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 has filed 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 IS PART OF THE REGISTRATION STATEMENT, AS THEY BECOME AVAILABLE, BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED CONVERSION DESCRIBED THEREIN. 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.

Fresenius Medical Care, the world's leading provider of products and services for individuals with renal diseases, today announced the candidates who will be proposed for election to the Supervisory Board of the new Fresenius Medical Care AG in the Extraordinary General Meeting on July 14, 2023. As published in February 2023, the Extraordinary General Meeting will also decide on the Company's plans to change its legal form from the current KGaA (Kommanditgesellschaft auf Aktien) into a German stock corporation (Aktiengesellschaft) with a two-tier governance, including a Management Board and a co-determined Supervisory Board.

Fresenius Medical Care and its shareholders will 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. The change of legal form 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. Furthermore, the proposed governance structure will particularly strengthen the rights of free float shareholders.  

Proposed for election to the Supervisory Board are:

• Shervin J. Korangy, President & CEO at BVI Medical. He previously was a senior executive at Novartis Group, AG and a Managing Director at The Blackstone Group, Inc. Korangy holds U.S. citizenship.
• Dr. Marcus Kuhnert, CFO at Merck KGaA until the end of June 2023. Prior to that, he was CFO of the Laundry & Homecare division at Henkel. Kuhnert holds German and U.S. citizenship.
• Gregory Sorensen, M.D., CEO at DeepHealth, Chairman of the Board of Directors at IMRIS and a member of the Supervisory Boards of Fresenius Medical Care AG & Co. KGaA and of Fresenius Medical Care Management AG since 2021. From 2011 to 2015, he was CEO of Siemens Healthcare North America. Sorensen holds U.S. citizenship.
• Pascale Witz, President at PWH Advisors and a member of the Supervisory Boards of Fresenius Medical Care AG & Co. KGaA and of Fresenius Medical Care Management AG since 2016. The French citizen previously held the positions of Executive Vice President at Sanofi, and President & CEO of GE Healthcare Pharmaceutical Diagnostics.

“All four candidates are highly qualified and independent,” said outgoing Supervisory Board Chairman Dr. Dieter Schenk. “The mix of two current and two new Supervisory Board members also gives us a good balance between continuity and fresh views. Our goal is to have a best-in-class, diverse Supervisory Board with a broad range of skills and backgrounds.”

Michael Sen, Chairman of the Supervisory Board of Fresenius Medical Care Management AG and CEO of Fresenius, said: “The four candidates proposed for election have broad experience in different areas of the healthcare sector and in all major markets, including the U.S. Their expertise and international background will be a valuable support for us in the transformation of Fresenius Medical Care and the successful development of the Company.”

In total, the co-determined Supervisory Board of the future Fresenius Medical Care AG will consist of twelve members. In addition to the four members to be elected by the Extraordinary General Meeting, Fresenius, which holds 32.2 percent of the ordinary share capital, will have the right to appoint two members to the Supervisory Board. Fresenius will appoint its CEO Michael Sen and its CFO Sara Hennicken to the Supervisory Board of Fresenius Medical Care AG. The other six members of the Supervisory Board will be elected by the employees.

The Company proposes a four-year election period for the Supervisory Board of the future Fresenius Medical Care AG. The board will decide independently on its chairmanship. It is intended that Michael Sen will stand for election as Chairman of the Supervisory Board.

The full agenda for the Extraordinary General Meeting on July 14, 2023 was published today. It can be found on our website: https://www.freseniusmedicalcare.com/en/agm

Fresenius Medical Care, the world’s leading provider of products and services for individuals with renal diseases, signed the German Diversity Charter “Charta der Vielfalt”, underscoring its commitment towards creating an equitable and diverse working environment. This follows the Company’s announcement in April this year, that it has adopted United Nations (UN) Women’s Empowerment Principles.

Charta der Vielfalt – under the patronage of German Chancellor Olaf Scholz – aims to promote diversity in companies and institutions. The initiative has the objective of advancing the recognition, appreciation and inclusion of diversity in the workplace in Germany. In signing the charter, Fresenius Medical Care commits to creating a work environment where all employees are valued – regardless of age, ethnic origin and nationality, gender and gender identity, physical and mental abilities, religion and ideology, sexual orientation and social background.

Helen Giza, CEO of Fresenius Medical Care, said: “Fresenius Medical Care’s commitment towards diversity, equity and inclusion is key to unlocking greater innovation and creating long-term value for our patients and the communities we serve. Signing the Charta der Vielfalt is a testament to our dedication to cultivating a sense of belonging in an environment where every employee feels safe, welcome, and appreciated.”

In 2022, the Company issued three global policies, focusing on promoting diversity, equity, and inclusion, supporting employee groups, and diversity in recruitment. 

To date, the Company has 16 employee groups supporting Women Leaders, the LatinX  community and more, enabling employees to come together for professional and personal development, and peer support. Fresenius Medical Care also educates its leaders on how to model inclusive behaviors. Furthermore, to promote gender diversity, the company has set itself the goal of increasing the overall representation of women in management positions to reflect the percentage of women in the global employee population by 2030. More information on Fresenius Medical Care's commitment can be found in the Company’s Non-Financial Group Report 2022.

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 has filed 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 IS PART OF THE REGISTRATION STATEMENT, AS THEY BECOME AVAILABLE, BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED CONVERSION DESCRIBED THEREIN. 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.

Fresenius Medical Care, the world's leading provider of products and services for individuals with renal diseases, is on a defined path of turning around the performance, and has outlined its strategy, as Helen Giza, CEO of Fresenius Medical Care, reported at today’s Annual General Meeting. “Our strategic roadmap starts with having an optimal structure in place”, Giza said in her speech to the shareholders, referring to the new operational model, which is in effect since January 1, 2023, and the proposed change of the legal form, which will be decided upon in an extraordinary general meeting on July 14, 2023. “We are just at the beginning of a new chapter in Fresenius Medical Care’s history, and I am energized and excited about our clear transformational turnaround plan under execution, supported by our 125,000 employees around the world. By 2025, Fresenius Medical Care will not only be a more agile and more resilient company, but also remain the partner of choice, setting the standard in kidney care with industry leading returns.” 

“There is no other global healthcare company with our expertise, scope, and scale in kidney care. Fresenius Medical Care is uniquely positioned to meet the demands for kidney care on a global basis”, Helen Giza said. “Today, our predictive analytics capabilities and continuous enhancement of medical algorithms are key parameters for improving the quality of outcomes and quality of life for our patients.”

A large shareholder majority of 99.99 percent approved the dividend proposal of €1.12, which reflects a reduction by 17 percent compared to the previous year, in line with the policy to align dividend payments with earnings development.

Shareholder majorities of 99.09 and 91.46 percent, respectively, approved the actions of the General Partner and the Supervisory Board in 2022.

At the Annual General Meeting, 87.12 percent of the registered capital was represented. The meeting again was held as a purely virtual event.

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 has filed 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 IS PART OF THE REGISTRATION STATEMENT, AS THEY BECOME AVAILABLE, BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED CONVERSION DESCRIBED THEREIN. 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.

 

• Both segments contributed to organic growth with improving volume trends in Care Delivery and strong critical care business in Care Enablement
• More moderate decline in operating income due to phasing, continued improvement in organic growth in line with expectations, easing labor shortage in the U.S., and progressing FME25 transformation
• First measures of legacy portfolio optimization delivered 
• Financial outlook for FY 2023 confirmed

Helen Giza, Chief Executive Officer of Fresenius Medical Care, said: “While the results for the first quarter slightly exceeded our albeit low expectations formulated at the beginning of the year, we still expect 2023 to be a year of level-setting for Fresenius Medical Care. However, the operational improvements already achieved, show that our newly implemented operating model and the turnaround plan provide the right framework. The first quarter confirmed the trends towards improving treatment volumes and towards a stabilizing labor environment in the U.S. Both are key for an increasing operating leverage as well as for ensuring the high-quality standard for our patients. Based on these positive developments, we confirm our financial outlook for 2023.”

 

¹ 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 Humacyte investment remeasurement and the net gain related to InterWell Health. Additionally, the FY 2022 basis for the 2023 outlook was adjusted for U.S. Provider Relief Funding. For FY 2023, special items include costs related to the FME25 program, the Humacyte investment remeasurement, the costs associated with the legal form conversion and effects from legacy portfolio optimization. For further details please see the reconciliation attached to the Press Release.
² Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA

 

Operating income decline moderated by positive underlying trends

Revenue increased by 3% to EUR 4,704 million (+2% at constant currency, +2% organic).

Care Delivery revenue increased by 3% to EUR 3,756 million (+1% at constant currency, +2% organic). 

In Care Delivery U.S., growth of 2% (-2% at constant currency, -1% organic) was mainly driven by a positive exchange rate effect. At constant currency, the decrease in revenue was mainly due to a decline in organic growth and the prior-year partial reversal of an accrual related to a revenue recognition adjustment for accounts receivable in legal dispute. Despite reimbursement rate increases in 2023, organic growth in the U.S. was negatively affected by the impact of the reconciliation of revenues recorded in 2022 for the final performance year of our ESRD Seamless Care Organizations (ESCOs). While the annualization effect of COVID-19-related excess mortality continues to weigh on growth, the improvement trend has continued with only slightly negative same market treatment growth (–0.3%). 

In Care Delivery International, revenue grew dynamically at 5% (+12% at constant currency, +12% organic). At constant currency, this was mainly driven by strong organic growth, which was mostly due to the effects of hyperinflation in various markets, including Latin America, as well as contributions from acquisitions. Despite the annualization effect of COVID-19-related excess mortality, same market treatment growth was positive at 0.5%.

Care Enablement revenue increased by 3% to EUR 1,311 million (+3% at constant currency, +3% organic). At constant currency, growth was mainly driven by higher sales of critical care products in China and home hemodialysis products. The revenue development was additionally supported by increased average sales prices for products sold.

Within Inter-segment eliminations, revenue for products transferred between the operating segments at fair market value decreased by 1% to EUR 363 million (-2% at constant currency; Q1 2022: EUR 366 million).³  

Operating income decreased by 25% to EUR 261 million (-28% at constant currency), resulting in a margin of 5.5% (Q1 2022: 7.6%). Operating income excluding special items and U.S. Provider Relief Funding (PRF)¹ declined by 9% to EUR 354 million (-13% at constant currency), resulting in a margin of 7.5% (Q1 2022: 8.6%).

Operating income in Care Delivery decreased by 4% to EUR 284 million (-9% at constant currency), resulting in a margin of 7.6% (Q1 2022: 8.2%). Operating income excluding special items and PRF¹ decreased by 2% to EUR 302 million (-6% at constant currency). At constant currency, excluding special items and PRF¹, this was mainly due to the absence of effects that had contributed positively in the previous year, i.e. the partial reversal of an accrual related to a revenue recognition adjustment for accounts receivable in legal dispute, the reconciliation of revenues recorded in 2022 for the final performance year of our ESCOs, and the suspension of sequestration in the U.S. Savings from the FME25 Program, favorable business growth and lower personnel expense had a positive impact.

³ The Company transfers products between segments at fair market value. The associated internal revenues and expenses and any remaining internally generated profit or loss for the product transfers are recorded within the operating segments initially, are eliminated upon consolidation and are included within “Inter-segment eliminations”.

Operating income in the Care Enablement segment decreased to EUR -24 million (Q1 2022: EUR 69 million), resulting in a margin of -1.9% (Q1 2022: 5.5%). Operating income excluding special items and PRF¹ decreased by 29% to EUR 69 million (-32% at constant currency). At constant currency, excluding special items and PRF¹ this was mainly due to inflationary cost increases for energy, material and personnel. Higher volumes in critical care, in particular in China, overall price improvements and savings from the FME25 Program contributed positively. With EUR 83 million, the costs related to the discontinuation of a development program for a dialysis cycler was the most sizable special item that has been adjusted for in the first quarter. This is part of the announced legacy portfolio optimization.

Operating income for Corporate was positive with EUR 10 million (Q1 2022: EUR -10 million), mainly due to the remeasurement of the investment in Humacyte. Excluding special items, operating income amounted to EUR -8 million (Q1 2022: EUR -7 million). 

Net income² decreased by 45% to EUR 86 million (-47% at constant currency). Excluding special items and PRF¹, net income declined by 22% to EUR 154 million ( 24% at constant currency). In addition to the effects on operating income mentioned above, negative impacts resulted from higher net interest expense, which was mainly driven by refinancing activities, as well as an increase in the proportionate share of non-tax-deductible expenses compared to taxable income.

Basic earnings per share (EPS) decreased by 45% to EUR 0.29 (-47% at constant currency). EPS excluding special items and PRF¹ declined by 22% to EUR 0.53 (-24% at constant currency).

 

Cash flow development

In the first quarter, Fresenius Medical Care generated EUR 143 million of operating cash flow (Q1 2022: EUR 159 million), resulting in a margin of 3.0% (Q1 2022: 3.5%). The reduction was mainly due to the decrease in net income.

Free cash flow⁴ amounted to EUR 2 million (Q1 2022: EUR -1 million) in the first quarter, resulting in a margin of 0.0% (Q1 2022: 0.0%).

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

Outlook

Based on the results for the first quarter, Fresenius Medical Care confirms its financial targets for 2023.

Fresenius Medical Care expects for 2023 revenue to grow at a low to mid-single digit percentage rate (2022 basis: EUR 19,398 million) and operating income to remain flat or decline by up to a high-single digit percentage rate (2022 basis: EUR 1,540 million).⁵ 

⁵ Revenue and operating income, as referred to in the outlook, are both on a constant currency basis and excluding special items. 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 Humacyte investment remeasurement., and the net gain related to InterWell Health. Additionally, FY 2022 basis for Outlook 2023 and 2025 was adjusted for Provider Relief Funding. For FY 2023, special items include costs related to the FME25 program, the Humacyte investment remeasurement, the costs associated with the legal conversion and effects from legacy portfolio optimization. For further details please see the reconciliation attached to the Press Release.

Patients, clinics and employees

As of March 31, 2023, Fresenius Medical Care treated 343,067 patients in 4,060 dialysis clinics worldwide and had 125,231 employees (headcount) globally, compared to 130,177 employees as of March 31, 2022.

 

Conference call

Fresenius Medical Care will host a conference call to discuss the results of the first quarter 2023 on May 9, 2023 at 3:30 p.m. CEST / 9:30 a.m. EDT. Details will be available on the Fresenius Medical Care website in the “Investors” section. A replay will be available shortly after the call.

 

Please refer to our statement of earnings included at the end of this news and to the attachments as separate PDF files for a complete overview of the results of the first quarter 2023. Our 6-K disclosure provides more details.

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 has filed 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 IS PART OF THE REGISTRATION STATEMENT, AS THEY BECOME AVAILABLE, BECAUSE THEY CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED CONVERSION DESCRIBED THEREIN. 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.

• Provides profitability of the new global operating segments - Care Enablement and Care Delivery¹
• Outlines turnaround plan to deliver on 2025 profitability margin ambition

Fresenius Medical Care, the world’s leading provider of products and services for individuals with kidney disease, is hosting today a Capital Markets Day featuring Chief Executive Officer Helen Giza and the Members of the Management Board discussing the Company’s turnaround plan and the further path to profitability improvement. Helen Giza also presents the Company’s unaudited 2022 global segment margin analysis, now reoriented to the new operating model.

¹ Based on attached unaudited tables

After significant impacts from the pandemic with increased patient mortality and labor challenges, Fresenius Medical Care already sees a trend towards pre-pandemic levels in these areas. With productivity improvements already initiated, the Company is well positioned to capture the expected volume rebound and will benefit from increasing operational leverage. 

“While 2023 has always been expected to be a year of level setting for Fresenius Medical Care, we have very strong market positions and are operating in an environment where growth is expected to rebound. We see the first results of our focused turnaround plan, and I am confident in the progress we are making,” said Helen Giza. “We will look at 2023 as a time when we made important decisions to build a new foundation for unlocking value as the leading kidney care company. While there is much to do, we have a clear path forward that will lead to significant profitability improvement in each of our operating segments.”

 
Outlook²
As announced in February, for 2023 Fresenius Medical Care expects revenue to grow at a low to mid-single digit percentage rate (2022 basis: EUR 19,398 million) and operating income to remain flat or decline by up to a high-single digit percentage rate in 2023 (2022 basis: EUR 1,540 million).

By 2025 Fresenius Medical Care targets to achieve an improved operating income margin of 10 to 14% (2022 basis 7.9%). To achieve this, Fresenius Medical Care is focusing on driving margin improvement initiatives in each of its two operating segments. 

For Care Delivery, important margin drivers include in addition to the support from the FME25 program, the contributions from improving operational leverage driven by volume rebound and a reduced clinic infrastructure, improving U.S. reimbursement rate and mix, labor productivity, as well as driving growth and operational efficiencies in the international Care Delivery business. By 2025, Fresenius Medical Care expects the Care Delivery segment operating income margin to improve from 9.5% in 2022 to a range of 10 to 14%.

The Care Enablement operating segment is targeted to deliver the most significant margin uplift. The operating income margin is planned to improve from 1.9% in 2022 to a range of 8 to 12% by 2025. Care Enablement has been hit particularly hard in the recent years by the inflationary environment, which was further exacerbated by supply chain cost increases. Important elements of the turnaround plan include the contributions from the FME25 program, pricing and contracting and direct procurement excellence, continued expansion in the more attractive international markets and streamlining processes while further reducing G&A costs and creating operational efficiency improvements. 

² Revenue and operating income, as referred to in the Outlook, are both on a constant currency basis and excluding special items. 
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. Additionally, FY 2022 basis for Outlook 2023 and 2025 was adjusted for Provider Relief Funding. For further details please see the reconciliation attached to the Press Release.

Portfolio optimization efforts
In addition to improving profit margins, separate portfolio optimization efforts are underway to both refocus the Company around its core businesses and streamline current R&D efforts in Care Enablement. Fresenius Medical Care is diligently assessing options for its portfolio assets and will cease R&D efforts for products deemed not commercially viable. Portfolio optimization efforts are not included in the Outlook outlined above and will be treated as special items and proceeds are planned to be used for deleveraging.

Collectively, these measures shall support the Company’s ambition to double the return on capital invested by 2025.
 

Fresenius Medical Care, the world’s leading provider of products and services for individuals with renal diseases, adopts United Nations (UN) Women’s Empowerment Principles, established by the UN Global Compact and UN Women.

The Women’s Empowerment Principles (WEPs) are a set of seven principles offering guidance to business on how to promote gender equity and women’s empowerment in the workplace, marketplace and community. The WEPs are informed by international labor and human rights standards and grounded in the recognition that businesses have a stake in, and a responsibility for, gender equity and women’s empowerment.

Helen Giza, CEO of Fresenius Medical Care, said: “In signing the UN Women’s Empowerment Principles, Fresenius Medical Care is demonstrating its commitment to supporting women throughout their careers by ensuring they have equitable opportunities in a diverse and inclusive work culture; and supporting women in our business processes and in the communities we serve.” 

Today’s announcement is another sign of the Company’s ongoing commitment towards diversity, equity, and inclusion. In 2022, the Company has set itself new gender diversity targets to support the development of female leaders across the company. By 2027, Fresenius Medical Care aims to increase the share of female leaders in the first level below the Management Board to 35%, and the share of female leaders in the second level to 45%. In 2022, the proportion of women in the first two levels below the Management Board was 30%. Moreover, the Company has set itself the goal of increasing the overall representation of women in management positions to reflect the percentage of women in the global employee population by 2030. The new targets were published in its 2022 Non-financial Group Report. 

Fresenius Medical Care, the world’s leading provider of products and services for individuals with renal diseases, has won the prestigious CIO 100 Award. The Company was recognized for its groundbreaking efforts to develop a tool to predict intradialytic hypotension (IDH) before it occurs in hemodialysis patients. IDH is a frequent complication of long-term hemodialysis that can lead to serious clinical outcomes including death and is difficult to predict. 

The Renal Research Institute (RRI), a division of Fresenius Medical Care, and the Company's Digital Technology & Innovation (DTI) team, developed a secure data pipeline that collects real time data from dialysis machines and medical sensors throughout the United States at a high frequency.

The increased data flow allows machine learning and cloud computing to develop a real-time IDH prediction for patients. Clinic teams use the information to specially tailor treatment plans and proactively intervene at the point of care preventing IDH, potentially improving patients’ morbidity and mortality.

“This is a true example of partnership, collaboration, and teamwork, and we are proud that our commitment to bring it to the next level of these exciting technologies will result in a better care experience for our patients, and most importantly, improve quality of life and patient outcomes,” said Franklin W. Maddux, MD, Global Chief Medical Officer and Member of the Board of Fresenius Medical Care.

The CIO 100 Awards celebrates 100 organizations and the teams within them that are using IT in innovative ways to deliver business value, whether by creating competitive advantage, optimizing business processes, enabling growth, or improving relationships with customers. Because it is given to companies and not individuals, it is an acknowledged mark of enterprise excellence. 

The Renal Research Institute (RRI) is dedicated to measurably improving outcomes in patients suffering from chronic kidney disease (CKD) through research, technical innovation, implementation of processes and education. RRI strives to achieve its goals through collaboration with national and international academic partners, industry, and not-for-profit organizations operating in the field of kidney disease. RRI fosters its relationship with academic centers of the highest caliber through partnerships. RRI promotes research and education programs with an emphasis on international clinical fellows, scientists, and renal nurses. Through partnerships, RRI is able to enhance the spectrum of comprehensive renal services by advancing peritoneal and hemodialysis therapies through clinical research and the application of practice guidelines and new technology. For more information, visit the Renal Research Institute’s website at www.renalresearch.com.
 

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.

Fresenius Medical Care (FME), the world’s leading provider of products and services for individuals with renal diseases, has taken the Zero Health Gaps Pledge at the World Economic Forum in Davos, Switzerland. 

The Zero Health Gaps Pledge is part of the Global Health Equity Network (GHEN), which brings together key stakeholders from the public and private sectors to advance a collective vision of Zero Health Gaps, in line with the UN Sustainable Development Goals. In total, 36 companies from eight countries committed to sign the first-in-kind global pledge. By taking the pledge, Fresenius Medical Care is declaring its commitment to meaningful action and collaboration toward health equity. 

“We believe that access to equitable and high-quality health care is a fundamental human right, and we are committed to working with global leaders and organizations to improve the lives of millions of people throughout the world,” said Helen Giza, CEO of Fresenius Medical Care. “We will also look inward and achieve clear, actionable steps to make our processes economically and environmentally sustainable, while increasing access to the care we provide in the global communities we serve.”

The difference in average life expectancy at birth between high- and low-income countries is glaring at 78 and 64 years respectively. Global climate and health crises, including the COVID-19 pandemic, have heightened both the severity of these inequities and the potential consequences of inaction. The Zero Health Gaps Pledge is a direct response to the growing health disparities across the globe. 

Fresenius Medical Care has taken a number of actions to address health equity. The company’s Health Equity Dashboard provides important demographic and regional data to identify possible inequities in key patient outcomes. The goal is to tailor interventions to individuals in different locations to help ensure there are no care delivery gaps. 

“Around 3.8 million patients worldwide regularly undergo dialysis treatment. Fresenius Medical Care is passionate about the importance of closing the gaps in health equity,” said Franklin W. Maddux, MD, Global Chief Medical Officer. “We are excited to help lead the way for the international health care community by taking the Zero Health Gaps Pledge and look forward to tackling this significant challenge head on.”

Nwamaka (Amaka) Eneanya, MD, Head of Strategy and Operations for the Global Medical Office, will lead the company’s global health equity strategy including its efforts to meet the Zero Health Gaps Pledge. She will work with Mignon Early, Vice President of Diversity, Equity, and Inclusion, to ensure strategic initiatives are developed in the context of Fresenius Medical Care’s diverse employee base.

Click here to read the complete “Zero Health Gaps Pledge” including its ten key commitments, and click here to learn more about the Global Health Equity Network.