decreased by 7% to €359 million (H1/18: €388 million).
Operating cash flow1 was €197 million (Q2/18: €162 million) with a margin of 8.4% (Q2/18: 6.9%). In H1/19, operating cash flow1 was €288 million (H1/18: €259 million) with a margin of 6.2% (H1/18: 5.5%). The increase is mainly attributable to the decrease in days sales outstanding (DSO) at Helios Spain.
Fresenius Helios confirms its outlook for FY/19 and expects organic sales growth of 2% to 5% and an EBIT1 growth of -5% to -2%.
For further information on the IFRS 16 reconciliation of Fresenius Helios, please see page 18.
1 Adjusted for IFRS 16 effect
2 Adjusted for the post-acute care business transferred to Fresenius Vamed as of July 1, 2018
3 Net income attributable to shareholders of Fresenius SE & Co. KGaA
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32 of the PDF document.
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.
Sales of Fresenius Vamed increased by 76% (31%1) to €467 million (Q2/18: €266 million). Organic sales growth was 27%, acquisitions contributed 3%1 to growth. Positive currency translation effects increased sales by 1%. Sales in the service business grew by 106% (35%1) to €344 million (Q2/18: €167 million), supported by an intensified collaboration with Fresenius Helios. Sales of the project business increased by 24% to €123 million (Q2/18: €99 million). In H1/19, sales increased by 76% (32%1) to €907 million (H1/18: €515 million). Organic sales growth was 29%, acquisitions contributed 3%1 to growth. Both the service and the project business showed strong growth momentum.
EBIT2 increased by 67% to €20 million (Q2/18: €12 million) with an EBIT margin of 4.3% (Q2/18: 4.5%). EBIT2 additionally adjusted for the acquisition of Helios’ German post-acute care business was €8 million (-33% YoY) with an EBIT margin of 2.3% - the decrease was mainly driven by phasing effects in the project business. In H1/19, EBIT2 increased by 72% to €31 million (H1/18: €18 million) with an EBIT margin of 3.4% (H1/18: 3.5%). EBIT2 additionally adjusted for the acquisition of Helios’ German post-acute care business was €15 million (-17% YoY) with an EBIT margin of 2.2%.
Net income2,3 increased by 86% to €13 million (Q2/18: €7 million). In H1/19, net income2,3 increased by 73% to €19 million (H1/18: €11 million).
Order intake decreased by -41% to €115 million (Q2/18: €195 million) but increased by 9% to €498 million in H1/19 (H1/18: €455 million). As of June 30, 2019, order backlog was at €2,690 million (Dec 31, 2018: €2,420 million).
Operating cash flow2 decreased to -€42 million (Q2/18: -€14 million) with a margin of -9.0% (Q2/18: -5.3%). In H1/19, Operating cash flow2 decreased to -€65 million (H1/18:
-€56 million) with a margin of -7.2% (H1/18: -10.9%).
Fresenius Vamed confirms its outlook for FY/19 and expects organic sales growth of ~10% and EBIT growth2 of 15% to 20%.
For further information on the IFRS 16 reconciliation of Fresenius Vamed, please see page 18 of the PDF document.
1 Adjusted for German post-acute care business acquired from Fresenius Helios as of July 1, 2018
2 Adjusted for IFRS 16 effect
3 Net income attributable to shareholders of VAMED AG
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32 of the PDF document.
Conference Call
As part of the publication of the results for the second quarter 2019, a conference call will be held on July 30, 2019 at 1:30 p.m. CEDT (7:30 a.m. EDT). You are cordially invited to follow the conference call in a live broadcast over the Internet at www.fresenius.com/media-calendar. 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.
This release contains forward-looking statements that are subject to various risks and uncertainties. Future results could differ materially from those described in these forward-looking statements due to certain factors, e.g. changes in business, economic and competitive conditions, regulatory reforms, results of clinical trials, foreign exchange rate fluctuations, uncertainties in litigation or investigative proceedings, and the availability of financing. Fresenius does not undertake any responsibility to update the forward-looking statements in this release.
If no timeframe is specified, information refers to Q2/2019
1 Adjusted for IFRS 16 effect
2 Q2/18 and H1/18 adjusted for divestitures of Care Coordination activities at Fresenius Medical Care (FMC)
3 Net income attributable to shareholders of Fresenius SE & Co. KGaA
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32 of the PDF document.
Group sales growth guidance for 2019 raised
Based on the Group’s good H1/19 results and good prospects for the remainder of the year, Fresenius raises its 2019 Group sales growth guidance. Fresenius now projects sales growth1 of 4% to 7% in constant currency. Previously, Fresenius expected sales growth1 of 3% to 6% in constant currency. The company confirms its earnings guidance. Net income2,3 growth is expected to be ~0% in constant currency. The guidance for 2019 includes the related sales and dilutive earnings contributions of the NxStage acquisition.
Fresenius expects net debt/EBITDA4 at year-end to be around the upper-end of the original self-imposed target corridor of 2.5x to 3.0x. This includes the NxStage acquisition which is increasing the net debt/EBITDA ratio in 2019 by ~30 basis points and excludes IFRS 16 effects.
Due to the adoption of the IFRS 16 accounting standard (“IFRS 16 effect”), Fresenius’ self-imposed target corridor has shifted to 3.0x to 3.5x net debt/EBITDA on a reported basis.
1 On a comparable basis: FY/18 base: €33,009 million; FY/18 adjusted for divestitures of Care Coordination activities at FMC (H1/18); FY/19: adjusted for IFRS 16 effect
2 Net income attributable to shareholders of Fresenius SE & Co. KGaA
3 On a comparable basis: FY/18 base: €1,872 million; FY/18 before special items and adjusted for divestitures of Care Coordination activities at FMC (H1/18); FY/19: before special items (transaction-related expenses, revaluations of biosimilars contingent liabilities, gain related to divestitures of Care Coordination activities at FMC, expenses associated with the cost optimization program at FMC), adjusted for IFRS 16 effect
4 Both net debt and EBITDA calculated at expected annual average exchange rates; excluding further potential acquisitions
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32 of the PDF document.
6% sales growth1 in constant currency
Group sales were €8,761 million including an IFRS 16 effect of -€18 million. Group sales1 on a comparable basis increased by 8% (6% in constant currency) to €8,779 million (Q2/18: €8,124 million). Organic sales growth was 5%. Acquisitions/divestitures contributed net 1% to growth. In H1/19, Group sales were €17,256 million including an IFRS 16 effect of -€40 million. Group sales1 on a comparable basis increased by 8% (6% in constant currency) to €17,296 million (H1/18: €15,994 million). Organic sales growth was 5%. Acquisitions/divestitures contributed net 1% to growth. Positive currency translation effects of 2% were mainly driven by the U.S. dollar strengthening against the euro.
Net income2,3 growth in constant currency
Group EBITDA before special items was €1,703 million including an IFRS 16 effect of €242 million. Group EBITDA2 on a comparable basis decreased by 2% (-5% in constant currency) to €1,461 million (Q2/18: €1,495 million). In H1/19, Group EBITDA before special items was €3,404 million including an IFRS 16 effect of €462 million. Group EBITDA2 on a comparable basis increased by 2% (-1% in constant currency) to €2,942 million (H1/18: €2,889 million).
Group EBIT before special items was €1,118 million including an IFRS 16 effect of €37 million. Group EBIT2 on a comparable basis decreased by 5% (-7% in constant currency) to €1,081 million (Q2/18: €1,135 million). The EBIT margin2 on a comparable basis was 12.3% (Q2/18: 14.0%). A significant contributor was the reduction in patient attribution and a decreasing savings rate for ESCOs, based on recent reports for prior plan years (“ESCO effect”). Reported Group EBIT4 was €1,118 million. In H1/19, Group EBIT before special items was €2,248 million including an IFRS 16 effect of €56 million. Group EBIT2 on a comparable basis remained at previous year’s level (-3% in constant currency) at €2,192 million (H1/18: €2,185 million). The EBIT margin2 on a comparable basis was 12.7% (H1/18: 13.7%). Reported Group EBIT4 was €2,233 million.
Group net interest before special items was -€180 million including an IFRS 16 effect of -€58 million. On a comparable basis, net interest2 improved to -€122 million (Q2/18: -€140 million) mainly due to successful refinancing activities and lower interest rates. Reported Group net interest4 was -€179 million. In H1/19, Group net interest before special items was -€361 million including an IFRS 16 effect of -€106 million. On a comparable basis, net interest1 improved to -€255 million (H1/18: -€279 million). Reported Group net interest3 was -€363 million.
1 On a comparable basis: Q2/18 and H1/18 adjusted for divestitures of Care Coordination activities at FMC;
Q2/19 and H1/19 adjusted for IFRS 16 effect
2 On a comparable basis: Q2/19 and H1/19 before special items and adjusted for IFRS 16 effect;
Q2/18 and H1/18 adjusted for divestitures of Care Coordination activities at FMC
3 Net income attributable to shareholders of Fresenius SE & Co. KGaA
4 After special items and including IFRS 16 effect
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32 of the PDF document.
The Group tax rate before special items and adopting IFRS 16 was 22.8%. Group tax rate1 on a comparable basis was 22.8% (Q2/18: 23.3%). In H1/19, the Group tax rate before special items and adopting IFRS 16 was 23.1%. In H1/19, Group tax rate1 on a comparable basis was 23.1% (H1/18: 22.1%).
Noncontrolling interest before special items was €253 million including an IFRS 16 effect of €7 million. Noncontrolling interest1 on a comparable basis was €260 million (Q2/18:
€290 million). In H1/19, Noncontrolling interest before special items was €524 million including an IFRS 16 effect of €20 million. Noncontrolling interest1 on a comparable basis was €544 million (H1/18: €560 million), of which 93% was attributable to the Noncontrolling interest in Fresenius Medical Care.
Group net income2 before special items was €471 million including an IFRS 16 effect of -€9 million. Group net income1,2 on a comparable basis increased by 1% (0% in constant currency) to €480 million (Q2/18: €473 million). Reported Group net income2,3 was €471 million. Earnings per share2 before special items were €0.85 including an IFRS 16 effect of -€0.01. Earnings per share1,2 on a comparable basis increased by 1% (0% in constant currency) to €0.86 (Q2/18: €0.85). Reported Earnings per share2,3 were €0.85.
In H1/19, Group net income2 before special items was €928 million including an IFRS 16 effect of -€17 million. Group net income1,2 on a comparable basis increased by 2% (0% in constant currency) to €945 million (H1/18: €924 million). Reported Group net income2,3 was €924 million. In H1/19, Earnings per share2 before special items were €1.67 including an IFRS 16 effect of -€0.03. Earnings per share1,2 on a comparable basis increased by 2% (0% in constant currency) to €1.70 (H1/18: €1.66). Reported Earnings per share2,3 were €1.66.
Continued investment in growth
2019 is an investment year for the Fresenius Group. Fresenius is making good progress in all of its investment initiatives to secure long-term sustainable growth. Spending on property, plant and equipment was €565 million (Q2/18: €451 million). This corresponds to 6% of sales. In H1/19, spending on property, plant and equipment was €1,006 million (H1/18: €831 million), primarily for the modernization and expansion of dialysis clinics, production facilities as well as hospitals and day clinics. This corresponds to 6% of sales.
Total acquisition spending was €234 million (Q2/18: €194 million) including the acquisition of Clínica Medellín in Colombia by Fresenius Helios, among others. In H1/19, total acquisition spending was €2,157 million (H1/18: €386 million), mainly for the acquisition of NxStage by Fresenius Medical Care.
1 On a comparable basis: Q2/19 and H1/19 before special items and adjusted for IFRS 16 effect;
Q2/18 and H1/18 adjusted for divestitures of Care Coordination activities at FMC
2 Net income attributable to shareholders of Fresenius SE & Co. KGaA
3 After special items and including IFRS 16 effect
Cash flow development
Group operating cash flow was €1,205 million including an IFRS 16 effect of €182 million. On a comparable basis, Group operating cash flow was €1,023 million (Q2/18: €1,020 million) with a margin of 11.7% (Q2/18: 12.2%). Free cash flow before acquisitions and dividends adjusted for IFRS 16 was €467 million (Q2/18: €580 million). Free cash flow after acquisitions and dividends adjusted for IFRS 16 was -€437 million (Q2/18: €1,331 million). The IFRS 16 effect amounts to €182 million respectively. Correspondingly, cash flow from financing activities decreased by €182 million.
In H1/19, Group operating cash flow was €1,494 million including an IFRS 16 effect of €353 million. On a comparable basis, Group operating cash flow was €1,141 million (H1/18: €1,256 million) with a margin of 6.6% (H1/18: 7.6%). Free cash flow before acquisitions and dividends adjusted for IFRS 16 was €128 million (H1/18: €425 million) mainly due to increasing investments. Free cash flow after acquisitions and dividends adjusted for IFRS 16 was -€2,719 million (H1/18: €942 million). The IFRS 16 effect amounts to €353 million respectively. Correspondingly, cash flow from financing activities decreased by €353 million.
Solid balance sheet structure
The Group’s total assets were €64,929 million including an IFRS 16 effect of €5,587 million. Adjusted for IFRS 16, Group total assets1 increased by 5% (4% in constant currency) to €59,342 million (Dec. 31, 2018: €56,703 million). Current assets1 remained flat (remained flat in constant currency) to €14,851 million (Dec. 31, 2018: €14,790 million). Non-current assets1 increased by 6% (6% in constant currency) to €44,491 million (Dec. 31, 2018: € 41,913 million).
Total shareholders’ equity was €25,382 million including an IFRS 16 effect of -€186 million. Adjusted for IFRS 16, total shareholders’ equity increased by 2% (2% in constant currency) to €25,568 million (Dec. 31, 2018: €25,008 million). The equity ratio was 39.1%. Adjusted for IFRS 16, the equity ratio was 43.1% (Dec. 31, 2018: 44.1%).
Group debt was €26,879 million including an IFRS 16 effect of €5,773 million. Adjusted for IFRS 16, Group debt increased by 11% to €21,106 million (11% in constant currency) (Dec. 31, 2018: € 18,984 million). Group net debt was €25,416 million including an IFRS 16 effect of €5,773 million. Adjusted for IFRS 16, Group net debt increased by 21% (21% in constant currency) to € 19,643 million (Dec. 31, 2018: € 16,275 million) mainly due to the acquisition of NxStage by Fresenius Medical Care.
As of June 30, 2019, the net debt/EBITDA ratio increased to 3.21x1,2,3,4 (December 31, 2018: 2.71x2,4). Including the IFRS 16 effect, the reported net debt/EBITDA ratio increased to 3.64x2,3,4.
1 Adjusted for IFRS 16 effect
2 At LTM average exchange rates for both net debt and EBITDA; pro forma closed acquisitions/divestitures
3 Including acquisition of NxStage
4 Before special items
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32.
Business Segments
Fresenius Medical Care (Figures 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 June 30, 2019, Fresenius Medical Care was treating 339,550 patients in 3,996 dialysis clinics. Along with its core business, the company provides related medical services in the field of Care Coordination.
Adjusted for the Q2/18 contribution from the divested Care Coordination activities, the IFRS 16 effect and the contribution from NxStage, sales of Fresenius Medical Care increased by 8% (5% at constant currency) to €4,284 million (Q2/18: €3,956 million). Organic sales growth was 4%. Positive currency translation effects of 3% were mainly related to the U.S. dollar strengthening against the euro. In H1/19, sales adjusted for the H1/18 contribution from the divested Care Coordination activities, the IFRS 16 effect and the contribution from NxStage increased by 9% (5% at constant currency) to €8,409 million (H1/18: €7,680 million). Organic sales growth was 5%.
EBIT4 decreased by 12% (-17% in constant currency) to €491 million (Q2/19: €558 million) The EBIT margin4 decreased to 11.5% (Q2/18: 14.1%). A significant contributor was the reduction in patient attribution and a decreasing savings rate for ESCOs, based on recent reports for prior plan years (“ESCO effect”).
1 On an adjusted basis: before special items (transaction-related expenses, gain related to divestitures of Care Coordination activities, expenses associated with the cost optimization program), adjusted for IFRS 16 effect, excluding effects from NxStage transaction
2 Q2/18 and H1/18 adjusted for divestitures of Care Coordination activities
3 Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
4 Q2/18 and H1/18 before special items and after adjustments; Q2/19 and H1/19 before special items (transaction-related expenses, gain related to divestitures of Care Coordination activities, expenses associated with the cost optimization program), adjusted for IFRS 16 effect, excluding effects from NxStage transaction
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32.
In H1/19, EBIT6 decreased by 2% (-7% in constant currency) to €1,042 million (H1/18: €1,064 million). The EBIT margin4 decreased to 12.4% (H1/18: 13.9%).
Net income1,2 decreased by 9% (-14% in constant currency) to €279 million (Q2/18: €308 million). A significant contributor was the ESCO effect. In H1/19, net income1,2 decreased by 1% (-6% in constant currency) to €597 million (H1/18: €604 million).
Operating cash flow was €700 million3 (Q2/18: €656 million) with a margin of 16.0% (Q2/18: 15.6%). In H1/19, operating cash flow was €635 million (H1/18: €611 million) with a margin of 7.6% (H1/18: 7.5%).
For FY/19, Fresenius Medical Care expects adjusted sales to grow by 3% to 7%5,6 in constant currency. Adjusted net income1 is expected to develop in the range of -2% to +2%5,7 in constant currency.
For further information on the IFRS 16 reconciliation of Fresenius Medical Care, please see page 18 in the PDF document.
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 Q2/18 and H1/18 before special items and after adjustments; Q2/19 and H1/19 before special items (transaction-related expenses, gain related to divestitures of care coordination activities, expenses associated with the cost optimization program), adjusted for IFRS 16 effect, excluding effects from NxStage transaction
3 €852 million including an IFRS 16 effect of €152 million
4 €928 million including an IFRS 16 effect of €293 million
5 FY/18 before special items, Q2/18 and H1/18 adjusted for divestitures of Care Coordination activities;
FY/19 before special items (transaction-related expenses, gain related to divestitures of care coordination activities, expenses associated with the cost optimization program), adjusted for IFRS 16 effects, excluding effects from NxStage transaction
6 FY/18 base: €16,026 million
7 FY/18 base: €1,341 million
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32 in 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.
Sales of Fresenius Kabi increased by 5% (5% in constant currency) to €1,691 million (Q2/18: €1,604 million). Organic sales growth was 4%. In H1/19, sales increased by 6% (4% in constant currency) to €3,392 million (H1/18: €3,207 million). Organic sales growth was 4%. Positive currency translation effects of 2% were mainly related to the U.S. dollar strengthening against the euro.
Sales in North America increased by 4% (organic growth: -1%) to €573 million (Q2/18: €549 million). In H1/19, sales in North America increased by 5% (organic growth:
-1%) to €1,196 million (H1/18: €1,140 million). The anticipated easing of shortage situations, intensified competition in individual molecules, and a prescribing trend towards non-opioids pain management were the main headwinds.
Sales in Europe grew by 2% (organic growth: 1%) to €572 million (Q2/18: €563 million). In H1/19, sales in Europe increased by 2% (organic growth: 2%) to €1,145 million (H1/18: €1,120 million).
Sales in Asia-Pacific increased by 15% (organic growth: 15%) to €374 million (Q2/18: €326 million). In H1/19, sales in Asia-Pacific increased by 14% (organic growth: 13%) to €715 million (H1/18: €627 million).
Sales in Latin America/Africa increased by 4% (organic growth: 13%) to €172 million (Q2/18: €166 million). In H1/19, sales in Latin America/Africa increased by 5% (organic growth: 15%) to €336 million (H1/18: €320 million).
EBIT1 increased by 7% (4% in constant currency) to €308 million (Q2/18: €289 million) with an EBIT margin1 of 18.2% (Q2/18: 18.0%). In H1/19, EBIT1 increased by 10% (6% in constant currency) to €611 million (H1/18: €557 million) with an EBIT margin1 of 18.0% (H1/18: 17.4%).
Net income1,2 increased by 14% (12% in constant currency) to €211 million (Q2/18: €185 million). In H1/19, net income1,2 increased by 17% (12% in constant currency) to €414 million (H1/18: €355 million).
Operating cash flow3 was €201 million (Q2/18: €228 million). The cash flow margin was 11.9% (Q2/18: 14.2%). In H1/19, operating cash flow3 was €333 million (H1/18: €454 million). The cash flow margin was 9.8% (H1/18: 14.2%).
Fresenius Kabi confirms its outlook for FY/19 and expects organic sales growth4 of 3% to 6% and EBIT growth5 in constant currency of 3% to 6%.
For further information on the IFRS 16 reconciliation of Fresenius Kabi, please see page 18 of the PDF document.
1 On a comparable basis: before special items and adjusted for IFRS 16 effect
2 Net income attributable to shareholders of Fresenius SE & Co. KGaA
3 Adjusted for IFRS 16 effect (operating cash flow after special items)
4 On a comparable basis: FY/18 base: €6,544 million; FY/19 before special items (acquisition-related expenses, revaluations of biosimilars contingent liabilities) and adjusted for IFRS 16 effect
5 On a comparable basis: FY/18 base: €1,139 million; FY/18 before special items; FY/19 before special items (acquisition-related expenses, revaluations of biosimilars contingent liabilities) and adjusted for IFRS 16 effect.
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32 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 treats approximately 5.3 million patients annually. Quirónsalud operates 50 hospitals, 62 outpatient centers and around 300 occupational risk prevention centers, and treats approximately 13.3 million patients annually.
Sales of Fresenius Helios remained at previous year’s level (increased by 6%1 organic growth: 5%) to €2,349 million (Q2/18: €2,343 million). In H1/19, sales also remained at previous year’s level (increased by 5%1; organic growth: 4%) to €4,660 million (H1/18: €4,674 million).
Sales of Helios Germany decreased by 3% (increased by 5%1; organic growth: 5%) to €1,506 million (Q2/18: €1,547 million). Organic sales growth was positively influenced by pricing effects and a strong case mix. In H1/19, sales of Helios Germany decreased by 4% (increased by 3%1; organic growth: 3%) to €2,991 million (H1/18: €3,121 million).
Sales of Helios Spain increased by 6% (organic growth: 4%) to €842 million (Q2/18: €796 million) despite the negative effect related to the Easter holidays. In H1/19, sales of Helios Spain increased by 7% (organic growth: 6%) to €1,668 million (H1/18: €1,553 million).
1 Adjusted for the post-acute care business transferred to Fresenius Vamed as of July 1, 2018
2 Adjusted for IFRS 16 effect
3 Net income attributable to shareholders of Fresenius SE & Co. KGaA
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32 of the PDF document.
EBIT1 of Fresenius Helios decreased by 6% (-4% ) to €274 million (Q2/18: €293 million) with an EBIT margin of 11.7% (Q2/18: 12.5%). In H1/19, EBIT1 of Fresenius Helios decreased by 5% (-4%2) to €540 million (H1/18: €571 million) with an EBIT margin of 11.6% (H1/18: 12.2%).
EBIT1 of Helios Germany decreased by 8% (-4%2) to €154 million (Q2/18: €168 million) with an EBIT margin of 10.2% (Q2/18: 10.9%). In H1/19, EBIT1 of Helios Germany decreased by 12% (-10%2) to €303 million (H1/18: €345 million) with an EBIT margin of 10.1% (H1/18: 11.1%). Whilst EBIT and margin have further stabilized, investments for preparatory structural measures continue to weigh on Helios Germany’s financial performance.
Despite the negative Easter effect, EBIT1 of Helios Spain increased by 1% to €125 million (Q2/18: €124 million) with an EBIT margin of 14.8% (Q2/18: 15.6%). In H1/19, EBIT1 of Helios Spain increased by 7% to €244 million (H1/18: €227 million).
Net income1,3 decreased by 7% to €183 million (Q2/18: €197 million). In H1/19, net income1,3 also decreased by 7% to €359 million (H1/18: €388 million).
Operating cash flow1 was €197 million (Q2/18: €162 million) with a margin of 8.4% (Q2/18: 6.9%). In H1/19, operating cash flow1 was €288 million (H1/18: €259 million) with a margin of 6.2% (H1/18: 5.5%). The increase is mainly attributable to the decrease in days sales outstanding (DSO) at Helios Spain.
Fresenius Helios confirms its outlook for FY/19 and expects organic sales growth of 2% to 5% and an EBIT1 growth of -5% to -2%.
For further information on the IFRS 16 reconciliation of Fresenius Helios, please see page 18.
1 Adjusted for IFRS 16 effect
2 Adjusted for the post-acute care business transferred to Fresenius Vamed as of July 1, 2018
3 Net income attributable to shareholders of Fresenius SE & Co. KGaA
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32 of the PDF document.
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.
Sales of Fresenius Vamed increased by 76% (31%1) to €467 million (Q2/18: €266 million). Organic sales growth was 27%, acquisitions contributed 3%1 to growth. Positive currency translation effects increased sales by 1%. Sales in the service business grew by 106% (35%1) to €344 million (Q2/18: €167 million), supported by an intensified collaboration with Fresenius Helios. Sales of the project business increased by 24% to €123 million (Q2/18: €99 million). In H1/19, sales increased by 76% (32%1) to €907 million (H1/18: €515 million). Organic sales growth was 29%, acquisitions contributed 3%1 to growth. Both the service and the project business showed strong growth momentum.
EBIT2 increased by 67% to €20 million (Q2/18: €12 million) with an EBIT margin of 4.3% (Q2/18: 4.5%). EBIT2 additionally adjusted for the acquisition of Helios’ German post-acute care business was €8 million (-33% YoY) with an EBIT margin of 2.3% - the decrease was mainly driven by phasing effects in the project business. In H1/19, EBIT2 increased by 72% to €31 million (H1/18: €18 million) with an EBIT margin of 3.4% (H1/18: 3.5%). EBIT2 additionally adjusted for the acquisition of Helios’ German post-acute care business was €15 million (-17% YoY) with an EBIT margin of 2.2%.
Net income2,3 increased by 86% to €13 million (Q2/18: €7 million). In H1/19, net income2,3 increased by 73% to €19 million (H1/18: €11 million).
Order intake decreased by -41% to €115 million (Q2/18: €195 million) but increased by 9% to €498 million in H1/19 (H1/18: €455 million). As of June 30, 2019, order backlog was at €2,690 million (Dec 31, 2018: €2,420 million).
Operating cash flow2 decreased to -€42 million (Q2/18: -€14 million) with a margin of -9.0% (Q2/18: -5.3%). In H1/19, Operating cash flow2 decreased to -€65 million (H1/18:
-€56 million) with a margin of -7.2% (H1/18: -10.9%).
Fresenius Vamed confirms its outlook for FY/19 and expects organic sales growth of ~10% and EBIT growth2 of 15% to 20%.
For further information on the IFRS 16 reconciliation of Fresenius Vamed, please see page 18 of the PDF document.
1 Adjusted for German post-acute care business acquired from Fresenius Helios as of July 1, 2018
2 Adjusted for IFRS 16 effect
3 Net income attributable to shareholders of VAMED AG
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 20-32 of the PDF document.
Conference Call
As part of the publication of the results for the second quarter / first half of 2019, a conference call will be held on July 30, 2019 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.
This release contains forward-looking statements that are subject to various risks and uncertainties. Future results could differ materially from those described in these forward-looking statements due to certain factors, e.g. changes in business, economic and competitive conditions, regulatory reforms, results of clinical trials, foreign exchange rate fluctuations, uncertainties in litigation or investigative proceedings, and the availability of financing. Fresenius does not undertake any responsibility to update the forward-looking statements in this release.
Industrial production of infusion solutions at Fresenius Kabi's plant in Friedberg, Germany. Visual check of freeflex® bags.
September 28, 2019
Madrid, Spain
International Congress of the European Respiratory Society (ERS), September 28 - October 2 2019
November 16, 2019
Bangkok, Thailand
ISBT Asia, November 16 - 19 2019
Fresenius Medical Care, the world’s largest provider of dialysis services and products, celebrated today the 40th anniversary of the company’s Schweinfurt, Germany plant. Joining employees and their family members for the festivities were numerous business and political representatives, including Schweinfurt Mayor Sebastian Remelé.
Schweinfurt is Fresenius Medical Care’s largest development and manufacturing facility for dialysis machines and other medical technology devices. Over the past four decades more than 800,000 dialysis machines have been made at the site, where the company is now investing some €20 million in a new, 8,000-square-meter (86,000-square-foot) technology center. The Schweinfurt facility’s workforce now numbers more than 1,200, with about a third of the employees involved in research and development.
“Schweinfurt is a huge success story – not just for Fresenius Medical Care, but even more so for our patients around the world,” said Rice Powell, CEO of Fresenius Medical Care. “For 40 years now, we have been developing life-sustaining products here at the very highest level, and we’re doing our best to continue writing new chapters in that success story. With the building of the new technology center, we are working to mesh development and production at this site even closer together, so that we can provide even better dialysis machines for our patients in the future.”
“I am very proud that Fresenius Medical Care is established in Schweinfurt and from here developed into the world market leader for dialysis machines,” said Mayor Remelé. “These dialysis systems are used to treat several hundred thousand patients with chronic kidney failure. In the name of the city of Schweinfurt, and personally, I want to wish Fresenius Medical Care continued great success in this important field.”
The plant’s history dates back to 1979 and the acquisition of a vacant factory building in a Schweinfurt industrial zone. There, under the business name MTS Medizin-Technische Systeme Schweinfurt GmbH, 40 employees began producing the first dialysis machine developed by Fresenius – the A2008C, which won the gold medal for technical innovation at the Leipzig Trade Fair that same year. By 1984, every second dialysis machine produced in Germany was “Made in Schweinfurt.” The A2008C would go on to become the world’s leading and best-selling dialysis machine, a position Fresenius Medical Care still holds following the introduction of the A2008C’s successor models. Today, more than half of all dialysis machines sold worldwide are made by Fresenius Medical Care.
Dialysis machines, bloodline systems and dialyzers – the latter often dubbed “artificial kidneys” because this is where the blood is cleaned – are the most important products for treating chronic kidney disease. During treatment, the dialysis machine pumps the patient’s blood through bloodlines, monitors its circulation through the dialyzer, and adds anti-coagulants. Treatments are generally carried out three times weekly, taking between three and six hours each.
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 certain factors, including changes in business, economic and competitive conditions, regulatory reforms, foreign exchange rate fluctuations, uncertainties in litigation or investigative proceedings, and the availability of financing. These and other risks and uncertainties are detailed in Fresenius Medical Care AG & Co. KGaA's reports filed with the U.S. Securities and Exchange Commission. Fresenius Medical Care AG & Co. KGaA does not undertake any responsibility to update the forward-looking statements in this release.
Fresenius Medical Care, the world’s largest provider of dialysis products and services, is pleased the U.S. administration’s plans for changing the way care is provided to people with kidney disease supports its existing strategy. The company has long worked on various initiatives to promote home dialysis, improve access to transplants, and develop new, value-based care models for chronic kidney disease patients.
Rice Powell, CEO of Fresenius Medical Care, said: “We congratulate the Administration on today’s announcement and celebrate the proposed initiatives as a win for our patients and for the 30 million Americans living with kidney disease. We are committed to continuously improving the quality of life of patients affected by kidney disease and have already established initiatives to improve prevention, offer more flexible treatment options, introduce value-based care models and promote organ donation –in the United States and abroad.
We share the U.S. Administration’s commitment to expanding access to home dialysis, transplantation and new models of value-based care for chronic kidney disease, and we see it as an endorsement of our initiatives. We invest constantly in innovation and will continue to do so in order to further develop the healthcare system. The proposed reimbursement models and new incentives will help foster further innovation and support a healthcare delivery system structure that is closely attuned to the needs of our patients.
Our recent merger with NxStage, which makes the leading hemodialysis machine for home use, is just one piece of a focused effort to educate patients and physicians around the benefits of home treatment and provide industry leading solutions to enable them to do so. We are also investing in technologies for the future, including new innovations for remote patient monitoring and telehealth that, combined with predictive analytics and artificial intelligence, will make it easier to help patients between visits to a doctor and avoid unnecessary hospitalizations.
We welcome reimbursement reforms that facilitate investments in care models designed to improve outcomes and help reduce costs, two goals to which more use of home dialysis and transplants can equally contribute. We will carefully review the U.S. administration’s proposal and contribute to developing the framework that offers the best possible conditions and greatest benefit for patients.”
Fresenius Medical Care's Global Medical Office conducts research in various fields of prevention and the use of clinical data to develop optimal treatment paths while avoiding unnecessary and expensive complications.
The company is also active in the field of regenerative medicine, and is a pioneer in testing flat-rate and value-based reimbursement models. The End Stage Renal Disease Seamless Care Organizations (ESCOs) of Fresenius Medical Care, which were established in close cooperation with the U.S. Centers for Medicare & Medicaid Services (CMS), have already achieved improved treatment outcomes and cost savings.
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 certain factors, including changes in business, economic and competitive conditions, regulatory reforms, foreign exchange rate fluctuations, uncertainties in litigation or investigative proceedings, and the availability of financing. These and other risks and uncertainties are detailed in Fresenius Medical Care AG & Co. KGaA's reports filed with the U.S. Securities and Exchange Commission. Fresenius Medical Care AG & Co. KGaA does not undertake any responsibility to update the forward-looking statements in this release.
