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Services
June 08, 2018 - 08:30 am
Berlin, Germany
June 7 – 8, 2018
For the seventh straight time, the market research institute Potentialpark has honored the global healthcare group Fresenius as the German company with the best overall Internet offering for job applicants.
In its just-released study for 2018, Potentialpark also put Fresenius first in two individual categories – Online Application Management and Mobile. The company was rated second in the Career Website category, and third for Social Media.
Potentialpark has carried out an annual study of German companies’ online offerings for job applicants since 2002. For this year’s study, Potentialpark assessed the online activities of 141 German companies according to more than 300 criteria. Some 38,000 students and graduates around the world participated.
“Digital channels are hugely important to our potential applicants – and that makes them essential for us,” said Markus Olbert, Senior Vice President for Corporate Human Resources at Fresenius. “For us, these awards from Potentialpark are both an indicator and a motivator to continually improve. For example, we recently overhauled our job search, and in combination with some additional optimizations to our digital channels we were able to increase the number of completed applications by about 25 percent.”
Doctor and premature baby on the neonatology ward of the Quirónsalud Clinic in Barcelona.
Company aims at strong growth in 2018 – Mid-term targets through 2020 confirmed – Growth initiatives for the next decade put in place
If no timeframe is specified, information refers to fiscal year 2017.
Fiscal year 2017:
Q4/2017:
1 Before acquisition-related expenses, expenditures for further development of biosimilars business and FCPA provision
2 Consistent with scope of original guidance: before acquisition-related expenses, expenditures for further development of biosimilars business, book gain from U.S. tax reform and FCPA provision
3 Net income attributable to shareholders of Fresenius SE & Co. KGaA
Stephan Sturm, CEO of Fresenius, said: “At Fresenius, 2017 was a year of tremendous accomplishments. Our dedicated doctors and nurses treated 17 million patients in our hospitals – and helped bring over 70,000 babies into the world. Over 320,000 dialysis patients received more than 48 million life-saving treatments in our clinics. And healthcare systems benefited as we launched over 90 new generic – and therefore less expensive – drugs. All of this was achieved by the more than 270,000 people whom it was our privilege to employ last year. Our business results reflect our successful work for people. Record sales and earnings in 2017, along with the company’s strong guidance for this year and through 2020, show that our uncompromising focus on patients and quality also pays for our investors.”
Investigation into alleged breaches of FDA data integrity requirements at Akorn, Inc.
Fresenius is conducting an independent investigation, using external experts, into alleged breaches of FDA data integrity requirements relating to product development at Akorn, Inc. The Management and Supervisory Boards of Fresenius will assess the findings of that investigation. The consummation of the transaction may be affected if the closing conditions under the merger agreement are not met. Fresenius does not intend to provide further updates as the investigation proceeds. Fresenius continues to seek FTC clearance.
Strong Group guidance1 for 2018
For 2018, Fresenius projects sales growth2 of 5% to 8% in constant currency. Net income3,4 is expected to grow by 6% to 9% in constant currency. Excluding expenditures for the further development of the biosimilars business, net income3,5 is expected to grow by ~10% to 13% in constant currency.
Fresenius expects to further reduce its net debt/EBITDA6 ratio by year-end 2018.
Mid-term growth targets 2020 confirmed7
Based on the strong financial results 2017, Fresenius confirms the 2020 mid-term growth targets. Group sales are expected to grow with a compounded annual growth rate (CAGR) in the range of 7.1% to 10.3% (Mid-point: 8.7%). Group net income3 is projected to increase with a CAGR in the range of 8.3% to 12.6% (Mid-point: 10.5%).
25th consecutive dividend increase proposed
Based on the strong financial results, the Management Board will propose to the Supervisory Board a dividend increase of 21% to €0.75 per share (2016: €0.62). The expected dividend distribution to the shareholders of Fresenius SE & Co. KGaA is €416 million.
1 Excluding pending acquisitions of Akorn and NxStage
2 2017 adjusted for IFRS 15 (€486 million at Fresenius Medical Care)
3 Net income attributable to shareholders of Fresenius SE & Co. KGaA
4 Base 2017: €1,816 million; 2018 before special items (before acquisition-related expenses); including expenditures for further development of biosimilars business (€43 million after tax in FY/17 and ~€120 million after tax in FY/18)
5 Base 2017: €1,859 million; 2018 before special items (before acquisition-related expenses)
6 Calculated at expected annual average exchange rates, for both net debt and EBITDA; excluding pending acquisitions of Akorn and NxStage; excluding further potential acquisitions; at current IFRS rules
7 At February 2017 exchange rates and IFRS rules; including small and mid-size acquisitions
16% sales growth in constant currency
Group sales increased by 15% (16% in constant currency) to €33,886 million (2016: €29,471 million). Organic sales growth was 6%. Acquisitions contributed 10%. Negative currency translation effects (1%) were mainly driven by the devaluation of the US dollar and the Chinese yuan against the euro. In Q4/2017, Group sales increased by 11% (17% in constant currency) to €8,695 million (Q4/2016: €7,820 million). Organic sales growth was 6%. Acquisitions contributed 11%.
Group sales by region:
1 Calculated on the basis of contribution to consolidated sales
2 Including effects of agreement with the U.S. Departments of Veterans Affairs and Justice (VA agreement)
21% adjusted net income1,2 growth in constant currency
Group EBITDA3 increased by 14% (15% in constant currency) to €6,267 million (2016: €5,517 million). Adjusted Group EBIT4 increased by 14% (15% in constant currency) to €4,890 million (2016: €4,302 million). The adjusted EBIT margin4 was 14.4% (2016: 14.6%). In Q4/2017, adjusted Group EBIT4 increased by 9% (14% in constant currency) to €1,354 million (Q4/2016: €1,244 million), the adjusted EBIT margin4 was 15.6% (Q4/2016: 15.9%). Group EBIT3 before special items increased by 12% (14% in constant currency) to €4,830 million (2016: €4,302 million). The EBIT margin3 was 14.3% (2016: 14.6%). In Q4/2017, Group EBIT3 increased by 5% (11% in constant currency) to €1,308 million (Q4/2016: €1,244 million), the EBIT margin3 was 15.0% (Q4/2016: 15.9%).
Group net interest3 reached -€636 million (2016: -€582 million). The increase is mainly driven by the financing of the Quirónsalud acquisition, partly offset by positive effects from refinancing activities.
The Group tax rate before special items was 28.2% (2016: 28.1%). The U.S. tax reform, which went into effect on January 1, 2018, triggered a revaluation of deferred tax liabilities. This resulted in a one-time book gain of €103 million in 2017. Accordingly, the group tax rate after special items decreased to 23.0%.
Noncontrolling interest3 was €1,194 million (2016: €1,116 million), of which 95% was attributable to the noncontrolling interest in Fresenius Medical Care.
Adjusted Group net income1,2 increased by 19% (21% in constant currency) to €1,859 million (2016: €1,560 million). Adjusted earnings per share1,2 increased by 18% (19% in constant currency) to €3.35 (2016: €2.85). In Q4/2017, adjusted Group net income1,2 increased by 18% (22% in constant currency) to €520 million (Q4/2016: €442 million). Adjusted earnings per share1,2 increased by 16% (20% in constant currency) to €0.93 (Q4/2016: €0.81).
1 Net income attributable to shareholders of Fresenius SE & Co. KGaA
2 Consistent with scope of original guidance: before acquisition-related expenses, expenditures for further development of biosimilars business, book gain from U.S. tax reform and FCPA provision
3 Before special items
4 Consistent with scope of original guidance: before acquisition-related expenses, expenditures for further development of biosimilars business and FCPA provision
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 18-19 in the pdf document.
Group net income before special items1 increased by 16% (18% in constant currency) to €1,816 million (2016: €1,560 million). Earnings per share1,2 increased by 15% (16% in constant currency) to €3.28 (2016: €2.85). In Q4/2017, Group net income1,2 increased by 10% (15% in constant currency) to €487 million (Q4/2016: €442 million). Earnings per share1,2 increased by 9% (13% in constant currency) to €0.88 (Q4/2016: €0.81).
Group net income1 increased by 16% (18% in constant currency) to €1,814 million
(2016: €1,560 million). Earnings per share1 increased by 15% (16% in constant currency) to €3.27 (2016: €2.85). In Q4/2017, Group net income1 increased by 16% (21% in constant currency) to €511 million (Q4/2016: €442 million). Earnings per share1 increased by 14% (19% in constant currency) to €0.92 (Q4/2016: €0.81).
Continued investment in growth
Spending on property, plant and equipment was €1,828 million (2016: €1,633 million), primarily for the modernization and expansion of dialysis clinics, production facilities as well as hospitals and day clinics. This corresponds to 5.4% of sales.
Total acquisition spending of €6,852 million (2016: €926 million) was mainly related to the acquisitions of Quirónsalud and Merck KGaA’s biosimilars business.
Excellent cash flow development
Operating cash flow increased by 10% to €3,937 million (2016: €3,585 million) with a margin of 11.6% (2016: 12.2%). The excellent cash flow was driven by Fresenius Medical Care and a record cash flow at Fresenius Kabi.
Free cash flow before acquisitions and dividends increased by 13% to €2,232 million (2016: €1,969 million), with a margin of 6.6% (2016: 6.7%). Free cash flow after acquisitions and dividends was €-4,557 million (2016: €746 million) reflecting the acquisitions of Quirónsalud and Merck KGaA’s biosimilars business.
1 Net income attributable to shareholders of Fresenius SE & Co. KGaA
2 Before special items
Solid balance sheet structure
The Group’s total assets increased by 14% (21% in constant currency) to €53,133 million (Dec. 31, 2016: €46,697 million), driven primarily by the acquisition of Quirónsalud. Current assets grew by 7% (15% in constant currency) to €12,604 million (Dec. 31, 2016: €11,744 million). Non-current assets increased by 16% (23% in constant currency) to €40,529 million (Dec. 31, 2016: € 34,953 million).
Total shareholders’ equity increased by 4% (14% in constant currency) to €21,720 million (Dec. 31, 2016: €20,849 million). The equity ratio decreased to 40.9% (Dec. 31, 2016: 44.6%).
Group debt increased by 29% (35% in constant currency) to €19,042 million (Dec. 31, 2016: € 14,780 million), mainly driven by the acquisition financing of Quirónsalud. Group net debt increased by 32% (37% in constant currency) to € 17,406 million (Dec. 31, 2016: € 13,201 million.
As of December 31, 2017, the net debt/EBITDA ratio was 2.841,2 (September 30, 2017: 2.971,2; December 31, 2016: 2.331; pro forma Quirónsalud 3.091).
1 At LTM average exchange rates for both net debt and EBITDA; pro forma acquisitions
2 Before special items
Increased number of employees
As of December 31, 2017, the number of employees increased by 17% to 273,249 (Dec. 31, 2016: 232,873).
Business Segments
Fresenius Medical Care
Fresenius Medical Care is the world's largest provider of products and services for individuals with renal diseases. As of December 31, 2017, Fresenius Medical Care was treating 320,960 patients in 3,752 dialysis clinics. Along with its core business, the company focuses on expanding the range of medical services in the field of Care Coordination.
Sales1 increased by 7% (9% in constant currency) to €17,784 million (2016: €16,570 million). Organic sales growth was 7%. Acquisitions and divestitures increased sales by net 2%. Currency translation effects reduced sales by 2%. In Q4/2017, sales of €4,429 million (Q4/2016: €4,417 million) were on the prior-year level (increased by 8% in constant currency).
Health Care services sales (dialysis services and care coordination) increased by 8% (10% in constant currency) to €14,532 million (2016: €13,505 million). Dialysis product sales increased by 6% (7% in constant currency) to €3,252 million (2016: €3,064 million).
In North America, sales increased by 7% to €12,879 million (2016: €12,030 million). Health Care services sales grew by 7% to €12,036 million (2016: €11,214 million). Dialysis product sales increased by 3% to €843 million (2016: €816 million).
Sales outside North America increased by 8% (9% in constant currency) to €4,890 million (2016: €4,527 million). Health Care services sales increased by 9% (11% in constant currency) to €2,496 million (2016: €2,292 million). Dialysis product sales increased by 6% (7% in constant currency) to €2,315 million (2016: €2,185 million).
1Excluding agreement with the United States Depatment of Veterans Affairs and Justice (VA agreement): €17,689 million
2Before natural disaster costs, VA agreement and FCPA provision
3Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
4Before book gain from U.S. tax reform, natural disaster costs, VA agreement and FCPA provision
5Reported sales 2017 of €17,784 million, adjusted for IFRS 15 (€486 million)
6Base 2017: €1,280 million; 2018 including recurring benefits from U.S. tax reform of €140 million to €160 million
EBIT decreased by -2% (0% in constant currency) to €2,362 million (2016: €2,409 million). Adjusted EBIT1 increased by 4% (5% in constant currency) to €2,493 million (2016: €2,409 million), mainly due to the strong business performance in North America and in Asia-Pacific. The adjusted EBIT1 margin was 14.1% (2016: 14.5%). In Q4/2017, EBIT decreased by -29% (-22% in constant currency) to €519 million (2016: €730 million). In Q4/2017, adjusted EBIT1 of €726 million (Q4/2016: €730 million) was slighty below the prior-year level (increased by 6% in constant currency). The adjusted EBIT margin1 was 16.4% (Q4/2016: 16.5%).
Net income2 increased by 12% (14% in constant currency) to €1,280 million (2016: €1,144 million). Consistent with the original scope of guidance, i.e. excluding the effects of the VA agreement, natural disaster costs, the book gain from the US tax reform and the FCPA provision, net income2 increased by 7% in constant currency. In Q4/2017, net income2 increased by 8% (increased 16% in constant currency) to €394 million (Q4/2016: €363 million). Excluding the effects of the VA agreement, natural disaster costs, the book gain from the US tax reform and the FCPA provision, net income2 increased by 6% in constant currency.
Operating cash flow increased by 13% to €2,192 million (2016: €1,932 million). The cash flow margin was 12.3% (2016: 11.7%).
For 2018, Fresenius Medical Care expects sales to grow by ~8%3 in constant currency. The 2018 guidance is based on 2017 sales adjusted for the effect of the IFRS 15 implementation. Net income2 is expected to increase by 13% to 15%4 in constant currency in 2018, including recurring benefits from U.S tax reform of €140 million to €160 million.
1Before natural disaster costs, effects of VA agreement and FCPA provision
2Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
3Reported sales 2017 of €17,784 million, adjusted for effect from IFRS 15 (€486 million)
4Base 2017: €1,280 million
For further information, please see Fresenius Medical Care’s Press Release at www.freseniusmedicalcare.com.
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, we are developing products with a focus on oncology and autoimmune diseases.
1Before special items
2Consistent with scope of original guidance: before acquisition-related expenses and expenditures for further development of biosimilars business
3Net income attributable to shareholders of Fresenius SE & Co. KGaA
4Consistent with scope of original guidance: before acquisition-related expenses, expenditures for further development of biosimilars business and book gain from U.S. tax reform
5Base 2017: €1,177 million; 2018 before special items (before acquisition-related expenses), including expenditures for further development of biosimilars business (€60 million in FY/17 and expected expenditures of ~€160 million in FY/18)
6Base: 2017: €1,237 million; 2018 before special items (before acquisition-related expenses)
Sales increased by 6% (7% in constant currency) to €6,358 million (2016: €6,007 million). Organic sales growth was 7%. Negative currency translation effects (-1%) were mainly related to the devaluation of the US dollar and the Chinese yuan against the Euro. In Q4/2017, sales increased by 3% (8% in constant currency) to €1,594 million (Q4/2016: €1,550 million). Organic sales growth was 8%.
Sales in Europe grew by 4% (organic growth: 5%) to €2,214 million (2016: €2,135 million). In Q4/2017, sales increased by 2% (3% organic) to €579 million (Q4/2016: €566 million).
Sales in North America increased by 6% (8% organic) to €2,290 million (2016: €2,170 million). In Q4/2017, sales increased by 2% (11% organic) to €554 million (Q4/2016: €542 million).
Sales in Asia-Pacific increased by 8% (11% organic) to €1,196 million (2016: €1,108 million). In Q4/2017, sales increased by 5% (11% organic) to €302 million (Q4/2016: €287 million). Sales in Latin America/Africa increased by 11% (10% organic) to €658 million (2016: €594 million). In Q4/2017, sales increased by 3% (10% organic) to €159 million (Q4/2016: €155 million).
Adjusted EBIT1 increased by 6% (8% in constant currency) to €1,237 million (2016: €1,171 million). The adjusted EBIT margin1 was 19.5% (2016: 19.5%). In Q4/2017, adjusted EBIT1 increased by 3% (9% in constant currency) to €318 million (Q4/2016: €308 million). The adjusted EBIT margin1 was 19.9% (Q4/2016: 19.9%).
EBIT before special items increased by 1% (3% in constant currency) to €1,177 million (2016: €1,171 million). The EBIT margin before special items was 18.5% (2016: 19.5%). In Q4/2017, EBIT before special items decreased by -12% ( 6% in constant currency) to €272 million (Q4/2016: €308 million). The EBIT margin before special items decreased to 17.1% (Q4/2016: 19.9%) due to expenditures for the further development of biosimilars business.
Adjusted net income2,3 increased by 10% (13% in constant currency) to €745 million (2016: €675 million). In Q4/2017, adjusted net income2,3 increased by 4% (10% in constant currency) to €191 million (Q4/2016: €184 million).
Operating cash flow reached an all-time high of €1,010 million (2016: €1,004 million). The cash flow margin was 15.9% (2016: 16.7%).
For 2018, Fresenius Kabi expects organic sales growth of 4% to 7% and EBIT growth in constant currency of -3% to -6%4. Excluding expenditures for the further development of the biosimilars business EBIT is expected to grow by ~2% to 5%5 in constant currency.
1Consistent with scope of original guidance: before acquisition-related expenses and expenditures for further development of biosimilars business
2Net income attributable to shareholders of Fresenius SE & Co. KGaA
3Consistent with scope of original guidance: before acquisition-related expenses, expenditures for further development of biosimilars business and book gain from U.S. tax reform
4Base 2017: €1,177 million; 2018 before special items (before acquisition-related expenses), including expenditures for further development of biosimilars business (€60 million in FY/17 and expected expenditures of ~€160 million in FY/18)
5Base: 2017: €1,237 million; 2018 before special items (before acquisition-related expenses)
Fresenius Helios
Fresenius Helios is Europe's leading private hospital operator. The company comprises Helios Germany and Helios Spain (Quirónsalud). Helios Germany operates 111 hospitals, thereof 88 acute care clinics and 23 post-acute care clinics, and treats more than 5.3 million patients annually. Quirónsalud operates 45 hospitals, 55 outpatient centers and around 300 occupational risk prevention centers, and treats approximately 11.6 million patients per year.
Fresenius Helios increased sales by 48% to €8,668 million (2016: €5,843 million). Organic sales growth was 4%. Acquisitions, mainly Quirónsalud, increased sales by 44%. In Q4/2017, sales increased by 54% to €2,246 million (Q4/2016: €1,461 million), organic sales growth was 3%.
Sales of Helios Germany increased by 4% (4% organic) to €6,074 million (2016: €5,843 million). In Q4/2017, sales increased by 3% (3% organic) to €1,512 million (Q4/2016: €1,461 million). Helios Spain (Quirónsalud) has been consolidated since February 1, 2017 and generated sales of €2,594 million (thereof €734 million in Q4/2017).
Fresenius Helios grew EBIT by 54% to €1,052 million (2016: €683 million). The EBIT margin increased to 12.1% (2016: 11.7%). In Q4/2017, EBIT increased by 61% to €283 million (Q4/2016: €176 million). The EBIT margin increased to 12.6% (Q4/2016: 12.0%).
EBIT of Helios Germany increased by 6% to €725 million (2016: €683 million) with a margin of 11.9% (2016: 11.7%). In Q4/2017, EBIT of Helios Germany was on the prior-year level with €176 million (Q4/2016: €176 million). The margin was 11.6% (2016: 12.0%).
EBIT of Helios Spain was €327 million (thereof €107 million in Q4/2017) with a margin of 12.6% (Q4/2017: 14.6%).
Net income1 increased by 34% to €728 million (2016: €544 million). In Q4/2017, net income1 increased by 42% to €202 million (Q4/2016: €142 million).
Operating cash flow increased by 18% to €733 million (2016: €622 million) driven by the first-time consolidation of Quirónsalud and an excellent operating result. The margin was 8.5% (2016: 10.6%).
For 2018, Fresenius Helios expects organic sales growth of 3% to 6% and EBIT growth of 7% to 10%.
1Net income attributable to shareholders of Fresenius SE & Co. KGaA
Fresenius Vamed
Fresenius Vamed manages projects and provides services for hospitals and other health care facilities worldwide. 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 increased by 6% (6% in constant currency) to €1,228 million (2016: €1,160 million). Organic sales growth was 6%. Sales in the project business increased by 2% to €606 million (2016: €594 million). Sales in the service business grew by 10% to €622 million (2016: €566 million). In Q4/2017, sales increased by 14% to €480 million (Q4/2016: €420 million). Organic sales growth was 14%.
EBIT grew by 10% to €76 million (2016: €69 million). The EBIT margin increased to 6.2% (2016: 5.9%). In Q4/2017, EBIT increased by 16% to €44 million (Q4/2016: €38 million). The EBIT margin increased to 9.2% (2016: 9.0%).
Net income1 grew by 11% to €50 million (2016: €45 million). In Q4/2017, net income1 increased by 21% to €29 million (Q4/2016: €24 million).
Order intake increased to €1,096 million (2016: €1,017 million), reaching an all-time high. As of December 31, 2017, order backlog was €2,147 million (Dec. 31, 2016: €1,961 million).
For 2018, Fresenius Vamed expects organic sales growth in the range of 5% to 10% and EBIT growth of 5% to 10%.
1Net income attributable to shareholders of VAMED AG
Press Conference
As part of the publication of the results for fiscal year 2017, a press conference will be held on February 27, 2018 at 10 a.m. CET. You are cordially invited to follow the press conference in a live broadcast over the Internet at www.fresenius.com/media-calendar. Following the press conference, 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.
For a detailed overview of special items and adjustments, please see the reconciliation tables in the pdf file on page 18-19.
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 fiscal year 2017.
Fiscal year 2017:
Q4/2017:
1 Before acquisition-related expenses, expenditures for further development of biosimilars business and FCPA provision2 Consistent with scope of original guidance: before acquisition-related expenses, expenditures for further development of biosimilars business, book gain from U.S. tax reform and FCPA provision3 Net income attributable to shareholders of Fresenius SE & Co. KGaA
Investigation into alleged breaches of FDA data integrity requirements at Akorn, Inc.
Fresenius is conducting an independent investigation, using external experts, into alleged breaches of FDA data integrity requirements relating to product development at Akorn, Inc. The Management and Supervisory Boards of Fresenius will assess the findings of that investigation. The consummation of the transaction may be affected if the closing conditions under the merger agreement are not met. Fresenius does not intend to provide further updates as the investigation proceeds. Fresenius continues to seek FTC clearance.
Strong Group guidance1 for 2018
For 2018, Fresenius projects sales growth2 of 5% to 8% in constant currency. Net income3,4 is expected to grow by 6% to 9% in constant currency. Excluding expenditures for the further development of the biosimilars business, net income3,5 is expected to grow by ~10% to 13% in constant currency.
Fresenius expects to further reduce its net debt/EBITDA6 ratio by year-end 2018.
Mid-term growth targets 2020 confirmed7
Based on the strong financial results 2017, Fresenius confirms the 2020 mid-term growth targets. Group sales are expected to grow with a compounded annual growth rate (CAGR) in the range of 7.1% to 10.3% (Mid-point: 8.7%). Group net income3 is projected to increase with a CAGR in the range of 8.3% to 12.6% (Mid-point: 10.5%).
25th consecutive dividend increase proposed
Based on the strong financial results, the Management Board will propose to the Supervisory Board a dividend increase of 21% to €0.75 per share (2016: €0.62). The expected dividend distribution to the shareholders of Fresenius SE & Co. KGaA is €416 million.
1 Excluding pending acquisitions of Akorn and NxStage2 2017 adjusted for IFRS 15 (€486 million at Fresenius Medical Care)3 Net income attributable to shareholders of Fresenius SE & Co. KGaA4 Base 2017: €1,816 million; 2018 before special items (before acquisition-related expenses); including expenditures for further development of biosimilars business (€43 million after tax in FY/17 and ~€120 million after tax in FY/18)5 Base 2017: €1,859 million; 2018 before special items (before acquisition-related expenses)6 Calculated at expected annual average exchange rates, for both net debt and EBITDA; excluding pending acquisitions of Akorn and NxStage; excluding further potential acquisitions; at current IFRS rules7 At February 2017 exchange rates and IFRS rules; including small and mid-size acquisitions
16% sales growth in constant currency
Group sales increased by 15% (16% in constant currency) to €33,886 million (2016: €29,471 million). Organic sales growth was 6%. Acquisitions contributed 10%. Negative currency translation effects (1%) were mainly driven by the devaluation of the US dollar and the Chinese yuan against the euro. In Q4/2017, Group sales increased by 11% (17% in constant currency) to €8,695 million (Q4/2016: €7,820 million). Organic sales growth was 6%. Acquisitions contributed 11%.
Group sales by region:
1 Calculated on the basis of contribution to consolidated sales2 Including effects of agreement with the U.S. Departments of Veterans Affairs and Justice (VA agreement)
21% adjusted net income1,2 growth in constant currency
Group EBITDA3 increased by 14% (15% in constant currency) to €6,267 million (2016: €5,517 million). Adjusted Group EBIT4 increased by 14% (15% in constant currency) to €4,890 million (2016: €4,302 million). The adjusted EBIT margin4 was 14.4% (2016: 14.6%). In Q4/2017, adjusted Group EBIT4 increased by 9% (14% in constant currency) to €1,354 million (Q4/2016: €1,244 million), the adjusted EBIT margin4 was 15.6% (Q4/2016: 15.9%). Group EBIT3 before special items increased by 12% (14% in constant currency) to €4,830 million (2016: €4,302 million). The EBIT margin3 was 14.3% (2016: 14.6%). In Q4/2017, Group EBIT3 increased by 5% (11% in constant currency) to €1,308 million (Q4/2016: €1,244 million), the EBIT margin3 was 15.0% (Q4/2016: 15.9%).
Group net interest3 reached -€636 million (2016: -€582 million). The increase is mainly driven by the financing of the Quirónsalud acquisition, partly offset by positive effects from refinancing activities.
The Group tax rate before special items was 28.2% (2016: 28.1%). The U.S. tax reform, which went into effect on January 1, 2018, triggered a revaluation of deferred tax liabilities. This resulted in a one-time book gain of €103 million in 2017. Accordingly, the group tax rate after special items decreased to 23.0%.
Noncontrolling interest3 was €1,194 million (2016: €1,116 million), of which 95% was attributable to the noncontrolling interest in Fresenius Medical Care.
Adjusted Group net income1,2 increased by 19% (21% in constant currency) to €1,859 million (2016: €1,560 million). Adjusted earnings per share1,2 increased by 18% (19% in constant currency) to €3.35 (2016: €2.85). In Q4/2017, adjusted Group net income1,2 increased by 18% (22% in constant currency) to €520 million (Q4/2016: €442 million). Adjusted earnings per share1,2 increased by 16% (20% in constant currency) to €0.93 (Q4/2016: €0.81).
1 Net income attributable to shareholders of Fresenius SE & Co. KGaA2 Consistent with scope of original guidance: before acquisition-related expenses, expenditures for further development of biosimilars business, book gain from U.S. tax reform and FCPA provision3 Before special items4 Consistent with scope of original guidance: before acquisition-related expenses, expenditures for further development of biosimilars business and FCPA provision
For a detailed overview of special items and adjustments please see the reconciliation tables on pages 18-19 in the pdf document.
Group net income before special items1 increased by 16% (18% in constant currency) to €1,816 million (2016: €1,560 million). Earnings per share1,2 increased by 15% (16% in constant currency) to €3.28 (2016: €2.85). In Q4/2017, Group net income1,2 increased by 10% (15% in constant currency) to €487 million (Q4/2016: €442 million). Earnings per share1,2 increased by 9% (13% in constant currency) to €0.88 (Q4/2016: €0.81).
Group net income1 increased by 16% (18% in constant currency) to €1,814 million
(2016: €1,560 million). Earnings per share1 increased by 15% (16% in constant currency) to €3.27 (2016: €2.85). In Q4/2017, Group net income1 increased by 16% (21% in constant currency) to €511 million (Q4/2016: €442 million). Earnings per share1 increased by 14% (19% in constant currency) to €0.92 (Q4/2016: €0.81).
Continued investment in growth
Spending on property, plant and equipment was €1,828 million (2016: €1,633 million), primarily for the modernization and expansion of dialysis clinics, production facilities as well as hospitals and day clinics. This corresponds to 5.4% of sales.
Total acquisition spending of €6,852 million (2016: €926 million) was mainly related to the acquisitions of Quirónsalud and Merck KGaA’s biosimilars business.
Excellent cash flow development
Operating cash flow increased by 10% to €3,937 million (2016: €3,585 million) with a margin of 11.6% (2016: 12.2%). The excellent cash flow was driven by Fresenius Medical Care and a record cash flow at Fresenius Kabi.
Free cash flow before acquisitions and dividends increased by 13% to €2,232 million (2016: €1,969 million), with a margin of 6.6% (2016: 6.7%). Free cash flow after acquisitions and dividends was €-4,557 million (2016: €746 million) reflecting the acquisitions of Quirónsalud and Merck KGaA’s biosimilars business.
1 Net income attributable to shareholders of Fresenius SE & Co. KGaA2 Before special items
Solid balance sheet structure
The Group’s total assets increased by 14% (21% in constant currency) to €53,133 million (Dec. 31, 2016: €46,697 million), driven primarily by the acquisition of Quirónsalud. Current assets grew by 7% (15% in constant currency) to €12,604 million (Dec. 31, 2016: €11,744 million). Non-current assets increased by 16% (23% in constant currency) to €40,529 million (Dec. 31, 2016: € 34,953 million).
Total shareholders’ equity increased by 4% (14% in constant currency) to €21,720 million (Dec. 31, 2016: €20,849 million). The equity ratio decreased to 40.9% (Dec. 31, 2016: 44.6%).
Group debt increased by 29% (35% in constant currency) to €19,042 million (Dec. 31, 2016: € 14,780 million), mainly driven by the acquisition financing of Quirónsalud. Group net debt increased by 32% (37% in constant currency) to € 17,406 million (Dec. 31, 2016: € 13,201 million.
As of December 31, 2017, the net debt/EBITDA ratio was 2.841,2 (September 30, 2017: 2.971,2; December 31, 2016: 2.331; pro forma Quirónsalud 3.091).
1 At LTM average exchange rates for both net debt and EBITDA; pro forma acquisitions2 Before special items
Business Segments
Fresenius Medical Care
Fresenius Medical Care is the world's largest provider of products and services for individuals with renal diseases. As of December 31, 2017, Fresenius Medical Care was treating 320,960 patients in 3,752 dialysis clinics. Along with its core business, the company focuses on expanding the range of medical services in the field of Care Coordination.
Sales1 increased by 7% (9% in constant currency) to €17,784 million (2016: €16,570 million). Organic sales growth was 7%. Acquisitions and divestitures increased sales by net 2%. Currency translation effects reduced sales by 2%. In Q4/2017, sales of €4,429 million (Q4/2016: €4,417 million) were on the prior-year level (increased by 8% in constant currency).
Health Care services sales (dialysis services and care coordination) increased by 8% (10% in constant currency) to €14,532 million (2016: €13,505 million). Dialysis product sales increased by 6% (7% in constant currency) to €3,252 million (2016: €3,064 million).
In North America, sales increased by 7% to €12,879 million (2016: €12,030 million). Health Care services sales grew by 7% to €12,036 million (2016: €11,214 million). Dialysis product sales increased by 3% to €843 million (2016: €816 million).
Sales outside North America increased by 8% (9% in constant currency) to €4,890 million (2016: €4,527 million). Health Care services sales increased by 9% (11% in constant currency) to €2,496 million (2016: €2,292 million). Dialysis product sales increased by 6% (7% in constant currency) to €2,315 million (2016: €2,185 million).
1 Excluding agreement with the United States Depatment of Veterans Affairs and Justice (VA agreement): €17,689 million2 Before natural disaster costs, VA agreement and FCPA provision3 Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA4 Before book gain from U.S. tax reform, natural disaster costs, VA agreement and FCPA provision5 Reported sales 2017 of €17,784 million, adjusted for IFRS 15 (€486 million)6 Base 2017: €1,280 million; 2018 including recurring benefits from U.S. tax reform of €140 million to €160 million
EBIT decreased by -2% (0% in constant currency) to €2,362 million (2016: €2,409 million). Adjusted EBIT1 increased by 4% (5% in constant currency) to €2,493 million (2016: €2,409 million), mainly due to the strong business performance in North America and in Asia-Pacific. The adjusted EBIT1 margin was 14.1% (2016: 14.5%). In Q4/2017, EBIT decreased by -29% (-22% in constant currency) to €519 million (2016: €730 million). In Q4/2017, adjusted EBIT1 of €726 million (Q4/2016: €730 million) was slighty below the prior-year level (increased by 6% in constant currency). The adjusted EBIT margin1 was 16.4% (Q4/2016: 16.5%).
Net income2 increased by 12% (14% in constant currency) to €1,280 million (2016: €1,144 million). Consistent with the original scope of guidance, i.e. excluding the effects of the VA agreement, natural disaster costs, the book gain from the US tax reform and the FCPA provision, net income2 increased by 7% in constant currency. In Q4/2017, net income2 increased by 8% (increased 16% in constant currency) to €394 million (Q4/2016: €363 million). Excluding the effects of the VA agreement, natural disaster costs, the book gain from the US tax reform and the FCPA provision, net income2 increased by 6% in constant currency.
Operating cash flow increased by 13% to €2,192 million (2016: €1,932 million). The cash flow margin was 12.3% (2016: 11.7%).
For 2018, Fresenius Medical Care expects sales to grow by ~8%3 in constant currency. The 2018 guidance is based on 2017 sales adjusted for the effect of the IFRS 15 implementation. Net income2 is expected to increase by 13% to 15%4 in constant currency in 2018, including recurring benefits from U.S tax reform of €140 million to €160 million.
1 Before natural disaster costs, effects of VA agreement and FCPA provision2 Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA3 Reported sales 2017 of €17,784 million, adjusted for effect from IFRS 15 (€486 million)4 Base 2017: €1,280 million
For further information, please see Fresenius Medical Care’s Investor News at www.freseniusmedicalcare.com.
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, we are developing products with a focus on oncology and autoimmune diseases.
1 Before special items2 Consistent with scope of original guidance: before acquisition-related expenses and expenditures for further development of biosimilars business3 Net income attributable to shareholders of Fresenius SE & Co. KGaA4 Consistent with scope of original guidance: before acquisition-related expenses, expenditures for further development of biosimilars business and book gain from U.S. tax reform5 Base 2017: €1,177 million; 2018 before special items (before acquisition-related expenses), including expenditures for further development of biosimilars business (€60 million in FY/17 and expected expenditures of ~€160 million in FY/18)6 Base: 2017: €1,237 million; 2018 before special items (before acquisition-related expenses)
Sales increased by 6% (7% in constant currency) to €6,358 million (2016: €6,007 million). Organic sales growth was 7%. Negative currency translation effects (-1%) were mainly related to the devaluation of the US dollar and the Chinese yuan against the Euro. In Q4/2017, sales increased by 3% (8% in constant currency) to €1,594 million (Q4/2016: €1,550 million). Organic sales growth was 8%.
Sales in Europe grew by 4% (organic growth: 5%) to €2,214 million (2016: €2,135 million). In Q4/2017, sales increased by 2% (3% organic) to €579 million (Q4/2016: €566 million).
Sales in North America increased by 6% (8% organic) to €2,290 million (2016: €2,170 million). In Q4/2017, sales increased by 2% (11% organic) to €554 million (Q4/2016: €542 million).
Sales in Asia-Pacific increased by 8% (11% organic) to €1,196 million (2016: €1,108 million). In Q4/2017, sales increased by 5% (11% organic) to €302 million (Q4/2016: €287 million). Sales in Latin America/Africa increased by 11% (10% organic) to €658 million (2016: €594 million). In Q4/2017, sales increased by 3% (10% organic) to €159 million (Q4/2016: €155 million).
Adjusted EBIT1 increased by 6% (8% in constant currency) to €1,237 million (2016: €1,171 million). The adjusted EBIT margin1 was 19.5% (2016: 19.5%). In Q4/2017, adjusted EBIT1 increased by 3% (9% in constant currency) to €318 million (Q4/2016: €308 million). The adjusted EBIT margin1 was 19.9% (Q4/2016: 19.9%).
EBIT before special items increased by 1% (3% in constant currency) to €1,177 million (2016: €1,171 million). The EBIT margin before special items was 18.5% (2016: 19.5%). In Q4/2017, EBIT before special items decreased by -12% ( 6% in constant currency) to €272 million (Q4/2016: €308 million). The EBIT margin before special items decreased to 17.1% (Q4/2016: 19.9%) due to expenditures for the further development of biosimilars business.
Adjusted net income2,3 increased by 10% (13% in constant currency) to €745 million (2016: €675 million). In Q4/2017, adjusted net income2,3 increased by 4% (10% in constant currency) to €191 million (Q4/2016: €184 million).
Operating cash flow reached an all-time high of €1,010 million (2016: €1,004 million). The cash flow margin was 15.9% (2016: 16.7%).
For 2018, Fresenius Kabi expects organic sales growth of 4% to 7% and EBIT growth in constant currency of -3% to -6%4. Excluding expenditures for the further development of the biosimilars business EBIT is expected to grow by ~2% to 5%5 in constant currency.
1 Consistent with scope of original guidance: before acquisition-related expenses and expenditures for further development of biosimilars business2 Net income attributable to shareholders of Fresenius SE & Co. KGaA3 Consistent with scope of original guidance: before acquisition-related expenses, expenditures for further development of biosimilars business and book gain from U.S. tax reform4 Base 2017: €1,177 million; 2018 before special items (before acquisition-related expenses), including expenditures for further development of biosimilars business (€60 million in FY/17 and expected expenditures of ~€160 million in FY/18)5 Base: 2017: €1,237 million; 2018 before special items (before acquisition-related expenses)
Fresenius Helios
Fresenius Helios is Europe's leading private hospital operator. The company comprises Helios Germany and Helios Spain (Quirónsalud). Helios Germany operates 111 hospitals, thereof 88 acute care clinics and 23 post-acute care clinics, and treats more than 5.3 million patients annually. Quirónsalud operates 45 hospitals, 55 outpatient centers and around 300 occupational risk prevention centers, and treats approximately 11.6 million patients per year.
Fresenius Helios increased sales by 48% to €8,668 million (2016: €5,843 million). Organic sales growth was 4%. Acquisitions, mainly Quirónsalud, increased sales by 44%. In Q4/2017, sales increased by 54% to €2,246 million (Q4/2016: €1,461 million), organic sales growth was 3%.
Sales of Helios Germany increased by 4% (4% organic) to €6,074 million (2016: €5,843 million). In Q4/2017, sales increased by 3% (3% organic) to €1,512 million (Q4/2016: €1,461 million). Helios Spain (Quirónsalud) has been consolidated since February 1, 2017 and generated sales of €2,594 million (thereof €734 million in Q4/2017).
Fresenius Helios grew EBIT by 54% to €1,052 million (2016: €683 million). The EBIT margin increased to 12.1% (2016: 11.7%). In Q4/2017, EBIT increased by 61% to €283 million (Q4/2016: €176 million). The EBIT margin increased to 12.6% (Q4/2016: 12.0%).
EBIT of Helios Germany increased by 6% to €725 million (2016: €683 million) with a margin of 11.9% (2016: 11.7%). In Q4/2017, EBIT of Helios Germany was on the prior-year level with €176 million (Q4/2016: €176 million). The margin was 11.6% (2016: 12.0%).
EBIT of Helios Spain was €327 million (thereof €107 million in Q4/2017) with a margin of 12.6% (Q4/2017: 14.6%).
Net income1 increased by 34% to €728 million (2016: €544 million). In Q4/2017, net income1 increased by 42% to €202 million (Q4/2016: €142 million).
Operating cash flow increased by 18% to €733 million (2016: €622 million) driven by the first-time consolidation of Quirónsalud and an excellent operating result. The margin was 8.5% (2016: 10.6%).
For 2018, Fresenius Helios expects organic sales growth of 3% to 6% and EBIT growth of 7% to 10%.
1 Net income attributable to shareholders of Fresenius SE & Co. KGaA
Fresenius Vamed
Fresenius Vamed manages projects and provides services for hospitals and other health care facilities worldwide. 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 increased by 6% (6% in constant currency) to €1,228 million (2016: €1,160 million). Organic sales growth was 6%. Sales in the project business increased by 2% to €606 million (2016: €594 million). Sales in the service business grew by 10% to €622 million (2016: €566 million). In Q4/2017, sales increased by 14% to €480 million (Q4/2016: €420 million). Organic sales growth was 14%.
EBIT grew by 10% to €76 million (2016: €69 million). The EBIT margin increased to 6.2% (2016: 5.9%). In Q4/2017, EBIT increased by 16% to €44 million (Q4/2016: €38 million). The EBIT margin increased to 9.2% (2016: 9.0%).
Net income1 grew by 11% to €50 million (2016: €45 million). In Q4/2017, net income1 increased by 21% to €29 million (Q4/2016: €24 million).
Order intake increased to €1,096 million (2016: €1,017 million), reaching an all-time high. As of December 31, 2017, order backlog was €2,147 million (Dec. 31, 2016: €1,961 million).
For 2018, Fresenius Vamed expects organic sales growth in the range of 5% to 10% and EBIT growth of 5% to 10%.
1 Net income attributable to shareholders of VAMED AG
Conference Call
As part of the publication of the results for fiscal year 2017, a conference call will be held on February 27, 2018 at 2 p.m. CET (8 a.m. EST). 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.
Key figures (IFRS) – fourth quarter and full year 2017
1 Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
cc = at constant currency
For a reconciliation of adjusted figures, please refer to the PDF.
“In 2017 we continued the success story of Fresenius Medical Care with another set of record results. We managed an unusual number of severe natural disasters, have delivered on our financial targets, and again we are able to propose the highest dividend in our Company’s history,” said Rice Powell, Chief Executive Officer of Fresenius Medical Care. “With the acquisition of the Cura Group in Australia and our planned acquisition of NxStage we are setting the course for future periods beyond our published 2020 outlook. We will continue improving our cost base with the implementation of the second phase of our Global Efficiency Program, GEP II. In 2018, we intend to continue the profitable growth track and further optimize our portfolio in the core dialysis as well as in the Care Coordination business.”
High net income growth for 2018 targeted
For 2018, Fresenius Medical Care expects revenue growth of around 8% at constant currency. The 2018 targets are based on 2017 revenue adjusted for the effect of the IFRS 15 implementation. Net income is expected to increase by 13 to 15% at constant currency including recurring benefits from the U.S. tax reform of EUR 140 to 160 million. The targets do not include effects from the NxStage acquisition. Fresenius Medical Care reconfirms the mid-term outlook for 2020, excluding the effect from IFRS 15 implementation and the recurring benefits from the U.S. tax reform in the years 2018 to 2020.
2 Numbers at constant currency
3 Reported revenue 2017 of EUR 17,784 million adjusted for effect from IFRS 15 implementation of EUR 486 million
4 Targets 2018: including recurring benefits from U.S. tax reform of EUR 140 to 160 million
21st consecutive dividend increase proposed
Based on the strong results for full year 2017, a dividend of EUR 1.06 per share, representing a dividend increase of 10%, will be proposed to the Annual General Meeting in May.
Strong underlying revenue and net income growth in 2017
Revenue in the fourth quarter 2017 – strongly impacted by headwinds from foreign exchange rates – came in at the level of the previous year’s quarter with EUR 4,429 million. At constant currency, revenue increased by 8% (+8% excluding the VA Agreement). Health Care Services revenue reached EUR 3,581 million and Health Care Products revenue came in at EUR 848 million. Both increased by 8% at constant currency.
Revenue for full year 2017 increased by 9% at constant currency to EUR 17,784 million (+9% excluding the VA Agreement). Health Care Services revenue increased by 10% at constant currency to EUR 14,532 million, mainly due to strong underlying organic growth and contributions from acquisitions. Health Care Products revenue increased by 7% at constant currency to EUR 3,252 million. This growth was primarily driven by higher sales of dialyzers, non-dialysis products in the acute business, machines and peritoneal dialysis products.
Corporate cost in the fourth quarter 2017 amounted to EUR 289 million. The strong increase compared to the fourth quarter 2016 (EUR 82 million) is mainly driven by the recognition of a charge of EUR 200 million based on ongoing discussions toward a settlement with the U.S. Securities and Exchange Commission and the U.S. Department of Justice that would avoid litigation over government demands under the Foreign Corrupt Practices Act related to certain identified conduct, including certain legal expenses and other related costs or asset impairments (“FCPA related charge”). In 2012, Fresenius Medical Care voluntarily advised the U.S. Department of Justice and the U.S. Securities Exchange Commission about its investigations into this conduct.
Operating income (EBIT) in the fourth quarter 2017 reached EUR 519 million. Adjusted EBIT increased by 6% at constant currency and reached EUR 726 million. For full year 2017, EBIT was EUR 2,362 million. On an adjusted basis EBIT increased by 5% at constant currency to EUR 2,493 million, mainly due to the strong business performance in North America and in Asia-Pacific.
Net interest expense in the fourth quarter 2017 was EUR 80 million, compared to EUR 90 million in the fourth quarter 2016. For full year 2017 net interest expense was EUR 354 million, a decrease of 3% year over year. The decrease was positively influenced by the replacement of interest bearing bonds, repaid in 2016 and 2017 by debt instruments at lower interest rates.
Income tax expense in the fourth quarter 2017 benefited from a book gain from the U.S. tax reform of EUR 236 million. Mainly for this reason, full year 2017 income tax expense decreased by 27% to EUR 454 million.
This decrease mainly resulted from the U.S. tax reform. Excluding (i) the impact from the VA Agreement, (ii) the effects associated with natural disaster costs, (iii) the FCPA related charge of EUR 200 million which was not tax effected and (iv) the U.S. tax reform, the 2017 effective tax rate increased to 31.0%, an increase of 50 basis points compared to the same period of 2016.
Net income5 for the fourth quarter of 2017 increased by 16% at constant currency to EUR 394 million. Adjusted for the impact from (i) the unfavorable effects of the VA Agreement (EUR 1 million), (ii) natural disaster costs in North America (EUR 3 million), (iii) FCPA related charge (EUR 200 million), as well as (iv) the benefit from the U.S. tax reform (EUR 236 million), net income was EUR 362 million (0%, +6% at constant currency). Based on approximately 306.9 million shares (weighted average number of shares outstanding), basic earnings per share (EPS) improved by 8%, to EUR 1.28. Adjusted for the effects described before, EPS was EUR 1.18 (0%, +6% at constant currency).
For 2017 net income5 increased by 14% at constant currency to EUR 1,280 million. Excluding the four effects described in the previous paragraph ((i) EUR +51 million, (ii) EUR -11 million, (iii) EUR -200 million, and (iv) EUR +236 million), net income increased to EUR 1,204 million (+5%, +7% at constant currency). Based on approximately 306.6 million shares, basic EPS increased from EUR 3.74 to EUR 4.17 (+12%). Excluding the effects described above, EPS increased to EUR 3.93 (+5%, +7% at constant currency).
5 Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
North America with strong growth supported by Care Coordination
In the fourth quarter 2017, the North America segment generated revenue of EUR 3,164 million (+8% at constant currency), strongly influenced by currency headwinds. Health Care Services revenue came in at EUR 2,950 million (+8% at constant currency), of which Care Coordination contributed EUR 715 million (+24% at constant currency) driven by significant organic revenue growth of 19%. Dialysis Care revenue reached EUR 2,235 million (+3% at constant currency). With $352, revenue per treatment in the United States was slightly down (-1%) due to lower revenue with commercial payors.
Cost per treatment increased by 3% to $276, largely driven by higher bad debt expenses, higher personnel expense and various other costs. The strong growth of the Health Care Products revenue (EUR 214 million, +9% at constant currency) was mainly driven by higher sales of machines, renal drugs and peritoneal dialysis products.
Operating income in North America in the fourth quarter reached EUR 608 million (+11% at constant currency). The operating income margin of 19.2% came in above last year’s strong fourth quarter margin of 18.4%. The improvement was triggered by an extraordinarily high contribution from Care Coordination which achieved an EBIT margin of 12.5%. The improvement was mainly driven by higher revenue including an acceleration of earnings from the Bundled Payment for Care Improvements (BPCI) initiative for previous reporting periods combined with increased volumes for hospital-related physician services, lower bad debt expense and the gain from the sale of Shiel Medical Laboratory. The Dialysis EBIT in North America reached EUR 519 million (-6% at constant currency), impacted by higher bad debt and personnel expenses, lower revenue with commercial payors, higher costs such as rent and insurance, the impact from natural disasters and higher costs for health care supplies.
For full year 2017, North America revenue increased by 9% at constant currency to EUR 12,879 million. Health Care Services revenue grew by 10% at constant currency to EUR 12,036 million, driven by higher Dialysis Care revenue (+5% at constant currency to EUR 9,227 million) and increased Care Coordination revenue (+28% at constant currency to EUR 2,809 million). Operating income increased in line with revenue growth to EUR 2,086 million (+10% at constant currency). As of the end of 2017, we had 197,356 patients being treated at the 2,393 clinics in North America. Dialysis treatments increased by 3%.
Solid Health Care Products and Health Care Services growth in EMEA
Revenue in the EMEA segment increased by 6% at constant currency to EUR 660 million in the fourth quarter 2017. Health Care Services revenue increased by 4% at constant currency to EUR 312 million. This was mainly the result of growth in same market treatments and contributions from acquisitions. Health Care Products revenue in EMEA increased by 7% at constant currency and reached EUR 348 million. The growth in Dialysis Products revenue was driven by higher sales of products for acute care, products for peritoneal dialysis and machines, partially offset by lower sales of dialyzers. Non-dialysis products increased due to higher sales of acute cardiopulmonary products. Operating income in the EMEA segment decreased by 7% at constant currency to EUR 110 million in the fourth quarter 2017. The operating income margin decreased year-over-year to 16.7% (Q4 2016: 19.0%) mainly due to further investments in Xenios and unfavorable foreign currency transaction effects.
For full year 2017, EMEA revenue increased by 6% at constant exchange rates to EUR 2,547 million and operating income decreased to EUR 444 million (-6% at constant currency). As of the end of 2017, we had 62,490 patients being treated at 746 clinics in EMEA. Dialysis treatments increased by 5%.
Growth in Asia-Pacific fuelled by acquisitions
Asia-Pacific revenue grew strongly by 12% at constant currency to EUR 418 million in the fourth quarter 2017. With EUR 191 million in Health Care Services revenue the region recorded growth of 17% at constant currency, mainly driven by the acquisition impact from Cura Group in Australia. The 7% constant currency growth in Health Care Products revenue to EUR 227 million was mainly supported by higher sales of dialyzers, bloodlines and products for peritoneal dialysis. Operating income reached EUR 76 million (-8% at constant currency). The operating income margin was 18.2% (Q4 2016: 21.8%). This was primarily driven by cost related to the build-up of dialysis services and peritoneal dialysis product business in China, the impact from foreign currency transaction effects and unfavorable mix effects related to acquisitions with lower margins.
For full year 2017, Asia-Pacific revenue grew by 13% at constant currency to EUR 1,623 million and operating income increased by 10% at constant currency to EUR 313 million. Operating income margin was stable on a high level of 19.3% (FY 2016: 19.6%). As of the end of 2017, we had 29,739 patients being treated at 381 clinics in Asia-Pacific. Dialysis treatments increased by 6%.
Improved contribution from Latin America
Latin America delivered revenue of EUR 185 million in the fourth quarter 2017, an increase of 16% at constant currency. Health Care Services revenue increased by 16% at constant currency to EUR 128 million and was driven by higher organic revenue per treatment. Health Care Products revenue increased by 15% at constant currency to EUR 57 million, mainly due to higher sales of machines, dialyzers and concentrates. Operating income came in at EUR 14 million (-12% at constant currency). The operating margin was 7.4% (Q4 2016: 9.7%), impacted by unfavorable foreign currency transaction effects, higher manufacturing costs primarily related to inflation, higher overhead costs and only partially offset by reimbursement rate increases that mitigate inflationary cost increases.
For full year 2017, Latin America revenue grew by 15% at constant currency to EUR 720 million and operating income increased by 3% at constant currency to EUR 58 million. Operating income margin was at 8.1% (FY 2016: 9.2%). As of the end of 2017, we had 31,375 patients being treated at 232 clinics in Latin America. Dialysis treatments increased by 2%.
Solid operating cash flow
In the fourth quarter 2017, the company generated net cash provided by operating activities of EUR 528 million, representing 11.9% of revenue (Q4 2016: EUR 772 million). The decrease was primarily attributable to a less favorable DSO (days sales outstanding) effect this year and higher income tax payments.
In full year 2017, the company generated net cash provided by operating activities of EUR 2,192 million, compared to EUR 1,932 million for full year 2016. This represents 12.3% of revenue, clearly reaching our 2017 target of more than 10%. The increase in net cash provided by operating activities was largely driven by the payment from the U.S. Departments of Veterans Affairs and Justice for reimbursement, the impact of the 2016 discretionary contribution of EUR 90 million to pension plan assets in the U.S. and the impact of other working capital items, partially offset by higher income tax payments. Free cash flow was also very strong at EUR 1,351 million, compared to EUR 1,017 million for full year 2016. DSO as of December 31, 2017 was 67 days, a decrease of 3 days compared to the previous year.
Global Efficiency Program phase II
Fresenius Medical Care has launched the second phase of its Global Efficiency Program (GEP II) in 2018. The program’s objectives are to identify and realize further efficiency potential and enhance the overall competitiveness of Fresenius Medical Care. Starting in 2018, GEP II targets to achieve sustained cost improvements of EUR 100 to 200 million per annum by 2020.
NxStage acquisition to foster home penetration
In August 2017, Fresenius Medical Care signed a merger agreement to acquire NxStage Medical, Inc., a U.S.-based medical technology and services company. The planned acquisition has a total transaction volume of approximately EUR 1.7 billion (USD 2.0 billion). On October 27, shareholders of NxStage approved the acquisition by Fresenius Medical Care. The completion of the acquisition is subject to regulatory approvals and other customary closing conditions. Closing is expected to occur in 2018.
Press Conference
Fresenius Medical Care will hold a press conference at its headquarters in Bad Homburg, Germany to discuss the results of the fourth quarter and full year 2017 on Tuesday, February 27, 2018, at 10 am CET. The press conference will be webcasted at the company's website. A replay will be available shortly after the conference.
Conference call
Fresenius Medical Care will hold a conference call to discuss the results of the fourth quarter and full year 2017 on Tuesday, February 27, at 3:30 p.m. CET / 9:30 a.m. EDT. The company invites investors to follow the live webcast of the call 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 fourth quarter and full year 2017.
Fresenius Medical Care is the world's largest provider of products and services for individuals with renal diseases of which around 3.2 million patients worldwide regularly undergo dialysis treatment. Through its network of 3,752 dialysis clinics, Fresenius Medical Care provides dialysis treatments for 320,960 patients around the globe. Fresenius Medical Care is also the leading provider of dialysis products such as dialysis machines or dialyzers. Along with the core business, the company focuses on expanding the range of related medical services in the field of Care Coordination. Fresenius Medical Care is listed on the Frankfurt Stock Exchange (FME) and on the New York Stock Exchange (FMS).
For more information visit the Company’s website at www.freseniusmedicalcare.com.
Disclaimers
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 Helios recently opened a 130-bed building at the company’s hospital in Dachau, a city near Munich. The new structure is part of a €55 million renovation and expansion program that will include a modernization of the existing hospital building over the next two years. Meanwhile, in the northern German city of Nienburg/Weser, work has started on a building that will almost double the size of the emergency department at Fresenius Hospital Mittelweser. About €2.3 million is being invested in this project, which is scheduled for completion in the autumn.
