- Organic revenue growth of +2.3% supported by both segments Care
Delivery and Care Enablement
- Operating income1 and operating income
margin1 increase driven by Care Enablement
- Additional FME25 savings of EUR 57
million achieved and on track to reach the upper end of the
full year savings target range
- Further divestitures closed as execution of portfolio
optimization program continues
- Net financial debt and net leverage ratio further improved
- FY 2024 outlook confirmed
BAD HOMBURG, Germany, July 30,
2024 /PRNewswire/ -- "In the second quarter, we
further improved our financial performance while executing against
our strategic plan and the company transformation. This quarter is
another important proof point for the operational turnaround as we
remain focused to deliver on our targets", said Helen Giza, Chief Executive Officer of Fresenius
Medical Care AG. "Our operating income margin progressed toward our
2025 margin target band, as Care Enablement increased its
profitability. In Care Delivery, U.S. same market treatment growth
improved sequentially despite continued elevated mortality. In both
segments, we accelerated FME25 savings against plan and are now on
track to reach the upper end of our FME25 savings target range for
2024." Giza added: "In light of the developments in the first half
year, we confirm our financial outlook for the full year 2024."
|
Key figures
(unaudited)
|
|
|
|
Q2 2024
|
Q2 2023
|
Growth
|
Growth
|
H1 2024
|
H1 2023
|
Growth
|
Growth
|
|
EUR m
|
EUR m
|
yoy
|
yoy, cc
|
EUR m
|
EUR m
|
yoy
|
yoy, cc
|
|
Revenue
|
4,766
|
4,825
|
-1 %
|
-2 %
|
9,491
|
9,529
|
0 %
|
0 %
|
|
on outlook
base1
|
4,743
|
4,741
|
|
0 %
|
9,565
|
9,360
|
|
+2 %
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
425
|
357
|
+19 %
|
+21 %
|
671
|
618
|
+9 %
|
+10 %
|
|
on outlook
base1
|
433
|
400
|
|
+8 %
|
849
|
738
|
|
+15 %
|
|
|
|
|
|
|
|
|
|
|
Net
income2
|
187
|
140
|
+33 %
|
+34 %
|
258
|
227
|
+14 %
|
+15 %
|
|
on outlook
base1
|
207
|
176
|
|
+18 %
|
405
|
322
|
|
+26 %
|
|
|
|
|
|
|
|
|
|
|
Basic EPS
(EUR)
|
0.64
|
0.48
|
+33 %
|
+34 %
|
0.88
|
0.77
|
+14 %
|
+15 %
|
|
on outlook
base1
|
0.70
|
0.60
|
|
+18 %
|
1.38
|
1.10
|
|
+26 %
|
|
|
|
|
|
|
|
|
|
|
yoy = year-on-year,
cc = at constant currency, EPS = earnings per share
|
Focused execution against the strategic plan
In the second quarter, the FME25 transformation program
continued its momentum, delivering EUR 57
million additional sustainable savings while related
one-time costs amounted to EUR 40
million. With the progress in the second quarter, Fresenius
Medical Care is on track to reach the upper end of the targeted
additional sustainable savings range of EUR
100 to 150 million by year end 2024, totaling to
EUR 650 million by year end 2025.
Moreover, Fresenius Medical Care is executing its portfolio
optimization plan to exit non-core and dilutive assets. During the
second quarter, the company closed the divestment of Cura Day
Hospitals Group, Australia, and of
its dialysis clinic networks in Chile, Ecuador, Sub-Saharan Africa and Turkiye. The
divestitures of clinic operations in Curacao, Guatemala and Peru were closed in July. Special items
associated with portfolio optimization amounted to negative
EUR 15 million in the second
quarter.
All transactions that are currently signed as part of Fresenius
Medical Care's portfolio optimization plan are estimated to
negatively impact operating income by around EUR 250 million in the full year 2024 and will be
treated as special items. These transactions are expected to
generate cash proceeds of around EUR 650 million upon closing,
thereof approx. EUR 500 million have
been received by the end of the second quarter.
Revenue development impacted by execution against portfolio
optimization plan
Revenue decreased by 1% to EUR 4,766 million in the second quarter (-2% at
constant currency, +2% organic). Revenue on outlook
base1 grew by 0.1% compared to prior year. Divestitures
realized during 2023 and during the second quarter 2024 negatively
impacted the revenue development.
Care Delivery revenue decreased by 3% to
EUR 3,771 million (-3% at constant
currency, +2% organic) and by 1% on outlook base1.
In Care Delivery U.S., revenue increased by 1% (0% at constant
currency, +1% organic) and by 1% on outlook base1. A
growing value-based care business, reimbursement rate increases and
a favorable payor mix had a positive impact. Effects from elevated
mortality continued to weigh on U.S. same market treatment growth
in a year-over-year comparison, while sequential trends remain
encouraging. Adjusted for the exit from less profitable acute care
contracts (-0.2%), U.S. same market treatment growth came in flat
(-0.1%).
In Care Delivery International, revenue decreased by 18% (-18%
at constant currency, +3% organic) and by 12% on outlook
base1. This negative development was strongly driven by
divestments closed during the second quarter and partially offset
by organic growth. International same market treatment growth was
positive at 1.9%.
Care Enablement revenue grew by 3% to EUR 1,363 million (+3% at constant currency, +3%
organic) and by 3% on outlook base1 as positive
pricing momentum continues.
Within Inter-segment eliminations, revenue for products
transferred between the operating segments at fair market value
decreased by 1% to a deduction of EUR 368
million (-2% at constant currency).3
In the first half, revenue remained virtually unchanged at
EUR 9,491 million (0% at constant
currency, +3% organic) and on outlook base1 increased by
2%. Care Delivery revenue decreased by 1% to EUR 7,559 million (0% at constant currency, +4%
organic), with Care Delivery U.S. growing by 2% (+2% at constant
currency, +4% organic) and Care Delivery International decreasing
by 14% (-11% at constant currency, +3% organic). Care Enablement
revenue increased by 1% to EUR 2,660
million (+2% at constant currency, + 2% organic).
Inter-segment eliminations decreased by 1% to a deduction of
EUR 728 million (0% at constant
currency).
Operating margin improvement driven by Care
Enablement
Operating income increased by 19% to EUR
425 million in the second quarter (+21% at constant currency),
resulting in a margin of 8.9% (Q2 2023: 7.4%). Operating
income on outlook base1 increased by 8% to EUR 433 million, resulting in a margin of 9.1%
(Q2 2023: 8.4%). Divestitures realized during the second quarter
had a neutral effect on operating income.
Operating income in Care Delivery decreased by 14% to
EUR 332 million (-13% at constant
currency), resulting in a margin of 8.8% (Q2 2023: 9.9%). Operating
income on outlook base1 decreased by 7%, resulting
in a margin1 of 9.9% (Q2 2023: 10.6%). In-line with
expectations, the development was mainly driven by higher personnel
expenses and inflationary cost increases. Business growth and
savings from the FME25 program contributed positively to the
earnings development.
Operating income in Care Enablement strongly increased to
EUR 68 million (Q2 2023:
EUR 2 million), resulting in a margin
of 5.0% (Q2 2023: 0.1%). Operating income on outlook
base1 quadrupled compared to prior year, resulting
in a margin1 of 5.1% (Q2 2023: 1.3%). The strong
increase was driven by business growth and savings from the FME25
program, compensating inflationary cost increases and a negative
impact from foreign currency transaction.
Operating income for Corporate amounted to EUR 30 million (Q2 2023: EUR -25 million). Operating income on outlook
base1 amounted to EUR 0
million (Q2 2023: EUR -13
million).
In the first half, operating income increased by 9% up to
EUR 671 million (10% at constant
currency), resulting in a margin of 7.1% (H1 2023: 6.5%).
Divestitures realized during the first half had a slightly positive
impact on operating income. Operating income on outlook
base1 increased by 15% up to EUR
849 million, resulting in a margin of 8.9% (H1 2023: 7.9%).
In Care Delivery, operating income declined by 22% to EUR 521 million (-22% at constant currency),
resulting in a margin of 6.9% (H1 2023: 8.8%). Operating income
margin on outlook base1 improved to 9.6% (H1 2023:
9.2%). In Care Enablement, operating income strongly increased to
EUR 138 million (H1 2023:
EUR -23 million), resulting in a
margin of 5.2% (H1 2023: -0.9%). Operating income margin on outlook
base1 improved strongly to 5.5% (H1 2023: 3.1%).
Operating income for Corporate amounted to EUR 17 million (H1 2023: -15 million).
Net income2 increased by 33%
to EUR 187 million in the second quarter (+34% at constant
currency). Net income on outlook base1 increased by
18%.
In the first half, net income2 increased by 14% to
EUR 258 million (+15% at constant
currency). Net income on outlook base1 increased by
26%.
Basic earnings per share (EPS) increased by 33% to
EUR 0.64 (+34% at constant currency).
EPS on outlook base1 increased by 18% to EUR 0.70.
In the first half, EPS increased by 14% to EUR 0.88 (+15% at constant currency). EPS on
outlook base1 increased by 26% to EUR 1.38 .
Lower net financial debt and further improved net leverage
ratio
In the second quarter, Fresenius Medical Care generated
EUR 442 million of operating cash
flow (Q2 2023: EUR 1,007
million), resulting in a margin of 9.3% (Q2 2023: 20.9%).
The operating cash flow development was negatively impacted by
EUR 407 million, primarily as a
result of changing vendors post the cyber incident at Change
Healthcare. This negative cash impact is expected to be recovered
in Q3 2024. Additionally, the phasing of federal income tax
payments in the U.S. negatively impacted the development.
In the first half, operating cashflow amounted to EUR 570 million (H1 2023: EUR 1,150 million), resulting in a margin of 6.0%
(H1 2023: 12.1%).
Free cash flow4 amounted to
EUR 289 million in the second quarter
(Q2 2023:
EUR 852 million), resulting in a
margin of 6.1% (H1 2023: 17.7%). In the first half, Fresenius
Medical Care generated free cash flow of EUR
287 million (H1 2023: EUR 854
million), resulting in a margin of 3.0% (H1 2023: 9.0%).
Total net debt and lease liabilities were further
reduced to EUR 10,658 million (Q2
2023: EUR 11,714 million). At 3.1x,
the corresponding net leverage ratio (net debt/EBITDA) further
decreased towards the lower end of our self-imposed target
corridor.
Outlook
Fresenius Medical Care confirms its outlook for fiscal 2024 and
expects revenue to grow by a low- to mid-single digit percent rate
compared to prior year. The company expects operating income to
grow by a mid- to high-teens percent rate compared to prior
year.
The expected growth rates for 2024 are at constant currency,
excluding special items as well as the business impacts from closed
divestitures in 2023 and the settlement agreement with the U.S.
government (Tricare) in Q4 2023. The 2023 basis for the revenue
outlook is EUR 19,049 million and for
the operating income outlook is EUR 1,540
million.
The company also reconfirms its targets to achieve an operating
income margin of 10% to 14% by 2025. This excludes impacts from
portfolio changes.
Patients, clinics and employees
As of June 30, 2024, Fresenius
Medical Care treated 311,037 patients in 3,757 dialysis
clinics worldwide and had 113,639 employees
(headcount) globally, compared to 117,128 employees as of
March 31, 2024.
Media conference call
Fresenius Medical Care will host a media conference call to
discuss the results of the second quarter and first half of 2024
earnings today, July 30, 2024, at
09:30 a.m. CEST / 3:30 a.m. EDT. The media conference call is for
journalists who can register vial the following link: Registration.
Details on the media conference call are also available on the
Fresenius Medical Care website in the "Media" section: media call.
Attendees who would like to follow the presentation parallel to the
conference call, you can register here for the webcast. The
webcast will only be broadcasted in "listen only" mode.
Investor conference call
Fresenius Medical Care will host a conference call to discuss
the results of the second quarter and first half of 2024 today,
July 30, 2024, at 2:00 p.m. CEST / 8:00 a.m.
EDT. Details are available on the Fresenius Medical Care
website in the "Investors" section. A replay will be available
shortly after the call.
Please refer to our statement of earnings included at the end of
this news and to the attachments as separate PDF files for a
complete overview of the results of the second quarter and first
half of 2024. Our 6-K disclosure provides more details.
About Fresenius Medical Care:
Fresenius Medical Care is the world's leading provider of products
and services for individuals with renal diseases of which around
4.1 million patients worldwide regularly undergo dialysis
treatment. Through its network of 3,757 dialysis clinics, Fresenius
Medical Care provides dialysis treatments for approx. 311,000
patients around the globe. Fresenius Medical Care is also the
leading provider of dialysis products such as dialysis machines or
dialyzers. Fresenius Medical Care is listed on the Frankfurt Stock
Exchange (FME) and on the New York Stock Exchange (FMS).
For more information visit the company's website
at www.freseniusmedicalcare.com.
Disclaimer:
This release contains forward-looking statements that are subject
to various risks and uncertainties. Actual results could differ
materially from those described in these forward-looking statements
due to various factors, including, but not limited to, changes in
business, economic and competitive conditions, legal changes,
regulatory approvals, impacts related to the COVID-19 pandemic
results of clinical studies, foreign exchange rate fluctuations,
uncertainties in litigation or investigative proceedings, and the
availability of financing. These and other risks and uncertainties
are detailed in Fresenius Medical Care's reports filed with the
U.S. Securities and Exchange Commission. Fresenius Medical Care
does not undertake any responsibility to update the forward-looking
statements in this release.
|
1 Revenue
and operating income outlook, as referred to in the 2024 outlook,
are both at constant currency, excluding special items as well as
the business impact from closed divestitures in 2023 and the
settlement agreement with the U.S. government (Tricare) in Q4
2023. For FY 2023 and 2024, special items include costs related to
the FME25 program, the Humacyte remeasurements, the legal form
conversion costs and effects from legacy portfolio optimization.
For further details please see the reconciliation attached to the
Press Release.
|
|
|
2 Net income
attributable to shareholders of Fresenius Medical Care
AG
|
|
|
3 The
company transfers products between segments at fair market value.
The associated internal revenues and expenses and all other
consolidation of transactions are included within "Inter-segment
eliminations".
|
|
|
4 Net cash
provided by / used in operating activities, after capital
expenditures, before acquisitions/divestitures, investments, and
dividends
|
|
Statement of
earnings
|
|
Three months ended June
30,
|
|
in € million, except
share data, unaudited
|
2024
|
2023
|
Change
|
Change
at cc
|
|
|
|
|
|
|
Revenue
|
4,766
|
4,825
|
-1.2 %
|
-1.7 %
|
|
Revenue (outlook
base)1
|
4,743
|
4,741
|
|
0.1 %
|
|
|
Costs of
revenue
|
3,600
|
3,628
|
-0.8 %
|
-1.3 %
|
|
Selling, general and
administrative expense
|
771
|
775
|
-0.5 %
|
-1.0 %
|
|
Research and
development expense
|
46
|
57
|
-20.3 %
|
-20.7 %
|
|
Income from equity
method investees
|
(33)
|
(48)
|
-32.4 %
|
-32.4 %
|
|
Other operating
income
|
(228)
|
(76)
|
200.6 %
|
201.2 %
|
|
Other operating
expense
|
185
|
132
|
40.0 %
|
35.3 %
|
|
Operating
income
|
425
|
357
|
19.1 %
|
20.5 %
|
|
Operating income
(outlook base)1
|
433
|
400
|
|
8.3 %
|
|
|
Interest expense,
net
|
85
|
81
|
5.9 %
|
4.5 %
|
|
Income before
taxes
|
340
|
276
|
23.0 %
|
25.2 %
|
|
Income tax
expense
|
99
|
81
|
22.0 %
|
28.1 %
|
|
Net
income
|
241
|
195
|
23.3 %
|
24.0 %
|
|
Net income attributable
to noncontrolling interests
|
54
|
55
|
-2.1 %
|
-2.8 %
|
|
Net
income2
|
187
|
140
|
33.2 %
|
34.4 %
|
|
Net income2
(outlook base)1
|
207
|
176
|
|
17.5 %
|
|
|
|
|
|
|
Weighted average number
of shares
|
293,413,449
|
293,413,449
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
€0.64
|
€0.48
|
33.2 %
|
34.4 %
|
|
Basic earnings per
share (outlook base)1
|
€0.70
|
€0.60
|
|
17.5 %
|
|
|
In percent of
revenue
|
|
|
|
|
|
Operating income
margin
|
8.9 %
|
7.4 %
|
|
|
|
Operating income margin
(outlook base)1
|
9.1 %
|
8.4 %
|
|
|
|
|
1 Outlook
base as referred to the 2024 outlook, presented at constant
currency, excluding special items, business impacts from closed
divestitures in 2023 and the Tricare settlement in Q4 2023. For a
reconciliation, please refer to the table at the end of the press
release.
|
|
2
Attributable to shareholders of FME AG.
|
|
Statement of
earnings
|
|
|
Six months ended June
30,
|
|
in € million, except
share data, unaudited
|
2024
|
2023
|
Change
|
Change
at cc
|
|
Revenue
|
9,491
|
9,529
|
-0.4 %
|
0.4 %
|
|
Revenue (outlook
base)1
|
9,565
|
9,360
|
|
2.2 %
|
|
|
|
|
|
|
Costs of
revenue
|
7,151
|
7,183
|
-0.4 %
|
0.3 %
|
|
Selling, general and
administrative expense
|
1,547
|
1,557
|
-0.7 %
|
-0.2 %
|
|
Research and
development expense
|
93
|
113
|
-17.3 %
|
-17.3 %
|
|
Income from equity
method investees
|
(61)
|
(76)
|
-18.9 %
|
-18.9 %
|
|
Other operating
income
|
(341)
|
(193)
|
76.6 %
|
76.5 %
|
|
Other operating
expense
|
431
|
327
|
31.8 %
|
32.4 %
|
|
Operating
income
|
671
|
618
|
8.6 %
|
10.0 %
|
|
Operating income
(outlook base)1
|
849
|
738
|
|
15.1 %
|
|
|
|
|
|
|
Interest expense,
net
|
174
|
163
|
6.4 %
|
6.8 %
|
|
Income before
taxes
|
497
|
455
|
9.4 %
|
11.1 %
|
|
Income tax
expense
|
139
|
126
|
10.2 %
|
14.3 %
|
|
Net
income
|
358
|
329
|
9.1 %
|
9.9 %
|
|
Net income attributable
to noncontrolling interests
|
100
|
102
|
-1.3 %
|
-1.1 %
|
|
Net
income2
|
258
|
227
|
13.8 %
|
14.9 %
|
|
Net income2
(outlook base)1
|
405
|
322
|
|
25.6 %
|
|
Weighted average number
of shares
|
293,413,449
|
293,413,449
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
€0.88
|
€0.77
|
13.8 %
|
14.9 %
|
|
Basic earnings per
share (outlook base)1
|
€1.38
|
€1.10
|
|
25.6 %
|
|
In percent of
revenue
|
|
|
|
|
|
Operating income
margin
|
7.1 %
|
6.5 %
|
|
|
|
Operating income margin
(outlook base)1
|
8.9 %
|
7.9 %
|
|
|
|
|
1 Outlook
base as referred to the 2024 outlook, presented at constant
currency, excluding special items, business impacts from closed
divestitures in 2023 and the Tricare settlement in Q4 2023. For a
reconciliation, please refer to the table at the end of the press
release.
|
|
2
Attributable to shareholders of FME AG.
|
|
Reconciliation of
non-IFRS financial measures to the most directly comparable
IFRS Accounting Standards financial measures for
comparability with the Company´s outlook (outlook
base)
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended June
30,
|
Six months ended June
30,
|
|
in € million,
unaudited
|
2024
|
2023
|
2024
|
2023
|
|
|
|
|
|
|
Operating
performance (outlook base)
|
|
|
|
|
|
These items are
excluded to ensure comparability of the figures presented with the
Company's financial targets which have been defined excluding
special items and at constant currency.
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
4,766
|
4,825
|
9,491
|
9,529
|
|
Divestitures1
|
—
|
(84)
|
—
|
(169)
|
|
Revenue excl. 2023
divestitures
|
4,766
|
4,741
|
9,491
|
9,360
|
|
Currency translation
effects
|
(23)
|
—
|
74
|
—
|
|
Revenue (outlook
base)
|
4,743
|
4,741
|
9,565
|
9,360
|
|
|
|
|
|
|
Operating
income
|
425
|
357
|
671
|
618
|
|
FME25
Program
|
40
|
25
|
67
|
51
|
|
Legal Form Conversion
Costs
|
2
|
5
|
3
|
7
|
|
Legacy Portfolio
Optimization2
|
15
|
10
|
158
|
94
|
|
Humacyte
Remeasurements
|
(46)
|
4
|
(61)
|
(15)
|
|
Sum of special
items
|
11
|
44
|
167
|
137
|
|
Divestitures1
|
—
|
(1)
|
—
|
(17)
|
|
Sum of special items
and 2023 divestitures
|
11
|
43
|
167
|
120
|
|
Operating income excl.
special items and 2023 divestitures
|
436
|
400
|
838
|
738
|
|
Currency translation
effects
|
(3)
|
—
|
11
|
—
|
|
Operating income
(outlook base)
|
433
|
400
|
849
|
738
|
|
|
|
|
|
|
Net
income3
|
187
|
140
|
258
|
227
|
|
FME25
Program
|
29
|
20
|
49
|
40
|
|
Legal Form Conversion
Costs
|
1
|
4
|
2
|
5
|
|
Legacy Portfolio
Optimization2
|
29
|
8
|
136
|
68
|
|
Humacyte
Remeasurements
|
(34)
|
3
|
(45)
|
(11)
|
|
Sum of special
items
|
25
|
35
|
142
|
102
|
|
Divestitures1
|
—
|
1
|
—
|
(7)
|
|
Sum of special items
and 2023 divestitures
|
25
|
36
|
142
|
95
|
|
Net income3
excl. special items and 2023 divestitures
|
212
|
176
|
400
|
322
|
|
Currency translation
effects
|
(5)
|
—
|
5
|
—
|
|
Net income3
(outlook base)
|
207
|
176
|
405
|
322
|
|
|
|
|
|
|
1 Business
impacts from closed divestitures in 2023.
|
|
|
|
|
|
2 2024:
mainly comprise the impairment of intangible and tangible assets
resulting from the measurement of assets held for sale as well as
losses from divestitures; 2023: mainly comprise the derecognition
of capitalized development costs and the impairment of intangible
assets (licenses and distribution rights) as well as termination
costs (including certain contractual obligation expenses) related
to a dialysis cycler development program which was discontinued in
the first quarter of 2023 and other impacts related to agreed-upon
divestitures in 2023.
|
|
3
Attributable to shareholders of FME AG.
|
|
|
Media contact
Christine
Peters
T +49 160 60 66 770
christine.peters@freseniusmedicalcare.com
Contact for analysts and investors
Dr. Dominik Heger
T +49 6172 609-2601
dominik.heger@freseniusmedicalcare.com
www.freseniusmedicalcare.com
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SOURCE Fresenius Medical Care Holdings, Inc.