Fourth Quarter 2013 Key Figures:

Net revenue: $3,867 million, +4%

Operating income (EBIT): $661 million, +18%

Net income¹: $349 million, +36%

Basic earnings per ordinary share: $1.16, +38%


Full Year 2013 Key Figures:

Net revenue: $14,610 million, +6%

Operating income (EBIT): $2,256 million, +2%

Net income¹: $1,110 million, -6%

Basic earnings per ordinary share: $3.65, -6%

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


Dividend proposal:

Ordinary share €0.77, +3%


Rice Powell, chief executive officer of Fresenius Medical Care, commented: "With a very strong fourth quarter, we completed a sound fiscal year 2013 and achieved the targets we set for ourselves. Despite the impact of the reimbursement cuts in the U.S. that were introduced last year we achieved another record in net revenue, supported by a continued excellent cash flow performance. Looking ahead we are faced with a challenging environment, in particular with structural changes due to growing pressure on reimbursement systems. In order to successfully meet these changes we are concentrating on measures aimed at enhancing our profitability in 2014 and beyond."


Fourth Quarter 2013

Revenue

Net revenue for the fourth quarter of 2013 increased by 4% to $3,867 million (+5% at constant currency) compared to the fourth quarter of 2012. Organic revenue growth worldwide was 3%. Dialysis services revenue grew by 3% to $2,895 million (+4% at constant currency) and dialysis product revenue increased by 8% to $972 million (+8% at constant currency).

North America revenue for the fourth quarter of 2013 increased by 3% to $2,507 million. Organic revenue growth was 1.5%. Dialysis services revenue grew by 3% to $2,288 million with a same store treatment growth of 3.4%. Dialysis product revenue increased by 6% to $219 million.

International revenue increased by 6% to $1,351 million (+8% at constant currency). Organic revenue growth was 7%. Dialysis services revenue increased by 4% to $607 million (+8% at constant currency). Dialysis product revenue increased by 8% to $744 million (+8% at constant currency).


Earnings

Operating income (EBIT) for the fourth quarter of 2013 increased by 18% to $661 million compared to $559 million in the fourth quarter of 2012. Operating income for North America for the fourth quarter of 2013 increased by 7% to $446 million compared to $416 million in the fourth quarter of 2012. In the International segment, operating income for the fourth quarter of 2013 increased by 23% to $261 million compared to $212 million in the fourth quarter of 2012.

Net interest expense for the fourth quarter of 2013 was $98 million, compared to $115 million in the fourth quarter of 2012.

Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA for the fourth quarter of 2013 was $349 million, an increase of 36% compared to the corresponding number of $257 million for the fourth quarter of 2012.

Income tax expense was $171 million for the fourth quarter of 2013 which translates into an effective tax rate of 30.4%. This compares to income tax expense of $142 million and a tax rate of 32.1% for the fourth quarter of 2012.

Basic earnings per ordinary share (EPS) for the fourth quarter of 2013 was $1.16, an increase of 38% compared to the corresponding number for the fourth quarter of 2012. The weighted average number of shares outstanding for the fourth quarter of 2013 was approximately 301.0 million shares, compared to 306.4 million shares for the fourth quarter of 2012. The decrease in shares outstanding resulted from the share buy-back program, which was completed in August 2013, partially offset by stock option exercises in the past twelve months.


Cash flow

In the fourth quarter of 2013, the company generated $589 million in net cash provided by operating activities, an increase of 3% compared to the corresponding figure of last year and representing 15.2% of revenue.

A total of $234 million was spent for capital expenditures, net of disposals. Free cash flow was $355 million (representing 9.2% of revenue) compared to $345 million in the fourth quarter of 2012.

A total of $198 million in cash was spent for acquisitions, net of divestitures. Free cash flow after investing activities was $157 million, compared to $286 million in the fourth quarter of 2012.


Full year 2013

Revenue and Earnings

Net revenue for the full year 2013 increased by 6% to $14,610 million (+6% at constant currencies) compared to the full year 2012.

Operating income (EBIT) for the full year 2013 increased by 2% to $2,256 million compared to $2,219 million in the full year 2012.

Net interest expense for the full year 2013 was $409 million compared to $426 million for the full year 2012.

For the full year 2013, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA was $1,110 million, down by 6% from the corresponding number of $1,187 million for the full year 2012.

Income tax expense for the full year 2013 was $592 million which translates into an effective tax rate of 32.0%. This compares to income tax expense of $605 million and a tax rate of 31.3% for the full year 2012.

In the full year of 2013, basic earnings per ordinary share (EPS) decreased by 6% to $3.65 compared to $3.89 for the full year 2012. The weighted average number of shares outstanding during the full year 2013 was approximately 303.8 million.


Cash flow

Net cash provided by operating activities during the full year 2013 was $2,035 million (representing 13.9% of revenue) compared to $2,039 million for the same period in 2012.

A total of $728 million in cash was spent for capital expenditures, net of disposals. Free cash flow for the full year 2013 was $1,307 million compared to $1,373 million in the same period in 2012.

A total of $478 million in cash was spent for acquisitions, net of divestitures. Free cash flow after investing activities was $829 million compared to a negative $242 million in the full year 2012.


Employees

As of December 31, 2013, Fresenius Medical Care had 90,690 employees (full-time equivalents) worldwide, compared to 86,153 employees at the end of 2012. This increase of approximately 4,500 employees is due to overall growth in the company's business and acquisitions.


Balance sheet structure

The company´s total assets were $23,120 million (Dec. 31, 2012: $22,326 million), an increase of 4%. Current assets increased by 3% to $6,287 million (Dec. 31, 2012: $6,127 million). Non-current assets were $16,833 million (Dec. 31, 2012: $16,199 million), an increase of 4%. Total equity increased by 3% to $9,485 million (Dec. 31, 2012: $9,207 million). The equity ratio was 41%, unchanged compared to the ratio at the end of 2012. Total debt was $8,417 million (Dec. 31, 2012: $8,298 million). As of December 31, 2013, the debt/EBITDA ratio was 2.8 (Dec. 31, 2012: 2.8).

Please refer to the attachments for a complete overview of the results for the fourth quarter and full year 2013.


Dividend

At the Annual General Meeting to be held on May 15, 2014, shareholders will be asked to approve a dividend of €0.77 per ordinary share, an increase of 3% from 2012 (€0.75). For the 17th consecutive year, shareholders can expect to receive an increased annual dividend.


Outlook

The company expects revenue to be at around $15.2 billion in 2014, translating into a growth rate of around 4%.

Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA is expected to be between $1.0 billion and $1.05 billion in 2014. The company initiated a global efficiency program designed to enhance the company's performance over a multi-year period. Potential cost savings before income taxes of up to $60 million generated from this program are not included in the outlook for 2014.

For 2014, the company expects to spend around $900 million on capital expenditures and around $400 million on acquisitions. The debt/EBITDA ratio is expected to be equal to or below 3.0 by the end of 2014.


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 2013 on Tuesday, February 25, 2014, at 10 am CET. The company cordially invites journalists to view the live video webcast at the company's website www.fmc-ag.com in the section "News and Press / Video service". A replay will be available shortly after the meeting.

Fresenius Medical Care, the world's largest provider of dialysis products and services, today announced two changes in the Management Board.

Prof. Emanuele Gatti (58), the Management Board member currently responsible for the region Europe, Middle East, Africa and Latin America (EMEALA) and Global Chief Strategist, has decided as a personal choice to enter the next phase of his career. Prof. Gatti will discontinue his operational responsibilities and Management Board position effective March 31, 2014 and in his new role as Executive Advisor for Healthcare Strategies and Policies, he will support CEO Rice Powell in selecting strategic opportunities as well as represent the company in several external committees. In addition, and in combination with his academic activities, he will continue to work for the company to develop regenerative medicine and to improve dialysis and blood purification therapies.

Prof. Emanuele Gatti began his career with Fresenius dialysis business segment in January 1989 and after several successful years with increasing responsibilities, including managing the Southern European dialysis business, he was appointed to the Management Board of Fresenius Medical Care AG in May 1997. "This change had been planned, and now, for personal reasons, it seems the right time to move into the next phase of my life. Over all these years, working to develop life-saving products and services together with wonderful employees, I have been able to contribute to the global growth and success of this special company. This has always been a source of great pleasure for me. With the planned future projects, I am sure that I will further contribute to the improvement of renal care for thousands of patients," Emanuele Gatti said.

Effective April 1, 2014, Mr. Dominik Wehner will succeed Prof. Gatti as the Management Board Member for the Europe, Middle East and Africa region while the Latin America region under John Anderson's management will report to Rice Powell.

Dominik Wehner (45) began his career at Fresenius Medical Care in 1994 as Sales Manager and is currently Executive Vice President responsible for the regions of Eastern Europe, Middle East and Africa which he turned into one of the growth drivers of EMEALA. He also serves on the Vifor Fresenius Medical Care Renal Pharma Board of Directors and was instrumental in the successful extension of the venture activities in EMEALA.

Dr. Rainer Runte (54), the Management Board member currently responsible for Global Law, Compliance, Intellectual Property and Labor relations in Germany, has informed the company he does not intend to renew his contract, which concludes December 31, 2014. Dr. Runte and the company mutually agreed he will step down from the Management Board and his daily responsibilities on April 1, 2014. Until such time a permanent successor to Dr. Runte is named, David Kembel, Chief Compliance Officer for Fresenius Medical Care North America, will assume responsibility for Global Compliance on an interim basis. Rice Powell as the Chairman of the Management Board will assume Dr. Runte's remaining responsibilities until the search for a General Counsel is complete. Dr. Runte will remain connected to Fresenius Medical Care through his advisory role on matters of corporate law and compliance.

Dr. Runte began his career with Fresenius in 1990, became Senior Vice President for Law at Fresenius Medical Care in 1997 and was appointed to the Management Board in 2002. Before joining the company, he worked as a university research assistant and as an attorney in a law firm specializing in economic law. "After 24 years of contributions to the success of Fresenius Medical Care and being a Management Board Member for 13 years, I believe the time has come for me to take some time away from the day-to-day work activities and decide which career direction I might want to pursue," Rainer Runte said.

Ulf Mark Schneider, Chairman of the Supervisory Board of Fresenius Medical Care Management AG, commented: "Emanuele Gatti and Rainer Runte have made significant contributions to Fresenius Medical Care. Both were instrumental in building the company into the global dialysis leader it is today. I respect their decisions and appreciate that the company will continue to benefit from their experience and insights as part of their advisory roles. On behalf of the Supervisory Board, I would like to thank them for their dedication, perseverance and outstanding results. At the same time, I would like to welcome Dominik Wehner to his new role on Fresenius Medical Care's Management Board. Dominik is a proven executive with significant dialysis products and service experience and an impressive track record. I am convinced that the Europe, Middle East and Africa region will continue to thrive under his inspiring and energetic leadership."

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, hosted a Capital Markets Day (CMD) on April 3 in New York.

The event was aimed at giving analysts and investors further insight into Fresenius Medical Care's vision for 2020 and the growth and efficiency strategies the company is pursuing. The CMD included presentations by chief executive officer Rice Powell and other members of the senior management team on global strategy, regional business strategies, R&D, manufacturing, medical therapy and financials.

Fresenius Medical Care also announced its long-term financial target for 2020. Based on revenue of $14.6 billion in fiscal year 2013, the company has set its ambitious revenue guidance for 2020 at $28 billion. This represents a cumulative average growth rate of around 10% per annum (CAGR) and a near doubling of revenue compared to 2013.

Participants at the CMD received an update on the company's Global Efficiency Program. The program's objectives are to identify efficiency potential, enhance the overall competitiveness of Fresenius Medical Care, and free up resources for reinvestment. The company has several projects in place that will achieve sustained efficiency gains over multiple years and should lead to cost savings of $300 million per annum by 2017.

Fresenius Medical Care's world-leading position in the dialysis industry has been built on its vision and capabilities in developing innovations that shape the future of treatment for patients. Fresenius Medical Care will continue to develop innovative products focused on quality outcomes for the patient while expanding the company's dialysis products and services around the world.

In addition to strong growth in the underlying business of dialysis products and services, Fresenius Medical Care sees significant potential in a business area it began developing some years ago and now calls Care Coordination. Care Coordination is an extension of the company's renal care for its patients and currently includes e.g. vascular care, laboratory and pharmacy businesses. Fresenius Medical Care plans to build this business segment and expects revenue from Care Coordination to grow from 3% of total revenue in 2013 to about 18% in 2020.

Rice Powell, chief executive officer of Fresenius Medical Care, commented at the CMD: "The number of dialysis patients is expected to double in the next seven years. We will continue to execute on our plan for growth and efficiency across the business. Our vertically integrated business enables us to provide the most effective and efficient care for these patients and is the platform to expand our care coordination capabilities. We recognize that moving beyond our core dialysis product and services business brings areas with different risk and margin profiles, and we are convinced this is reflected in our vision and guidance for 2020. With the acceleration in our revenue growth going forward we should be able to generate earnings after tax growth in the high single digits."

PDF versions of presentations and other information material given at the Capital Markets Day can be found on our website: www.fmc-ag.com/5119.htm.

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, and Joslin Diabetes Center, Inc., the world's preeminent diabetes research, clinical care and education organization, announced an agreement today to jointly develop renal care programs in select Joslin Affiliated Centers for patients with diabetic kidney disease (DKD).

Fresenius Medical Care and Joslin will jointly develop clinical guidelines and effective care delivery systems to manage high blood pressure, glucose, and nutrition in patients with DKD. In addition, the organizations will help educate patients as they prepare for the possibility of end stage renal disease (ESRD) and the necessity for dialysis or kidney transplantation. Fresenius Medical Care and Joslin's multidisciplinary and coordinated approach to chronic disease management will seek to improve patient outcomes while reducing unnecessary or lengthy hospitalizations, drug interactions and overall morbidity and mortality associated with uncoordinated care.

"Identifying and treating individuals with chronic kidney disease, especially those with diabetes, as early as possible can help us improve health outcomes for patients and lower costs for the health care system," said Ron Kuerbitz, chief executive officer of Fresenius Medical Care North America. "But even more exciting is what this research can mean for the future. We hope that bringing together the world leaders in diabetes research and kidney care will lay the foundation for future therapeutic breakthroughs."

"We are excited to partner with Fresenius Medical Care," said John L. Brooks III, President and CEO of Joslin Diabetes Center. "Kidney disease is one of the most devastating complications of diabetes. Together with Fresenius Medical Care we hope to make real progress in improving the care of patients with DKD."

Chronic kidney disease (CKD) and ESRD combined are estimated to affect more than 13% of the U.S. population, and diabetes is one of the leading causes of ESRD. The Centers for Disease Control estimates that one in three adults in this country will have diabetes by 2050 if today's trends continue. These alarming statistics underscore the importance of the Fresenius Medical Care – Joslin collaboration and the development of clinical guidelines to manage care for patients who have both of these complex, chronic diseases.

• First quarter performance in line with full year guidance
• North America influenced by sequestration and rebasing impact
• International influenced by currency and delayed product sales
• On track to achieve full year guidance
• Accelerated medical and quality initiatives

First quarter 2014 key figures

Net revenue: $3,564 Million, +3%
Operating income (EBIT): $445 million, -10%
Net income*: $205 million, -9%
Basic earnings per ordinary share: $0.68, -7%

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

"We can look back on a first quarter that was in line with our guidance for the full year," said Rice Powell, chief executive officer of Fresenius Medical Care. "Based on our quarterly results, and on the continuous efforts we are making to increase profitability, we are able to confirm our full-year guidance. Moreover, by capitalizing on market opportunities in our core dialysis business and expanding in business areas like care coordination for dialysis, Fresenius Medical Care is well placed to meet the company's ambitious long-term targets."

 

 

 

First quarter 2014 key figures

Revenue

Net revenue for the first quarter of 2014 increased by 3% to $3,564 million (+4% at constant currency) compared to the first quarter of 2013. Organic revenue growth worldwide was 3%. Dialysis services revenue grew by 4% to $2,782 million (+5% at constant currency) and dialysis product revenue decreased by 1% to $782 million (flat at constant currency) compared to the first quarter of 2013.

North America revenue for the first quarter of 2014 increased by 5% to $2,393 million. Organic revenue growth was 4%. Dialysis services revenue grew by 5% to $2,201 million with a same store treatment growth of 3.3%. Dialysis product revenue increased by 5% to $192 million.

International revenue decreased by 1% to $1,161 million (+4% at constant currency). Organic revenue growth was 3%. Dialysis services revenue increased by 1% to $581 million (+8% at constant currency). Dialysis product revenue decreased by 2% to $580 million (-1% at constant currency).

Earnings

Operating income (EBIT) for the first quarter of 2014 decreased by 10% to $445 million compared to $493 million in the first quarter of 2013. Operating income for North America for the first quarter of 2014 decreased by 8% to $336 million compared to $366 million in the first quarter of 2013. In the International segment, operating income for the first quarter of 2014 decreased by 6% to $180 million compared to $192 million in the first quarter of 2013.

Net interest expense for the first quarter of 2014 was $96 million, compared to $104 million in the first quarter of 2013.

Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA for the first quarter of 2014 was $205 million, a decrease of 9% compared to the corresponding number of $225 million for the first quarter of 2013.

Income tax expense was $102 million for the first quarter of 2014 which translates into an effective tax rate of 29.1%. This compares to income tax expense of $129 million and a tax rate of 33.2% for the first quarter of 2013.

Basic earnings per ordinary share (EPS) for the first quarter of 2014 was $0.68, a decrease of 7% compared to the corresponding number for the first quarter of 2013. The weighted average number of shares outstanding for the first quarter of 2014 was approximately 301.5 million shares, compared to 306.7 million shares for the first quarter of 2013. The decrease in shares outstanding resulted from last year`s share buy-back program, partially offset by stock option exercises in the past twelve months.

Cash flow

In the first quarter of 2014, the company generated $112 million in net cash provided by operating activities, a decrease of 64% compared to the corresponding figure of last year and representing 3% of revenue.

A total of $197 million was spent for capital expenditures, net of disposals. Free cash flow was -$85 million compared to $169 million in the first quarter of 2013.

A total of $135 million in cash was spent for acquisitions and investments, net of divestitures. Free cash flow after investing activities was -$220 million, compared to $98 million in the first quarter of 2013.

Employees

As of March 31, 2014, Fresenius Medical Care had 91,542 employees (full-time equivalents) worldwide, compared to 86,855 employees at the end of March 2013. This increase of more than 4,500 employees was attributable to our continued organic growth as well as to acquisitions.

Balance sheet structure

The company´s total assets were $23,423 million (Dec. 31, 2013: $23,120 million), an increase of 1%. Current assets increased by 3% to $6,497 million (Dec. 31, 2013: $6,287 million). Non-current assets were $16,926 million (Dec. 31, 2013: $16,833 million), an increase of 1%. Total equity increased by 2% to $9,680 million (Dec. 31, 2013: $9,485 million). The equity ratio was 41%, unchanged compared to the ratio at the end of 2013. Total debt was $8,609 million (Dec. 31, 2013: $8,417 million). As of March 31, 2014, the debt/EBITDA ratio was 2.9 (Dec. 31, 2013: 2.8).

Changes in management board

On March 12, 2014, the company announced the resignations of Prof. Emanuele Gatti and Dr. Rainer Runte, both effective March 31, 2014, from the general partner's management board. Dr. Gatti's position on the management board and duties relating to Europe, Middle East and Africa have been assumed by Mr. Wehner, effective April 1, 2014, while Latin America region management duties have been assumed by Mr. John Anderson who reports directly to CEO Mr. Powell. Until such time as a permanent successor to Dr. Runte is named, Mr. David Kembel, chief compliance officer for Fresenius Medical Care North America, has assumed Dr. Runte's responsibilities for Global Compliance on an interim basis, and CEO Mr. Powell, as the chairman of the management board, has assumed Dr. Runte's remaining responsibilities, until the search for a General Counsel is complete.

Long-term revenue target

On April, 4 Fresenius Medical Care announced its long-term financial target for 2020. Based on revenue of $14.6 billion in fiscal year 2013, the company has set its ambitious revenue guidance for 2020 at $28 billion. This represents a cumulative average growth rate of around 10% per annum (CAGR) between 2015 and 2020 and a near doubling of revenue compared to 2013. Over the same period the company expects a high single digit increase in net income and EPS.

Fresenius Medical Care's world-leading position in the dialysis industry has been built on its vision and capabilities in developing innovations that shape the future of treatment for patients. Fresenius Medical Care will continue to develop innovative products focused on quality outcomes for the patient while expanding the company's dialysis products and services around the world. In addition to strong growth in the underlying business of dialysis products and services, Fresenius Medical Care sees significant potential in a business area it began developing some years ago and now calls Care Coordination. Care Coordination is an extension of the company's renal care for its patients and currently includes e.g. vascular care, laboratory and pharmacy businesses. By further integrating those services in the US into the existing core business and thereby creating a high-performance renal network including risk based models and by the development of chronic care centers in the International segment, the company expects a significant improvement of patient care outcomes. Fresenius Medical Care plans to build this business segment and expects revenue from Care Coordination to grow from 3% of total revenue in 2013 to about 18% in 2020.

Outlook

The company expects revenue to be at around $15.2 billion in 2014, translating into a growth rate of around 4%.

Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA is expected to be between $1.0 billion and $1.05 billion in 2014. The company initiated a global efficiency program designed to enhance the company's performance over a multi-year period. Potential cost savings before income taxes of up to $60 million generated from this program are not included in the outlook for 2014.

For 2014, the company expects to spend around $900 million on capital expenditures and around $400 million on acquisitions. The debt/EBITDA ratio is expected to be equal to or below 3.0 by the end of 2014.

Conference Call

Fresenius Medical Care will hold a conference call to discuss the results of the first quarter 2014 on Tuesday, May 6, 2014, 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, expects continued strong growth in the coming years. At today's Annual General Meeting in Frankfurt, Rice Powell, chief executive officer, confirmed the long-term targets announced in April. The company expects sales to almost double to about $28 billion in 2020 from $14.6 billion last year. This represents a cumulative average growth rate (CAGR) of about 10 percent annually between 2015 and 2020, with high-single-digit increases in net income and earnings per share over the same period.

"These are ambitious targets – no question," Rice Powell said in his speech to shareholders. "But with our unwavering focus on growth and efficiency, I am certain that we will meet the company's long-term goals. We are the global leaders in dialysis, and our company is continuing to shape the future of the dialysis industry. By expanding into dialysis-related medical services we will be able to better coordinate care, to the benefit of all our patients."

Rice Powell also confirmed the company's guidance for 2014. Fresenius Medical Care expects revenue to be at around $15.2 billion, translating into a growth rate of around 4%. Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA is expected to be between $1.0 billion and $1.05 billion in 2014.

With a large majority of 99.85%, shareholders approved Fresenius Medical Care's 17th consecutive dividend increase. The dividend will be raised to €0.77 from €0.75 per ordinary share.

A shareholder majority of over 99% approved the actions of both the Management and Supervisory Boards in 2013.

At the annual general meeting, 74.28% of the subscribed capital was represented.

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, has entered into an agreement to invest approximately $600 million in Sound Inpatient Physicians, Inc. (www.soundphysicians.com) to become majority shareholder as part of a recapitalization of Sound, alongside existing investor TowerBrook Capital Partners and Sound's senior leadership team. The transaction is subject to customary closing conditions and is expected to close within the next ten days.

Sound Physicians has grown rapidly to more than 1,000 physician partners providing care in over 100 hospitals and post-acute care centers across the United States. It has pioneered a consistent, patient-centered approach that relies on experienced physician leadership and a web-based workflow platform. The focus on consistent processes and standards supporting highly trained clinical experts positions Sound Physicians as the partner of choice for efficient and effective performance throughout the acute and post-acute episode of care.

"Fresenius Medical Care shares with Sound Physicians a long record of improving health outcomes for patients and reducing costs to the health care system," said Ron Kuerbitz, Chief Executive Officer of Fresenius Medical Care North America. "This investment in Sound's inpatient expertise is a significant step forward in our care coordination strategy and augments our network of 2,150 dialysis clinics, 53 vascular care centers, renal pharmacy and full service and specialty laboratories to help us better address the full spectrum of our patients' health care needs. We have a singular focus: improving the quality of life of every patient every day. We believe the doctors and nurses at Sound Physicians share this commitment and we are excited to partner with them to deliver better results to patients."

"We are excited to have Fresenius Medical Care as our new strategic partner," said Robert A. Bessler, MD, Sound's Chief Executive Officer. "They bring decades of experience in managing chronic disease for dialysis patients and have improved quality, patient satisfaction and reduced the overall cost of care for this population. Their values and business goals are closely aligned with Sound Physicians and our hospital partners. I look forward to benefiting from their leadership in advancing innovation and improvement in the acute episode of care in hospitals and post-acute arenas throughout the U.S."

The Company expects Sound Physicians to generate approximately $500 million in revenue in the next twelve months and expects the investment to be accretive to operating earnings within the first year after closing, subject to adjustment for transaction costs. It will fund the investment through available cash and committed credit facilities, supplemented by additional debt financing.

Fresenius Medical Care also disclosed that it has acquired MedSpring Urgent Care Centers (www.medspring.com), with operations in Illinois and Texas. MedSpring's 14 urgent care centers provide convenient, consistent, high-quality primary care and customer service every day.

"MedSpring's commitment to providing primary care to patients where and when they need it most is a critical component of a truly effective 21st century health care network," said Kuerbitz. "We look forward to working with them to help expand their existing footprint and continue to provide patients with a more complete set of health care options."

"Every day, our associates succeed in delivering quality, cost-effective care our patients love, and it shows in our satisfaction scores where we receive 4.9 out of 5 stars," explained Jon Belsher, M.D., MedSpring's Chief Medical Officer. "We are excited about the potential to continue to improve patient care as part of the broader Fresenius Medical Care network."

• Second quarter shows accelerated growth
• Improvement of underlying operating performance driven by both the North American as well as International segment
• Implemented further initiatives in the second quarter to expand the care coordination activities
• Company remains on track to achieve full year guidance

Second quarter 2014 key figures:

Net revenue: $3,835 million, +6%
Operating income (EBIT): $556 million, +2%
Net income¹: $234 million, -11%
Net income adjusted²: $252 million, -4%
Basic earnings per share: $0.77, -10%
Adjusted earnings per share²: $0.83, -3%


First half 2014 key figures:

Net revenue: $7,398 million, +5%
Operating income (EBIT): $1,001 million, -4%
Net income¹: $439 million, -10%
Net income adjusted²: $457 million, -6%
Basic earnings per share: $1.46, -9%
Adjusted earnings per share²: $1.52, -5% 

¹ attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
² adjusted for an unfavorable tax impact of USD 18 million in the second quarter of 2014

Rice Powell, chief executive officer of Fresenius Medical Care stated: "The second quarter showed sequentially enhanced revenue growth and improved strong operating performance. We expect the organic growth to continue in the second half of the year and are confident to meet our guidance for the full year as well as our cost savings target of up to $60 million before tax for 2014. With our recent acquisitions of Sound Physicians and MedSpring Urgent Care we made important steps in our strategy of expanding our service network to achieve excellent patient care in a more coordinated and integrated model."


Second quarter 2014

Revenue

Net revenue for the second quarter of 2014 increased by 6% to $3,835 million (+7% at constant currency) compared to the second quarter of 2013. Organic revenue growth worldwide was 5%. Dialysis services revenue grew by 7% to $2,949 million (+8% at constant currency) and dialysis product revenue increased by 2% to $886 million (+1% at constant currency) compared to the second quarter of 2013.

North America revenue for the second quarter of 2014 increased by 6% to $2,521 million. Organic revenue growth was 4%. Dialysis services revenue grew by 7% to $2,316 million with a same store treatment growth of 3.3%. Dialysis product revenue decreased by 6% to $205 million.

International revenue increased by 6% to $1,297 million (+7% at constant currency). Organic revenue growth was 5%. Dialysis services revenue increased by 8% to $633 million (+12% at constant currency). Dialysis product revenue increased by 3% to $664 million (+3% at constant currency).


Earnings

Operating income (EBIT) for the second quarter of 2014 increased by 2% to $556 million compared to $544 million in the second quarter of 2013. Operating income for North America increased by 3% in the second quarter of 2014 to $401 million compared to $391 million in the second quarter of 2013. In the International segment, operating income for the second quarter of 2014 increased by 11% to $243 million compared to $218 million in the second quarter of 2013.

Net interest expense for the second quarter of 2014 was $98 million, compared to $103 million in the second quarter of 2013.

Income tax expense was $177 million for the second quarter of 2014 which translates into an effective tax rate of 38.7%. This compares to income tax expense of $144 million and a tax rate of 32.6% for the second quarter of 2013. The tax rate in the second quarter of 2014 was influenced by a special tax impact which resulted in an expense of $18 million in the second quarter of 2014. On an adjusted basis the tax rate for the second quarter of 2014 was 34.8%. For the full year, the company expects a tax rate of around 34%.

Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA for the second quarter of 2014 was $234 million, a decrease of 11% compared to the corresponding number of $263 million for the second quarter of 2013. On an adjusted basis net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA for the second quarter of 2014 was $252 million.

Basic earnings per share (EPS) for the second quarter of 2014 was $0.77, a decrease of 10% compared to the corresponding number for the second quarter of 2013. On an adjusted basis EPS for the second quarter of 2014 was $0.83. The weighted average number of shares outstanding for the second quarter of 2014 was approximately 301.8 million shares, compared to 306.3 million shares for the second quarter of 2013. The decrease in shares outstanding resulted from last year`s share buy-back program, partially offset by stock option exercises in the past twelve months.


Cash flow

In the second quarter of 2014, the company generated $449 million in net cash provided by operating activities, a decrease of 14% compared to the corresponding figure of last year and representing 12% of revenue.

A total of $218 million was spent for capital expenditures, net of disposals. Free cash flow was $231 million compared to $352 million in the second quarter of 2013.

A total of $297 million in cash was spent for acquisitions and investments, net of divestitures. Free cash flow after investing activities was -$66 million, compared to $339 million in the second quarter of 2013.


First half 2014

Revenue and earnings

Net revenue for the first half of 2014 increased by 5% to $7,398 million (+6% at constant currency) compared to the first half of 2013. Organic revenue growth worldwide was 4%.

Operating income (EBIT) for the first half of 2014 decreased by 4% to $1,001 million compared to $1,038 million in the first half of 2013.

Net interest expense for the first half of 2014 was $195 million compared to $207 million in the first half of 2013.

Income tax expense for the first half of 2014 was $278 million which translates into an effective tax rate of 34.5%. This compares to income tax expense of $273 million and a tax rate of 32.8% for the first half of 2013. On an adjusted basis the tax rate for the first half of 2014 was 32.3%. For the full year, the company expects a tax rate of around 34%.

For the first half of 2014, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA was $439 million, down by 10% from the corresponding number of $488 million for the first half of 2013. On an adjusted basis net income attributable to shareholders of Fresenius Medical Care AG&Co. KGaA for the first half of 2014 was $457 million.

In the first half of 2014 basic earnings per share (EPS) was $1.46, a decrease of 9% compared to the corresponding number for the first half of 2013. On an adjusted basis EPS for the first half of 2014 was $1.52. The weighted average number of shares outstanding during the first half of 2014 was approximately 301.6 million shares.


Cash flow

In the first half of 2014, the company generated $562 million in net cash provided by operating activities compared to $841 million for the same period in 2013, representing 8% of revenue.

A total of $415 million was spent for capital expenditures, net of disposals. Free cash flow for the first half of 2014 was $147 million compared to $522 million in the first half of 2013.

A total of $432 million in cash was spent for acquisitions and investments, net of divestitures. Free cash flow after investing activities was -$285 million, compared to $438 million in the first half of 2013.


Employees

As of June 30, 2014, Fresenius Medical Care had 94,401 employees (full-time equivalents) worldwide, compared to 87,944 employees at the end of June 2013. This increase of more than 6,400 employees was attributable to our continued organic growth as well as to acquisitions.


Balance sheet structure

The company´s total assets were $24,145 million (Dec. 31, 2013: $23,120 million), an increase of 4%. Current assets increased by 8% to $6,805 million (Dec. 31, 2013: $6,287 million). Non-current assets were $17,340 million (Dec. 31, 2013: $16,833 million), an increase of 3%. Total equity increased by 2% to $9,650 million (Dec. 31, 2013: $9,485 million). The equity ratio was 40% as compared to 41% at the end of 2013. Total debt was $9,139 million (Dec. 31, 2013: $8,417 million). As of June 30, 2014, the debt/EBITDA ratio was 3.1 (Dec. 31, 2013: 2.8).

Please refer to the attachments for a complete overview of the results for the second quarter and first half of 2014.


Strategic investments in Care Coordination

Fresenius Medical Care has entered into an agreement to invest approximately $600 million in Sound Inpatient Physicians Inc. to become majority shareholder in a network of more than 1,000 physician partners providing care in over 100 hospitals and post-acute care centers across the United States. The transaction of Sound Inpatient Physicians Inc. has been closed in July 2014.

Fresenius Medical Care also acquired MedSpring Urgent Care Centers, with operations in Illinois and Texas. MedSpring's 14 urgent care centers provide high-quality primary care and customer service.

Thereby the company executes on the strategy disclosed earlier this year to invest in care coordination around dialysis. The investment clearly advances the commitment to address the full spectrum of care for chronically ill patients.


Outlook

The company expects revenue to be at around $15.2 billion in 2014, translating into a growth rate of around 4%. This outlook excludes revenue of about $500 million from acquisitions.

Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA is expected to be unchanged between $1.0 billion and $1.05 billion in 2014. The company initiated a global efficiency program designed to enhance the company's performance over a multi-year period. Potential cost savings before income taxes of up to $60 million generated from this program are not included in the outlook for 2014.

For 2014, the company expects to spend around $900 million on capital expenditures. Reflecting mainly the latest acquisitions the company now expects an acquisition spending of around $1.0 billion for fiscal year 2014 (previously $400 million). As a consequence the debt/EBITDA ratio is expected to be around 3.0 by the end of 2014.


Conference call

Fresenius Medical Care will hold a conference call to discuss the results of the second quarter and first half on Thursday, July 31, 2014, 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, has launched a new cycler that delivers a Peritoneal Dialysis (PD) therapy tailored to individual patients' needs. sleep•safe harmony was presented to leading specialists from around the world at two scientific congresses in Berlin and Madrid on September 6 and 7. The device is available from now on in selected countries including Germany, Spain, Great Britain and France.

Dialysis patients have chronic kidney disease in common, but they still differ in many ways – by age, height, weight, stage of illness and residual renal function, etc. All these differences have a decisive impact on the required treatment. If the treatment is closely tailored to the needs of the individual patient, the patent's overall feeling of health and well-being is increased. Compared with previous models, sleep•safe harmony is even easier to operate, and makes it possible for more patients to tailor their own treatments. PD is a therapy that can be conducted at home, if the patient meets certain medical conditions and is willing to learn how to perform the treatment.

sleep•safe harmony has animations built into the machine's screen that guide the patient through the procedure, so that the patient is assured that all the treatment steps are being performed as planned. This contributes to the improvement of patient compliance and saves training time. Thereby, the new device strongly supports patients in performing their treatment on their own.

Specifically, Adapted APD (Automated PD) therapy with sleep•safe harmony enables physicians and nurses to combine sequences of short dwells and small fill volumes with long dwells and large fill volumes and varying glucose concentrations. Adapted APD is a new way of prescribing PD that optimizes ultrafiltration and clearance within one PD session. sleep•safe harmony enables complete individualization for a fully personalized treatment, as well as guided prescription on the cycler or via PatientOnLine software.

Moreover, all therapies carried out with sleep•safe harmony are supported by the innovative Fresenius Medical Care FlexPoint technology. By controlling various settings, this technology helps to achieve optimized treatment efficiency, keep treatment within the prescribed time, and minimize potential alarms while benefiting the patient's well-being and security by avoiding overfilling.

In addition, the sleep•safe harmony cycler offers advanced features aimed at improving patient care. The device's key features are: a large touch screen with animations guiding through each treatment step; guided prescriptions directly on the device; optimized fluid usage (no extra volume for priming needed); convenient handling through automatic connection and barcode recognition of fluid bags, integrated handles and PatientCardPlus with more than 12 months capacity of treatment data, and simple installation via plug & use – due to double insulation, no transformer is needed.

For more information, visit www.sleepsafe-harmony.com.

 

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