Fresenius Medical Care AG & Co. KGaA ("the Company"), the world's largest provider of Dialysis Products and Services, today announced that the share split with capital increase from the Company's funds approved by the Ordinary General Meeting on May 15, 2007, will become effective on June 18, 2007. On the same day, the shares will be traded "ex split" and the shareholders' deposits will be adapted to the new number of shares. Every holder of an ordinary share now holds three ordinary shares and every holder of a preference share holds three preference shares. As a result of the share split, the price level will be reduced arithmetically without affecting the overall value for shareholders.
The Fresenius Medical Care shares will continue to trade under ISIN DE0005785802 (ordinary share) and ISIN DE0005785836 (preference share).
The subscribed capital of Fresenius Medical Care AG & Co. KGaA now amounts to €295,422,342.00, divided into 291,701,520 ordinary shares and 3,720,822 preference shares.
For American Depositary Share (ADS) Investors:
Fresenius Medical Care shares are traded on the New York Stock Exchange (NYSE) in the form of ADSs under the ISIN US3580291066 (ordinary share) and ISIN US3580292056 (preference share). Before the share split 3 ADSs represented 1 underlying Share. Upon effectiveness of the share split, the ratio between the ordinary and preference ADS and the underlying ordinary and preference shares is now 1:1, meaning that one Fresenius Medical Care ordinary or preference ADSs is the equivalent of one Fresenius Medical Care ordinary or preference share.
For more information about Fresenius Medical Care visit the Company's website at www.fmc-ag.com.
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Fresenius Medical Care is the world's largest integrated provider of products and services for individuals undergoing dialysis because of chronic kidney failure, a condition that affects more than 1,500,000 individuals worldwide. Through its network of 2,194 dialysis clinics in North America, Europe, Latin America, Asia-Pacific and Africa, Fresenius Medical Care provides dialysis treatment to 169,216 patients around the globe. Fresenius Medical Care is also the world's leading provider of dialysis products such as hemodialysis machines, dialyzers and related disposable products. Fresenius Medical Care is listed on the Frankfurt Stock Exchange (FME, FME3) and the New York Stock Exchange (FMS, FMS/P).
Fresenius Medical Care AG & Co. KGaA ("the Company") (Frankfurt Stock Exchange: FME, FME3) (NYSE: FMS, FMS-p), the world's largest provider of Dialysis Products and Services, today announced that it intends to sell approximately US$ 500 million senior unsecured notes. The notes will be offered mainly to US institutional investors. Proceeds from the offering will be used to reduce indebtedness under the Company's senior secured bank credit facility and other, short-term debt, and for general corporate purposes.
The proposed offering will not be registered under the Securities Act of 1933, but will be offered in the United States pursuant to an exemption from registration under Rule 144A as well as outside the United States under Regulation S. The Company expects completion of the offering at the beginning of July 2007.
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Fresenius Medical Care is the world's largest integrated provider of products and services for individuals undergoing dialysis because of chronic kidney failure, a condition that affects more than 1,500,000 individuals worldwide. Through its network of 2,194 dialysis clinics in North America, Europe, Latin America, Asia-Pacific and Africa, Fresenius Medical Care provides dialysis treatment to 169,216 patients around the globe. Fresenius Medical Care is also the world's leading provider of dialysis products such as hemodialysis machines, dialyzers and related disposable products. Fresenius Medical Care is listed on the Frankfurt Stock Exchange (FME, FME3) and the New York Stock Exchange (FMS, FMS/P).
For more information about Fresenius Medical Care visit the Company's website at www.fmc-ag.com.
Most dialysis patients have a significantly better chance of survival if they are treated with high-flux dialyzers rather than low-flux dialyzers. This is the conclusion of a new international study conducted under the direction of the Italian renal specialist Prof. Francesco Locatelli from the Alessandro Manzoni Hospital in Lecco.
The results of the study were presented last weekend during the European Dialysis and Transplantation Association/European Renal Association (EDTA/ERA) Congress in Barcelona. The study showed that dialysis patients with a low albumin concentration in their blood that were treated with high-flux dialyzers had a 37% lower mortality risk during the three to seven-and-a-half years of the study than those that were treated with low-flux dialyzers. Depending on the country, 56% to 85% of dialysis patients have a low albumin concentration in their blood (four grams per deciliter or less).
The study was conducted over seven-and-a-half years in nine European countries. The 738 patients involved were treated three times a week. Half of the patients received treatment with high-flux dialyzers – predominantly dialyzers from Fresenius Medical Care. The other half received therapy with low-flux dialyzers.
This is the first time a prospective randomized clinical study scientifically proves that treatment with high-flux dialyzers reduces the mortality risk of patients with severe chronic kidney disease. Indications of a lower mortality risk first appeared in the mid-90s.
Specialists attribute the increased survival rates from high-flux dialyzers to a more efficient filtering of larger uremic toxins from the blood. High-flux membranes have a greater water permeability and pores that are two-and-a-half times larger than low-flux membranes. The filtering capabilities of high-flux membranes are closer to the natural kidney function and allow the body to remove large amounts of liquids and toxic uremic substances in a short period of time. High-flux dialyzers can also help maintain any remaining kidney function for a longer period of time.
High-flux dialyzers have the most technically advanced membranes. Their use is increasing worldwide and, in many countries, more than 60% of the patients are treated with high-flux dialyzers. "The positive results of the new study validate our efforts to offer innovative dialysis products such as our high-flux dialyzers with Helixone membranes so that dialysis patients can look toward the future with more confidence. We expect demand for high-flux dialyzers to continue to increase. And we are proud that the majority of the patients in the study's high-flux-group were treated with our dialyzers," said Dr. Emanuele Gatti, Fresenius Medical Care Chief Executive Officer for Europe, Latin America, Middle East and Africa.
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Helixone is a registered trademark of Fresenius Medical Care.
Fresenius Medical Care is the world's largest integrated provider of products and services for individuals undergoing dialysis because of chronic kidney failure, a condition that affects more than 1,500,000 individuals worldwide. Through its network of 2,194 dialysis clinics in North America, Europe, Latin America, Asia-Pacific and Africa, Fresenius Medical Care provides dialysis treatment to 169,216 patients around the globe. Fresenius Medical Care is also the world's leading provider of dialysis products such as hemodialysis machines, dialyzers and related disposable products. Fresenius Medical Care is listed on the Frankfurt Stock Exchange (FME, FME3) and the New York Stock Exchange (FMS, FMS/P).
For more information about Fresenius Medical Care visit the Company's website at www.fmc-ag.com.
Fresenius Medical Care AG & Co. KGaA ("the Company"), the world's largest provider of Dialysis Products and Services, today announced the pricing of Senior Notes due 2017 in the amount of US$ 500 million. The coupon will be 6 7/8%. Proceeds will be used to reduce indebtedness under the Company's senior secured bank credit facility and other, short-term debt.
The Senior Notes will be issued by FMC Finance III S.A., a wholly-owned subsidiary of the Company, and will be guaranteed on a senior basis jointly and severally by the Company, Fresenius Medical Care Holdings, Inc. and Fresenius Medical Care Deutschland GmbH.
Lawrence A. Rosen, Chief Financial Officer of Fresenius Medical Care, commented: "We are pleased to have successfully completed the company's first senior unsecured bond offering. Investors have clearly recognized our sustainable financial strength and are confident in the future of the industry and Fresenius Medical Care."
The notes were not registered under the Securities Act of 1933, but were offered in the United States pursuant to an exemption of registration under Rule 144 A, as well as outside the United States under Regulation S. The notes may not be offered or sold in the United States without registration or an applicable exemption from the registration requirements.
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Fresenius Medical Care is the world's largest integrated provider of products and services for individuals undergoing dialysis because of chronic kidney failure, a condition that affects more than 1,500,000 individuals worldwide. Through its network of 2,194 dialysis clinics in North America, Europe, Latin America, Asia-Pacific and Africa, Fresenius Medical Care provides dialysis treatment to 169,216 patients around the globe. Fresenius Medical Care is also the world's leading provider of dialysis products such as hemodialysis machines, dialyzers and related disposable products. Fresenius Medical Care is listed on the Frankfurt Stock Exchange (FME, FME3) and the New York Stock Exchange (FMS, FMS/P).
For more information about Fresenius Medical Care visit the Company's website at www.fmc-ag.com.
Summary Second Quarter 2007
- Net revenue : $ 2,404 million, + 11%
- Operating income (EBIT): $ 391 million, + 5%
- Net income: $ 179 million, + 38%
- Earnings per share: $ 0.60, + 37%
Summary First Half 2007
- Net revenue : $ 4,725 million, + 21%
- Operating income (EBIT): $ 756 million, + 23%
- Net income: $ 339 million, + 38%
- Earnings per share: $ 1.15, + 37%
Fresenius Medical Care AG & Co. KGaA ("the Company"), the world's largest provider of Dialysis Products and Services, today announced its results for the second quarter and first half 2007.
Second Quarter 2007:
Revenue
Net revenue for the second quarter 2007 increased by 11% to $2,404 million (9% at constant currency) compared to the second quarter 2006. Organic revenue growth worldwide was 8%. Dialysis Services revenue grew by 9% to $1,796 million (8% at constant currency) in the second quarter of 2007. Dialysis Product revenue increased by 18% to $608 million (13% at constant currency) in the same period.
North America revenue increased by 6% to $1,660 million. Dialysis Services revenue grew by 5% to $1,499 million. Excluding effects of the divestiture of the perfusion business, Dialysis Service revenue increased by 6%. Average revenue per treatment for the U.S. clinics increased by 3% to $327 in the second quarter 2007 compared to $317 for the same quarter in 2006. Dialysis Product revenue increased by 21% to $161 million led by strong sales of our 2008K hemodialysis machines and the phosphate binding drug PhosLo.
International revenue was $744 million, an increase of 23% (15% at constant currency) compared to the second quarter of 2006. Dialysis Services revenue reached $296 million, an increase of 32% (24% at constant currency). Dialysis Product revenue rose by 17% to $448 million (10% at constant currency), led by strong sales of hemodialysis machines, peritoneal dialysis products and dialyzers.
Earnings
Operating income (EBIT) increased by 5% to $391 million compared to $372 million in the second quarter 2006. Operating income for the second quarter 2006 includes costs of $4 million related to costs of restructuring and the transformation of the Company's legal form, and a gain of $39 million from the divestiture of dialysis clinics in conjunction with the acquisition of Renal Care Group. Excluding these costs and the gain from the divestiture, operating income for the second quarter 2007 increased by 16%, resulting in an operating margin of 16.3%. For the second quarter 2006 the operating margin was 15.5%.
In North America, compared with the second quarter 2006, the operating margin excluding the effects of one-time items increased by 140 basis points to 17.2% due to revenue rate improvements, the new PhosLo business and higher product sales which more than offset higher personnel expenses. In the International segment, the operating margin decreased by 50 basis points to 17.5% mainly due to higher growth in the dialysis care business.
Net interest expense for the second quarter 2007 was $92 million compared to $100 million in the same quarter of 2006. This positive development was mainly attributable to a lower debt level in combination with lower average interest rates.
Income tax expense was $113 million for the second quarter of 2007 compared to $137 million in the second quarter of 2006, reflecting effective tax rates of 38.0% and 50.6%, respectively. In the second quarter 2006, the tax rate had been impacted by a tax expense related to the gain on the divestiture of dialysis clinics in the U.S. Excluding this impact, the tax rate was at 40.2%.
Net income for the second quarter 2007 was $179 million, an increase of 38%. Net income increased by 30% when compared to the second quarter 2006 excluding the effects of one-time items in 2006.
Earnings per share (EPS) for the second quarter of 2007 rose by 37% to $0.60 per ordinary share compared to $0.44 for the second quarter of 2006. Earnings per ordinary American Depository Share (ADS) are the same as one ADS now represents one share as a result of the change in ratio under the Company's ordinary shares and preference shares. The weighted average number of shares outstanding for the second quarter of 2007 was approximately 295.4 million shares compared to 293.9 million shares for the second quarter of 2006. The increase in shares outstanding results from stock option exercises in 2006 and in the first half 2007.
Cash Flow
In the second quarter of 2007, the Company generated $225 million in cash from operations, representing 9% of revenue. The strong cash flow generation was primarily supported by earnings.
A total of $132 million was spent for capital expenditures, net of disposals. Free Cash Flow before acquisitions was $93 million compared to $145 million in the second quarter of 2006 excluding the effects of the acquisition of RCG. A total of $24 million in cash was used for acquisitions. Free Cash Flow after acquisitions was $69 million compared to $121 million last year, excluding the acquisition of Renal Care Group.
First Half 2007:
The operations of Renal Care Group (RCG) are included in the Company's consolidated statements of income and cash flows from April 1, 2006, therefore, the current first half year results are not directly comparable with the results of the first six months for 2006.
Revenue and Earnings
Net revenue was $4,725 million, up 21% from the first half of 2006. At constant currency, net revenue rose by 19%. Organic growth was 8% in the first six months of 2007.
Operating income (EBIT) increased by 23% to $756 million compared to $616 million in the first half of 2006. Operating income for the first half of 2006 includes costs of $4 million as a result of restructuring and the transformation of the Company's legal form, and a gain from the clinic divestitures of $39 million.
Excluding these items, operating income for the first half of 2007 increased by 30%. This performance resulted in an operating margin of 16.0% compared to 14.8% for the first half of 2006.
Net interest expense for the first six months of 2007 was $187 million compared to $156 million in the same period of 2006. The increase was the result of additional interest expense partially offset by the write-off in 2006 of deferred financing costs related to the 2003 senior credit facility of $15 million, both in conjunction with the financing of the RCG acquisition.
Income tax expense was $216 million in the first half of 2007 compared to $209 million in the same period in 2006, reflecting tax rates of 38.0% and 45.4%, respectively. The tax rate in the first half of 2006 was impacted by a tax expense related to the gain on the divestiture of dialysis clinics in the U.S. Excluding this impact, the effective tax rate in the first half of 2006 was at 39.2%.
For the first half of 2007, net income was $339 million, up 38% from the first half of 2006. Net income for the first half of 2007 increased by 29% compared to the first half of 2006 excluding the effects of one-time items in 2006.
For the first half of 2007, earnings per ordinary share rose by 37% to $1.15. The weighted average number of shares outstanding during the first half of 2007 was approximately 295.3 million.
Cash flow
Cash from operations during the first six months of 2007 was $508 million compared to $312 million for the same period in 2006 on a reported basis. Excluding the effects of one-time items, cash from operations was $402 million in the first half of 2006. The increase compared to prior year was mainly due to increased earnings.
A total of $240 million was used for capital expenditures, net of disposals. Free Cash Flow before acquisitions for the first six months of 2007 was $268 million compared to $152 million in same period in 2006. The underlying Free Cash Flow before acquisitions and the effects of one-time items for the first half of 2006 was $242 million. A total of $114 million in cash was used for acquisitions.
Please refer to the attachments for a complete overview on the second quarter and first half 2007.
Patients – Clinics – Treatments
As of June 30, 2007, Fresenius Medical Care treated 171,687 patients worldwide, which represents a 6% increase in patients compared to last year. North America provided dialysis treatments for 120,270 patients, an increase of 2%. Including 32 clinics managed by Fresenius Medical Care North America, the number of patients in North America was 122,199. The International segment served 51,417 patients, an increase of 17% over last year.
As of June 30, 2007, the Company operated a total of 2,209 clinics worldwide. This is comprised of 1,581 clinics in North America, an increase of 3%, and 628 clinics in the International segment, an increase of 17%.
Fresenius Medical Care delivered approximately 13.0 million dialysis treatments worldwide during the first six months of 2007. This represents an increase of 16% year over year. North America accounted for 9.08 million treatments, an increase of 16%, and the International segment delivered 3.92 million treatments, an increase of 17% over last year.
Employees
As of June 30, 2007, Fresenius Medical Care had 60,031 employees (full-time equivalents) worldwide compared to 56,803 employees at the end of 2006. The increase of 3,228 employees is primarily due to acquisitions in Asia and continued organic growth in the U.S.
Debt/EBITDA Ratio
The ratio of debt to Earnings before Interest, Taxes and Amortization (EBITDA) decreased from 3.60 at the end of the second quarter of 2006 to 3.03 at the end of the second quarter 2007. At the end of 2006, the debt/EBITDA ratio was 3.23.
Rating
In the second quarter 2007, Standard & Poor's Ratings Services raised its rating on the Company's senior secured debt to 'BBB-' from 'BB+'. Standard & Poor's also upgraded the outlook for the Company's corporate rating from "negative" to "stable".
Moody's upgraded the outlook for Fresenius Medical Care to ‘positive' from ‘stable'.
Issuance of 10 Year Senior Notes
At the beginning of the third quarter 2007, Fresenius Medical Care issued Senior Notes due 2017 in the amount of $500 million. The coupon is 6 7/8%. Proceeds were used to reduce indebtedness under the Company's senior secured bank credit facility and other, short-term debt. The Senior Notes were issued by FMC Finance III S.A., a wholly-owned subsidiary of the Company, and are guaranteed on a senior basis jointly and severally by the Company, Fresenius Medical Care Holdings, Inc. and Fresenius Medical Care Deutschland GmbH.
Acquisition of a Production Plant in China
On July 17, 2007 Fresenius Medical Care acquired a production plant in Jiangsu, China from Bioteque Corp., Taipei, Taiwan. This plant currently produces bloodlines and other non-reusable products for the Chinese market and offers excellent additional opportunities to produce liquid and other non-reusable products for the Chinese market and other countries in the region. In addition, the Company entered into three exclusive distribution contracts for marketing and distribution of Bioteque's bloodline and needle products in Taiwan, Korea and Japan.
Divestiture of Perfusion Business in the U.S.
Fresenius Medical Care sold the perfusion business unit of Fresenius Medical Care Extracorporeal Alliance ("FMCEA") to Specialty Care Services Group, Inc. during the second quarter 2007. In 2006, FMCEA's perfusion business contributed revenue of approximately $110 million. The Company deconsolidated the U.S. perfusion business effective May 9, 2007.
Share Split of 1:3
On June 18, 2007, the previously announced share split for both classes of shares (ordinary and preference) in the ratio of 1:3 became effective. In connection with the share split, the ratio between the ordinary and preference ADS and the underlying ordinary and preference shares was adjusted to 1:1, meaning that one Fresenius Medical Care ordinary or preference ADS is now the equivalent of one Fresenius Medical Care ordinary or preference share.
Outlook for 2007 Upgraded
Based on the strong operational performance in the first half of 2007, the Company raises its outlook for the full year 2007 and now expects to achieve revenue of more than $9.5 billion. This represents an increase of at least 12%. Previously, the Company expected revenue of approximately $9.4 billion.
Net income is now projected to be in the range of $685 million to $705 million in 2007. This represents an increase of between 19% and 23% on an adjusted basis as compared to 2006 after one-time effects. On a reported basis, this translates into an increase in net income of between 28% and 31%. Previously, the Company expected net income in the range of $675 million to $695 million.
In addition, the Company still expects spending on capital expenditures and acquisitions to be approximately $650 million in 2007. The debt/EBITDA ratio is projected to be below 3.0 by the end of 2007.
Ben Lipps, Chief Executive Officer of Fresenius Medical Care, commented: "We are pleased to report excellent financial results for the second quarter and six months ending June 30, 2007. Contributing to the financial results, we have achieved an organic growth rate of 8%. In addition we readjusted our service portfolio focusing on profitability and expanded our product base in Asia-Pacific. We continue to see many growth opportunities and upgraded our guidance which reflects our confidence in the further profitable growth of our company particularly in the international region. We remain focused on providing quality care for our patients, working on all fronts to ensure that they achieve the best possible clinical outcomes to maximize their overall health and well being."
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Fresenius Medical Care is the world's largest integrated provider of products and services for individuals undergoing dialysis because of chronic kidney failure, a condition that affects more than 1,500,000 individuals worldwide. Through its network of 2,209 dialysis clinics in North America, Europe, Latin America, Asia-Pacific and Africa, Fresenius Medical Care provides dialysis treatment to 171,687 patients around the globe. Fresenius Medical Care is also the world's leading provider of dialysis products such as hemodialysis machines, dialyzers and related disposable products. Fresenius Medical Care is listed on the Frankfurt Stock Exchange (FME, FME3) and the New York Stock Exchange (FMS, FMS/P).
For more information about Fresenius Medical Care visit the Company's website at www.fmc-ag.com.
Fresenius Medical Care
Statement of Earnings see PDF-file
Summary Third Quarter 2007
- Net revenue : $ 2,426 million, + 9%
- Operating income (EBIT): $ 397 million, + 14%
- Net income: $ 181 million, + 30%
- Earnings per share: $ 0.61, + 29%
Summary First Nine Months 2007
- Net revenue : $ 7,151 million, + 16%
- Operating income (EBIT): $ 1,152 million, + 19%
- Net income: $ 520 million, + 35%
- Earnings per share: $ 1.76, + 34%
Fresenius Medical Care AG & Co. KGaA ("the Company"), the world's largest provider of Dialysis Products and Services, today announced its results for the third quarter and nine months of 2007.
Third Quarter 2007:
Revenue
Net revenue for the third quarter 2007 increased by 9% to $2,426 million (6% at constant currency) compared to the third quarter 2006. Organic revenue growth worldwide was 6%. Dialysis Services revenue grew by 6% to $1,801 million (4% at constant currency) in the third quarter of 2007. Dialysis Product revenue increased by 18% to $625 million (12% at constant currency) in the same period.
North America revenue increased by 3% to $1,660 million. Dialysis Services revenue grew by 1% to $1,494 million. Excluding effects of the divestiture of the perfusion business, Dialysis Service revenue increased by 3%. Average revenue per treatment for the U.S. clinics increased by 1% to $327 in the third quarter 2007 compared to $324 for the same quarter in 2006. Dialysis Product revenue increased by 18% to $167 million led by strong sales of our 2008K hemodialysis machines and the phosphate binding drug PhosLo.
International revenue was $766 million, an increase of 23% (14% at constant currency) compared to the third quarter of 2006. Dialysis Services revenue reached $307 million, an increase of 32% (23% at constant currency). Dialysis Product revenue rose by 18% to $459 million (9% at constant currency), led by strong sales of hemodialysis machines, peritoneal dialysis products and dialyzers.
Earnings
Operating income (EBIT) increased by 14% to $397 million compared to $349 million in the third quarter 2006. Operating income for the third quarter 2006 includes costs of $7 million related to costs of restructuring and a gain of $1 million from the divestiture of dialysis clinics in conjunction with the acquisition of Renal Care Group. Excluding these effects, operating income for the third quarter 2007 increased by 12%, resulting in an operating margin of 16.4%. For the third quarter 2006 the operating margin was 15.9%.
| Operating income (EBIT) before one-time items Three months ended September 30, (in US-$ million) |
2007 | 2006 | Growth |
| Operating income (EBIT) | 397 | 349 | + 14% |
| Cost of restructuring | - | 7 | |
| Gain from divestiture | - | (1) | |
| Operating income (EBIT) before one-time items | 397 | 355 | + 12% |
In North America, the operating margin increased from 16.3% (excluding the effects of one-time items) by 70 basis points to 17.0% due to revenue rate improvements, the new PhosLo business and higher product sales which more than offset higher personnel expenses. In the International segment, the operating margin decreased by 60 basis points to 17.6% mainly due to higher growth in the emerging markets and the effect of returning to normal plant maintenance from the shortened schedule in the prior year.
Net interest expense for the third quarter 2007 was $95 million compared to $100 million in the same quarter of 2006. This positive development was mainly attributable to a lower debt level in combination with lower average interest rates and the recognition of interest income related to the collection of overdue receivables. Interest expense was impacted by $5 million ($3 million, net after taxes) as a result of the write-off of deferred financing costs related to the repayment of a portion of the Company's senior credit agreement in connection with the issuance of $500 million senior notes.
Income tax expense was $115 million for the third quarter of 2007 compared to $105 million in the third quarter of 2006, reflecting effective tax rates of 38.0% and 42.3%, respectively. In the third quarter 2006, the tax rate had been impacted by a tax audit in Germany. Excluding this impact, the tax rate was at 39.1%.
Net income for the third quarter 2007 was $181 million, an increase of 30%. Net income increased by 27% when compared to the third quarter 2006 excluding the effects of one-time items in 2006.
| Net income before one-time items Three months ended September 30, (in US-$ million) |
2007 | 2006 | Growth |
| Net income | 181 | 139 | + 30% |
| Cost of restructuring | - | 5 |  |
| Gain from divestiture | - | (1) | |
| Net income before one-time items | 181 | 143 | + 27% |
Earnings per share (EPS) for the third quarter of 2007 rose by 29% to $0.61 per ordinary share compared to $0.47 for the third quarter of 2006. The weighted average number of shares outstanding for the third quarter of 2007 was approximately 295.8 million shares compared to 294.5 million shares for the third quarter of 2006. The increase in shares outstanding resulted from stock option exercises in 2006 and in the first nine months of 2007.
Cash Flow
In the third quarter of 2007, the Company generated $382 million in cash from operations, representing approximately 16% of revenue. The strong cash flow generation was primarily supported by earnings and reduction of working capital.
A total of $123 million was spent for capital expenditures, net of disposals. Free Cash Flow before acquisitions was $259 million compared to $40 million in the third quarter of 2006 on a reported basis. A total of $24 million in cash was used for acquisitions, net of divestitures. Free Cash Flow after acquisitions was $235 million compared to $32 million in the third quarter of 2006.
Nine Months Ended September 30, 2007:
The operation of Renal Care Group (RCG) are included in the Company's consolidated statements of income and cash flows from April 1, 2006, therefore, the current results for the first nine months are not directly comparable with the results of the first nine months for 2006.
Revenue and Earnings
Net revenue for the nine months ended September 30, 2007 was $7,151 million, up 16% from the same period in 2006. At constant currency, net revenue rose by 14%. Organic growth was 7% in the first nine months of 2007.
Operating income (EBIT) increased by 19% to $1,152 million compared to $964 million in the first nine months of 2006. Operating income for the nine months ended September 30, 2006 includes costs of $12 million as a result of restructuring and the transformation of the Company's legal form, and a gain from the clinic divestitures of $40 million.
Excluding these items, operating income for the nine months 2007 increased by 23%. This performance resulted in an operating margin of 16.1% compared to 15.2% in the same period of 2006.
| Operating income (EBIT) before one-time items Nine months ended September 30, (in US-$ million) |
2007 | 2006 | Growth |
| Operating income (EBIT) | 1,152 | 964 | + 19% |
| Cost of restructuring and transformation | - | 12 | |
| Gain from divestiture | - | (40) | |
| Operating income (EBIT) before one-time items | 1,152 | 936 | + 23% |
Net interest expense for the nine months ended September 30, 2007 was $281 million compared to $255 million in the same period of 2006. The increase was mainly the result of additional interest expense partially offset by the write-off in 2006 of deferred financing costs related to the 2003 senior credit facility of $15 million, both in conjunction with the financing of the RCG acquisition.
Income tax expense was $331 million for the nine months compared to $314 million in the same period in 2006, reflecting tax rates of 38.0% and 44.3%, respectively. The tax rate for the first nine months of 2006 was impacted by tax payments in the U.S mainly related to the gain on the divestiture of dialysis clinics in the U.S. Excluding this impact, the effective tax rate for the first nine months 2006 was at 40.3%.
For the nine months ended September 30, 2007, net income was $520 million, up 35% from the same period in 2006. Net income for the nine months of 2007 increased by 28% compared to the same period 2006 excluding the effects of one-time items in 2006.
| Net income before one-time items Nine months ended September 30, (in US-$ million) |
2007 | 2006 | Growth |
| Net income | 520 | 385 | + 35% |
| Cost of restructuring and transformation | - | 7 | |
| Write-off FME prepaid financing fees | |
9 | |
| Loss from divestiture | - | 4 | |
| Net income before one-time items | 520 | 405 | + 28% |
For the nine months ended September 30, 2007, earnings per ordinary share rose by 34% to $1.76. The weighted average number of shares outstanding during the nine months 2007 was approximately 295.4 million.
Cash Flow
Cash from operations for the first nine months of 2007 was $890 million compared to $465 million for the same period in 2006 on a reported basis. Excluding the effects of one-time items, cash from operations was $663 million for nine months of 2006. The increase compared to prior year was mainly due to increased earnings and a reduction in working capital.
A total of $364 million was used for capital expenditures, net of disposals. Free Cash Flow before acquisitions for the nine months of 2007 was $526 million compared to $192 million in same period in 2006. The underlying Free Cash Flow before acquisitions and the effects of one-time items for the first nine months of 2006 was $390 million. A total of $110 million in cash was used for acquisitions, net of divestitures.
Please refer to the attachments for a complete overview on the third quarter and first nine months of 2007.
Patients – Clinics – Treatments
As of September 30, 2007, Fresenius Medical Care treated 172,227 patients worldwide, which represents a 7% increase in patients compared to last year. North America provided dialysis treatments for 120,607 patients, an increase of 3%. Including 33 clinics managed by Fresenius Medical Care North America, the number of patients in North America was 122,479. The International segment served 51,620 patients, an increase of 16% over last year.
As of September 30, 2007, the Company operated a total of 2,221 clinics worldwide. This is comprised of 1,591 clinics in North America, an increase of 3%, and 630 clinics in the International segment, an increase of 16%.
Fresenius Medical Care delivered approximately 19.6 million dialysis treatments worldwide during the first nine months of 2007. This represents an increase of 13% year over year. North America accounted for 13.7 million treatments, an increase of 11%, and the International segment delivered 5.9 million treatments, an increase of 16% over last year.
Employees
As of September 30, 2007, Fresenius Medical Care had 60,625 employees (full-time equivalents) worldwide compared to 56,803 employees at the end of 2006. The increase of 3,822 employees is primarily due to acquisitions in Asia and continued organic growth in the U.S.
Debt/EBITDA Ratio
The ratio of debt to Earnings before Interest, Taxes and Amortization (EBITDA) decreased from 3.44 at the end of the third quarter of 2006 to 2.88 at the end of the third quarter 2007. At the end of 2006, the debt/EBITDA ratio was 3.23.
Rating
There have been no ratings changes in the third quarter 2007, Standard & Poor's Ratings Services rates the Company's corporate credit rating as 'BB' with a ‘stable' outlook.
Moody's rates the Company's corporate credit rating as ‘Ba2' with a ‘positive' outlook.
Issuance of 10 Year Senior Notes
At the beginning of the third quarter 2007, Fresenius Medical Care issued Senior Notes due 2017 in the amount of $500 million. The coupon is 6 7/8%. Proceeds were used to reduce indebtedness under the Company's senior secured bank credit facility and other, short-term debt.
Outlook for 2007 Confirmed
The Company confirms its outlook for the full year 2007 and expects to achieve revenue of more than $9.5 billion. This represents an increase of at least 12%.
Net income was projected to be in the range of $685 million to $705 million in 2007. Based on the strong performance in the third quarter, the Company now expects the net income to be at the upper end of this guidance.
In addition, the Company still expects spending on capital expenditures and acquisitions to be approximately $650 million in 2007. The debt/EBITDA ratio is projected to be below 3.0 by the end of 2007.
For 2010, Fresenius Medical Care continues to expect revenue of more than $11.5 billion. Earnings after tax are projected to grow in the low- to mid-teens per year.
Ben Lipps, Chief Executive Officer of Fresenius Medical Care, commented: "Third quarter performance continues the strong trend of this year and was clearly outstanding considering the temporary US regulatory challenges. The North American segment achieved operating margins at the high end of its target. The International segment continues its strong double-digit revenue growth even during the Summer Quarter. We continued to grow above market in our product business on a worldwide basis. Cash flow from operations was very strong and clearly ahead of our expectations. We are clearly on track to achieve our targets for the current year and for 2010."
Video Webcast
Fresenius Medical Care will hold a press conference at its headquarters in Bad Homburg, Germany, to discuss the results of the third quarter and the first nine months of 2007 on October 31, 2007, at 10:00 a.m. CET. The Company cordially invites journalists to view the live video webcast of the meeting here on this website. A replay will be available shortly after the meeting.
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Fresenius Medical Care is the world's largest integrated provider of products and services for individuals undergoing dialysis because of chronic kidney failure, a condition that affects more than 1,500,000 individuals worldwide. Through its network of 2,221 dialysis clinics in North America, Europe, Latin America, Asia-Pacific and Africa, Fresenius Medical Care provides dialysis treatment to 172,227 patients around the globe. Fresenius Medical Care is also the world's leading provider of dialysis products such as hemodialysis machines, dialyzers and related disposable products. Fresenius Medical Care is listed on the Frankfurt Stock Exchange (FME, FME3) and the New York Stock Exchange (FMS, FMS/P).
For more information about Fresenius Medical Care visit the Company's website at www.fmc-ag.com.
Fresenius Medical Care
Statement of Earnings
see PDF-file
During the American Society of Nephrology's Renal Week 2007 additional findings from the Calcium Acetate Renagel Evaluation (CARE 2) data set were presented by Dr. Wajeh Qunibi of the University of Texas Health Science Center, San Antonio. The study showed that there are no significant differences in aortic or mitral valve calcification between hemodialysis patients treated with PhosLo and those treated with selevamer if LDL is kept at constant levels. Previous findings from the same study have already shown that there is no difference in overall cardiovascular calcification in both treatment groups. The new findings also showed that the daily calcium intake from the use of calcium acetate as a phosphate binder for one year did not contribute to the progression of cardiovascular calcification in hemodialysis patients. These conclusions are consistent with the initial CARE-2 data presented at ASN renal week 2006.
PhosLo's safety and efficacy was further validated by the results of the Dialysis Clinical Outcomes Revisited (DCOR) trial, the first interventional outcomes study published in Kidney International, November 2007. The DCOR trial clearly demonstrated that there were no statistically significant differences in the all-cause or cardiovascular mortality among 2,100 hemodialysis patients randomized to sevelamer or calcium-based phosphate binders (CBPB). Additionally, a review of the laboratory data in DCOR demonstrated that the CBPB group had significantly better serum phosphorus and intact parathyroid hormone compared to the selevamer group (p<0.01).
These findings will provide additional data on the safety of PhosLo as the Company works with the Food and Drug Administration (FDA) to expand the PhosLo label indication to chronic kidney disease (CKD) predialysis. On October 16, 2007, the FDA's Cardiovascular and Renal Drugs Advisory Committee's recommended that the FDA extend the use of phosphate binders in predialysis patients with hyperphosphatemia. This favorable vote will allow the Company to work with the FDA on the regulatory pathway to this important label extension.
Dr. Ben Lipps, Chairman of the Management Board and Chief Executive Officer commented, "This data continues to validate our goal of providing safe and effective treatments to patients with bone and mineral abnormalities by offering pharmaceutical treatments as a part of our integrated "pharmatech" therapy."
About CARE-2
The CARE-2 study was a prospective, randomized, controlled head-to-head comparison between PhosLo and sevelamer with the addition of atorvastain calcium, as appropriate, in both treatment groups to control LDL (low density lipoprotein) levels. The study found not statistically significant difference in the progression of cardiovascular calcification (CAC) between the two treatment groups after 12 months of treatment. Patients treated with PhosLo and sevelamer achieved comparable reductions in serum phosphorus and calcium-phosphorus product and even more importantly K/DOQI target levels were reached significantly faster with PhosLo.
About PhosLo
PhosLo is a calcium acetate phosphate binder for oral application in renal disease patients. Excess phosphate consumed with food is normally removed by the kidneys in a process that can only partially be replaced by dialysis in patients with chronic kidney failure. Too much phosphate in the blood can result in a number of adverse events, including bone disease, thyroid problems and vascular calcification. The risk of such damage in end-stage renal disease patients can be lowered by regularly taking phosphate binders. Currently, the phosphate binder market exceeds $500 million worldwide. PhosLo is a trademark of Fresenius Medical Care.
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Fresenius Medical Care is the world's largest integrated provider of products and services for individuals undergoing dialysis because of chronic kidney failure, a condition that affects more than 1,500,000 individuals worldwide. Through its network of 2,221 dialysis clinics in North America, Europe, Latin America, Asia-Pacific and Africa, Fresenius Medical Care provides dialysis treatment to 172,227 patients around the globe. Fresenius Medical Care is also the world's leading provider of dialysis products such as hemodialysis machines, dialyzers and related disposable products. Fresenius Medical Care is listed on the Frankfurt Stock Exchange (FME, FME3) and the New York Stock Exchange (FMS, FMS/P).
For more information about Fresenius Medical Care visit the Company's website at www.fmc-ag.com.
Fresenius Medical Care AG & Co. KGaA today announced that it has acquired Renal Solutions, Inc. (RSI). The acquisition agreement provides for total consideration of up to $190 million, consisting of $100 million at closing, $60 million after the first year, and up to $30 million in milestone payments over the next three years. RSI had approximately $10 million of net debt outstanding at closing.
RSI is currently commercializing the Allient Sorbent Hemodialysis System, which is returning sorbent-based technology (SORB) to the dialysis field. The SORB cartridge has a long market history in hemodialysis with over 6 million cartridges sold. As the innovator in the SORB technology field, RSI holds key patents and other intellectual property worldwide related to the SORB technology.
The sorbent technology purifies tap water to dialysate quality and allows dialysate to be regenerated. This reduces the water volume requirement for a typical hemodialysis treatment from 120 liters / 37 gallons of reverse osmosis water to just 6 liters / 1.5 gallons of drinking water per treatment.
The combination of Fresenius Medical Care's leading hemodialysis technology and the SORB technology will provide a platform for superior home products and therapies. Furthermore, the significant reduction of dialysate through SORB technology is one major step towards miniaturization – a pre-requisite for the wearable kidney concept which could benefit certain patients and complement clinical-based therapy.
Fresenius Medical Care sees the current market size of the Home Therapy Market (Peritoneal Dialysis and Home Hemodialysis) at about $2 billion representing approximately 11% of the overall worldwide dialysis market. The Company believes the Home Therapy market has the potential to grow to $4 billion within the next 10 years. Fresenius Medical Care has a market share in this market segment of approximately 30%. Home hemodialysis (HHD) has been a niche market for many years but with growing attention in recent past. With increased access to adequate therapy, the Company projects the number of HHD patients in North America could grow from about 0.5% at the end of 2006 to approximately 4% of the patient population in the next 10 years.
Dr. Ben Lipps, Chief Executive Officer of Fresenius Medical Care commented, "The acquisition of RSI is an important step to advance the technology required for strong future growth in this field. The combination offers us the long-term opportunity to extend our leadership to home and acute dialysis products. Furthermore, by combining our equipment and membrane technology with the SORB technology, we can provide innovative solutions in the future such as a possible wearable kidney. With this acquisition, Fresenius Medical Care expects to increase its annual R&D spending by approximately $10 million starting in 2008. Our mid-term financial targets for the years 2007 through 2010 remain unchanged."
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Fresenius Medical Care is the world's largest integrated provider of products and services for individuals undergoing dialysis because of chronic kidney failure, a condition that affects more than 1,500,000 individuals worldwide. Through its network of 2,221 dialysis clinics in North America, Europe, Latin America, Asia-Pacific and Africa, Fresenius Medical Care provides dialysis treatment to 172,227 patients around the globe. Fresenius Medical Care is also the world's leading provider of dialysis products such as hemodialysis machines, dialyzers and related disposable products. Fresenius Medical Care is listed on the Frankfurt Stock Exchange (FME, FME3) and the New York Stock Exchange (FMS, FMS/P).
For more information about Fresenius Medical Care visit the Company's website at www.fmc-ag.com.
For more information about Renal Solutions Inc. visit the Company's website at www.renalsolutionsinc.com.
Fresenius Kabi, a subsidiary of Fresenius SE, has reached an agreement to acquire the Italian company Ribbon S.r.L. Ribbon is a leading European manufacturer of the antibiotic agent classes cephalosporines and penicillines with two state-of-the-art production facilities in northern Italy.
In the field of intravenously administered drugs (I.V. drugs) Fresenius Kabi offers, among others, a comprehensive range of products with the antibiotic agents cephalosporines and penicillines. With the acquisition of Ribbon, Fresenius Kabi becomes one of the few I.V. drug suppliers globally who have know-how and manufacturing expertise along the entire pharmaceutical value chain. The acquisition is a further step in the company's generic I.V. drug growth plan and significantly strengthens Fresenius Kabi's market position. At the same time, the company is ensuring its own supply of high-quality active agents for its antibiotic products.
Dr. Ulf M. Schneider, Chairman of the Management Board of Fresenius SE: "With the acquisition of Sanderson in Chile announced last week and today's acquisition of Ribbon we continue our Fresenius Kabi growth strategy. Sanderson provides an excellent platform for further expansion in Latin America. The Ribbon acquisition strengthens our position in the intravenously administered drug market and is an important step towards achieving quality and cost leadership in this product segment."
Ribbon is headquartered in Milan and has about 130 associates. The company is privately-held and expects sales of approximately € 54 million in 2007.
The transaction is expected to close in January 2008.
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Fresenius is a health care group with international operations, providing products and services for dialysis, hospital and outpatient medical care. In 2006 group sales were approx. € 10.8 billion. On September 30, 2007 the Fresenius Group had 110,379 employees worldwide.
Fresenius Kabi is the leader in infusion therapy and clinical nutrition in Europe and in its most important countries of Latin America and Asia Pacific. Fresenius Kabi's core product range includes infusion solutions for fluid substitution, blood volume expansion and parenteral nutrition, as well as products for enteral nutrition. Furthermore the company provides concepts for ambulatory health care and is focused on managing and providing home therapies. With its philosophy "Caring for life" and a broad product portfolio, the company aims at improving the quality of life of patients all over the world. On September 30, 2007 the company had 16,852 employees. In 2006, Fresenius Kabi achieved sales of € 1,893 million and an operating profit of € 291 million. Fresenius Kabi AG is a 100% subsidiary of the health care group Fresenius SE.
Fresenius Medical Care ("the Company") (Frankfurt Stock Exchange: FME - ISIN: DE0005785802, FME3 - ISIN: DE0005785836) (NYSE: FMS, FMS-p), the world's largest provider of Dialysis Products and Services, today announced that the preference share conversion offer will start on January 6, 2006. All preference shareholders, including holders of preference shares represented by American Depositary Shares ("ADSs") will have the opportunity to convert their preference shares into ordinary shares on a 1:1 basis accompanied by payment of a conversion premium of €9.75 per preference share to the Company in a period of four weeks ending February 3, 2006, subject to extension. The share conversion and transformation of the legal form of the Company into a KGaA are expected to be completed during February 2006.
The conversion offer is being conducted through two offers – a German offer and a U.S. offer open to all preference shareholders resident in the U.S. and all ADS holders. All terms and conditions of the conversion offers are detailed in the German prospectus, which is also available for download from our webpage (www.fmc-ag.com), and the U.S. prospectus, which will be mailed to U.S. resident shareholders and ADS holders. Additional copies of the German prospectus may be obtained from the Company or from Deutsche Bank AG; additional copies of the U.S. prospectus may be obtained from D.F. King & Co., Inc., the Information Agent for the U.S. offer.
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Fresenius Medical Care AG is the world's largest, integrated provider of products and services for individuals undergoing dialysis because of chronic kidney failure, a condition that affects more than 1,300,000 individuals worldwide. Through its network of approximately 1,670 dialysis clinics in North America, Europe, Latin America, Asia-Pacific and Africa, Fresenius Medical Care provides dialysis treatment to approximately 130,400 patients around the globe. Fresenius Medical Care is also the world's leading provider of dialysis products such as hemodialysis machines, dialyzers and related disposable products.
For more information about Fresenius Medical Care visit the Company's website at www.fmc-ag.com.
The conversion offer may be made in the United States only by prospectus. The conversion offer has not yet commenced. When the conversion offer commences, each United States resident preference shareholder of Fresenius Medical Care AG should read the prospectus when it becomes available because it will contain important information about the conversion offer. Fresenius Medical Care preference shareholders can obtain the U.S. prospectus and other documents that are filed with the United States Securities and Exchange Commission's web site at www.sec.gov. Preference shareholders may also obtain copies of the prospectus and other documents filed with the Securities and Exchange Commission for free by contacting Fresenius Medical Care when the documents become available.