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Fresenius Kabi has signed a worldwide settlement and license agreement with AbbVie, settling all pending patent litigations between the two companies. Under the terms of the agreement and subject to marketing authorization by the health authorities, Fresenius Kabi’s biosimilar candidate of Humira^®* (adalimumab), MSB11022**, could be commercialized in the United States from September 30, 2023.

On October 17, 2018 licenses under the agreement came into effect in certain countries in Europe in which AbbVie owns intellectual property. The application for marketing authorization for MSB11022 was submitted by Fresenius Kabi to the European Medicines Agency (EMA) at the end of last year. The dossier is currently under review. A first launch in Europe is expected in the first half of 2019.

“This agreement is a major step on our way to successfully developing and commercializing our biosimilar portfolio," said Dr. Michael Schönhofen, Member of the Fresenius Kabi Management Board and President of the Pharmaceuticals Division. “In line with our caring for life philosophy, our aim is to contribute to broader access to affordable therapies for chronic and acute diseases. Biosimilar drugs are an increasingly important component in reaching this aim – to the benefit of patients and healthcare systems. The agreement with AbbVie provides further clarity regarding when we will be able to commercialize our biosimilar candidate of Humira^®.”

*Humira^® (adalimumab) is a registered trademark of AbbVie Biotechnology Ltd.
**MSB11022 is being developed as a biosimilar candidate of Humira^® and is not yet approved by health authorities.

Fresenius confirms and narrows its Group guidance¹ for FY/18. Group sales are expected to increase at the low end of the original 5% to 8%² guidance range (in constant currency). Fresenius expects net income^3,4 growth at the low end of the original 6% to 9% guidance range (in constant currency). Excluding expenditures for the further development of the biosimilars business, net income^3,5 growth is projected at the low end of the original ~10% to 13% guidance range (in constant currency). Narrowing the Group guidance ranges is due to updated expectations at Fresenius Medical Care, Fresenius Kabi and Fresenius Helios.

Fresenius Medical Care adjusts its outlook for FY/18 as the business development in Q3/18 was below the company’s expectations. Fresenius Medical Care now expects sales growth of 2% to 3%⁶ in constant currency (previously: 5% to 7%⁶). Whilst Fresenius Kabi confirms its guidance of 4% to 7% organic sales growth, it now expects to reach the top end of this range. Fresenius Kabi sees a strong development across all product lines and regions with North America standing out. Fresenius Helios confirms and narrows its FY/18 organic sales growth outlook, and now projects growth at the low end of the original 3% to 6% range. The business development in Germany in Q3/18 was below the company’s expectations mainly due to a decline in admissions and additional catalogue effects. In line with market development in Germany, Fresenius Helios sees a trend towards outpatient treatments leading to fewer admissions in its hospitals.

On a comparable basis⁸, Fresenius Medical Care now expects FY/18 net income⁷ to increase by 11% to 12%⁸ in constant currency (previously: 13% to 15%⁸). On an adjusted basis⁹, Fresenius Medical Care now expects FY/18 net income⁷ to increase by 2% to 3%⁹ in constant currency (previously: 7% to 9%⁹). Fresenius Kabi increases its FY/18 EBIT outlook and now expects 1% to 3%¹⁰ growth in constant currency (previously: -2% to +1%¹⁰). The increase is driven by a strong development across all product lines and regions with North America standing out. FY/18 EBIT excluding expenditures for the further development of the biosimilars business is now expected to grow by ~9% to 11%¹¹ in constant currency (previously: ~6% to 9%¹¹). Fresenius Helios adjusts its FY/18 EBIT outlook and now expects 0% to 2% growth (previously: 5% to 8%), driven by lower sales growth in Germany. Moreover, preparatory structural activities for anticipated regulatory requirements (e.g. clustering), as well as a lack of privatization opportunities in the German market continue to weigh on earnings growth.

Fresenius Vamed confirms its outlook for FY/18 and expects organic sales growth in the range of 5% to 10% and FY/18 EBIT growth of 32% to 37%. The integration of the inpatient post-acute care business acquired from Helios Germany is fully on track.

Q3/2018 preliminary financial results

In Q3/18, Fresenius Group sales increased by ~3%¹² (~4%¹² in constant currency) to ~€8.2 billion (Q3/2017: €8.297 billion). Group net income³ before special items¹³ increased by ~8% (~8% in constant currency) to ~€445 million (Q3/2017: €413 million). Fresenius Medical Care has increased the provision for the FCPA (Foreign Corrupt Practices Act) related charge by €75 million (not tax deductible). As in 2017, this charge is treated as a special item. Group net income³ before special items¹³ and before expenses for the further development of the biosimilars business increased by ~13% (~13% in constant currency) to ~€474 million (Q3/2017: €423 million).

Fresenius will publish its detailed Q3/18 and Q1-Q3/18 financial results on October 30, 2018.

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¹Excluding effects related to the Akorn and NxStage transactions, gains from divestitures of Care Coordination activities and FCPA provision
²2017 base adjusted for IFRS 15 adoption (deduction of €486 million at Fresenius Medical Care) and divestitures of Care Coordination activities (deduction of €558 million at Fresenius Medical Care)
³Net income attributable to shareholders of Fresenius SE & Co. KGaA
⁴2017 base: €1,804 million; 2018 before special items (i.e. expenses related to the Akorn and NxStage transactions, gains from divestitures of Care Coordination activities and FCPA provision; including contributions to the campaigns in the U.S. opposing state ballot initiatives at Fresenius Medical Care and including expenditures for further development of the biosimilars business at Fresenius Kabi (€43 million after tax in FY/17 and ~€120 million after tax in FY/18))
⁵2017 base: €1,847 million; 2018 before special items (i.e. expenses related to the Akorn and NxStage transactions, gains from divestitures of Care Coordination activities and FCPA provision; including contributions to the campaigns in the U.S. opposing state ballot initiatives at Fresenius Medical Care excluding the expenditures for further development of the biosimilars business at Fresenius Kabi (€43 million after tax in FY/17 and ~€120 million after tax in FY/18))
⁶2017 base: €16,739 million (adjusted for IFRS 15 adoption (-€486 million) and divestitures of Care Coordination activities (-€558 million))
⁷Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
⁸2017 base: €1,242 million, excluding H2/17 net income of divestitures of Care Coordination activities (-€38 million); 2018 including benefits of the U.S. tax reform but excluding gains from divestitures of Care Coordination activities, contributions to the campaigns in the U.S. opposing state ballot initiatives at Fresenius Medical Care and FCPA provision
⁹2017 base: €1,162 million, excluding divestitures of Care Coordination activities (-€38 million), the effect of the U.S. tax reform, natural disaster costs, FCPA provision and effects of the agreement with the U.S. Departments of Veterans Affairs and Justice (VA agreement)
¹⁰2017 base: €1,177 million; 2017 & 2018 before special items, including expenditures for the further development of the biosimilars business (€60 million in FY/17 and ~€160 million in FY/18)
¹¹2017 base: €1,237 million; 2017 & 2018 before special items, excluding expenditures for the further development of the biosimilars business (€60 million in FY/17 and ~€160 million in FY/18)
¹²Growth rates adjusted for IFRS 15 adoption and divestitures of Care Coordination activities (Q3/17 base: €7,927 million)
¹³Before expenses related to the Akorn transaction, gains from divestitures of Care Coordination activities and FCPA provision, but including contributions to the campaigns in the U.S. opposing state ballot initiatives at Fresenius Medical Care

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Fresenius confirms and narrows its Group guidance¹ for FY/18. Group sales are expected to increase at the low end of the original 5% to 8%² guidance range (in constant currency). Fresenius expects net income^3,4 growth at the low end of the original 6% to 9% guidance range (in constant currency). Excluding expenditures for the further development of the biosimilars business, net income^3,5 growth is projected at the low end of the original ~10% to 13% guidance range (in constant currency). Narrowing the Group guidance ranges is due to updated expectations at Fresenius Medical Care, Fresenius Kabi and Fresenius Helios.

Fresenius Medical Care adjusts its outlook for FY/18 as the business development in Q3/18 was below the company’s expectations. Fresenius Medical Care now expects sales growth of 2% to 3%⁶ in constant currency (previously: 5% to 7%⁶). Whilst Fresenius Kabi confirms its guidance of 4% to 7% organic sales growth, it now expects to reach the top end of this range. Fresenius Kabi sees a strong development across all product lines and regions with North America standing out. Fresenius Helios confirms and narrows its FY/18 organic sales growth outlook, and now projects growth at the low end of the original 3% to 6% range. The business development in Germany in Q3/18 was below the company’s expectations mainly due to a decline in admissions and additional catalogue effects. In line with market development in Germany, Fresenius Helios sees a trend towards outpatient treatments leading to fewer admissions in its hospitals.

On a comparable basis⁸, Fresenius Medical Care now expects FY/18 net income⁷ to increase by 11% to 12%⁸ in constant currency (previously: 13% to 15%⁸). On an adjusted basis⁹, Fresenius Medical Care now expects FY/18 net income⁷ to increase by 2% to 3%⁹ in constant currency (previously: 7% to 9%⁹). Fresenius Kabi increases its FY/18 EBIT outlook and now expects 1% to 3%¹⁰ growth in constant currency (previously: -2% to +1%¹⁰). The increase is driven by a strong development across all product lines and regions with North America standing out. FY/18 EBIT excluding expenditures for the further development of the biosimilars business is now expected to grow by ~9% to 11%¹¹ in constant currency (previously: ~6% to 9%¹¹). Fresenius Helios adjusts its FY/18 EBIT outlook and now expects 0% to 2% growth (previously: 5% to 8%), driven by lower sales growth in Germany. Moreover, preparatory structural activities for anticipated regulatory requirements (e.g. clustering), as well as a lack of privatization opportunities in the German market continue to weigh on earnings growth.

Fresenius Vamed confirms its outlook for FY/18 and expects organic sales growth in the range of 5% to 10% and FY/18 EBIT growth of 32% to 37%. The integration of the inpatient post-acute care business acquired from Helios Germany is fully on track.

Q3/2018 preliminary financial results

In Q3/18, Fresenius Group sales increased by ~3%¹² (~4%¹² in constant currency) to ~€8.2 billion (Q3/2017: €8.297 billion). Group net income³ before special items¹³ increased by ~8% (~8% in constant currency) to ~€445 million (Q3/2017: €413 million). Fresenius Medical Care has increased the provision for the FCPA (Foreign Corrupt Practices Act) related charge by €75 million (not tax deductible). As in 2017, this charge is treated as a special item. Group net income³ before special items¹³ and before expenses for the further development of the biosimilars business increased by ~13% (~13% in constant currency) to ~€474 million (Q3/2017: €423 million).

Fresenius will publish its detailed Q3/18 and Q1-Q3/18 financial results on October 30, 2018.

----------------------------------------
¹Excluding effects related to the Akorn and NxStage transactions, gains from divestitures of Care Coordination activities and FCPA provision
²2017 base adjusted for IFRS 15 adoption (deduction of €486 million at Fresenius Medical Care) and divestitures of Care Coordination activities (deduction of €558 million at Fresenius Medical Care)
³Net income attributable to shareholders of Fresenius SE & Co. KGaA
⁴2017 base: €1,804 million; 2018 before special items (i.e. expenses related to the Akorn and NxStage transactions, gains from divestitures of Care Coordination activities and FCPA provision; including contributions to the campaigns in the U.S. opposing state ballot initiatives at Fresenius Medical Care and including expenditures for further development of the biosimilars business at Fresenius Kabi (€43 million after tax in FY/17 and ~€120 million after tax in FY/18))
⁵2017 base: €1,847 million; 2018 before special items (i.e. expenses related to the Akorn and NxStage transactions, gains from divestitures of Care Coordination activities and FCPA provision; including contributions to the campaigns in the U.S. opposing state ballot initiatives at Fresenius Medical Care excluding the expenditures for further development of the biosimilars business at Fresenius Kabi (€43 million after tax in FY/17 and ~€120 million after tax in FY/18))
⁶2017 base: €16,739 million (adjusted for IFRS 15 adoption (-€486 million) and divestitures of Care Coordination activities (-€558 million))
⁷Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
⁸2017 base: €1,242 million, excluding H2/17 net income of divestitures of Care Coordination activities (-€38 million); 2018 including benefits of the U.S. tax reform but excluding gains from divestitures of Care Coordination activities, contributions to the campaigns in the U.S. opposing state ballot initiatives at Fresenius Medical Care and FCPA provision
⁹2017 base: €1,162 million, excluding divestitures of Care Coordination activities (-€38 million), the effect of the U.S. tax reform, natural disaster costs, FCPA provision and effects of the agreement with the U.S. Departments of Veterans Affairs and Justice (VA agreement)
¹⁰2017 base: €1,177 million; 2017 & 2018 before special items, including expenditures for the further development of the biosimilars business (€60 million in FY/17 and ~€160 million in FY/18)
¹¹2017 base: €1,237 million; 2017 & 2018 before special items, excluding expenditures for the further development of the biosimilars business (€60 million in FY/17 and ~€160 million in FY/18)
¹²Growth rates adjusted for IFRS 15 adoption and divestitures of Care Coordination activities (Q3/17 base: €7,927 million)
¹³Before expenses related to the Akorn transaction, gains from divestitures of Care Coordination activities and FCPA provision, but including contributions to the campaigns in the U.S. opposing state ballot initiatives at Fresenius Medical Care

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• Anticipated revenue decrease of around 6% on a reported basis and an increase of around 2% on a comparable basis¹ (+3% at constant currency)
• Net income development affected by
  • Weaker than expected Dialysis Services business
  • Contributions to the campaigns in the U.S. opposing state ballot initiatives
  • Year-to-date adjustments for hyperinflation in Argentina
  • Increased provision for the ongoing FCPA settlement discussion
• Targets for full year 2018 revised:
  • Revenue growth on a comparable basis¹: 2 to 3% (from 5 to 7%)
  • Net income growth on a comparable basis¹: 11 to 12% (from 13 to 15%)

 ¹For a detailed reconciliation, please refer to the table at the end of the press release
 ²Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA

“The underlying growth trends and business drivers remain intact. While we were able to improve profitability in North America, the growth acceleration in the region did not materialize as fast as anticipated. In addition, the business performance in some emerging countries was muted due to a challenging economic environment. Based on these developments, which are not expected to be fully recovered in the fourth quarter, we adjust our targets for fiscal 2018,” said Rice Powell, Chief Executive Officer of Fresenius Medical Care. “To protect the access of our patients to dialysis care, we contributed to the opposition to the ballot initiatives in the U.S.”

Revenue
Revenue in the third quarter 2018 is anticipated to decline by around 6% to approx. EUR 4,058 million (a decrease of around 6% at constant currency), mainly driven by the higher comparable base which included the Q3 2017 revenue contribution from Sound Inpatient Physicians (“Sound”) of EUR 253 million as well as the impact from the IFRS 15 implementation. Excluding these two effects, revenue is expected to increase by around 2% on a comparable basis (~3% at constant currency), mainly driven by an increase in treatment volumes in North America. The increase in revenue is anticipated to come in below expectations due to an overall weaker than expected Health Care Services business in North America and the difficult economic environment in certain emerging countries, including currency fluctuations. The lower than expected increase in North America was mainly driven by an unfavorable payor mix as well as lower than expected volumes in the Dialysis Services and Care Coordination businesses.

Operating income (EBIT)
Total operating income (EBIT) is expected to reach approx. EUR 527 million in the third quarter of 2018, a decrease of around 13% (a decrease of around 20% at constant currency). The anticipated strong decrease was mainly attributable to the higher comparable base which included the Q3 2017 EBIT contribution from Sound of EUR 20 million. In addition, the contributions to the opposition to the ballot initiatives in the U.S. of EUR 23 million (not tax effected) in the third quarter affected the operating income growth. We have also increased the provision for the FCPA related charge by EUR 75 million (not tax effected). This increase reflects an understanding with the U.S. Government on the financial aspects of a potential settlement and an update of ongoing legal costs to reach closure. However, significant non-financial matters are still under discussion and must be resolved to the company’s satisfaction for a settlement to occur.

Excluding the effects of Sound, the contributions to the ballot initiatives as well as the FCPA related charge, EBIT is expected to increase by around 5% on a comparable basis (around 4% at constant currency). The assumed lower than expected EBIT increase on a comparable basis was driven by the weaker Dialysis Services business in North America due to higher patient care and supply cost, in particular for home dialysis. The development was also negatively impacted by charges for hyperinflation in Argentina of around EUR 17 million at constant currency (not tax effected), transactional exchange rate losses and higher bad debt associated with the development in certain emerging countries. These developments could not be fully mitigated in the quarter.

Net income
Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA is expected to decrease by around 8% to approx. EUR 285 million in the third quarter of 2018 (a decrease of around 17% at constant currency). On a comparable basis net income is expected to increase by around 20% to approx. EUR 364 million (around 19% at constant currency). The contributions to the opposition to the ballot initiatives in the U.S., the hyperinflationary adjustment for Argentina and the increase of the provision for the FCPA related charge have not been tax effected.

Outlook 2018
Fresenius Medical Care adjusts its targets for the financial year 2018 as the business development in the third quarter 2018 was below the company’s expectations. The company now expects revenue growth of 2 to 3% at constant currency (previously: 5 to 7%). Net income on a comparable basis is expected to increase by 11 to 12% (previously: 13 to 15%) at constant currency. On an adjusted basis, net income is expected to increase by 2 to 3% (previously: 7 to 9%) at constant currency.

The targets exclude the effect from the planned acquisition of NxStage Medical.

Final Q3 2018 results and conference call
All figures in this press release are still preliminary. The company will publish its Q3 and 9 months 2018 financial results, as scheduled, on October 30, 2018. Fresenius Medical Care will host a conference call to discuss the results of the third quarter on October 30, 2018, at 3:30 p.m. CET / 9:30 a.m. EDT. Details will be available on the company’s website www.freseniusmedicalcare.com in the “Investors/Events” section. A replay will be available shortly after the call.

Fresenius Kabi has opened a new state-of-the-art compounding center in Canada. It involves an investment of 11 million Canadian dollars (more than €7 million), and the new site expands the company’s presence in Mississauga, Ontario. Fresenius Kabi is responding to increasing demand for large batches of compounded medications for patients in Canadian hospitals, and the 35,000-square-foot (3,300-square-meter) compounding center has the capacity to expand. The new facility is expected to employ 70 people by 2022.

Fresenius Kabi has opened a new state-of-the-art compounding center in Canada. It involves an investment of 11 million Canadian dollars (more than €7 million), and the new site expands the company’s presence in Mississauga, Ontario. Fresenius Kabi is responding to increasing demand for large batches of compounded medications for patients in Canadian hospitals, and the 35,000-square-foot (3,300-square-meter) compounding center has the capacity to expand. The new facility is expected to employ 70 people by 2022.

Fresenius Kabi has reached a milestone on the road to approval for another biosimilar. MSB11455, a biosimilar candidate for Neulasta^® (pegfilgrastim), has met its primary endpoints in the two pivotal clinical studies. For more information please see the website of Fresenius Kabi.

Fresenius Kabi has reached a milestone on the road to approval for another biosimilar. MSB11455, a biosimilar candidate for Neulasta^® (pegfilgrastim), has met its primary endpoints in the two pivotal clinical studies. For more information please see the website of Fresenius Kabi.

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Fresenius Medical Care, the world’s largest provider of dialysis products and services, supports the recommendation by the United Kingdom’s National Institute for Health and Care Excellence (NICE) to facilitate population healthcare management for UK patients with end-stage renal disease. In a guideline on renal replacement therapy published on October 3, 2018, NICE, a non-departmental public body of the UK’s Department of Health, advises health and social care professionals to consider hemodiafiltration (HDF) rather than high-flux hemodialysis (HD) if the patient is treated in-center, due to the positive impact on patient outcomes and cost-effectiveness. 

High-flux HD is the application of high-flux dialyzers to remove a broad spectrum of small and large uremic toxins in order to contribute towards better management of dialysis patients. HDF adds a convective component to the high-flux HD treatment, making it even more effective in removing larger toxins and further improving patient outcomes.

In order to provide evidence-based guidance, NICE systematically reviewed best available renal replacement therapy studies and conducted an economic evaluation. The assessment identified clear benefits of HDF treatment for both renal disease patients and the national healthcare system, as HDF is not only considered cost-effective but is also expected to decrease mortality rates among patients. 

Fresenius Medical Care has a long-standing commitment to make HDF available to patients to achieve the best possible outcomes. The company has developed innovative technologies which automatically maximize substitution rates in HDF and support the application of HighVolumeHDF®. This makes HDF treatments as simple as HD, and allows HDF treatments to be delivered at the same cost as HD in the UK. 

Dr. Katarzyna Mazur-Hofsaess, Chief Executive Officer of Fresenius Medical Care for Europe, the Middle East and Africa, said: “The NICE guidelines incorporate the existing evidence base for the benefits of HDF therapy. We are convinced that our HighVolumeHDF® therapy platform provides the easiest way for the user to deliver HDF to patients. Our commitment to make HighVolumeHDF® available to all patients across the UK remains a top priority for us.”

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In the lawsuit by Akorn, Inc. against Fresenius for the consummation of the April 2017 merger agreement the Court of Chancery in the U.S. state of Delaware today ruled in favor of Fresenius. The judgment is not yet final.

Fresenius terminated the merger agreement due to Akorn’s failure to fulfill several closing conditions. An independent investigation initiated by Fresenius had revealed, among other things, material breaches of FDA data integrity requirements relating to Akorn's operations. Akorn responded by suing in the Court of Chancery in Delaware for the consummation of the agreement.