Fresenius Medical Care AG & Co. KGaA, the world's largest provider of dialysis products and services, announced today that the United States government's litigation against its United States subsidiary (the "company") in connection with "Method II" Medicare reimbursement has successfully concluded with the Department of Justice's filing yesterday of a stipulation of dismissal. The end of this litigation also concludes the broader investigation begun by the government in St. Louis, Missouri in 2005.

The Department of Justice investigated many areas of the company's operations under subpoenas issued in St. Louis beginning in April 2005. In July 2007, after two years of investigation, the Department initiated litigation on a single topic of the investigation: that Renal Care Group, which the company had acquired by merger, violated the False Claims Act by maintaining a "Method II" subsidiary.

In 2011, a federal trial court in Tennessee entered judgment against the company for $83 million. In October 2012, however, the United States Court of Appeals reversed and vacated the judgment. The Court of Appeals further ruled against the Department of Justice on several significant issues of law raised by the case, agreeing with the company that it was not unlawful for Renal Care Group to maintain a subsidiary that billed under Method II. The Court of Appeals then remanded the case to the trial court to allow the Department to proceed to trial on remaining, unresolved issues. By its filing yesterday, the Department confirmed that it would not pursue the remand and would litigate no further.

Ben Lipps, chief executive officer of Fresenius Medical Care, commented: "We are pleased to have this lengthy litigation successfully concluded."

Full Year 2012 Summary:

Reported

Net Revenue: $13,800 million, +10%

Operating income (EBIT): $2,219 million, +7%

Net income*: $1,187 million, +11%

Earnings per ordinary share: $3.89, +10%

Adjusted**

Operating income (EBIT): $2,329 million, +12%

Net income*: $1,118 million, +4%

Earnings per ordinary share: $3.66, +4%

Dividend proposal

Ordinary Share: €0.75, +9%

Preference Share: €0.77, +8%

*Attributable to shareholders of Fresenius Medical Care AG & Co. KGaA

** Fresenius Medical Care´s net income guidance for 2012 was based on adjusted numbers. For further details see PDF-File.

Fourth Quarter of 2012

Revenue

Net revenue for the fourth quarter of 2012 increased by 13% to $3,706 million (+14% at constant currency) compared to the fourth quarter of 2011. Organic revenue growth worldwide was 8%. Dialysis services revenue grew by 18% to $2,804 million (+19% at constant currency) and dialysis product revenue increased by 2% to $902 million and increased by 4% at constant currency.

North America revenue for the fourth quarter of 2012 increased by 19% to $2,429 million. Dialysis services revenue grew by 22% to $2,222 million with a same store growth of 4%. Average revenue per treatment for U.S. services increased to $368 in the fourth quarter of 2012 compared to $351 for the corresponding quarter in 2011. Dialysis product revenue decreased by 3% to $207 million.

International revenue increased by 4% to $1,270 million and increased by 6% at constant currency. Organic revenue growth was 6%. Dialysis services revenue increased by 5% to $582 million and increased by 8% at constant currency. Dialysis product revenue increased by 3% to $688 million and increased by 5% at constant currency.

Earnings

Operating income (EBIT) for the fourth quarter of 2012 decreased by 5% to $559 million compared to $587 million in the fourth quarter of 2011. The operating income includes charges in the amount of $110 million related to the amendment of the agreement for our iron product Venofer in North America and a donation to the American Society of Nephrology. Excluding those charges the operating income for the fourth quarter increased by 14% to $ 669 million, translating into an operating margin of 18.1% for the fourth quarter of 2012 as compared to 18.0% for the corresponding quarter in 2011.

Excluding the above mentioned charges, the operating margin for North America increased from 19.6% to 21.2%. Average costs per treatment for U.S. services increased to $286 in the fourth quarter of 2012 as compared to $279 in the fourth quarter of 2011. In the International segment, the operating margin decreased from 18.7% to 16.7%.

Net interest expense for the fourth quarter of 2012 was $115 million, compared to $82 million in the fourth quarter of 2011. This development was mainly attributable to the higher level of indebtedness as a result of the issuance of various tranches of senior notes over the course of 2011 and 2012 to finance dialysis clinic acquisitions.

Income tax expense was $143 million for the fourth quarter of 2012 compared to $165 million in the fourth quarter of 2011, reflecting effective tax rates of 32.1% and 32.7%, respectively.

Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA for the fourth quarter of 2012 was $257 million, a decrease of 17% compared to the corresponding quarter of 2011. Excluding after tax charges in the amount of $71 million related to the amendment of the agreement for Venofer and a donation to the American Society of Nephrology, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA for the fourth quarter was $327 million, an increase of 5%.

Earnings per ordinary share (EPS) for the fourth quarter of 2012 was $0.84 compared to $1.02 for the fourth quarter of 2011. The weighted average number of shares outstanding for the fourth quarter of 2012 was approximately 306.4 million shares, compared to 303.9 million shares for the fourth quarter of 2011. The increase in shares outstanding resulted from stock option exercises in the past 12 months. Excluding the above mentioned charges earnings per ordinary share for the fourth quarter 2012 was $1.07.

Cash flow

In the fourth quarter of 2012, the company generated $572 million in cash from operations, an increase of 15% compared to the corresponding figure last year and representing 15.4% of revenue. The cash flow generation was mainly supported by the favorable development of working capital items.

A total of $227 million was spent for capital expenditures, net of disposals. Free cash flow before acquisitions was $345 million (representing 9.3% of revenue) compared to $306 million in the fourth quarter of 2011. A total of $59 million in cash was spent for acquisitions and investments, net of divestitures. Free cash flow after acquisitions and divestitures was $286 million, compared to minus $298 million in the fourth quarter of 2011.

Full Year 2012

Revenue and Earnings

Net revenue for the full year 2012 increased by 10% to $13,800 million (+12% at constant currency) compared to the full year 2011. Organic revenue growth worldwide was 5%.

Operating income (EBIT) for the full year 2012 increased by 7% to $2,219 million compared to $2,075 million for the full year 2011. The operating income includes charges in the amount of $110 million related to the amendment of the agreement for Venofer and a donation to the American Society of Nephrology. Excluding those charges the operating income for the full year 2012 increased by 12% to $2,329 million, translating into an operating margin of 16.9% as compared to 16.5% for the full year 2011.

Net interest expense for the full year 2012 was $426 million compared to $297 million in the same period of 2011.

For the full year 2012, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA increased by 11% to $1,187 million. This includes a non-taxable investment gain of $140 million related to the acquisition of Liberty Dialysis Holdings, Inc., including its 51% stake in Renal Advantage Partners, LLC (RAI). The gain is a result of measuring the 49% equity interest in RAI held by the company at its fair value at the time of the Liberty acquisition. It also includes after tax charges in the amount of $71 million related to the amendment of the agreement for Venofer and a donation to the American Society of Nephrology. Excluding the investment gain and the before mentioned charges net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA was $1,118 million, an increase of 4% compared to 2011.

Income tax expense for the full year 2012 was $605 million compared to $601 million in the same period in 2011, reflecting effective tax rates of 31.3% and 33.8%, respectively.

In the full year 2012, earnings per ordinary share rose by 10% to $3.89. The weighted average number of shares outstanding during the full year 2012 was approximately 305.1 million compared to 303.0 million shares for the full year 2011. Excluding the investment gain and the above mentioned charges earnings per ordinary share was $3.66.

Cash Flow

For the full year 2012, the company generated $2,039 million in cash from operations, an increase of 41% compared to the corresponding figure last year and representing 14.8% of revenue.

A total of $666 million in cash was spent for capital expenditures, net of disposals. Free cash flow before acquisitions for the full year 2012 was $1,373 million compared to $876 million in the same period in 2011. A total of $1,615 million in cash was spent for acquisitions, net of divestitures. Free cash flow after acquisitions and divestitures was minus $242 million compared to minus $899 million in the last year.

Please refer to the PDF-File for a complete overview on the fourth quarter and the full year 2012.

Patients – Clinics – Treatments

As of December 31, 2012, Fresenius Medical Care treated 257,916 patients worldwide, which represents an increase of 11% compared to the previous year's figure. North America provided dialysis treatments for 164,554 patients, an increase of 16%. Including 32 clinics managed by Fresenius Medical Care North America, the number of patients in North America was 166,920. The International segment provided dialysis treatment to 93,362 patients, an increase of 3% over the prior year's figure.

As of December 31, 2012, the company operated a total of 3,160 clinics worldwide, which represents an increase of 9% compared to the previous year's figure. The number of clinics is comprised of 2,082 clinics in North America (2,114 including managed clinics), and 1,078 clinics in the International segment, representing an increase of 13% and 2%, respectively.

During the full year 2012, Fresenius Medical Care delivered approximately 38.6 million dialysis treatments worldwide. This represents an increase of 12% compared to the previous year's figure. North America accounted for 24.4 million treatments, an increase of 13%. The International segment delivered 14.2 million treatments, an increase of 11%.

Employees

As of December 31, 2012, Fresenius Medical Care had 86,153 employees (full-time equivalents) worldwide, compared to 79,159 employees at the end of 2011. This increase of approximately 7,000 employees is due to overall growth in the company's business and acquisitions including Liberty Dialysis Holdings, Inc.

Dividend

The company intends to continue its earnings-driven policy. At the Annual General Meeting to be held on May 16, 2013, shareholders will be asked to approve a dividend of €0.75 per ordinary share, an increase of 9% from 2011 (€0.69). For the 16th consecutive year, shareholders can expect to receive an increased annual dividend.

Debt/EBITDA ratio

The ratio of debt to earnings before interest, taxes, depreciation and amortization (EBITDA) increased from 2.69 at the end of 2011 to 2.83 at the end of 2012. The debt/EBITDA ratio at the end of the third quarter 2012 was 2.81.

Rating

Both Standard & Poor's and Fitch rate the company's corporate credit as ‘BB+' with a ‘stable' outlook. Moody's rates the company's corporate credit as ‘Ba1' with a ‘stable' outlook. For further information on Fresenius Medical Care's credit ratings and credit instruments, please visit our website at www.fmc-ag.com / Investor Relations/ Credit Relations.

Outlook for 2013

For the year 2013 the company expects revenue to grow to more than $14.6 billion. Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA is expected to be between $1.1 billion and $1.2 billion. For 2013, the company expects to spend around $700 million on capital expenditures and around $300 million on acquisitions. The debt/EBITDA ratio is expected to be equal or below 3.0 by the end of 2013.

Targets for 2013 (in US$ million)

                                            2012         Goal 2013         Growth rate

Revenue                                13,800          > 14,600           > 6%

Operating income (EBIT)            2,219       2,300 – 2,500        4% - 13%

Net income (comparable basis)*   1,047     1,100 – 1,200       5% - 15%

*excluding investment gain

Rice Powell, chief executive officer of Fresenius Medical Care, commented: "Fresenius Medical Care looks back on another successful year. We once again achieved new records both in terms of revenue and earnings despite challenging global conditions. We were able to sustain our growth path but more importantly we made very good progress with our quality initiatives in both products and services. Quality and growth remain our top priorities in the future. With our strong management team and dedicated employees, Fresenius Medical Care remains very well positioned for great success in 2013 and beyond."

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 of 2012 on Tuesday, February 26, 2013, at 10 am CET. The Company cordially invites journalists to view the live video webcast at "News and Press / Video service". A replay will be available shortly after the meeting.

Fresenius Medical Care North America (FMCNA) announced today that it has received a warning letter from the Food and Drug Administration (FDA), asserting that the organization did not conduct adequate design verification studies of its electron beam (E-beam) sterilized polysulfone dialyzers manufactured at its facility located in Ogden, UT and that the process for design validation of these dialyzers has been incomplete. FMCNA received FDA clearance for this product in December 2000. The warning letter does not impose a product recall. FMCNA has continued confidence in the quality of products that are produced in Ogden.

"Fresenius Medical Care North America is committed to working with the FDA to resolve the concerns stated in the Letter," said Rice Powell, CEO of Fresenius Medical Care. "We will address the FDA's observations as soon as possible. We do not expect any effects on the company's guidance in terms of revenue and earnings in 2013."

The management board and the supervisory board of Fresenius Medical Care, the world's largest provider of dialysis products and services, have approved a share buy-back program. Fresenius Medical Care ordinary shares with an aggregate value of up to €385 million (approx. US$500 million) shall be repurchased pursuant to a normal course issuer bid in the open market during the next six months. The program will be financed from cash flow and existing credit facilities.

The management board and supervisory board of the company also approved a proposal to optimize the organization's capital structure by eliminating the remainder of the outstanding preference shares, which represent approximately 1.3% of the company's total share capital. The company will ask shareholders at its upcoming annual general meeting (AGM) on May 16, 2013 and in a separate meeting of preference shareholders to be held after the AGM to approve the mandatory conversion of all preference shares into ordinary shares on a 1:1 basis.

The conversion will be effected without a requirement for any additional payment by preference shareholders. However, the company has been in discussions with a major preference shareholder, a reputable European financial institution, holding approximately 77% of the outstanding preference shares who has agreed with the company to consider to support the proposed resolution and has furthermore undertaken to pay a conversion premium to the company relating to its preference shares.

The premium amount corresponds to an agreed value of the average spread during the 3-months period from January 1, 2013 through March 31, 2013 between the preference shares and the ordinary shares of approximately €9 per preference share or €27 million for the major preference shareholder's total preference share position.

Mike Brosnan, chief financial officer of Fresenius Medical Care said: "Our company has had an excellent earnings growth and cash flow performance in the past years. We have always used some of our cash to make strong investments in the future growth of our business. Looking forward, we intend to further strengthen our business and enhance total shareholder return."

First Quarter 2013 Key Figures

Net Revenue $3,464 million, +7%
Operating income (EBIT) $493 million, -2%
Net income¹ $225 million, -39%²
Earnings per ordinary share $0.74, -40%²
 

1 Attributable to shareholders of Fresenius Medical Care AG & Co. KGaA

2 The corresponding number for the first quarter of 2012 includes an investment gain of $127 million

 

Fresenius Medical Care AG & Co. KGaA (the "company" or "Fresenius Medical Care"; Frankfurt Stock Exchange: FME / New York Stock Exchange: FMS), the world's largest provider of dialysis products and services, today announced its results for the first quarter of 2013.

Revenue

Net revenue for the first quarter of 2013 increased by 7% to $3,464 million (+7% at constant currency) compared to the first quarter of 2012. Organic revenue growth worldwide was 4%. Dialysis services revenue grew by 8% to $2,678 million (+9% at constant currency) and dialysis product revenue increased by 2% to $786 million (+2% at constant currency).

North America revenue for the first quarter of 2013 increased by 9% to $2,287 million. Dialysis services revenue grew by 10% to $2,104 million with a same store treatment growth of 4%. Average revenue per treatment for U.S. services increased to $359 in the first quarter of 2013 compared to $353 for the corresponding quarter in 2012. Dialysis product revenue decreased by 2% to $183 million.

International revenue increased by 3% to $1,169 million (+4% at constant currency). Organic revenue growth was 5%. Dialysis services revenue increased by 3% to $574 million (+5% at constant currency). Dialysis product revenue increased by 3% to $595 million (+3% at constant currency).

Earnings

Operating income (EBIT) for the first quarter of 2013 decreased by 2% to $493 million compared to $503 million in the first quarter of 2012. This resulted in an operating margin of 14.2% for the first quarter of 2013 as compared to 15.5% for the corresponding quarter in 2012.

The operating margin for North America decreased from 16.5% to 16.1%. This development was impacted by higher personnel expenses and two less dialysis days in the first quarter of 2013 as compared to the first quarter of 2012. Average costs per treatment for U.S. services increased to $294 in the first quarter of 2013 as compared to $286 in the first quarter of 2012.

In the International segment, the operating margin decreased from 17.2% to 15.7%. The margin development was negatively influenced by the devaluation of the Venezuelan Bolivar.

Net interest expense for the first quarter of 2013 was $104 million, compared to $99 million in the first quarter of 2012. This development was positively influenced by lower interest rates but offset by lower interest income as a result of the retirement of a loan associated with the acquisition of Liberty Dialysis Holdings, Inc.

Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA for the first quarter of 2013 was $225 million, a decrease of 39% compared to the corresponding number for the first quarter of 2012. Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA decreased by 8% in the first quarter of 2013 if compared to the adjusted net income number of $244 million for the first quarter of 2012 excluding an investment gain of $127 million.

Income tax expense was $129 million for the first quarter of 2013 and translating into an effective tax rate of 33.2%. This compares to income tax expense of $137 million and a tax rate of 25.8% and, excluding the investment gain, an adjusted effective tax rate of 33.9% for the first quarter of 2012.

Earnings per ordinary share (EPS) for the first quarter of 2013 was $0.74, a decrease of 40% compared to the corresponding number for the first quarter of 2012. EPS decreased by 8% in the first quarter of 2013 if compared to an adjusted EPS number of $0.80, excluding the investment gain, for the first quarter of 2012. The weighted average number of shares outstanding for the first quarter of 2013 was approximately 306.7 million shares, compared to 304.2 million shares for the first quarter of 2012. The increase in shares outstanding resulted from stock option exercises in the past twelve months.

Cash flow

In the first quarter of 2013, the company generated $315 million in cash from operations, a decrease of 34% compared to the corresponding figure of last year and representing 9.1% of revenue.

A total of $146 million was spent for capital expenditures, net of disposals. Free cash flow before acquisitions was $169 million (representing 4.9% of revenue) compared to $359 million in the first quarter of 2012. A total of $71 million in cash was spent for acquisitions and investments, net of divestitures. Free cash flow after acquisitions and divestitures was $98 million, compared to minus $1,167 million in the first quarter of 2012.

Please refer to the attachments for a complete overview on the first quarter of 2013.

Patients – Clinics – Treatments

As of March 31, 2013, Fresenius Medical Care treated 261,648 patients worldwide, which represents an increase of 3% compared to the previous year's figure. North America provided dialysis treatments for 167,233 patients, an increase of 3% compared to the corresponding number for 2012. The International segment provided dialysis treatments for 94,415 patients, an increase of 3% over the prior year's figure.

As of March 31, 2013, the company operated a total of 3,180 clinics worldwide, an increase of 2% compared to the corresponding number for 2012. The number of clinics is comprised of 2,090 clinics in North America (+2%) and 1,090 clinics in the International segment (+2%).

During the first quarter of 2013, Fresenius Medical Care delivered approximately 9.7 million dialysis treatments worldwide. This represents an increase of 5% compared to the previous year's figure. North America accounted for 6.1 million treatments, an increase of 7%. The International segment delivered 3.5 million treatments, an increase of 2%.

Employees

As of March 31, 2013, Fresenius Medical Care had 86,855 employees (full-time equivalents) worldwide, compared to 86,153 employees at the end of 2012.

Debt/EBITDA ratio

The ratio of debt to earnings before interest, taxes, depreciation and amortization (EBITDA) decreased from 2.96 at the end of the first quarter of 2012 to 2.78 at the end of the first quarter of 2013. The debt/EBITDA ratio at the end of 2012 was 2.83.

Rating

Standard & Poor's rates the company's corporate credit as ‘BB+', with a ‘positive' outlook. Moody's rates the company's corporate credit as ‘Ba1' with a ‘stable' outlook. Fitch rates the company's corporate credit as ‘BB+' with a ‘stable' outlook.

Share buy-back program and simplification of capital structure

The management board and the supervisory board have approved a share buy-back program with an aggregate value of up to €385 million. The program will be financed from cash flow and existing credit facilities.

The boards also approved a proposal to optimize the organization's capital structure by the mandatory conversion of all preference shares into ordinary shares on a 1:1 basis. The preference shares currently represent approximately 1.3% of the company's total share capital. At its upcoming annual general meeting and in a separate meeting of preference shareholders the company will ask its shareholders to approve this conversion.

Guidance for 2013 confirmed

For the full year 2013, the company confirms its revenue and earnings outlook.

The company expects revenue to grow to more than $14.6 billion in 2013, translating into a growth rate of more than 6%.

Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA is expected to be between $1.1 billion and $1.2 billion in 2013. This represents an increase of between 5% and 15% if compared to the net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA for 2012 excluding an investment gain in the amount of $140 million. As we previously disclosed, the range of our net income guidance considers the U.S. government reversing the effect of sequestration for the calendar year. If this takes place it represents approximately $45 million in net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA. It is possible that the U.S. government may modify all or a portion of this but the likelihood of this diminishes as the year progresses.

For 2013, the company expects to spend around $700 million on capital expenditures and around $300 million on acquisitions. The debt/EBITDA ratio is expected to be equal or below 3.0 by the end of 2013.

Rice Powell, chief executive officer of Fresenius Medical Care, commented: "In a challenging, uncertain environment we delivered solid first quarter results led by the continuous growth in our dialysis services business in North America. Also of note is that we are confident meeting our guidance range for the full year, although we are not completely satisfied with our growth internationally in the first quarter of 2013. Along with the outstanding efforts of our talented people, we will continue to further strengthen our business to deliver sustainable growth and meaningful innovations for reliable high quality products to dialysis patients around the world."

Conference Call

Fresenius Medical Care will hold a conference call to discuss the results of the first quarter of 2013 on Tuesday, April 30, 2013, 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.fmc-ag.com in the "Investor Relations" section. A replay will be available shortly after the call.

Fresenius Medical Care, the world's largest provider of dialysis products and services, will simplify the company's capital structure. At the annual general meeting in Frankfurt today, a large shareholder majority of 99.97% approved the mandatory conversion of preference shares into ordinary shares on a 1:1 basis, as recommended by the Management Board and the Supervisory Board. A separate meeting of preference shareholders also approved the proposal, with a 99.99% majority. Preference shares currently represent about 1.3% of the company's total share capital.

With a large majority of 99.86%, shareholders approved Fresenius Medical Care's 16th consecutive dividend increase. The dividend will be raised to €0.75 from €0.69 per ordinary share, and to €0.77 from €0.71 per preference share.

Rice Powell, chief executive officer of Fresenius Medical Care, confirmed the full-year 2013 outlook. The company expects revenue to grow by more than 6% to over $14.6 billion this year, with net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA expected to be between $1.1 billion and $1.2 billion, an increase of between 5% and 15% from 2012*.

"Fresenius Medical Care has retained its global leadership position, and we continue to shape the future of the dialysis industry in a market that is expected to grow at 4% per annum in constant currency to 100 billion U.S. in 2020," Rice Powell told shareholders. "Our focus is always – and will always be - on superior quality in both products and services. We have the ability to grow through the expansion of our clinic network and to grow by expanding our product portfolio and adding new services. We think our business model of vertical integration will be advantageous for the future developments in this industry."

The annual general meeting was the first under the leadership of Rice Powell. He succeeded Dr. Ben Lipps on January 1, 2013.

A shareholder majority of over 99% approved the actions of both the Management and Supervisory Boards in 2012.

At the annual general meeting, 73.71% of the subscribed capital was represented. Only ordinary shareholders were entitled to vote.

*Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA – 2012 adjusted for a non-taxable investment gain of US$140 million

The Catalonian Online Hemodiafiltration Survival Study (ESHOL) published in February 2013 confirms Fresenius Medical Care's conviction that every patient should be given the chance to benefit from hemodiafiltration (HDF) therapy with high volumes of substitution fluid (HighVolumeHDF). The primary outcome of the study was that HighVolumeHDF therapy significantly improves patient survival compared with conventional dialysis treatment. At this year's ERA-EDTA Congress, held in Istanbul, Turkey from May 18 to 21, HighVolumeHDF was the main focus of Fresenius Medical Care's activities.

Results of the Catalonian HDF study, recently published in the Journal of the American Society of Nephrology, were presented at Fresenius Medical Care's Scientific Lunch Symposium by the lead study investigator, Dr. Francisco Maduell of Barcelona, Spain. With 906 patients from 27 centers in Spain's Catalonia region, this is the largest study to date on HDF. The main finding of this randomized controlled trial is a 30% reduced risk of all-cause mortality for patients treated with HDF and large volumes of substitution (HighVolumeHDF) compared with patients treated with conventional hemodialysis. The large number of participants – more than 1,000 – at the symposium underlined the nephrology community's keen interest in the symposium's subject, "Emerging Concept: High Volume Matters in Hemodiafiltration (HighVolumeHDF)."

Professor Bernard Canaud, Chairman of Fresenius Medical Care's EMEALA (Europe, Middle East, Africa, Latin America) Medical Board, summarized the symposium, stating that "HighVolumeHDF significantly improves patient survival and quality of life versus standard hemodialysis and should therefore be the standard in cardioprotective hemodialysis for all patients."

These latest findings confirm the longstanding conviction of Fresenius Medical Care that HighVolumeHDF is the most efficient and cardioprotective therapy for dialysis patients with end-stage renal failure. That is why Fresenius Medical Care has been developing products for cardioprotective hemodialysis for years, leading to the CorDiax product line and the Online Purification Cascade for best water quality. This comprehensive approach, presented at the booth and the therapy forum, perfectly supports the application of HighVolumeHDF in daily clinical practice. The 5008 CorDiax and 5008S CorDiax therapy systems include a new feature for achieving high substitution volumes, the AutoSub plus. This is an intelligent automatic regulation system to maximize the substitution volume for the individual patient while avoiding the risk of filter blockage. The 5008 CorDiax and 5008S CorDiax therapy systems therefore facilitate HighVolumeHDF in a very simple and safe manner, making HighVolumeHDF therapy feasible for all patients.

Fresenius Medical Care's strong commitment to research and innovation was also evidenced by the 44 abstracts of original scientific research accepted for presentation at the congress. These contributions, in the form of scientific posters and oral presentations, spanned multiple research categories, from stem cell research through all stages of chronic and acute kidney disease. The categories with the most Fresenius Medical Care research contributions were:

• Extracorporeal dialysis – techniques and adequacy (9 posters & 1 oral presentation)
• Epidemiology (7 posters)
• CKD-Mineral & Bone Disorder (3 posters & 3 oral presentations)

 

Three of the abstracts were considered among the best 10 contributions received, and were given special recognition by the ERA-EDTA.

Second Quarter 2013 Key Figures:

Net revenue $3,613 million  +5%

Operating income (EBIT) $544 million  -8%

Adjusted operating income (EBIT) $555 million  -2%

Net income¹ $263 million  -9%

Adjusted net income¹ $272 million  +2%

Earnings per ordinary share $0.86  -10%

Adjusted earnings per ordinary share $0.89  +2%

First Half 2013 Key Figures:

 

Net revenue $7,076 million  +6%

 

Operating income (EBIT) $1,038 million  -5%

Adjusted operating income (EBIT) $1,049 million  -3%

Net income¹ $488 million  -26%

Adjusted net income¹ $498 million  -3%

Earnings per ordinary share $1.59  -27%

Adjusted earnings per ordinary share $1.62  -4%

1 attributable to shareholders of Fresenius Medical Care AG & Co. KGaA

 

Fresenius Medical Care AG & Co. KGaA (the "company" or "Fresenius Medical Care"; Frankfurt Stock Exchange: FME / New York Stock Exchange: FMS), the world's largest provider of dialysis products and services, today announced its results for the second quarter and first half of 2013.

 

Second Quarter 2013

Revenue

Net revenue for the second quarter of 2013 increased by 5% to $3,613 million (+6% at constant currency) compared to the second quarter of 2012. Organic revenue growth worldwide was 5%. Dialysis services revenue grew by 5% to $2,743 million (+6% at constant currency) and dialysis product revenue increased by 6% to $870 million (+5% at constant currency).

North America revenue for the second quarter of 2013 increased by 6% to $2,375 million. Organic revenue growth was 5%. Dialysis services revenue grew by 6% to $2,157 million with a same store treatment growth of 4%. Dialysis product revenue increased by 6% to $218 million.

International revenue increased by 5% to $1,228 million (+6% at constant currency). Organic revenue growth was 5%. Dialysis services revenue increased by 4% to $586 million (+7% at constant currency). Dialysis product revenue increased by 5% to $642 million (+5% at constant currency).

Earnings

Operating income (EBIT) for the second quarter of 2013 decreased by 8% to $544 million compared to $589 million in the second quarter of 2012. The operating income for North America for the second quarter of 2013 decreased by 9% to $394 million compared to $431 million in the second quarter of 2012. In the International segment, the operating income for the second quarter of 2013 increased by 1% to $209 million compared to $207 million in the second quarter of 2012.
 

Adjusted for special items related to the acquisition of Liberty Dialysis Holdings Inc. and the impact from the budget cuts in the U.S. (sequestration) that were effectively introduced in April 2013, the operating income for the second quarter of 2013 decreased by 2% to $555 million compared to $568 million in the second quarter of 2012.

Net interest expense for the second quarter of 2013 was $103 million, compared to $104 million in the second quarter of 2012.

Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA for the second quarter of 2013 was $263 million, a decrease of 9% compared to the corresponding number of $289 million for the second quarter of 2012. Adjusted for the net of tax effects of the special items mentioned above, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA for the second quarter of 2013 increased by 2% to $272 million compared to $266 million for the second quarter of 2012.

Income tax expense was $144 million for the second quarter of 2013 which translates into an effective tax rate of 32.6%. This compares to income tax expense of $172 million and a tax rate of 34.6% for the second quarter of 2012. Adjusted for the special items mentioned above, the tax rate for the second quarter of 2013 was 32.1% as compared to 34.4% for the second quarter of 2012.

Earnings per ordinary share (EPS) for the second quarter of 2013 was $0.86, a decrease of 10% compared to the corresponding number for the second quarter of 2012. Adjusted for the special items mentioned above, EPS for the second quarter of 2013 increased by 2% to $0.89 compared to $0.88 for the second quarter of 2012. The weighted average number of shares outstanding for the second quarter of 2013 was approximately 306.3 million shares, compared to 304.4 million shares for the second quarter of 2012. The increase in shares outstanding mainly resulted from stock option exercises in the past twelve months, partially offset by the effect of the share buy-back program.

Cash flow
 

In the second quarter of 2013, the company generated $525 million in cash from operations, an increase of 16% compared to the corresponding figure of last year and representing 14.5% of revenue.
 

A total of $173 million was spent for capital expenditures, net of disposals. Free cash flow before acquisitions was $352 million (representing 9.8% of revenue) compared to $300 million in the second quarter of 2012.
 

A total of $13 million in cash was spent for acquisitions and investments, net of divestitures. Free cash flow after acquisitions and divestitures was $339 million, compared to $306 million in the second quarter of 2012.

First Half 2013:

Revenue and Earnings

Net revenue for the first half of 2013 increased by 6% to $7,076 million (+6% at constant currencies) compared to the first half of 2012. Organic revenue growth was 5% in the first half of 2013.

Operating income (EBIT) for the first half of 2013 decreased by 5% to $1,038 million compared to $1,092 million in the first half of 2012. Adjusted for special items related to the acquisition of Liberty Dialysis Holdings Inc. and the impact from sequestration the operating income for the first half of 2013 decreased by 3% to $1,049 million compared to $1,078 million for the first half of 2012.

Net interest expense for the first half of 2013 was $207 million compared to $203 million in the same period of 2012.
 

For the first half of 2013, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA was $488 million, down by 26% from the corresponding number of $660 million for the first half of 2012. Adjusted for the net of tax effects of the special items mentioned above, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA for the first half of 2013 decreased by 3% to $498 million compared to $514 million for the first half of 2012.

Income tax expense for the first half of 2013 was $273 million which translates into an effective tax rate of 32.8%. This compares to income tax expense of $309 million and a tax rate of 30.1% for the first half of 2012. Adjusted for the special items mentioned above, the tax rate for the first half of 2013 was 32.6% as compared to 33.8% for the first half of 2012.
 

In the first half of 2013, earnings per ordinary share decreased by 27% to $1.59 compared to $2.17 for the first half of 2012. Adjusted for the special items mentioned above, EPS for the first half of 2013 decreased by 4% to $1.62 compared to $1.69 for the first half of 2012. The weighted average number of shares outstanding during the first half of 2013 was approximately 306.5 million.

Cash Flow

Cash from operations during the first half of 2013 was $841 million compared to $932 million for the same period in 2012, representing 11.9% of revenue.
 

A total of $319 million in cash was spent for capital expenditures, net of disposals. Free cash flow before acquisitions for the first half of 2013 was $522 million compared to $658 million in the same period in 2012. A total of $84 million in cash was spent for acquisitions, net of divestitures. Free cash flow after acquisitions and divestitures was $438 million compared to minus $862 million in the first half of last year.

Please refer to the attachments for a complete overview of the results for the second quarter and first half of 2013.

Patients – Clinics – Treatments
 

As of June 30, 2013, Fresenius Medical Care treated 264,290 patients worldwide, which represents an increase of 3% compared to the previous year's figure. North America provided dialysis treatments for 168,160 patients, an increase of 3% compared to the corresponding number for 2012. The International segment provided dialysis treatments for 96,130 patients, an increase of 4% over the prior year's figure.
 

As of June 30, 2013, the company operated a total of 3,212 clinics worldwide, an increase of 3% compared to the corresponding number for 2012. The number of clinics is comprised of 2,104 clinics in North America (+3%) and 1,108 clinics in the International segment (+3%).
 

During the first half of 2013, Fresenius Medical Care delivered approximately 19.7 million dialysis treatments worldwide. This represents an increase of 5% compared to the previous year's figure. North America accounted for 12.5 million treatments, an increase of 5%. The International segment delivered 7.2 million treatments, an increase of 3%.

Employees
 

As of June 30, 2013, Fresenius Medical Care had 87,944 employees (full-time equivalents) worldwide, compared to 86,153 employees at the end of 2012.

Debt/EBITDA ratio
 

The ratio of debt to earnings before interest, taxes, depreciation and amortization (EBITDA) decreased from 2.92 at the end of the second quarter of 2012 to 2.91 at the end of the second quarter of 2013.

Rating
 

Standard & Poor's rates the company's corporate credit as ‘BB+', with a ‘positive' outlook. Moody's rates the company's corporate credit as ‘Ba1' with a ‘stable' outlook. During the second quarter, Fitch has raised the outlook from ‘stable' to ‘positive'. Fitch continues to rate the company's corporate credit as ‘BB+'.

Share buy-back program
 

Fresenius Medical Care has started the share buy-back program on May 20, 2013. The company intends to repurchase ordinary shares with an aggregate value of up to €385 million (approximately $500 million). The program is expected to run into the third quarter of 2013. As of June 30, 2013, around 3.58 million shares were repurchased in the amount of approximately €190 million (~$249 million).

Conversion of preference shares
 

At the annual general meeting and in a separate meeting of preference shareholders the shareholders approved the mandatory conversion of all preference shares into ordinary shares on a 1:1 basis. This conversion was finalized on June 28, 2013.

Guidance for 2013 confirmed
 

The company expects revenue to grow to more than $14.6 billion in 2013, translating into a growth rate of more than 6%.
 

In April 2013 budget cuts in the U.S. (sequestration) were effectively introduced. We do not assume that these measurements will be revised this year. Therefore the net income guidance range has been confirmed and has been substantiated for the potential impact from sequestration on our business performance. Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA is expected to be between $1.1 billion and $1.15 billion in 2013.
 

For 2013, the company expects to spend around $700 million on capital expenditures and around $500 million on acquisitions. The debt/EBITDA ratio is expected to be equal or below 3.0 by the end of 2013.
 

Rice Powell, chief executive officer of Fresenius Medical Care, commented: "Our second quarter results show a mixed picture. On the one hand, we have seen an accelerated growth of our business while on the other hand we were faced with the general budget cuts in the U.S. which affected our operating income performance. Nevertheless, we were able to show an earnings increase in the second quarter on an adjusted basis. To stay ahead of our competition given the challenging environment, we are rigorously focusing on our company-wide Global Efficiency Program that we initiated at the beginning of the year."

Conference Call
 

Fresenius Medical Care will hold a conference call to discuss the results of the second quarter and first half of 2013 on Tuesday, July 30, 2013, 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.fmc-ag.com in the "Investor Relations" section. A replay will be available shortly after the call.

 

The first "Green Innovation Award" was awarded today by a joint initiative of European Dialysis and Transplant Nurses Association/European Renal Care Association (EDTNA/ERCA) and Fresenius Medical Care at the 42nd EDTNA/ERCA International Conference in Malmö, Sweden. This award pays tribute to innovative ideas, best practices, and procedures that contribute to the promotion and development of environmental protection in hemodialysis treatment.

First prize went to a project from Saudi Arabia. In this pilot project, launched in 2011, overall water consumption was reduced by more than 50% mainly through the use of two reverse osmosis units for waste water. The second-place winner is a Spanish project that achieved significant savings in dialysate and water use by adjusting the dialysate flow to the blood flow rate. This use of technology improved treatment quality and optimized costs, while reducing the burden on the environment.

Eligible for participation were innovative green projects that provide transferrable, measurable and sustainable environmental benefits. An impartial jury, consisting of four experts on environmental matters related to dialysis, nominated the two winning projects, which were honored during a festive award ceremony at the EDTNA/ERCA conference.

Guido Giordana, Director of Business Operation Management NephroCare at Fresenius Medical Care, presented the award. "I feel personally honored to present the very first environmental award in renal care," he said. "Handing over this award, a personal wish comes true. I am happy to find the environmental impact of dialysis is gaining more and more attention, including at the point of care."

Jitka Pancirova, EDTNA/ERCA Executive Director, added: "It is of great importance to raise awareness for environmental protection within dialysis. With this we take the responsibility for our environment inherited through life-saving, resource-demanding dialysis treatment. Considering the increasing worldwide prevalence of End Stage Renal Disease, environmental protection is increasingly gaining importance and urgency in hemodialysis."

With the presentation of the "Green Innovation Award," both EDTNA/ERCA and Fresenius Medical Care are continuing their dedicated cooperation on environmental protection in dialysis, which started in 2009 with the "Go Green in Dialysis" initiative. This joint effort has already developed and published the "Environmental Guidelines for Dialysis," which help guide renal professionals to perform environmentally friendly treatments.

Third Quarter 2013 Key Figures:

Net revenue $3,666 million +7%

Operating income (EBIT) $557 million -2%

Adjusted operating income (EBIT) $576 million +2%

Net income ¹⁾ $273 million +1%

Adjusted net income ¹⁾ $285 million +6%

Earnings per ordinary share $0.91 +3%

Adjusted earnings per ordinary share $0.95 +7%


Nine Months 2013 Key Figures:


Net revenue $10,743 million +6%

Operating income (EBIT) $1,595 million -4%

Adjusted operating income (EBIT) $1,625 million -1%

Net income ¹⁾ $761 million -18%

Adjusted net income ¹⁾ $783 million 0%

Earnings per ordinary share $2.50 -18%

Adjusted earnings per ordinary share $2.57 0%


1) attributable to shareholders of Fresenius Medical Care AG & Co. KGaA

Bad Homburg, Germany – Fresenius Medical Care AG & Co. KGaA (the "company" or "Fresenius Medical Care"; Frankfurt Stock Exchange: FME / New York Stock Exchange: FMS), the world's largest provider of dialysis products and services, today announced its results for the third quarter and first nine months of 2013.


Rice Powell, chief executive officer of Fresenius Medical Care, commented: "Given the economic challenges we continue to face, we can be satisfied with our business performance in the third quarter, specifically with the strong organic revenue growth of 6%. As indicated after the second quarter we expected the second half of the year to be stronger to achieve our guidance for 2013. And there is no doubt that we need a very strong fourth quarter to get there. We will continue to grow our business and expand our renal network, and with this we will be best positioned for future success."


Third Quarter 2013


Revenue


Net revenue for the third quarter of 2013 increased by 7% to $3,666 million (+8% at constant currency) compared to the third quarter of 2012. Organic revenue growth worldwide was 6%. Dialysis services revenue grew by 8% to $2,813 million (+9% at constant currency) and dialysis product revenue increased by 5% to $853 million (+4% at constant currency).


North America revenue for the third quarter of 2013 increased by 8% to $2,436 million. Organic revenue growth was 6%. Dialysis services revenue grew by 9% to $2,224 million with a same store treatment growth of 3.5%. Dialysis product revenue increased by 5% to $212 million.


International revenue increased by 5% to $1,222 million (+6% at constant currency). Organic revenue growth was 4%. Dialysis services revenue increased by 5% to $589 million (+8% at constant currency). Dialysis product revenue increased by 5% to $633 million (+4% at constant currency).


Earnings


Operating income (EBIT) for the third quarter of 2013 decreased by 2% to $557 million compared to $568 million in the third quarter of 2012. Operating income for North America for the third quarter of 2013 decreased by 1% to $416 million compared to $420 million in the third quarter of 2012. In the International segment, operating income for the third quarter of 2013 increased by 5% to $204 million compared to $195 million in the third quarter of 2012.


Adjusted for the impact from the budget cuts in the U.S. (sequestration), that were effectively introduced in April 2013, the operating income for the third quarter of 2013 increased by 2% to $576 million.


Net interest expense for the third quarter of 2013 was $103 million, compared to $108 million in the third quarter of 2012.


Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA for the third quarter of 2013 was $273 million, an increase of 1% compared to the corresponding number of $270 million for the third quarter of 2012. Adjusted for the net of tax effects of the special item mentioned above, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA for the third quarter of 2013 increased by 6% to $285 million.


Income tax expense was $148 million for the third quarter of 2013 which translates into an effective tax rate of 32.6%. This compares to income tax expense of $153 million and a tax rate of 33.3% for the third quarter of 2012.


Earnings per ordinary share (EPS) for the third quarter of 2013 was $0.91, an increase of 3% compared to the corresponding number for the third quarter of 2012. Adjusted for the special item mentioned above, EPS for the third quarter of 2013 increased by 7% to $0.95. The weighted average number of shares outstanding for the third quarter of 2013 was approximately 301.3 million shares, compared to 305.5 million shares for the third quarter of 2012. The decrease in shares outstanding resulted from the effect of the share buy-back program, which was fully completed in August 2013, partially offset by stock option exercises in the past twelve months.


Cash flow


In the third quarter of 2013, the company generated $605 million in cash from operations, an increase of 13% compared to the corresponding figure of last year and representing 16.5% of revenue.


A total of $175 million was spent for capital expenditures, net of disposals. Free cash flow before acquisitions was $430 million (representing 11.7% of revenue) compared to $371 million in the third quarter of 2012.


A total of $195 million in cash was spent for acquisitions and investments, net of divestitures. Free cash flow after acquisitions and divestitures was $235 million, compared to $334 million in the third quarter of 2012.


First Nine Months 2013:


Revenue and Earnings


Net revenue for the first nine months of 2013 increased by 6% to $10,743 million (+7% at constant currencies) compared to the first nine months of 2012.


Operating income (EBIT) for the first nine months of 2013 decreased by 4% to $1,595 million compared to $1,659 million in the first nine months of 2012. Adjusted for special items related to the acquisition of Liberty Dialysis Holdings Inc. and the impact from sequestration the operating income for the first nine months of 2013 decreased by 1% to $1,625 million compared to $1,645 million for the first nine months of 2012.


Net interest expense for the first nine months of 2013 was $310 million compared to $311 million for the first nine months of 2012.


For the first nine months of 2013, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA was $761 million, down by 18% from the corresponding number of $930 million for the first nine months of 2012. Adjusted for the net of tax effects of the special items mentioned above, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA for the first nine months of 2013 was $783 million as compared to $784 million for the first nine months of 2012.


Income tax expense for the first nine months of 2013 was $421 million which translates into an effective tax rate of 32.8%. This compares to income tax expense of $462 million and a tax rate of 31.1% for the first nine months of 2012.


In the first nine months of 2013, earnings per ordinary share (EPS) decreased by 18% to $2.50 compared to $3.05 for the first nine months of 2012. Adjusted for the special items mentioned above, EPS for the first nine months of 2013 remained unchanged at $2.57 compared to the first nine months of 2012. The weighted average number of shares outstanding during the first nine months of 2013 was approximately 304.7 million.


Cash Flow


Cash from operations during the first nine months of 2013 was $1,446 million (representing 13.5% of revenue) compared to $1,467 million for the same period in 2012.


A total of $494 million in cash was spent for capital expenditures, net of disposals. Free cash flow before acquisitions for the first nine months of 2013 was $952 million compared to $1,029 million in the same period in 2012. A total of $279 million in cash was spent for acquisitions, net of divestitures. Free cash flow after acquisitions and divestitures was $673 million compared to a negative $528 million in the first nine months of last year.


Please refer to the attachments for a complete overview of the results for the third quarter and first nine months of 2013.

Patients – Clinics – Treatments


As of September 30, 2013, Fresenius Medical Care treated 265,824 patients worldwide, which represents an increase of 4% compared to the previous year's figure. North America provided dialysis treatments for 168,893 patients, an increase of 3% compared to the corresponding number for 2012. The International segment provided dialysis treatments for 96,931 patients, an increase of 4% over the prior year's figure.


As of September 30, 2013, the company operated a total of 3,225 clinics worldwide, an increase of 3% compared to the corresponding number for 2012. The number of clinics is comprised of 2,116 clinics in North America (+3%) and 1,109 clinics in the International segment (+3%).


During the first nine months of 2013, Fresenius Medical Care delivered approximately 30.03 million dialysis treatments worldwide. This represents an increase of 5% compared to the previous year's figure. North America accounted for 19.04 million treatments, an increase of 5%. The International segment delivered 10.99 million treatments, an increase of 4%.


Employees


As of September 30, 2013, Fresenius Medical Care had 89,282 employees (full-time equivalents) worldwide, compared to 86,153 employees at the end of 2012.


Debt/EBITDA ratio


The ratio of debt to earnings before interest, taxes, depreciation and amortization (EBITDA) slightly increased from 2.92 at the end of the second quarter of 2013 to 2.94 at the end of the third quarter of 2013.


Rating


Standard & Poor's rates the company's corporate credit as ‘BB+', with a ‘positive' outlook. Moody's rates the company's corporate credit as ‘Ba1' with a ‘stable' outlook. Fitch Ratings is currently reviewing Fresenius Medical Care's ratings.


Share buy-back program


Fresenius Medical Care`s share buy-back program was completed on August 14, 2013. The company bought back a total number of approximately 7.5 million shares with an aggregate value of €385 million (approximately $500 million). The program was financed from cash flow and existing credit facilities.


Guidance for 2013 confirmed


The company expects revenue to grow to more than $14.6 billion in 2013, translating into a growth rate of more than 6%.


Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA is expected to be between $1.1 billion and $1.15 billion in 2013, likely at the low end of the range.


For 2013, the company expects to spend around $700 million on capital expenditures and around $500 million on acquisitions. The debt/EBITDA ratio is expected to be equal or below 3.0 by the end of 2013.


Conference Call
 

Fresenius Medical Care will hold a conference call to discuss the results of the third quarter and first nine months of 2013 on Tuesday, November 5, 2013, at 3.30 p.m. CET / 9.30 a.m. EST. The company invites investors to follow the live webcast of the call at the company's website www.fmc-ag.com in the "Investor Relations" section. A replay will be available shortly after the call.