#FutureFresenius: Advancing patient care – Strategic course set to unlock full potential – Fresenius enters new era with simplified Group structure and therapy focus across 3 platforms – 2022 performance in line with expectations – 2023 outlook tough but realistic

 

• Fresenius has hit RESET and is now moving towards #FutureFresenius with a simplified structure, sharper focus and acceleration of performance
• Intention to deconsolidate Fresenius Medical Care by changing the legal form of FMC to a German Stock Corporation (“Aktiengesellschaft”) in simplified governance
• Focus on Operating Companies Fresenius Kabi and Fresenius Helios
• Active portfolio management for assets where Fresenius lacks best ownership
• New, more rigorous Fresenius Financial Framework with ambitious segment margin bands
• ~€1bn annual structural productivity improvement by 2025
• All initiatives pointed towards advancing patient care and becoming an industry-leading, therapy-focused healthcare company

If no timeframe is specified, information refers to Q4/2022.

 

¹ Before special items, Q1/22 restated following remeasurement Humacyte investment
² Net income attributable to shareholders of Fresenius SE & Co. KGaA
³ Excluding Ivenix and mAbxience acquisitions
For a detailed overview of special items please see the reconciliation tables on pages 22-25.

 

Fresenius is moving ahead on its pathway to #FutureFresenius. Through the planned deconsolidation of Fresenius Medical Care, the company will simplify its governance and group structure. The company will have a clear focus on therapy to advance patient care across the three platforms (Bio)Pharma, MedTech and Care Provision. Programs are in place to enhance profitability and for active portfolio management. Fresenius will increase the pace of annual structural productivity improvement to approximately 1 billion euros by 2025.

Intention to deconsolidate Fresenius Medical Care
The company plans to deconsolidate Fresenius Medical Care by changing Fresenius Medical Care’s legal form to a German Stock Corporation (“Aktiengesellschaft”). Subject to the necessary shareholder approvals and the registration with the commercial register, the conversion is expected to become effective by the end of the 2023 financial year at the latest. To this end, an Extraordinary General Meeting of Fresenius Medical Care is expected to be held in July to decide on the proposal to change the company into the legal form of an Aktiengesellschaft (“AG”). Following the planned change in its legal form, Fresenius Medical Care will no longer be part of the fully consolidated subsidiaries of Fresenius. Fresenius’ will continue to hold a 32 percent stake in the share capital of Fresenius Medical Care.

“After careful consideration and very constructive discussions with the Group’s key stakeholders, we are confident that the planned deconsolidation of Fresenius Medical Care is the best way forward to benefit both companies.” said Wolfgang Kirsch, Chairman of the Supervisory Board of Fresenius SE. “By converting Fresenius Medical Care to the legal form of an AG, both companies gain flexibility and can better advance their strategic priorities, positioning themselves in the best possible way for the future. Michael Sen and his management team, who have developed this new corporate structure, will lead Fresenius back to operational strength and sustainable growth. I am convinced that the new structure will enable Helen Giza as CEO to realize the full potential of Fresenius Medical Care, in which we continue to hold a significant stake.”

“This is an inflection point for Fresenius”, said Fresenius SE CEO Michael Sen. “I am pleased that our anchor shareholder, the Else Kröner-Fresenius Foundation, has expressed their support for our plans and I would like to thank them for their trust. The new structure will greatly benefit both companies: Fresenius Medical Care needs an operational turnaround, to improve its performance and focus on its core business. Fresenius needs to simplify its complex corporate structures and commit to its Operating Companies and to maximizing value from its investments.”

“Simplifying our governance structure is an important step towards more optionality for a successful future of Fresenius Medical Care”, said Helen Giza, CEO of Fresenius Medical Care. “The new legal form will give us the flexibility and autonomy to focus all our efforts to unlock value as the leading kidney care company.”

Focus on Operating Companies Fresenius Kabi and Fresenius Helios
The Operating Companies Fresenius Kabi and Fresenius Helios are at the center of the Group’s ambitions under #FutureFresenius. They are both geared for significant value creation and catering to system-critical areas of healthcare. Building on a resilient global generics business, Fresenius Kabi will expand along the growth vectors Nutrition, Biopharma and MedTech. Helios Germany and Quirónsalud are already the leading private hospital providers in Germany and Spain, caring for more than 24 million patients every year. Fresenius Helios intends to leverage its market position to actively shape industry trends across digitalization and integrated care.

For the Investment Companies Fresenius Medical Care and Fresenius Vamed, there will be a strong focus on active financial value management. Across the Group, refining the company’s operating model and advancing its ESG agenda and roadmap for the best of patients will be central elements of the further journey towards #FutureFresenius.

~€1bn annual structural productivity improvement by 2025
Structural productivity improvements are moving forward. The new target is to achieve annual structural cost savings of around €1 billion at EBIT level by 2025. In order to reach this goal, Fresenius is running targeted programs across all business segments and the Corporate Center, with the oversight and steering of the Group. Key elements include measures to optimize procurement, processes, sales and administrative costs, as well as divesting from non-core assets.

Thanks to its cost and efficiency program, the company has already realized €152 million in savings after taxes and non-controlling interests in fiscal year 2022, offset by €260 million in one-time costs. In line with previous practice, these expenses are classified as special items.

Fresenius Medical Care has increased the savings target for its FME25 transformation program from €500 million to €650 million by 2025 and now expects to invest up to €650 million in the same period¹. By the end of 2022, Fresenius Medical Care delivered €131 million (on EBIT level) of sustainable savings under the FME25 program, exceeding the original target of €40 to 70 million for the same period.

¹ Costs related to the FME25 program will be treated as a special item

New, more rigorous Fresenius Financial Framework
To enable and accelerate performance, the Management Board set up a new, more rigorous Fresenius Financial Framework. The framework sets ambitious EBIT margin bands for the segments. They serve as a benchmark when reviewing businesses, measuring performance and planning for the future.

At group level, Fresenius will measure its future performance based on return on invested capital (ROIC), a leverage target band and the cash conversion rate (CCR), among others.

New progressive dividend policy – Stable dividend proposed
With the new Fresenius Financial Framework, Fresenius aims to generate attractive and predictable dividend yields. In line with its new progressive dividend policy, the Company aims to increase the dividend in line with constant currency earnings per share¹ growth but at least maintain the dividend at the prior-year’s level. Therefore, the Management Board of Fresenius will propose to the Supervisory Board a stable dividend at the prior year level of €0.92 per share for FY/22 (FY/21: €0.92).

¹ Before Special items

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

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

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

¹ FY/22 base: €40,840 million
² FY/22 base: €3,727 million, before special items, excl. PRF; FY/23: before special items
³ FY/22 base: €2,187 million, before special items; FY/23: before special items
⁴ At LTM average exchange rates for both net debt and EBITDA; pro forma closed acquisitions/divestitures; excluding further potential acquisitions; before special items; including lease liabilities
⁵ At LTM average exchange rates for both net debt and EBITDA; pro forma closed acquisitions/divestitures; before special items; including lease liabilities

For a detailed overview of special items please see the reconciliation tables on pages 22-25.

 

Assumptions for guidance FY/23
For 2023, Fresenius assumes no further escalations of geopolitical tensions and challenges from COVID-19, and supply chain constraints continuing to ease.

Fresenius expects that the general cost inflation and labor shortages will have a more significant negative effect on its business than in 2022. This is due to the fact that H2/2022 showed stronger headwinds compared to H1/2022. Thus, Fresenius expects a marked annualization effect.

Fresenius will continue to closely monitor the potential further consequences of the overall heightened volatility and muted visibility, including balance sheet valuations.
For Fresenius Medical Care’s contribution to the Group’s financial figures, the assumptions for Fresenius Medical Care’s FY/23 guidance are also fully applicable to Fresenius Group’s FY/23 guidance. In 2022, Fresenius Medical Care’s EBIT was supported by €277 million of Provider Relief Funding from the U.S. government (at current currency). There is no additional governmental support assumed for 2023.

All of these assumptions are subject to considerable uncertainty.

4% revenue increase in constant currency
Group revenue increased by 7% (4% in constant currency) to €10,643 million (Q4/21: €9,966 million). Organic growth was 3%. Acquisitions/divestitures contributed net 1% to growth. Currency translation increased revenue growth by 3%. Excluding estimated COVID-19 effects¹, Group revenue growth would have been 4% to 5% in constant currency (Q4/21: 5% to 6%).

In FY/22, Group revenue increased by 9% (4% in constant currency) to €40,840 million (FY/21: €37,520 million). Organic growth was 3%. Acquisitions/divestitures contributed net 1% to growth. Currency translation increased revenue growth by 5%. Excluding estimated COVID-19 effects¹, Group revenue growth would have been 4% to 5% in constant currency (FY/21: 5% to 6%).

16% net income^2,3,4 decline in constant currency
Group EBITDA before special items decreased by 2% (-7% in constant currency) to €1,802 million (Q4/21²: €1,846 million). Reported Group EBITDA was €1,513 million (Q4/21: €1,868 million).

In FY/22, Group EBITDA before special items decreased by 1% (-6% in constant currency) at €6,808 million (FY/21²: €6,854 million). Reported Group EBITDA was €6,294 million (FY/21: €6,825 million).

Group EBIT before special items decreased by 10% (-14% in constant currency) to €1,052 million (Q4/21²: €1,166 million). The decrease was mainly driven by ongoing inflation leading to cost increases including personnel costs, material prices, logistics, and energy costs as well as negative one-offs at Fresenius Vamed and Fresenius Kabi. The EBIT margin before special items was 9.9% (Q4/21²: 11.7%). Reported Group EBIT was €687 million (Q4/21: €1,123 million).

In FY/22, Group EBIT before special items decreased by 6% (-11% in constant currency) to €4,004 million (FY/21²: €4,252 million). The EBIT margin before special items was 9.8% (FY/21²: 11.3%). Reported Group EBIT was €3,321 million (FY/21: €4,158 million).

¹ For estimated COVID-19 effects please see table on page 20.
² Before special items
³ Net income attributable to shareholders of Fresenius SE & Co. KGaA
⁴ Excluding Ivenix and mAbxience acquisitions

For a detailed overview of special items please see the reconciliation tables on pages 22-25.

Group net interest before special items was -€157 million (Q4/21¹: -€120 million) mainly due to financing activities, rising interest rates and currency translation effects. Reported Group net interest was -€132 million (Q4/21: -€122 million). In FY/22, Group net interest before special items was -€533 million (FY/21¹: -€504 million). Reported Group net interest was -€507 million (FY/21: -€506 million).

Group tax rate before special items was 24.4% (Q4/21 : 23.2%) mainly due to an increase in the proportionate share of non-tax-deductible expenses compared to taxable income as well as tax law changes at Fresenius Medical Care. Reported Group tax rate was 27.4% (Q4/21: 24.2%). In FY/22, Group tax rate before special items was 23.7% (FY/211: 22.6%) while the reported Group tax rate was 24.8% (FY/2021: 22.8%).

Noncontrolling interests before special items were -€232 million (Q4/21¹: -€282 million) of which 97% were attributable to the noncontrolling interests in Fresenius Medical Care. Reported noncontrolling interests were -€148 million (Q4/21: -€260 million). In FY/22, Noncontrolling interests before special items were -€918 million (FY/211: -€1,033 million) of which 91% were attributable to the noncontrolling interests in Fresenius Medical Care. Reported noncontrolling interests were -€745 million (FY/21: -1,001 million).

Group net income² before special items decreased by 15% (-19%/-16%  in constant currency) to €445 million (Q4/21¹: €521 million). The decrease was driven by the challenging macroeconomic environment with increased uncertainties, general cost inflation, staff shortage, disruptions in supply chains, and increased energy costs. Moreover, rising interest costs and negative one-off items at Fresenius Vamed and Fresenius Kabi as well as a higher tax rate weighed on the net income development. Excluding estimated COVID-19 effects⁴, Group net income² before special items was -19% to -15% in constant currency (Q4/21: 3% to 7%). Reported Group net income² decreased to €255 million (Q4/21: €499 million).

In FY/22, Group net income² before special items decreased by 7% (-12%/-10%³ in constant currency) to €1,729 million (FY/211: €1,867 million). Excluding estimated COVID-19 effects⁴, Group net income² before special items was -16% to -12% in constant currency (FY/21: 6% to 10%). Reported Group net income² decreased to €1,372 million (FY/21: €1,818 million).

¹ Before special items
² Net income attributable to shareholders of Fresenius SE & Co. KGaA
³ Excluding Ivenix and mAbxience acquisitions
⁴ For estimated COVID-19 effects please see table on page 20

For a detailed overview of special items please see the reconciliation tables on pages 22-25.

Earnings per share¹ before special items decreased by 16% (-20% in constant currency) to €0.79 (Q4/21 : €0.94). Reported earnings per share1 were €0.45 (Q4/21: €0.90). In FY/22, earnings per share¹ before special items decreased by 8% (-13% in constant currency) to €3.08 (FY/212: €3.35). Reported earnings per share1 were €2.44 (FY/21: €3.26).

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

For a detailed overview of special items please see the reconciliation tables on pages 22-25.

 

Investments
Spending on property, plant and equipment was €713 million corresponding to 7% of revenue (Q4/21: €690 million; 7% of revenue). These investments served primarily for the modernization and expansion of dialysis clinics, production facilities as well as hospitals and day clinics. In FY/22, spending on property, plant and equipment was €1,886 million corresponding to 5% of revenue (FY/21: €2,032 million; 5% of revenue).

Total acquisition spending was €43 million (Q4/21: €278 million) mainly for dialysis clinics at Fresenius Medical Care. In FY/22, total acquisition spending was €1,579 million (FY/21: €1,085 million).

Cash flow development
Group operating cash flow increased to €1,824 million (Q4/21: €1,749 million) with a margin of 17.1% (Q4/21: 17.5%). The strong development was driven by better cash collections and improved working capital management. Free cash flow before acquisitions and dividends increased to €1,219 million (Q4/21: €1,075 million). Free cash flow after acquisitions and dividends increased to €1,107 million (Q4/21: €841 million).

In FY/22, Group operating cash flow decreased to €4,198 million (FY/21: €5,078 million) with a margin of 10.3% (FY/21: 13.5%). The decrease was mainly due to lower net income and higher inventories. Free cash flow before acquisitions and dividends decreased to €2,421 million (FY/21: €3,061 million). Free cash flow after acquisitions and dividends decreased to €701 million (FY/21: €1,193 million).
 

Solid balance sheet structure
Group total assets increased by 6% (4% in constant currency) to €76,415 million (Dec. 31, 2021: €71,962 million) given currency translation effects, acquisitions and the expansion of business activities. Current assets increased by 5% (4% in constant currency) to €18,279 million (Dec. 31, 2021: €17,461 million), mainly driven by the increase of inventories and other current assets. Non-current assets increased by 7% (4% in constant currency) to €58,136 million (Dec. 31, 2021: €54,501 million).

Total shareholders’ equity increased by 10% (7% in constant currency) to €32,218 million (Dec. 31, 2021: €29,288 million). The equity ratio was 42.2% (Dec. 31, 2021: 40.7%).

Group debt increased by 2% (1% in constant currency) at €27,763 million (Dec. 31, 2021: € 27,155 million). Group net debt increased by 3% (1% in constant currency) to € 25,014 million (Dec. 31, 2021: € 24,391 million).

As of December 31, 2022, the net debt/EBITDA ratio was 3.65x^1,2 (Dec. 31, 2021: 3.51x^1,2) mainly driven by lower EBITDA contribution as well as acquisition spending. The net debt/EBITDA as of December 31, 2022 excluding the closed acquisition of Ivenix and the completed acquisition of a majority stake in mAbxience was 3.58^1,2.

¹ At LTM average exchange rates for both net debt and EBITDA; pro forma closed acquisitions/divestitures
² Before special items

For a detailed overview of special items please see the reconciliation tables on pages 22-25.

 

Business Segments

Fresenius Medical Care
(Financial data according to Fresenius Medical Care press release)

Fresenius Medical Care is the world's largest provider of products and services for individuals with renal diseases. As of December 31, 2022, Fresenius Medical Care was treating approximately 345,000 patients in 4,116 dialysis clinics. Along with its core business, the Renal Care Continuum, the company focuses on expanding in complementary areas and in the field of critical care.  ,  

• Fresenius Medical Care sets strategic focus and accelerates transformation
• Full year earnings in line with expectations: continued impact from higher labor costs and inflationary cost increases
• 2023 expected to be a transition year towards earnings growth recovery in 2024

Revenue increased by 8% (2% in constant currency) to €4,997million (Q4/21: €4,647 million). Organic growth was 2%. Currency translation increased revenue growth by 6%. In FY/22, revenue increased by 10% (2% in constant currency) to €19,398 million (FY/21: €17,619 million). Organic growth was 2%. Currency translation increased revenue growth by 8%.

EBIT decreased by 22% (-28% in constant currency) to €352 million (Q4/21: €449 million) resulting in a margin of 7.0% (Q4/21: 9.7%). EBIT before special items increased by 1% (-8% in constant currency) to €495 million (Q4/21: €492 million), resulting in a margin¹ of 9.9% (Q4/21: 10.6%). At constant currency, the decline was mainly due to supply chain and labor cost increases across all regions, the impact of U.S. Provider Relief funding from the U.S. government (PRF) received in the previous year’s quarter to compensate for certain COVID-19-related costs, and higher legal costs. This was partially offset by an unfavorable impact from the remeasurement of investments in the previous year and savings related to the FME25 program.

¹ Before special items
² Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
³ For further information, please see Fresenius Medical Care’s press release at www.freseniusmedicalcare.com.

For a detailed overview of special items please see the reconciliation tables on pages 22-25.

In FY/22, EBIT decreased by 18% (-25% in constant currency) to €1,512 million
(FY/21: €1,852 million) resulting in a margin of 7.8% (FY/21: 10.5%). At constant currency, the development was supported by €246 million (FY 2021: €63 million) of PRF to compensate for certain COVID-19-related costs. EBIT before special items decreased by 5% (-13% in constant currency) to €1,817 million (FY/21: €1,915 million), resulting in a margin  of 9.4% (FY/21: 10.9 %).

Net income² decreased by 39% (-47% in constant currency) to €139 million (Q4/21: €228 million). Net income2 before special items decreased by 4% (-14% in constant currency) to €253 million (Q4/21: €263 million). Besides the above-mentioned effects on operating income, the constant currency decline was mainly due to an increase in the proportionate share of non-tax-deductible expenses compared to taxable income as well as tax law changes.

In FY/22, net income² decreased by 31% (-37% in constant currency) to €673 million (FY/21: €969 million). Net income² before special items decreased by 10%
(-17% in constant currency) to €913 million (FY/21: €1,018 million).

Operating cash flow was €600 million (Q4/21: €669 million) with a margin of 12.0% (Q4/21: 14.4%). The decrease was mainly due to lower net income. In FY/22, operating cash flow was €2,167 million (FY/21: €2,489 million) with a margin of 11.2%
(FY/21: 14.1%).

For FY/23, Fresenius Medical Care expects revenue³ to grow at a low to mid-single digit percentage rate. In 2022, EBIT was supported by €277 million of PRF (at current currency). There is no additional governmental support assumed for 2023. To provide a comparable basis for the 2023 earnings outlook, the 2022 basis⁴ is adjusted accordingly. On this basis, EBIT is expected to remain flat or decline by up to a high single-digit percentage rate in 2023. In 2025, Fresenius Medical Care targets to achieve an improved operating income margin of 10-14%. Revenue and operating income, as referred to in the outlook, are both on a constant currency basis and excluding special items.

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

¹ Before special items
² Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
³ FY/22 base: €19,398 million
⁴ FY/22 base: €1,540 million

 

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. 

• Strong organic revenue growth
• Biopharmaceuticals with continued dynamic growth trajectory
• EBIT impacted by a non-cash one time item related to in-process R&D in North America

Revenue increased by 12% (8% in constant currency) to €2,036 million (Q4/21: €1,823 million). Organic growth was 7%. In FY/22, revenue increased by 9% (4% in constant currency) to €7,850 million (FY/21: €7,193 million). Organic growth was 3%. Positive currency translation effects of 4% in Q4/22 and 5% in FY/22 were mainly related to the U.S. dollar.

Revenue in North America increased by 14% (organic growth: 3%) to €669 million (Q4/21: €589 million). The significant revenue growth was mainly driven by positive currency translation effects and a solid development of the regular business. In FY/22, revenue in North America increased by 12% (organic growth: 0%) to €2,522 million (FY/21: €2,258 million).

Revenue in Europe increased by 9% (organic growth: 6%) to €724 million (Q4/21: €664 million) driven by a broad-based positive development, in particular at biopharmaceuticals. In FY/22, revenue in Europe increased by 6% (organic growth: 5%) to €2,691 million (FY/21: €2,544 million).

¹ Before special items
² Net income attributable to shareholders of Fresenius SE & Co. KGaA
³ Excluding Ivenix and mAbxience acquisitions

For a detailed overview of special items please see the reconciliation tables on pages 22-25.

 

Revenue in Asia-Pacific decreased by 2% (organic growth: -2%) to €389 million (Q4/21: €395 million). Organic growth was affected by COVID lockdowns and associated lower patient demand as well as price pressure from the NVBP (National Volume-Based Procurement) tenders in China. In FY/22, revenue in Asia-Pacific increased by 4% (organic growth: -2%) to €1,714 million (FY/21: €1,643 million).

Revenue in Latin America/Africa increased by 45% (organic growth: 41%) to €254 million (Q4/21: €175 million), due to a positive business development in both regions. In addition, the revenue development was positively impacted by hyperinflation in Brazil and Mexico. In FY/22, revenue in Latin America/Africa increased by 23% (organic growth: 18%) to €923 million (FY/21: €748 million).

Revenue in the Biopharmaceuticals business was €72 million. In FY/22, revenue in the Biopharmaceuticals business was €188 million (FY/21: €62 million).

EBIT¹ decreased by 15% (-19%/-13%  in constant currency) to €236 million (Q4/21: €279 million). EBIT development was impacted by non-cash one-time write offs, primarily related to a capitalized in-process R&D project in North America. Moreover, ongoing macroeconomic headwinds including inflationary cost increases, staff shortages and disrupted supply chains impacted the EBIT performance. In China COVID lockdowns and associated lower patient demand as well as price declines in connection with NVBP tenders weighed on profitability.

EBIT margin¹ was 11.6% (Q4/21: 15.3%). Excluding the acquisitions of Ivenix and the majority stake in mAbxience, the constant currency EBIT margin¹ was at 12.7%² in Q4/22. In FY/22, EBIT¹ decreased by 6% (-14%/-10%² in constant currency) to €1,080 million (FY/21: €1,153 million) with an EBIT margin¹ of 13.8%/14.4%2 (FY/21: 16.0%).

Net income^1,3 increased by 16% (10% in constant currency) to €206 million (Q4/21: €178 million). In FY/22, net income^1,3 remained stable (declined by -7% in constant currency) at €780 million (FY/21: €778 million).

¹ Before special items
² Excluding Ivenix and mAbxience acquisitions
³ Net income attributable to shareholders of Fresenius SE & Co. KGaA

For a detailed overview of special items please see the reconciliation tables on pages 22-25.

Operating cash flow decreased to €298 million (Q4/21: €335 million) with a margin of 14.6% (Q4/21: 18.4%) mainly driven by lower net income and higher inventories. In FY/22, operating cash flow decreased to €841 million (FY/21: €1,203 million) with a margin of 10.7% (FY/21: 16.7%).

For FY/23, Fresenius Kabi expects organic revenue¹ growth in a low- to mid-single-digit percentage range. The EBIT margin² is expected to be around one percentage point (pp) below the structural margin band of 14% to 17%.

¹ FY/22 base: €7,850 million
² FY/22 base: EBIT margin: 13.8%, before special items; FY/23 before special items

For a detailed overview of special items please see the reconciliation tables on pages 22-25.

 

Fresenius Helios
Fresenius Helios is Europe's leading private hospital operator. The company comprises Helios Germany, Helios Spain and Helios Fertility. Helios Germany operates 87 hospitals, around 240  outpatient centers, 21 occupational health centers and 6 prevention centers. Helios Spain operates 50 hospitals, around 100 outpatient centers and around 300 occupational risk prevention centers. In addition, the company is active in Latin America with 8 hospitals and as a provider of medical diagnostics. Helios Fertility offers a wide spectrum of state-of-the-art services in the field of fertility treatments.
 

• Fresenius Helios with strong organic revenue growth and healthy EBIT development
• Helios Germany with a return to a pre-COVID patient structure by year-end
• Helios Spain with very strong and consistent patient demand
• Helios Fertility with lower volumes driven by delayed treatments

Revenue increased by 5% (5% in constant currency) to €3,031 million (Q4/21: €2,882 million). Organic growth was 5%. Acquisitions at Helios Spain and Helios Fertility contributed 1% to revenue growth. Divestments reduced revenue by 1%. In FY/22, revenue increased by 8% (7% in constant currency) to €11,716 million (FY/21: €10,891 million). Organic growth was 6%. Acquisitions contributed 2% to revenue growth. Divestments reduced revenue by 1%.

Revenue of Helios Germany was flat (organic growth: 0%) to €1,749 million (Q4/21: €1,745 million), mainly driven by increasing admissions and a return to a pre-COVID patient structure by year-end. In FY/22, revenue of Helios Germany increased by 4% (organic growth: 4%) to €7,021 million (FY/21: €6,733 million.

Revenue of Helios Spain increased by 12% (12% in constant currency) to €1,214 million (Q4/21: €1,084 million). Organic growth of 12% was driven by very strong and consistent patient demand. The clinics in Latin America also showed a good performance. In FY/22, revenue of Helios Spain increased by 10% (10% in constant currency) to €4,441 million (FY/21: €4,021 million). Organic growth was 9%.

Revenue of the Helios Fertility were €66 million (Q4/21: €51 million). In FY/22, revenue of the Helios Fertility were €250 million (FY/21: €133 million).

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

For a detailed overview of special items please see the reconciliation tables on pages 22-25.

EBIT¹ increased by 4% (5% in constant currency) at €354 million (Q4/21: €339 million) with an EBIT margin¹ of 11.7% (Q4/21: 11.8%). In FY/22, EBIT¹ increased by 5% (5% in constant currency) to €1,185 million (FY/21: 1,127 million) with an EBIT margin¹ of 10.1% (FY/21: 10.3%).

EBIT¹ of Helios Germany increased by 2% to €174 million (Q4/21: €171 million) with an EBIT margin1 of 9.9% (Q4/21: 9.8%). The increase of costs from the use of external staff mainly due to flu-related staff absenteeism continued to weigh on profitability. Inflationary cost effects had also a negative impact. In FY/22, EBIT¹ of Helios Germany increased by 2% to €623 million (FY/21: €613 million) with an EBIT margin1 of 8.9% (FY/21: 9.1%).

EBIT¹ of Helios Spain increased due to the strong revenue growth and despite cost inflation by 6% (7% in constant currency) to €172 million (Q4/21: €162 million). The EBIT margin¹ was 14.2% (Q4/21: 14.9%). In FY/22, EBIT1 of Helios Spain increased by 8% (8% in constant currency) to €556 million (FY/21: €514 million). The EBIT margin1 was 12.5% (FY/21: 12.8%).  

EBIT¹ of Helios Fertility was €6 million (Q4/21: €5 million) with an EBIT margin¹ of 9.1% (Q4/21: 9.8%). Lower volumes by delayed treatments driven by macroeconomic environment. In FY/22, EBIT¹ of Helios Fertility was €21 million (FY/21: €19 million) with an EBIT margin¹ of 8.4% (FY/21: 14.3%).

Net income^1,2  increased by 4% (4% in constant currency) to €236 million (Q4/21: €227 million). In FY/22, net income^1,2 increased by 5% (5% in constant currency) to €766 million (FY/21: €728 million).

Operating cash flow increased to €956 million (Q4/21: €609 million) with a margin of 31.5% (Q4/21: 21.1%) mainly due to an improved receivables management. In FY/22, operating cash flow increased to €1,367 million (FY/21: €1,204 million) with a margin of 11.7% (FY/21: 11,1%)

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

¹ Before special items
² Net income attributable to shareholders of Fresenius SE & Co. KGaA
³ FY/22 base: €11,716 million
⁴ FY/22 base: EBIT margin: 10.1%, before special items, FY/23 before special items

For a detailed overview of special items please see the reconciliation tables on pages 22-25.

 

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.  

• Service business showing solid top-line performance, but one-time items and macro headwinds impact profitability
• Weak top-line performance driven by difficult economic environment and negative one-time items adversely impact earnings in project business
• Macro environment leading to negative one-time effects: Impairments due to reassessment and revaluation of claims and legal proceedings as well as certain business initiations that did not materialize as planned

Revenue decreased by 5% (-5% in constant currency) to €712 million (Q4/21: €748 million). Organic growth was -5%. In FY/22, revenue increased by 3% (2% in constant currency) to €2,359 million (FY/21: €2,297 million). Organic growth was 2%.

Revenue in the service business increased by 7% (7% in constant currency) to €445 million (Q4/21: €415 million) due to increasing rehabilitation treatments given fewer capacity restrictions. Revenue in the project business decreased by 20% (-20% in constant currency) to €267 million (Q4/21: €333 million. The weak revenue performance is mainly attributable to the continuing difficult macroeconomic environment. In FY/22, revenue in the service business increased by 7% (6% in constant currency) to €1,685 million (FY/21: €1,580 million). Revenue in the project business decreased by 6% (-6% in constant currency) to €674 million (FY/21: €717 million).

¹ Before special items
² Net income attributable to shareholders of VAMED AG

For a detailed overview of special items please see the reconciliation tables on pages 22-25.

EBIT¹ decreased by 114% to -€9 million (Q4/21: €66 million) with an EBIT margin¹ of -1.3% (Q4/21: 8.8%). Main driver for the weak development is the macroeconomic backdrop which led to a lower than expected revenue development in the project business and to significant negative one-time effects in the form of impairments due to a reassessment and revaluation of claims and legal proceedings as well as certain business initiations that did not materialize as planned. In FY/22, EBIT¹ decreased by 80% to €20 million (FY/21: €101 million) with an EBIT margin¹ of 0.8% (FY/21: 4.4%).

Net income^1,2 decreased by 129% to -€14 million (Q4/21: €49 million). In FY/22, Net income^1,2 decreased by 99% to €1 million (FY/21: €67 million).

Order intake was €572 million (Q4/21: €319 million). In FY/22 order intake was €1,241 million (FY/21: €1,290 million). As of December 31, 2022, order backlog was at €3,689 million (December 31, 2021: €3,473 million).

Operating cash flow decreased to €12 million (Q4/21: €128 million) with a margin of 1.7% (Q4/21: 17.1%), due to higher receivables and payed traded acoounts payable. In FY/22, operating cash flow decreased to -€44 million (FY/21: €151 million) with a margin of -1.9% (FY/21: 6.6%).

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

¹ Before special items
² Net income attributable to shareholders of VAMED AG
³ FY/22 base: €2,359 million
⁴ FY/22 base: EBIT margin: 0.8%, before special items; FY/23 before special items

For a detailed overview of special items please see the reconciliation tables on pages 22-25.

 

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

 

Under the U.S. Securities Act of 1933, as amended (the “Securities Act”), this press release may be deemed to be offering material of Fresenius Medical Care AG & Co. KGaA (“FME”). FME intends to file a registration statement on Form F-4 under the Securities Act with the U.S. Securities and Exchange Commission (the “SEC”), including an information statement/prospectus constituting a part thereof. FME SHAREHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC, INCLUDING THE INFORMATION STATEMENT/PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT, AS THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED CONVERSION. The final information statement/prospectus will be distributed to FME shareholders. Shareholders may obtain a free copy of the disclosure documents (when they are available) and other documents filed by FME with the SEC at the SEC’s website at www.sec.gov or from Fresenius Medical Care AG & Co. KGaA, Attention: Investor Relations, Else-Kröner-Strasse 1, 61352 Bad Homburg v.d.H., Germany.

 

• Setting strategic focus: Unlocking value as the leading kidney care company 
• Accelerating the transformation: 
  • Company fully reoriented to two global operating segments, 
  • proposes simplification of the governance structure;
  • FME25 program extended to sustained cost savings of EUR 650 million by 2025
• 2023 expected to be a transition year towards earnings growth recovery in 2024

Helen Giza, Chief Executive Officer of Fresenius Medical Care, said: “Our clear focus in the coming years will be on improved operational performance and our transformation efforts to ensure shareholder value creation. This will involve even bolder steps to both further simplify and focus the way we manage our business to drive sustainable profitable growth recovery. This will be achieved through a simplified and efficient governance structure, faster execution on operational efficiencies within the two new global segments, and further streamlining of our processes and portfolio. All of this supports our unwavering mission to provide the best possible care for our patients around the globe. 2022 has shown, that we operate in a very challenging environment. While we expect more headwinds than tailwinds, and no governmental support for 2023, our transformation efforts and sharpened focus will enable us to accelerate the execution of our strategic initiatives and to return to earnings growth in 2024.”

¹ Special items will be provided as separate KPI (“Revenue excluding special items”, “Operating income excluding special items”) to capture effects that are unusual in nature and have not been foreseeable or not foreseeable in size or impact at the time of giving guidance. These items are excluded to ensure comparability of the figures presented with the Company’s financial targets which have been defined excluding special items. For FY 2022, special items included costs related to the FME25 program, the impact of the war in Ukraine, the impact of hyperinflation in Turkiye, the remeasurement effect on the fair value of the investment in Humacyte, Inc., and the net gain related to InterWell Health. For further details please see the reconciliation at the end of the Press Release.
² Attributable to shareholders of Fresenius Medical Care AG & Co. KGaA

Strategic aspiration: unlocking value as the leading kidney care company

Fresenius Medical Care, the world’s leading provider of products and services for individuals with renal diseases, continues to deliver on its transformation to return to a sustainable profitable growth path and support the creation of shareholder value with a clear focus on strengthening the core business and generating further operational and structural efficiencies. The Company's significantly enhanced and accelerated efforts will target the following focus areas.

Structure: Fresenius Medical Care has implemented its new operating model with two global segments: Care Enablement (Health Care Products) and Care Delivery (Health Care Services). This operating model provides increased transparency to drive the targeted business performance improvements as well as scalable General & Administrative functions to support the operating segments. The announced plan to change the legal form will result in a simplified governance structure as well as faster and fully independent decision making while strengthening the rights of free float shareholders. Please see the separate Press Release published today for further details.

Capital allocation: Fresenius Medical Care has formulated a disciplined capital allocation policy to drive the improvement of Return on Invested Capital (ROIC) and remains committed to both its investment grade ratings as well as to managing its leverage ratio (Net debt/EBITDA) in the self-imposed target range of 3.0x to 3.5x. The Company will strictly follow its policy to align dividend payments with earnings development. This year’s dividend proposal of EUR 1.12 reflects a reduction by 17% compared to the previous year.

Operational efficiency: The Company will accelerate and extend its FME25 transformation program to further optimize processes along the new operating model. Fresenius Medical Care increases the savings target for the program from EUR 500 million to EUR 650 million by 2025 and now expects to invest up to EUR 650 million in the same period³. By the end of 2022, Fresenius Medical Care delivered EUR 131 million (on operating income level) of sustainable savings under the FME25 program, exceeding the original target of EUR 40 to 70 million for the same period.

In further support of its turnaround efforts the Company will drive additional operational efficiencies and cost reduction measures. In Care Delivery, this will include productivity and operating leverage improvements in the core dialysis services business. In Care Enablement, Fresenius Medical Care will focus on pricing initiatives, productivity measures and a review of its global manufacturing footprint.

Portfolio optimization: With a disciplined lens of focus on the core business and improving profitability, Fresenius Medical Care will adjust its portfolio. In Care Delivery, this includes exiting unsustainable markets in our international activities and divestitures of non-core businesses. In Care Enablement, the Company will rationalize its global Research & Development programs and is evaluating the divestment of non-core products in the portfolio. This will enable focused capital allocation towards areas with higher profitable growth in the core business. Proceeds from disposals resulting from the portfolio optimization shall be used to reduce the Company’s leverage ratio.

Continued progress in Value-based Care and sustainability

Fresenius Medical Care has grown the number of its ESRD (End-Stage Renal Disease) and CKD (Chronic Kidney Disease) patients receiving care in Value-based Care arrangements from around 20,000 patients in 2021 to around 90,000 in 2022. The Company had around USD 6 billion of medical cost under management in 2022 and expects that number to further increase to USD 11 billion by the end of 2025.

³ Costs related to the FME25 program will be treated as a special item.
With the successful completion of the Global Sustainability Program, Fresenius Medical Care has laid a foundation to drive its sustainability performance and create lasting value – economically, ecologically, and socially. Through the three-year program, the Company integrated sustainability principles into business activities, establishing global standards, processes, and performance tracking. Based on the results, new global sustainability targets have been set that confirm Fresenius Medical Care’s continuous commitment to sustainability. Key areas are: enhancing quality of care and access to health care, building the best team to serve patients, and reducing the Company’s environmental footprint.

Full year earnings in line with expectations: continued impact from higher labor costs and inflationary cost increases

Revenue increased by 8% to EUR 4,997 million (+2% at constant currency, +2% organic) in the fourth quarter.

Health Care Services revenue grew by 9% to EUR 3,947 million (+2% at constant currency, +3% organic). At constant currency, this was mainly driven by organic growth in EMEA, including the effects of hyperinflation in Turkiye, as well as organic growth in Asia-Pacific and Latin America. This was partially offset by the impact of COVID-19 on organic growth in North America.

Health Care Products revenue increased by 2% to EUR 1,050 million (stable at constant currency, stable organic). At constant currency, higher sales of in-center disposables were offset by lower sales of machines for chronic treatment.

In the full year, revenue grew by 10% to EUR 19,398 million (+2% at constant currency, +2% organic). Health Care Services revenue increased by 11% to EUR 15,418 million (+2% at constant currency, +1% organic); Health Care Products revenue grew by 6% to EUR 3,980 million (+2% at constant currency, +2% organic).

Operating income decreased by 22% to EUR 352 million (-28% at constant currency) in the fourth quarter, resulting in a margin of 7.0% (Q4 2021: 9.7%). Operating income excluding special items¹ increased by 1% to EUR 495 million (-8% at constant currency), resulting in a margin of 9.9% (Q4 2021: 10.6%). At constant currency, the decline was mainly due to supply chain and labor cost increases across all regions, the impact of U.S. Provider Relief Funding (PRF) received in the previous year’s quarter to compensate for certain COVID-19-related costs, and higher legal costs. This was partially offset by an unfavorable impact from the remeasurement of investments in the previous year and savings related to the FME25 program.

In the full year, operating income declined by 18% to EUR 1,512 million (-25% at constant currency), resulting in a margin of 7.8% (FY 2021: 10.5%). Excluding special items1, operating income decreased by 5% to EUR 1,817 million (-13% at constant currency), resulting in a margin of 9.4% (FY 2021: 10.9%).

Net income² decreased by 39% to EUR 139 million (-47% at constant currency) in the fourth quarter. Excluding special items1, net income2 declined by 4% to EUR 253 million (-14% at constant currency). Besides the above-mentioned effects on operating income, the constant currency decline was mainly due to an increase in the proportionate share of non-tax-deductible expenses compared to taxable income as well as tax law changes. Basic earnings per share (EPS) decreased by 39% to EUR 0.47 (-47% at constant currency). Excluding special items¹, EPS declined by 4% to EUR 0.86 (-14% at constant currency).

In the full year, net income² decreased by 31% to EUR 673 million (-37% at constant currency). Excluding special items¹, net income² declined by 10% to EUR 913 million (-17% at constant currency). EPS decreased by 31% to EUR 2.30 (-37% at constant currency). Excluding special items¹, EPS declined by 10% to EUR 3.11 (-17% at constant currency).

Regional developments

In North America, revenue increased by 12% to EUR 3,529 million (stable at constant currency, stable organic) in the fourth quarter. At constant currency, this was mainly due to the negative impact of COVID-19 on organic growth in Health Care Services, as well as lower sales of products for acute care treatments and machines for chronic treatment, weighing on growth in the Health Care Products business. In the full year, revenue grew by 12% to EUR 13,550 million (stable at constant currency, -1% organic).

Operating income in North America decreased by 10% to EUR 363 million (-19% at constant currency) in the fourth quarter, resulting in a margin of 10.3% (Q4 2021: 12.7%). At constant currency, the decline in operating income was mainly due to the impact of PRF received in the previous year’s quarter, higher labor costs, as well as inflationary and supply chain cost increases. This was partially offset by an unfavorable impact from the remeasurement of investments in the previous year and savings related to the FME25 program. In the full year, operating income declined by 10% to EUR 1,476 million (-20% at constant currency), resulting in a margin of 10.9% (FY 2021: 13.6%).

Revenue in the EMEA region was stable and amounted to EUR 730 million in the fourth quarter (+2% at constant currency, +2% organic). At constant currency, this was mainly due to organic growth in Health Care Services, including the effects of hyperinflation in Turkiye. This was partially offset by lower sales of machines for chronic treatment and acute cardiopulmonary products. In the full year, revenue grew by 3% to EUR 2,851 million (+5% at constant currency, +5% organic).

Operating income in EMEA increased by 13% to EUR 87 million (+14% at constant currency) in the fourth quarter, resulting in a margin of 12.0% (Q4 2021: 10.6%). At constant currency, growth in operating income was mainly due to reimbursement rate increases mitigating inflationary operational costs. In the full year, operating income declined by 17% to EUR 256 million (-16% at constant currency), resulting in a margin of 9.0% (FY 2021: 11.2%).

In Asia-Pacific, revenue increased by 2% to EUR 563 million (+3% at constant currency, +3% organic) in the fourth quarter. At constant currency, this was driven by organic growth in Health Care Services, which was primarily due to an increase in elective procedures, as well as in Health Care Products, mainly driven by higher sales of in-center disposables. In the full year, revenue increased by 7% to EUR 2,152 million (+4% at constant currency, +4% organic).

Operating income decreased by 10% to EUR 85 million (-9% at constant currency) in the fourth quarter, resulting in a margin of 15.0% (Q4 2021: 17.0%). At constant currency, the decline in operating income was mainly due to costs related to a legal dispute and inflationary cost increases, partially offset by favorable foreign currency transaction effects and growth in certain business lines. In the full year, operating income declined by 3% to EUR 340 million (-3% at constant currency), resulting in a margin of 15.8% (FY 2021: 17.4%).

Latin America revenue decreased by 16% to EUR 163 million (+33% at constant currency, +34% organic) in the fourth quarter. The increase at constant currency was mainly driven by organic growth in the Health Care Services business, as well as higher sales of products for acute care treatments. In the full year, revenue grew by 13% to EUR 797 million (+26% at constant currency, +27% organic).

Operating income increased to EUR 8 million in the fourth quarter, resulting in a margin of 4.8% (Q4 2021: -0.8%). At constant currency, growth in operating income was mainly due to reimbursement rate increases mitigating inflationary cost increases. This was partially offset by unfavorable foreign currency transaction effects. In the full year, operating income grew by 99% to EUR 24 million (+51% at constant currency), resulting in a margin of 3.0% (FY 2021: 1.7%).

Cash flow development

In the fourth quarter, Fresenius Medical Care generated EUR 600 million of operating cash flow (Q4 2021: EUR 669 million), resulting in a margin of 12.0% (Q4 2021: 14.4%). This was mainly due to lower net income. In the full year, operating cash flow amounted to EUR 2,167 million (FY 2021: EUR 2,489 million), resulting in a margin of 11.2% (FY 2021: 14.1%).

Free cash flow⁴ amounted to EUR 398 million (Q4 2021: EUR 400 million) in the fourth quarter, resulting in a margin of 8.0% (Q4 2021: 8.6%). In the full year, free cash flow amounted to EUR 1,480 million (FY 2021: EUR 1,660 million), resulting in a margin of 7.6% (FY 2021: 9.4%).

Patients, clinics and employees

As of December 31, 2022, Fresenius Medical Care treated 344,687 patients in 4,116 dialysis clinics worldwide (December 31, 2021: 4,171) and had 128,044 employees (headcount) globally, compared to 130,251 employees as of December 31, 2021. The decrease in the number of clinics compared to the previous year reflects lower patient numbers as well as the Company's measures as part of the FME25 transformation program.

Outlook

With its new operating model Fresenius Medical Care will be moving to a new financial reporting structure. In line with its DAX peer group, the Company now provides an annual outlook for revenue and operating income. Revenue and operating income, as referred to in the outlook, are both on a constant currency basis and excluding special items¹.

Fresenius Medical Care expects revenue to grow at a low to mid-single digit percentage rate in 2023 (2022 basis: EUR 19,398 million).

In 2022, operating income was supported by EUR 277 million of PRF (at current currency). There is no additional governmental support assumed for 2023. To provide a comparable basis for the 2023 earnings outlook, the 2022 basis is adjusted accordingly (EUR 1,540 million).

⁴ Net cash provided by / used in operating activities, after capital expenditures, before acquisitions, investments, and dividends

On this basis, operating income is expected to remain flat or decline by up to a high-single digit percentage rate in 2023.

By 2025 Fresenius Medical Care targets to achieve an improved operating income margin of 10 to 14%.

Press conference

Fresenius Group and Fresenius Medical Care will host a press conference to discuss strategic outlook and full year 2022 results on February 22, 2023 at 10:00 a.m. CET / 4:00 a.m. ET. The press conference will be webcasted in the “Media” section. A replay will be available shortly after the conference.

Conference call

Fresenius Medical Care will host a conference call to discuss the results of the fourth quarter and full year 2022 on February 22, 2023, at 3:30 p.m. CET / 9:30 a.m. ET. Details will be available in the “Investors” section of the Company’s website. A replay will be available shortly after the call.

Under the U.S. Securities Act of 1933, as amended (the “Securities Act”), this press release may be deemed to be offering material of Fresenius Medical Care AG & Co. KGaA (“FME”). FME intends to file a registration statement on Form F-4 under the Securities Act with the U.S. Securities and Exchange Commission (the “SEC”), including an information statement/prospectus constituting a part thereof. FME SHAREHOLDERS ARE URGED TO READ THE REGISTRATION STATEMENT AND ANY OTHER RELEVANT DOCUMENTS FILED OR THAT WILL BE FILED WITH THE SEC, INCLUDING THE INFORMATION STATEMENT/PROSPECTUS THAT WILL BE PART OF THE REGISTRATION STATEMENT, AS THEY BECOME AVAILABLE, BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED CONVERSION. The final information statement/prospectus will be distributed to FME shareholders. Shareholders may obtain a free copy of the disclosure documents (when they are available) and other documents filed by FME with the SEC at the SEC’s website at www.sec.gov or from Fresenius Medical Care AG & Co. KGaA, Attention: Investor Relations, Else-Kröner-Straße 1, 61352 Bad Homburg v.d.H., Germany.
 

• Proposed change of legal form to a German stock corporation will allow for more focused, faster and independent decision making and will free up executive and management capacity 
• Extraordinary general meeting to vote on conversion into a German stock corporation envisaged for early Q3 2023, transition process expected to be completed by the end of 2023

Fresenius Medical Care, the world’s leading provider of products and services for individuals with renal diseases, today announced its plans to propose to its shareholders to resolve the change of its legal form from its current KGaA structure (Kommanditgesellschaft auf Aktien) into a German stock corporation (Aktiengesellschaft). This follows a thorough review by Fresenius Medical Care and Fresenius which was publicly confirmed earlier this month. By way of the proposed conversion, Fresenius Medical Care intends to simplify its governance structure and to establish a German two-tier board system with a co-determined Supervisory Board and a Management Board. This structure will be in line with German standards. Fresenius continues to be a supportive and active shareholder of Fresenius Medical Care without being required to reduce its stake as part of the planned deconsolidation. 

Fresenius Medical Care expects to benefit from the proposed new legal structure as it removes layers from the governance structure and allows for an even more focused, faster and agile decision making. It will also free up executive and management capacity and avoid potential conflicts of interest. The new set-up will provide Fresenius Medical Care with unrestricted access to capital markets for financing purposes and will ensure independent decisions on financial and dividend policies.

Helen Giza, CEO of Fresenius Medical Care, said: “Simplifying our governance structure is an important step towards more optionality for a successful future. The new legal form will give us the flexibility and autonomy to focus all our efforts to unlock value as the leading kidney care company. At the same time, we remain fully committed to our long-term strategy ensuring that we stay true to our unwavering mission to provide the best possible care for our patients around the globe.”

The proposed governance structure will particularly strengthen the rights of free float shareholders. 

The proposed change of legal form requires the approval of the general meeting of the Company. An extraordinary general meeting is expected to take place in the beginning of the third quarter 2023, in which all shareholders will have the opportunity to decide about the proposed change of the legal form. In case of approval by the shareholders, the application for registration of the new legal form will be filed with the commercial register. The entire process of conversion of Fresenius Medical Care AG & Co. KGaA into a German stock corporation is expected to be completed at the latest by the end of this year.