Fresenius Medical Care, the world’s largest provider of dialysis products and services, has successfully refinanced its existing senior secured credit agreement, originally maturing in 2019.

The amended credit agreement now reflects a simplified, unsecured structure consistent with the investment grade rating of the company and lower tiered pricing. The new structure should also enable future bond issuances to be ranked pari passu with the credit agreement.

The new facility has an aggregate amount of approximately USD 3.9 billion and consists of revolving facilities and term loans, both U.S. Dollar and Euro denominated with maturities in 2020 and 2022.

 

Fresenius Medical Care, the world’s largest provider of dialysis products and services, sees excellent future prospects for continued growth. At its Capital Markets Day in Frankfurt, today the management of Fresenius Medical Care updates analysts and investors on the Company’s growth and efficiency strategy and confirms the ambitious financial targets for 2020.

The revenue growth target for 2020 is EUR 24 billion. This represents an annual average growth rate of around 10 percent. Over the same period Fresenius Medical Care also expects an annual, high single-digit percent increase in net income.

These goals are mainly driven by a solid development of the core business of dialysis services and products, with contributions from all regions. In addition, Fresenius Medical Care continues to grow in its Care Coordination business. This includes additional health services to provide a holistic approach in health care for the Company’s patients. Until 2020 Fresenius Medical Care is targeting an annual average revenue growth rate of more than 15 percent in Care Coordination which amounts to 16 percent of the total revenue today.

Fresenius Medical Care also announced its Global Efficiency Program II. The program’s objectives are to identify and realize further efficiency potential and enhance the overall competitiveness of Fresenius Medical Care. Starting in 2018, Global Efficiency Program II targets to achieve sustained efficiency gains that should lead to cost savings of EUR 100 to EUR 200 million per annum by 2020.

In an environment of increasing patient numbers and changing health care systems, Fresenius Medical Care sees significant potential in providing value-based care. This approach focuses on selling solutions, providing holistic care and receiving outcome-based reimbursement instead of offering single products or services. The vertically integrated business of the Company together with its Care Coordination capabilities enables Fresenius Medical Care to provide effective and efficient care. This is the platform for offering value-based care to an increasing number of patients.

Rice Powell, Chief Executive Officer of Fresenius Medical Care, said in his opening remarks: “The number of dialysis patients is expected to increase from 3 million at the end of 2016 to approximately 4.9 million by 2025. By leveraging our strong core competencies as the leading integrated global provider in the dialysis industry and more than a decade of experience in value-based care, we are excellently positioned for further profitable growth.”

Presentations and other information material given at the Capital Markets Day will be available on our website soon: http://www.freseniusmedicalcare.com/en/investors/events-presentations/

Fresenius Medical Care, the world’s largest provider of dialysis products and services, is expanding its peritoneal dialysis (PD) product range with the introduction of two new dialysis fluids. Both products contain pure bicarbonate buffers and have considerably reduced amounts of glucose degradation products (UltraLow GDP). The new fluids – bicaVera® low calcium and bicaNova® – will allow therapy to be adjusted more precisely to the individual patient’s needs in terms of calcium or buffer concentration.

bicaVera® and bicaNova® regulate the acid-base balance through a pure bicarbonate buffer, while the low calcium concentrations in these PD dialysis fluids follow the recent International Society of Peritoneal Dialysis (ISPD) guidelines.

The two new PD fluids were presented this month at the 2017 European Dialysis and Transplantation Association/European Renal Association (ERA-EDTA) congress in Madrid. They will be introduced in steps in several European markets.

In peritoneal dialysis, the lining of a patient’s abdominal cavity – the peritoneum – acts as the filter for cleaning the blood. Of the approximately 3 million dialysis patients around the world, about 350,000 choose peritoneal dialysis treatment.

Fresenius Medical Care offers a wide range of products for Continuous Ambulatory Peritoneal Dialysis (CAPD) and Automated Peritoneal Dialysis (APD). These include various dialysis fluids, bag systems, cyclers for APD, and the related bag and tube systems.

For medical professionals, more information about the peritoneal dialysis products of Fresenius Medical Care is available at www.freseniusmedicalcare.com/en/healthcare-professionals/peritoneal-dialysis/peritoneal-dialysis-overview/

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Moody’s Investors Service (“Moody’s”) has upgraded the corporate credit rating of Fresenius Medical Care, the world’s largest provider of dialysis products and services, from Ba1 to Baa3 with a stable outlook.

In addition, Moody's has upgraded all senior unsecured ratings from Ba2 to Baa3 and confirmed all senior secured ratings of Fresenius Medical Care at Baa3.

The upgrades reflect Moody’s view about Fresenius Medical Care’s strong track record of profitable growth, the company’s defensive business profile, as well as its ability to quickly delever after debt-financed acquisitions.

Moody’s further recognizes the solid growth outlook for Fresenius Medical Care driven by continued patient growth and prospects for international expansion.

The growth targets of the company’s 2020 strategy reflect the realization of these opportunities.

Fresenius Medical Care is now rated investment grade by Standard & Poor’s, Moody’s and Fitch.

 

 

 

 

Fresenius Medical Care, the world’s largest provider of dialysis products and services, expects significant sales and earnings growth in 2017. At the Annual General Meeting in Frankfurt today, CEO Rice Powell confirmed the full-year guidance: The company is targeting on a constant currency basis 8 to 10 percent revenue growth and an increase in net income of 7 to 9 percent.

Rice Powell also confirmed Fresenius Medical Care’s long-term financial goals: Revenue of €24 billion is targeted for 2020, corresponding to an average growth rate of about 10 percent. Over the same period, an annual, high single-digit percent increase in net income is also expected.

“Fresenius Medical Care is the world’s largest dialysis company,” Rice Powell said in his speech to the shareholders. “No one sells more dialysis products than we do. No company cares for more dialysis patients than we do. With Care Coordination, we are creating and expanding business areas that are geared towards offering patients comprehensive treatment beyond the dialysis clinic. New business areas like these will provide the foundations for enhanced growth.”

A large shareholder majority of 88.29 percent approved a 20 percent increase in the dividend, from €0.80 to €0.96, the company’s 20th consecutive dividend increase.

Shareholder majorities of 99.82 and 86.51 percent, respectively, approved the actions of the Management and Supervisory Boards in 2016.

At the Annual General Meeting, 76.82 percent of the subscribed capital was represented.

The next Annual General Meeting is scheduled for May 17, 2018.

 

 

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• Strong revenue increase by 14%¹ supported by growth in all regions and Care Coordination activities
• Net income^1,2 growth of 17% ahead of revenue development
• First quarter performance in line to achieve full year guidance
• Acquisition of majority stake in Cura Group, Australia, completed

Key figures (IFRS)

EUR million	Q1 2017	Q1 2016	growth
Revenue	4,548	3,916	+16%
Adjusted revenue1	4,448	3,916	+14%
Operating income (EBIT)	651	497	+31%
Adjusted operating income (EBIT)1	552	497	+11%
Net income1	308	213	+45%
Adjusted net income1,2	249	213	+17%
Basic earnings per share (in EUR)	1.01	0.70	+44%

¹ Adjusted for the effects of the agreement with United States Departments of Veterans Affairs and Justice on outstanding payments
² Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA

Rice Powell, Chief Executive Officer of Fresenius Medical Care, stated: “We saw a very positive start to the year. While both our dialysis services and products business showed strong growth, our Care Coordination activities confirmed its high growth potential. We are shaping our activities in this area and expect the profitability to improve in the course of the year. We are clearly on track to deliver on our ambitious targets for 2017.”

 

Revenue & earnings

Revenue for the company improved by 16% and reached EUR 4,548 million (12% at constant currency), largely driven by strong Health Care Services revenue growth of 19% in North America (15% at constant currency). Total Health Care Services revenue increased by 18% (14% at constant currency) to EUR 3,769 million, while product revenue grew 8% (6% at constant currency) to EUR 779 million. Organic growth³ of 9% for Health Care Services and 5% for the products business confirmed the strong underlying dynamic in the first quarter 2017.

Total operating income (EBIT) increased by 31% to EUR 651 million (margin of 14.3%). This increase was strongly supported by the Dialysis business in North America, the agreement with the United States Departments of Veterans Affairs and Justice and the business growth in Asia Pacific.

Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA was EUR 308 million, a very strong increase of 45%. Excluding the agreement with the United States Departments of Veterans Affairs and Justice, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA increased by 17%. Based on a number of approximately 306.2 million shares (weighted average number of shares outstanding), basic earnings per share (EPS) amounted to EUR 1.01, compared to EUR 0.70 for the first quarter of 2016.

 

 

 

³ Adjusted for the effects of the agreement with United States Departments of Veterans Affairs and Justice for outstanding payments

Development of Reporting Segments

North America revenue increased by 18% to EUR 3,375 million and corresponds to 74% of total revenue. At constant currency rates growth was at 14%. The Dialysis business grew by 14% (10% at constant currency), Care Coordination increased by 39% (34% at constant currency). The continued progress in Care Coordination was driven by organic growth of 27% and contributed EUR 691 million in revenues. Dialysis Care Services revenue growth was positively influenced by the positive effect from the agreement with the United States Departments of Veterans Affairs and Justice, a favourable impact from commercial payors and an increased number of treatments. Product revenue increased by 9% (6% at constant currency) due to higher sales of machines and products for peritoneal dialysis.

The substantially improved Dialysis operating income margin of 19.6% (+310 bp compared to Q1 2016) was driven by the agreement with the United States Departments of Veterans Affairs and Justice, a favourable impact from commercial payors, lower costs for health care supplies partially offset by higher personnel expense. The year over year lower margin in the Care Coordination activities was driven by higher bad debt expense, the impact from lower revenue for vascular services and increased costs for pharmacy services, partially offset by earnings recognized from the Bundled Payment for Care Improvement (BPCI) initiative related to hospitalist and intensivist services.

The total operating income of the North America segment was EUR 526 million (+31%), the operating income margin improved to 15.6%. Operating income (EBIT) for the first quarter 2017 excluding the agreement with the Veteran Administration was EUR 427 million, an increase of 6% compared to Q1 2016 (3% at constant currency). Excluding the agreement with the United States Departments of Veterans Affairs and Justice the operating income margin was 13.0%.

EMEA revenue increased by 7% (6% at constant currency) to EUR 614 million, mainly driven by a positive business development in Health Care Services revenue which increased by 11% (9% at constant currency). The increase at constant currency was driven by acquisitions and same-market treatment growth. Dialysis Product revenue grew by 1% to EUR 290 million. Positively influenced by an acquired business, the company generated EUR 21 million of non-dialysis product revenue. Operating income was EUR 114 million in Q1 2017, the operating income margin decreased from 20.6% to 18.7% mainly due to an unfavorable impact from acquisitions, overhead costs and a lower income from equity method investees.

Asia-Pacific revenue grew by 11% (7% at constant currency) to EUR 378 million. In the region Health Care Services generated revenue of EUR 169 million and therewith showed a 4% organic revenue growth. With a growth of 11% (8% constant currency) to EUR 209 million, the product business showed a solid sales performance, mainly driven by higher sales of dialyzers, machines and products for acute care treatments. Operating income increased to EUR 82 million (38%) and was supported by an improved revenue mix and the prior year impact from costs associated with changes in the management board. Operating income margin improved to 21.7% (compared to 17.5% in Q1 2016).

End of April 2017 Fresenius Medical Care successfully closed the acquisition of Cura day hospital group in Australia - the first step into Care Coordination outside the North American market. The transaction is strengthening the Company’s regional footprint by scaling up to around 40 outpatient facilities. The new entity generated EUR 87 million in revenues in the business year 2015/2016. Consolidation effects are already reflected in the given guidance for 2017.

Latin America delivered revenue of EUR 177 million, a significant improvement of 28%. At constant currency rates the business grew by 17%. The growth was mainly driven by reimbursement increases, higher number of treatments and a favorable currency impact. Product revenue grew by 23% based on higher machine sales. Operating income was at EUR 14 million, compared to EUR 10 million in previous year’s Q1. Operating income margin increased to 8.1% in Q1 2017 from 7.0% in Q1 2016.

Net interest expense was EUR 92 million compared to EUR 96 million in the first quarter of 2016. The decrease was driven by the replacement of high interest bearing senior notes repaid in 2016 by debt instruments at lower interest rates partially offset by an increased average debt level. Income tax expense was EUR 182 million for the first quarter of 2017, which translates into an effective tax rate of 32.5%, compared to last year’s Q1 with a tax rate of 31.4%. The increase was primarily driven by a lower portion of tax-free income attributable to non-controlling interests and the agreement with the United States Departments of Veterans Affairs and Justice.

Cash flow

In the first quarter of 2017, the company generated EUR 170 million in net cash provided by operating activities, representing 4% of revenue, compared to EUR 163 million in last year’s Q1. The cash flow was positively influenced by the payment related to the agreement with the United States Departments of Veterans Affairs and Justice, offset by seasonality in invoicing. The seasonality in invoicing will have no meaningful impact on the full year 2017. The number for DSO (days sales outstanding) increased sequentially by 3 days compared to Q4 2016 and reached 73 days.

Employees

As of March 31, 2017, Fresenius Medical Care had 110,530 employees (full-time equivalents) worldwide, compared to 104,687 employees at the end of March 2016. This increase was mainly attributable to our continued organic growth and acquired companies.

Outlook 2017 confirmed

Based on the very positive Q1 business development, Fresenius Medical Care confirms its full year outlook 2017. The company expects revenue growth between 8% and 10% at constant currency for fiscal 2017. Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA is expected to increase by 7% to 9% at constant currency over the previous year. The effects of the agreement with the U.S. Departments of Veterans Affairs and Justice are excluded.

Conference call

Fresenius Medical Care will hold a conference call to discuss the results of the first quarter 2017 on Wednesday, May 3, 2017 at 3.30 p.m. CEDT/ 9.30 a.m. EDT. The company invites investors to follow the live webcast of the call at the company’s website www.freseniusmedicalcare.com in the “Investors/Events” section. A replay will be available shortly after the call.

Please refer to the pdf file for a complete overview of the results for the first quarter 2017.

• Targets for 2016 achieved
• Group revenue +7% in 2016 (+7% adjusted¹)
• Strong EBIT growth of 13% in 2016, resulting in improved EBIT margin of 14.7%
• Net income +21% (+16% adjusted²)
• Very good performance in Health Care Services, particularly in North America
• Care Coordination continues to deliver significant organic revenue growth (+20%)
• Dividend proposal of €0.96 (+20%) for fiscal year 2016

Fourth quarter 2016 key figures

US$ million	Q4 2016	Q4 2015
Net revenue	4,687	4,348	+8%
Operative income (EBIT)	786	662	+19%
Net income3	388	317	+23%
Basic earnings per share (in $)	1.27	1.04	+22%

 

 

Full year 2016 key figures

US$ million	Q1-4 2016	Q1-4 2015
Net revenue	17,911	16,738	+7%
Operating income (EBIT)	2,638	2,327	+13%
Net income3	1,243	1,029	+21%
Net income adjusted2	1,228	1,057	+16%
Basic earnings per share (in $)	4.07	3.38	+20%
Dividend proposal (per share)	0.96	0.80	+20%

¹At constant currency, excluding acquisitions in 2015 and 2016
²Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA, adjusted for acquisitions and based on an adjusted 2015 net income of $1,057m
³Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA

 

"In our 20th anniversary year, we were able to mark another record year for Fresenius Medical Care and for our shareholders. I am pleased to confirm that we have achieved our financial targets for 2016. We were able to deliver a strong business performance across all segments and realize the planned savings of our Global Efficiency Program thanks to the outstanding dedication and commitment of our employees," said Rice Powell, Chief Executive Officer of Fresenius Medical Care. "Our path to value-based care continues. We are further investing in the dynamic growth of our Care Coordination activities as well as the innovative development of our core dialysis business. For 2017, we have again set ourselves ambitious targets and will continue to deliver high-quality care for our patients."

Revenue

Net revenue for the full year 2016 increased by 7% and reached $17,911 million (+8% at constant currency), driven by a strong performance in Health Care Services. Health Care Services revenue increased by 8% to $14,519 million (+9% at constant currency), mainly due to strong organic growth supported by positive price and volume effects. Dialysis Products revenue increased by 1% to $3,392 million (+4% at constant currency). The growth at constant currency was primarily supported by higher sales of dialyzers and machines. This was partially offset by lower sales of renal pharmaceuticals, resulting from the sale of our European marketing rights for certain renal pharmaceuticals to our joint venture, Vifor Fresenius Medical Care Renal Pharma, in 2015.

Net revenue in the fourth quarter of 2016 increased by 8% to $4,687 million (+9% at constant currency), mainly driven by higher Health Care Services revenue. Health Care Services revenue increased by 10% to $3,799 million (+10% at constant currency), mainly driven by positive price as well as volume effects. Dialysis Products revenue reached the same level as in the previous year ($888 million), an increase of 2% at constant currency.

Earnings

Operating income (EBIT) for the full year 2016 increased by 13% to $2,638 million, leading to an improved operating income margin of 14.7% (+80 basis points). The development of the EBIT margin was supported by a strong margin development, particularly in North America.

In the fourth quarter of 2016, operating income rose by 19% to $786 million, leading to a strong operating income margin of 16.8% (+160 basis points). The increase in EBIT margin was positively affected by the prior year impact from the GranuFlo® settlement expense as well as the margin improvement in North America and Asia-Pacific and a favorable impact from Corporate due to reduced legal and consulting expenses.

Net interest expense for the full year 2016 increased by 4% to $406 million, particularly due to lower interest income as a result of the repayment of interest bearing notes receivables in the fourth quarter of 2015. This was partially offset by a lower debt level driven by a favorable cash flow development.

For the same reasons, net interest expense in the fourth quarter of 2016 increased by 11% to $98 million.

Income tax expense for the full year 2016 increased by 10% to $683 million. This translates into an effective tax rate of 30.6%, a decrease of 150 basis points compared to the same period of 2015. This decrease was supported by lower tax expense as a result of released tax liabilities, as well as the prior year impact from the non-tax deductible loss from the divestiture of our dialysis service business in Venezuela.

In the fourth quarter of 2016, income tax expense were $212 million, translating into an effective tax rate of 30.8% (-60 basis points).

For the full year 2016, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA grew by 21% to $1,243 million and by 16% to $1,228 million on an adjusted basis¹. Based on approximately 305.7 million shares (weighted average number of shares outstanding), basic earnings per share (EPS) increased from $3.38 to $4.07 (+20%). The increase in the weighted average number of shares outstanding was the result of stock options exercised.

¹2015 net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA adjusted for the impacts of (i) the 2015 settlement cost for an agreement in principle for the GranuFlo case ($37 million) and (ii) acquisitions in 2015 ($9 million), resulting in an adjusted net income of $1,057 million; 2016 net income adjusted for 2016 acquisitions ($15 million), resulting in an adjusted net income of $1,228 million.

In the fourth quarter of 2016, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA grew by 23% to $388 million. Based on approximately 306.2 million shares (weighted average number of shares outstanding), basic EPS increased from $1.04 to $1.27 (+22%).

Segment development

North America: For the full year 2016, North America revenue increased by 9% to $12,886 million (72% of total revenue). Health Care Services revenue grew by 10% to $11,982 million, driven by higher Dialysis Care revenue (+7% to $9,675 million) and increased Care Coordination revenue (+23% to $2,307 million). Dialysis treatments rose by 4%. As of the end of 2016, we had 188,987 patients being treated at the 2,306 clinics that we own, operate or manage in North America. Dialysis Products revenue increased by 3% to $904 million, supported by higher sales of machines, dialyzers and peritoneal dialysis products partially offset by lower sales of renal pharmaceuticals and bloodlines. Operating income in North America came in at $2,119 million (+18%). The operating income margin reached a level of 16.4% (+120 basis points) as a result of lower cost from health care supplies, a higher volume of dialysis treatments with commercial payers and the prior year impact from the GranuFlo® settlement expense. The positive effect was partially offset by higher personnel expense and a cost impact related to the vesting of long term incentive plan grants. The operating income margin of Care Coordination decreased to 2.6%, mainly driven by increased costs for hospitalist and intensivist services.

In the fourth quarter of 2016, North America revenue increased by 9% to $3,374 million, mainly supported by higher dialysis treatments coupled with an increase in US revenue per treatment ($356, +$8). Care Coordination contributed revenues of $603 million (+20%). Operating income increased by 23% to $634 million in the fourth quarter, mainly supported by the prior year impact from the GranuFlo® settlement expense and higher revenue from commercial payers as well as lower cost from health care supplies. This was partially offset by higher personnel expense and an unfavorable impact from Care Coordination. The Care Coordination EBIT margin of -1.1% in North America was mainly impacted by higher costs related to bad debt reserves for hospitalist and intensivist services.

EMEA: For the full year 2016, EMEA revenue increased by 1% to $2,667 million (+4% at constant currency). Health Care Services revenue for the EMEA segment increased by 6% to $1,294 million (+9% at constant currency), mainly as the result of contributions from acquisitions and same market treatment growth, partially offset by the negative effect of exchange rate fluctuations. Dialysis treatments increased by 8%. As of the end of 2016, we had 59,767 patients being treated at the 711 dialysis clinics that we own, operate or manage in EMEA. Dialysis Products revenue decreased by 2% to $1,373 million (flat at constant currency), mainly due to lower sales of renal pharmaceuticals (whose marketing rights were sold in 2015), dialyzers and machines, mostly offset by increased sales of bloodlines and products for acute care treatments. Operating income in EMEA decreased by 9% to $524 million for the full year. The operating income margin decreased to 19.7% (-220 basis points), mainly due to the prior year impact from a gain from the sale of European marketing rights for certain renal pharmaceuticals, higher bad debt expense, lower income from equity method investees and unfavorable foreign exchange effects.

In the fourth quarter of 2016, EMEA revenue increased by 2% to $684 million (+4% at constant currency), mainly driven by a strong performance in Health Care Services (revenue +7% to $327 million, +10% at constant currency). Dialysis Products revenue in EMEA declined by 3% to $357 million in the fourth quarter (flat at constant currency). Operating income in EMEA decreased by 25% to $130 million due to the gain from the sale of European marketing rights for certain renal pharmaceuticals in 2015, lower income from equity method investees driven by higher product development cost, IT project cost as well as higher bad debt expense.

Asia-Pacific: Total revenue for the Asia-Pacific segment increased by 9% to $1,632 million (+8% at constant currency) for the full year 2016. Health Care Services revenue increased by 9% to $730 million (+3% at constant currency), based on an increase of 6% in dialysis treatments. With an 8% growth in revenue to $902 million (+12% at constant currency), the product business showed an excellent sales performance across the entire dialysis products range. As of the end of 2016, we had 29,328 patients being treated at the 374 dialysis clinics that we own, operate or manage in Asia-Pacific. Operating income increased by 7% to $319 million. Due to unfavorable foreign exchange effects and costs associated with changes in the Management Board, the EBIT margin decreased slightly to 19.6% (-20 basis points).

In the fourth quarter of 2016, revenue in the Asia-Pacific segment increased by 10% to $433 million (+8% at constant currency), driven by a good revenue growth in both the Health Care Services business (+12%/+5% at constant currency) as well as the products business (+8%/+10% at constant currency). Operating income increased by 20% to $94 million. The EBIT margin increased accordingly to 21.8% (+180 basis points) in the fourth quarter, mainly due to the favorable effect of prior year costs related to customs duties in India.

Latin America: Total revenue for the Latin America segment decreased by 7% to $712 million (+13% at constant currency) for the full year 2016. Health Care Services revenue decreased by 9% to $513 million (+15% at constant currency), mainly as a result of the negative effect of exchange rate fluctuations and the effect of closed or sold clinics (mainly Venezuela and Brazil), partially offset by increases in organic revenue per treatment. Dialysis treatments decreased by 3%, mainly due to the effect of closed or sold clinics. As of the end of 2016, we had 30,389 patients being treated at the 233 dialysis clinics that we own, operate or manage in Latin America. Dialysis Products revenue for the full year remained unchanged at $199 million (+7% at constant currency). The growth at constant currency was mainly driven by increased sales of dialyzers, hemodialysis solutions and concentrates, partially offset by lower sales of peritoneal dialysis products and machines. Operating income increased by a strong 37% to $66 million, mainly due to the prior-year loss from the divestment of the dialysis service business in Venezuela. The EBIT margin in Latin America increased to 9.2% (+290 basis points) for the full year, mainly driven by the above mentioned prior-year loss.

In the fourth quarter of 2016, revenue in the Latin America segment increased by 1% to $192 million (+13% at constant currency), mainly driven by a strong increase in Dialysis Products revenue (+11% to $56 million, +7% at constant currency). The growth at constant currency was the result of higher sales of dialyzers as well as hemodialysis solutions and concentrates, partially offset by lower sales of machines. Health Care Services revenue decreased by 3% to $136 million (+14% at constant currency), strongly impacted by unfavorable foreign exchange effects. Operating income in Latin America decreased by 18% to $19 million in the fourth quarter, mainly driven by higher bad debt expense. The EBIT margin decreased accordingly to 9.7% (-230 basis points).

Cash flow

In the full year 2016, the company generated net cash provided by operating activities of $2,140 million ($1,960 million for full year 2015), representing 11.9% of revenue, and thereby clearly reaching our target for 2016 (operating cash flow > 10% of revenue). The increase was mainly the result of improved inventory levels in North America driven by lower health care supplies, as well as increased earnings. This was partially offset by unfavorable effects from other working capital items and a $100 million discretionary cash contribution to pension plan assets in the United States. The number of DSO (days sales outstanding) as of December 31, 2016 was 70 days, a decrease of 1 day compared to the previous year.

In the fourth quarter of 2016, the company generated net cash provided by operating activities of $844 million, representing 18% of revenue ($548 million in the fourth quarter of 2015). The increase was primarily attributable to higher net income, a favorable effect from DSO and deferred income tax payments in the United States.

Employees

As of December 31, 2016, Fresenius Medical Care had 109,319 employees (full-time equivalents) worldwide, compared to 104,033 employees at the end of December 2015. This increase of 5% was primarily attributable to our continued organic growth and acquisitions.

Recent events: Acquisition of a majority stake in Cura Group

In February 2017, Fresenius Medical Care announced the acquisition of a majority stake in Cura Group (“Cura”), a leading operator of high-quality day hospitals in Australia. In its 19 private day hospitals across Australia, Cura provides a variety of specialized ambulant services, such as ophthalmology and orthopedic surgeries in an outpatient setting. Cura was established in 2008 and generated revenue of AU$127 million (€87 million) in the financial year 2015/2016. This acquisition allows Fresenius Medical Care to further leverage its core competence in operating outpatient facilities, extend its dialysis network and thereby lay the foundation for future growth in the Australian market. This transaction is subject to remaining shareholder agreements and authority approval.

Guidance 2017

Beginning January 1, 2017, Fresenius Medical Care AG & Co. KGaA focusses its reporting on financial statements in accordance with International Financial Reporting Standards (IFRS) in Euro currency. For full year 2017, the company expects revenue to grow by 8 to 10% at constant currency, based on 2016 revenue of €16,570 million. Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA is expected to grow by 7 to 9% at constant currency, based on 2016 net income of €1,144 million. The effects of the agreement with the U.S. Departments of Veterans Affairs and Justice are excluded.

Vision 2020

In April 2014, Fresenius Medical Care set medium-term targets on a constant-currency, US-GAAP basis. The company targeted an average, annual revenue increase of about 10 percent through 2020. At current exchange rates, this would result in a 2020 revenue target of €24 billion on an IFRS basis. Over the same period, Fresenius Medical Care expects an average annual growth of net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA in the high-single-digit percentage range. These goals are unchanged.

Press Conference

Fresenius Medical Care will hold a press conference at its headquarters in Bad Homburg, Germany to discuss the results of the fourth quarter and full year 2016 on Wednesday, February 22, 2017, at 10 am CET. The company cordially invites journalists to view the live video webcast at the company's website. A replay will be available shortly after the meeting.

Please refer to the PDF for a complete overview of the results for the fourth quarter and full year 2016.

 

 

Fresenius Medical Care, the world’s largest provider of dialysis products and services, acquires a majority stake in Cura Group ("Cura"), a leading operator of high-quality day hospitals in Australia.

In its 19 private day hospitals across Australia, Cura provides a variety of specialized ambulant services, such as ophthalmology and orthopedic surgeries in an outpatient setting. Cura was established in 2008 and generated revenue of AUD 127 million (EUR 87 million) in the financial year 2015/2016.

Fresenius Medical Care is addressing activities around a coordinated care approach to treat patients in a more holistic way. As a consequence, Fresenius Medical Care is strengthening its portfolio by scaling up to around 40 outpatient facilities in the Australian market. This step allows Fresenius Medical Care to further leverage its core competence in operating outpatient facilities, extend its dialysis network and thereby also lay the foundation for future growth for the new setup in the Australian market.

This transaction is subject to remaining shareholder agreements, authority approval and will be financed through a combination of cash and debt. Fresenius Medical Care expects the investment to be accretive on operating earnings in the first year after closing.

 

Fresenius Medical Care Holdings, Inc. (the “Company”), the North American subsidiary of Fresenius Medical Care AG & Co. KGaA (“FMC”), has reached an amicable agreement with the United States Departments of Veterans Affairs and Justice resolving reimbursement for services provided to veterans by the Company’s clinics during the period January 2009 through February 15, 2011. The agreement resolves litigation that began in March 2014.¹

The Company is pleased with the agreement, and looks forward to its continued service to veterans in the United States. FMC greatly appreciates the efforts and dedication of the Departments in the interest of providing the highest level of service to veterans.

The agreement is expected to increase FMC´s recognition of revenue in 2017 by approximately EUR 100 million. The estimated net income gain attributable to shareholders of FMC is expected to be around EUR 45 to 50 million, after giving consideration to non-controlling interest and income taxes. The payment is expected to be received in due course.

¹Fresenius Medical Care Holdings, Inc. v. United States, Case No. 2014 Civ. 00187 (U.S. Court of Federal Claims).