• Higher than anticipated COVID-19-related excess mortality, but declining throughout the quarter
• Earnings development affected by ongoing significantly elevated labor costs compounded by effects from Omicron in Health Care Services and by increased material and logistics costs in Health Care Products 
• Earnings development in EMEA additionally impacted by the war in Ukraine
• Financial targets for FY 2022 confirmed 

Rice Powell, Chief Executive Officer of Fresenius Medical Care, said: “When we see what is happening in Ukraine, it is again above all the human tragedy that leaves us deeply saddened. I am incredibly thankful and proud of all who continue to work tirelessly to ensure patient care and the holding up of our local operations under these outstandingly difficult circumstances. Although it is difficult to talk about numbers with these images in mind, I have to say that in addition, Omicron has affected the quarter heavily. This resulted in high excess mortality among our patients and significantly elevated labor costs in the U.S. to manage isolation clinics and shifts. We were able to compensate this and delivered the quarter in line with our expectations. Based on a strong decline in excess mortality in February and March, we confirm our financial targets for 2022.”

Higher than expected COVID-19-related excess mortality at the beginning of the year

COVID-19-related excess mortality among Fresenius Medical Care’s patients amounted to approximately 2,310 in the first quarter of 2022 (Q1 2021: ~3,200; Q2 2021: ~1,900; 
Q3 2021: ~2,900; Q4 2021: ~2,000³). It significantly declined in February and March in line with infection rates, but on a quarterly basis still exceeded the originally anticipated level. This resulted in an increased need for isolation clinics and shifts and limited the Company’s ability to mitigate the impacts from labor shortage and wage inflation in the U.S. market.
COVID-19-related excess mortality accumulated to approximately 9,000 patients over the past twelve months and to approximately 22,600 since the start of the pandemic. 
The overall estimated adverse effect of accumulated COVID-19-related excess mortality on organic growth in the Health Care Services business amounted to around 290 basis points in the first quarter. 
 

 ¹ 2021: costs related to the FME25 program; 2022: costs related to the FME25 program and impacts related to the war in Ukraine
 ² Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
 ³ Historical excess mortality updated for late entries

War in Ukraine impacting business development

The war in Ukraine is affecting Fresenius Medical Cares' dialysis operations and patient care in the country itself, but also caused higher bad debt expenses in Russia and Ukraine. The direct adverse effect of the war in Ukraine amounted to EUR 22 million at operating income level in the first quarter and is treated as a special item. Fresenius Medical Care will continue to monitor closely the potential effects of the war as well as the general impact of the challenging inflationary macroeconomic environment.

First quarter earnings development in line with expectations

Revenue increased by 8% to EUR 4,548 million (+3% at constant currency, +2% organic).

Health Care Services revenue increased by 8% to EUR 3,607 million (+3% at constant currency, +1% organic). At constant currency, this was mainly driven by organic growth, which was achieved despite the adverse impact of COVID-19, the partial reversal of an accrual related to a revenue recognition adjustment for accounts receivable in legal dispute and contributions from acquisitions.

Health Care Products revenue increased by 6% to EUR 941 million (+3% at constant currency, +3% organic). Constant currency growth was mainly driven by higher sales of in-center disposables and renal pharmaceuticals. This was partially offset by lower sales of machines for chronic treatment.

Operating income decreased by 27% to EUR 348 million (-30% at constant currency), resulting in a margin of 7.6% (Q1 2021: 11.3%). Operating income excluding special items, i.e. costs incurred for FME25 and the impacts related to the war in Ukraine, declined by 15% to EUR 403 million (-19% at constant currency), resulting in a margin of 8.9% (Q1 2021: 11.3%). At constant currency, the decline was mainly due to higher labor costs, adverse COVID-19-related effects, as well as inflationary and supply chain cost increases. These effects were only partially mitigated by the partial reversal of an accrual related to a revenue recognition adjustment for accounts receivable in legal dispute.

Net income² decreased by 37% to EUR 157 million (-39% at constant currency). Excluding special items, net income declined by 20% to EUR 200 million (-23% at constant currency), mainly due to the mentioned negative effects on operating income.

Basic earnings per share (EPS) decreased by 37% to EUR 0.54 (-39% at constant currency). EPS excluding special items declined by 20% to EUR 0.68 
(-23% at constant currency).

Cash flow development

In the first quarter, Fresenius Medical Care generated EUR 159 million of operating cash flow (Q1 2021: EUR 208 million), resulting in a margin of 3.5% (Q1 2021: 4.9%). The decrease was mainly due to continued recoupment of the U.S. government’s payments received in 2020 under the CARES Act and a decrease in net income, partially offset by a favorable impact from trade accounts and other receivables.

Free cash flow⁴  amounted to EUR -1 million (Q1 2021: EUR 29 million) in the first quarter, resulting in a margin of 0.0% (Q1 2021: 0.7%).

Regional developments

In North America, revenue increased by 9% to EUR 3,171 million (+2% at constant currency, +0% organic). At constant currency, this was mainly driven by organic growth in the Health Care Product business and the reversal of an accrual related to a revenue recognition adjustment for accounts receivable in legal dispute. This was partially offset by the adverse COVID-19 impact on the Health Care Services business.

Operating income in North America decreased by 24% to EUR 304 million (-29% at constant currency), resulting in a margin of 9.6% (Q1 2021: 13.7%). At constant currency, the decline in operating income was mainly due to higher labor costs, the adverse impact of COVID-19, inflationary and supply chain cost increases as well as costs related to FME25. This was only partially offset by the partial reversal of an accrual related to a revenue recognition adjustment for accounts receivable in legal dispute.

Revenue in the EMEA region increased by 1% to EUR 674 million in the first quarter (+3% at constant currency, +2% organic). At constant currency, this was mainly due to organic growth in the Health Care Services business, which was achieved despite the negative impact of COVID-19.

Operating income in EMEA decreased by 23% to EUR 61 million (-19% at constant currency), resulting in a margin of 9.1% (Q1 2021: 11.9%). The decline was mainly due to the impact related to the war in Ukraine.

⁴ Net cash provided by / used in operating activities, after capital expenditures, before acquisitions, investments, and dividends

In Asia-Pacific, revenue increased by 8% to EUR 507 million (+4% at constant currency, +4% organic). At constant currency, this was mainly driven by organic growth in the Health Care Products business.

Operating income increased by 16% to EUR 99 million (+14% at constant currency), resulting in a margin of 19.5% (Q1 2021: 18.1%). At constant currency, this was mainly due to a gain from the sale of clinics, favorable currency transaction effects and growth in the Health Care Products business.

Latin America revenue increased by 15% to EUR 183 million (+15% at constant currency, +16% organic), mainly driven by strong organic growth in both the Health Care Services and Health Care Products business.

Operating income improved by 68% to EUR 11 million (+51% at constant currency), resulting in a margin of 6.1% (Q1 2021: 4.2%). This was mainly due to a favorable currency transaction effect, which was partially offset by inflationary cost increases.

Patients, clinics and employees

As of March 31, 2022, Fresenius Medical Care treated 343,493 patients in 4,153 dialysis clinics worldwide and had 122,635 employees (full-time equivalents) globally, compared to 124,995 employees as of March 31, 2021.

Outlook

Based on the results for the first quarter, which were in line with the Company’s expectations, Fresenius Medical Care confirms its financial targets for 2022. The earnings improvement will be driven by expected business growth, PPE cost reduction and FME25 savings. The Company expects revenue and net income to grow at low to mid-single digit percentage rates in FY 2022.⁵  

⁵ These targets are based on the 2021 results excluding the costs related to FME25 of EUR 49 million (for Net Income). They are based on the assumptions outlined in the Press Release on the Q4 and FY 2021 results (Feb. 22, 2022), in constant currency and exclude special items. Special items include further costs related to FME25, the impacts related to the war in Ukraine, and other effects that are unusual in nature and have not been foreseeable or not foreseeable in size or impact at the time of giving guidance.

Conference call

Fresenius Medical Care will host a conference call to discuss the results of the first quarter 2022 on May 4, 2022 at 3:30 p.m. CEST / 9:30 a.m. EDT. Details will be 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 first quarter 2022. Our 6-K disclosure provides more details.

Fresenius Medical Care, the world's leading provider of products and services for individuals with renal diseases, announced today that the U.S. Food and Drug Administration (FDA) has awarded 510(k) clearance to the Versi™PD Cycler System¹. This next-generation portable automated peritoneal dialysis system from Fresenius Medical Care North America is the lightest, smallest and quietest dialysis cycler in the United States.

As the leading provider of kidney care products in the U.S., Fresenius Medical Care is developing new, innovative technologies designed to accelerate the growth of home therapies by making home dialysis systems smarter, more intuitive and easier to use for people living with kidney failure. VersiPD is simple, quiet, portable and advanced. VersiPD is also designed to improve health equity by making home therapy a more feasible option for a broader population of dialysis patients. 

Designed from the ground-up to enhance the patient experience, VersiPD will allow patients to enjoy restful sleep through its almost silent operation, fewer disruptive alarms and night mode. The cycler has the capability of more personalized prescription programming to meet the individual needs of a broad range of patients. VersiPD offers a large, intuitively designed touchscreen as well as embedded videos with audio guidance to assist patients step-by-step through setup and treatment. The cycler battery and custom cart facilitate mobility around the home, which can further improve the patient’s quality of life.

VersiPD is supported by the Kinexus™ Therapy Management Platform, a connected health system that aims to improve patient outcomes and nurses’ productivity through remote therapy monitoring and programming capabilities. The Kinexus platform is also available with the Liberty® Select Cycler and is designed to be fully compatible with the company’s future portfolio of home dialysis machines. Connected health is associated with reduced rates of hospitalization, technique failure and patient dropout, and an increased average patient length of stay on peritoneal dialysis.^2,3  

A limited rollout of VersiPD will begin this year, with wider availability planned in 2023 and beyond. The company also plans to roll out VersiPD in other regions around the world in the future.

¹ Previously known as Lilliput™ APD System
2 Chaudhuri S, Han H, Muchiutti C, et al. Remote Treatment Monitoring on Hospitalization and Technique Failure Rates in Peritoneal Dialysis Patients. Kidney360. 2020;1(3):191 LP - 202. doi:10.34067/KID.0000302019
³ Giles H, Ficociello L, Li Y, Ofsthun N, Kossmann R. Remote Patient Monitoring and Longevity on Peritoneal Dialysis [Abstract presented at 39th Annual Dialysis Conference]. Perit Dial Int. 2019;39(1_suppl): S4. doi:10.1177/089686081903901s01

Fresenius Kabi closed the acquisition announced in March of Ivenix, Inc. (“Ivenix”), a specialized infusion therapy company. Ivenix adds a next-generation infusion therapy platform for the significant U.S. market to Fresenius Kabi’s portfolio and provides the company with key capabilities in hospital connectivity. The combination of Ivenix’s leading hardware and software products with Fresenius Kabi’s offering in intravenous fluids and infusion devices will create a comprehensive and leading portfolio of premium products, forming a strong basis to enable sustainable growth in the high-value MedTech space. The purchase price is a combination of US$240 million upfront payment and milestone payments, strictly linked to the achievement of commercial and operating targets.

The Fresenius Management SE Supervisory Board has unanimously appointed Sara Hennicken (41), currently Senior Vice President Global Treasury & Corporate Finance at Fresenius, to become the company’s new Chief Financial Officer as of September 1, 2022. She will succeed Rachel Empey (45), who joined the Management Board of Fresenius as CFO on August 1, 2017 and will leave the company at her own request at the end of August.

Sara Hennicken joined Fresenius in 2019. Previously, she spent 14 years in investment banking, including nine years at Deutsche Bank, lastly as Managing Director and Senior Client Executive in Corporate Finance Coverage before moving to Fresenius. Between 2005 and 2010 she worked for Citigroup in Frankfurt and London. Sara Hennicken studied economics in Germany and in the United States.

Rachel Empey said: “The good and trusting collaboration with my colleagues in the Management Board, and with my team has been personally fulfilling. Fresenius is a great company with outstanding prospects; together we have moved the company forward. The last years have been very intense, and challenging, yet also a great and very enriching experience. So, leaving was not an easy decision for me, but now I am looking forward to the next chapter of my life. I personally brought Sara Hennicken on board in 2019, and I know my duties and tasks are in good hands with her. I’m very happy for Sara and wish her a lot of luck, success and happiness in her new position, with the additional responsibility she will be taking on.”

Wolfgang Kirsch, Chairman of the Supervisory Board of Fresenius, said: “Rachel Empey further developed Fresenius’ finance department and made it ready for the future. During her time here – part of which was heavily impacted by the pandemic – she also set in motion important changes and improvements in her other areas of responsibility, such as IT. On behalf of the entire Supervisory Board, I want to thank her for all her contributions and hard work. In Sara Hennicken, we have an innovative, young and yet highly experienced financial expert from within the company who will assure continuity in this area but also bring in new ideas. She is ideally qualified for this position. Together with our CEO Stephan Sturm and her other Management Board colleagues, she will contribute to the future success of our healthcare group.”

Stephan Sturm, CEO of Fresenius, said: “I’m sorry that Rachel is leaving our company. Over these last years, we always worked well together, very collegially and with great trust, and I especially valued her as a sparring partner during our discussions about the company’s growth strategy. But, of course, I respect her decision, and wish Rachel all the very best for this new chapter of her life. At the same time, I am very much looking forward to working with Sara, who will enrich our management team with her personality, experience and ideas. We will be working together even more closely than before to create the optimal foundations for financing our healthy growth, and the sustainable success of our company.”

Sara Hennicken said: “I am very happy about the confidence and trust being placed in me, and greatly looking forward to the new tasks ahead. As a globally active healthcare company, Fresenius makes an important contribution to society with which I can very much identify. Over the past years, I’ve been able to realign my department and modernize our financing structure. The excellent group-wide collaboration with my colleagues has been especially valuable. In my new position I want to build on this, for the benefit of our company.”

Fresenius Kabi and the U.S. based company Cerus Corporation signed a new agreement for the production of systems for pathogen inactivation in blood components. The collaboration will help expanding access to pathogen-reduced blood components to patients. For many years, Cerus and Fresenius Kabi have collaborated regarding medical products specializing in pathogen inactivation for platelets and plasma. Since market launch of Cerus’ INTERCEPT systems, more than 11 million units have been in use worldwide.

Calcium Gluconate in Sodium Chloride Injection is now available in ready-to-administer non-DEHP, non-PVC containers, complementing the company’s existing vial presentations in the United States. Fresenius Kabi now has the broadest portfolio of Calcium Gluconate in Sodium Chloride Injection products available from any manufacturer in the United States.

• First steps in executing Fresenius Kabi’s “Vision 2026” growth strategy
  • Acquisition of majority stake in mAbxience significantly enhances Fresenius Kabi’s presence in high-growth biopharmaceuticals market 
  • Ivenix adds next-generation infusion therapy platform to transform product offering 
• Combined, these acquisitions will meaningfully increase the company’s scale over the next years and accelerate the Group’s growth 
• Acquisitions combined are expected to be broadly neutral to Group cash earnings per share¹ in 2022 and accretive by 2023 
• Transactions expected to close by mid-2022

¹ earnings before amortization and integration costs

Stephan Sturm, CEO of Fresenius, said: “Through these acquisitions we are further strengthening and leveraging Fresenius Kabi's position, as both perfectly complement the company's growth businesses in biopharmaceuticals and medical technology. We will continue allocating capital in a targeted manner to rigorously pursue the recently presented growth strategy of our health care Group which has defined Fresenius Kabi as top priority. In this way, we are creating even better conditions for providing ever better medicine to ever more people. At the same time, we create meaningful value for our shareholders.”

Michael Sen, CEO of Fresenius Kabi, said: “Expanding our MedTech business and broadening our presence in Biopharmaceuticals are key to our Vision 2026 program. Today’s announcements fit squarely into our plans. With the acquisition of Ivenix, we add the next generation infusion therapy platform; we complement and strengthen our existing infusion therapy offering and we create a superior portfolio for the US market. With mAbxience, we are making a step-change in our biopharmaceuticals profile. This is a highly complementary transaction in terms of biologics pipeline, manufacturing capabilities and the business model. mAbxience is two businesses in one company. mAbxience and Ivenix as portfolio advancements are good for patients, good for healthcare providers and our company.”
 

Acquisition of a majority stake in mAbxience significantly enhances Fresenius Kabi’s presence in high-growth biopharmaceuticals market

• Delivers on core growth vector “Broaden Biopharma” of “Vision 2026”
• Provides access to expertise and capabilities in one of the fastest-growing areas of healthcare, positioning Fresenius Kabi for accelerated medium- and long-term growth
• Follows a convincing industrial logic focused on a global, end-to-end vertically integrated biopharmaceuticals footprint
• Creates a strong partnership with excellent growth potential in attractive biosimilars market
• Comprises high-growth biologics Contract Development and Manufacturing (“CDMO”) market with three state-of-the-art biologics manufacturing facilities in Spain and Argentina
• Provides access to a highly cost competitive biologics manufacturing capacity with significant cost synergies expected for Fresenius Kabi’s biosimilars portfolio

Fresenius Kabi announced today that it has agreed to acquire a stake of 55% of mAbxience Holding S.L. (”mAbxience”). The purchase price will be a combination of €495 million upfront payment and milestone payments, strictly tied to the achievement of commercial and development targets.  The contractual provisions also include a put / call option scheme regarding the current owners’ remaining shares in mAbxience (45%).

mAbxience is a leading international biopharmaceutical company, focused on the rapidly developing biosimilars market. The company was founded in 2010 by Dr. Hugo Sigman and Dr. Silvia Gold as the biotechnology division of Insud Pharma S.L. mAbxience has established itself as a leader in the development and manufacturing of biological drugs, with two commercialized biosimilar products (Rituximab and Bevacizumab) and a mid-single-digit number of molecules across immunology and oncology expected to be launched globally in the years 2024 to 2029. This is supported by internal R&D laboratories and state-of-the-art manufacturing facilities in Spain and Argentina. In addition to highly competitive production costs for the internal programs, the manufacturing platform allows mAbxience to offer third party biological CDMO services, including a recent contract with AstraZeneca to produce the drug substance for its COVID-19 vaccine in Latin America. The company currently employs approximately 600 staff and generated sales of approx. €255 million in 2021. 

The acquisition of a majority stake in mAbxience follows Fresenius Kabi’s recently unveiled Vision 2026 strategy, delivering on one of the core growth vectors – to “Broaden Biopharma” – by expanding along the value chain and further enhancing the existing Fresenius Kabi biosimilars pipeline. 

Fresenius Kabi expects, through its in-house biosimilars programs and through its investment in mAbxience, to capture an overproportionate share of the underlying rapid growth in the biopharmaceutical market. Fresenius Kabi’s footprint in biopharmaceuticals will be significantly strengthened by broadening its biosimilars portfolio and by gaining access to the distinctive manufacturing capabilities of mAbxience. It will also allow Fresenius Kabi to provide end-to-end integrated biopharmaceutical solutions for customers from its state-of-the-art facilities.

mAbxience operates three state-of-the-art facilities for the production of biologic drug substance. This addresses a critical gap in Fresenius Kabi’s value chain, adding flexible, single-use biologic drug substance capacity that can be leveraged to provide competitive cost of production for the enlarged biosimilars portfolio. This manufacturing capability also offers end-to-end integrated biopharmaceutical solutions for customers and thus establishes a strategic foothold for Fresenius Kabi in the fast-growing biologic CDMO sector, complementing the existing small molecule API and fill & finish operations.

Once completed, the transaction is expected to deliver material operating and cost synergies for Fresenius Kabi, primarily driven by leveraging mAbxience’s manufacturing capabilities for Fresenius Kabi’s existing biosimilars business. 

The transaction remains subject to regulatory approvals and other customary closing conditions and is expected to close by mid-2022.
 

Ivenix strengthens Fresenius Kabi’s MedTech business and accelerates growth

• Delivers on core growth vector “Expand MedTech” of Vision 2026
• Provides next-generation infusion therapy platform for U.S. market
• Complements Fresenius Kabi’s global infusion therapy offering
• Provides Fresenius Kabi with key capabilities in hospital connectivity and creates new options for growth of MedTech business
• Significant scale and growth synergies expected

Fresenius Kabi announced today that it has agreed to acquire Ivenix, Inc. („Ivenix“), a specialized infusion therapy company. The purchase price will be a combination of US$240 million upfront payment and milestone payments, strictly linked to the achievement of commercial and operating targets.

Ivenix is a privately held company based in North Andover, Massachusetts, USA. The company has developed the technologically most advanced infusion system including a large volume pump (“LVP”) with administration sets, infusion management software tools, applications and analytics to inform care and advance efficiency. The Ivenix Infusion System’s innovative design and architecture sets a new standard in infusion safety, simplicity and interoperability. The system is centred around the patient and clinician and is designed to reduce infusion-related errors and drive down the total cost of ownership. After having received the U.S. Food and Drug Administration’s (FDA) approval, the Ivenix Infusion System was successfully launched in late 2021.

Ivenix’ Infusion System provides access to attractive growth potential for Fresenius Kabi in the large and growing infusion therapy market. The combination of Ivenix’ leading hardware and software products with Fresenius Kabi’s offerings in intravenous fluids and infusion devices will create a comprehensive and leading portfolio of premium products, forming a strong basis to enable sustainable growth in the high-value MedTech space.  

The transaction is subject to regulatory approvals and other customary closing conditions and is expected to close by mid-2022. 

Financing and implications on Group financials

mAbxience is expected to be accretive to Group cash earnings per share (earnings before amortization and integration costs) right after closing. Ivenix is expected to be neutral to Group cash earnings per share in 2025 and accretive from 2026 onwards. 

Combined, these acquisitions are expected to be broadly neutral to Group cash earnings per share in 2022 and accretive as of 2023. 

The transactions are currently expected to be financed by cash flow and available liquidity. 

Conference Call 

A telephone conference on the acquisition of a majority stake in mAbxience Holding S.L. and the acquisition of Ivenix, Inc. will be held on March 31, 2022 at 1:30 p.m. CEST (7:30 a.m. EDT). All investors are cordially invited to follow the conference call in a live broadcast over the Internet at www.fresenius.com/investors. Following the call, a replay will be available on our website.