Fresenius Medical Care, the world’s largest provider of dialysis products and services, is still in the process of seeking approval by the U.S. Federal Trade Commission (FTC) for its acquisition of NxStage Medical, Inc. (“NxStage”) and therefore now expects the transaction to close in early 2019.

NxStage, which like Fresenius Medical Care North America is headquartered in the Boston, Massachusetts area, was founded in 1998 and has approximately 3,800 employees worldwide. In 2017, NxStage delivered USD 394 million in revenue.

Der Gesundheitskonzern Fresenius ist für seinen Langzeitkonto-Rechner mit dem „HR Excellence Award 2018“ in der Kategorie „Compensation & Benefits“ ausgezeichnet worden. Der Langzeitkonto-Rechner bietet den Mitarbeitern schnell und transparent Informationen über eingebrachte Beiträge, Auszeiten für die persönliche Weiterbildung oder die Pflege von Angehörigen sowie einen möglichen Vorruhestand. Mit den „HR Excellence Awards“ prämiert das Magazin „Human Resources Manager“ seit 2012 herausragende Projekte im Personalmanagement.

The Supervisory Board of Fresenius SE & Co. KGaA has decided to propose PricewaterhouseCoopers GmbH Wirtschaftsprüfungsgesellschaft as the auditor for the financial year 2020. The shareholders will decide on the appointment at the Annual General Meeting in 2020. New regulations provide for a regular rotation of the auditor, so Fresenius was not able to extend the existing mandate of KPMG AG Wirtschaftsprüfungsgesellschaft.

In the lawsuit by Akorn, Inc. against Fresenius for the consummation of the April 2017 merger agreement the Supreme Court in the U.S. state of Delaware today ruled in favor of Fresenius. As this is the highest Court in Delaware, no further appeal is possible.

Fresenius terminated the merger agreement due to Akorn’s failure to fulfill several closing conditions. An independent investigation initiated by Fresenius had revealed, among other things, material breaches of FDA data integrity requirements relating to Akorn's operations. Akorn responded by suing in the Court of Chancery in Delaware for the consummation of the agreement but Akorn’s lawsuit had been dismissed by the Court of Chancery of Delaware in the first instance as well as now in the second and last instance before the Delaware Supreme Court.

Current Group expectations for FY 2019
Based on the current status of the Group’s budget process and its FY 2018 guidance, Fresenius expects mid-single digit organic sales growth for FY 2019. Group net income^1,2, however, is expected to be broadly stable over FY 2018. Fresenius continues to seek both sales growth and efficiency improvement initiatives in order to enhance these expectations.

Current business segment expectations for FY 2019³
For FY 2019, Fresenius Medical Care currently broadly assumes solid comparable⁴ sales growth and the comparable⁴ net income to be around the level of FY 2018.

Given its outstanding financial performance in FY 2018, Fresenius Kabi will enter 2019 from a tough comparison basis. In general anticipation of easing drug shortage benefits and meaningful expenses for the further development of its biosimilars portfolio Fresenius Kabi expects mid-single digit organic sales growth and low- to mid-single digit EBIT⁵ growth in constant currency.

Within Fresenius Helios’ expectation of low- to mid-single digit organic sales growth, Helios Spain continues to grow faster than Helios Germany. Helios Spain’s expected mid-single-digit EBIT growth will not fully offset the headwinds at Helios Germany resulting from regulatory changes and already started countermeasures. Thus, in aggregate, Fresenius Helios currently expects EBIT contraction at a low- to mid-single digit rate.

Fresenius Vamed expects underlying⁶ growth rates similar to previous years.

Current Group medium-term expectations
Given its current expectations for FY 2018 and FY 2019, Fresenius now believes its ambitious Group targets for 2020 will not be met.

From 2020 onwards, Fresenius now expects sustainable organic Group sales growth in the mid-single digits. Group net income⁷ is expected to grow organically slightly faster than sales. Upon Fresenius Kabi’s biosimilars business breaking even, Fresenius expects an acceleration of Group earnings growth. Unlike previous mid-term targets, these expectations exclude the effect of small- to medium-sized acquisitions.

In addition to the significant R&D and business development investments in FY 2017 and
FY 2018, Fresenius expects record investments in 2019 in both, capex and opex. These investments will further strengthen the basis for sustainable mid-term growth and are testament to Fresenius’ confidence in the dynamic growth opportunities in all of its business segments and end-markets.

Stephan Sturm, CEO of Fresenius, said: “We remain highly confident that Fresenius is on track to continue growing healthily over the medium and long term. Our updated expectations reflect the significant changes made to our portfolio over the last two years. They do not reflect acquisitions, which, however, will remain an important source of growth going forward. Further strengthened by the investments we will make in our businesses next year, Fresenius will be even better positioned for the coming decade.”

Acquisitions
Current expectations include the NxStage acquisition by Fresenius Medical Care and exclude any effects related to Akorn, Inc. While mid-term expectations exclude the effects of small- to medium-sized acquisitions, Fresenius will continue to pursue its strategy of selective acquisitions in order to complement organic growth.

Growing dividend
For FY 2018, Fresenius expects to propose a dividend increase in line with earnings growth⁸, consistent with its stated dividend policy. The Company intends to further increase its dividend for FY 2019.

Next steps
Fresenius will announce detailed FY 2019 financial guidance and mid-term targets with the release of its FY 2018 results on February 20, 2019.

Conference Call
A conference call will be held on December 7, 2018 at 8 a.m. CET (2 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 shortly on our website.

¹In constant currency, before special items and effects of IFRS 16, incl. expenses for the further development of the biosimilars business, H1/18 adjusted for divestitures of Care Coordination activities. 2019 including NxStage operating results.
²Net income attributable to shareholders of Fresenius SE & Co. KGaA
³Business segment expectations before effects of IFRS 16
⁴“comparable” is on a constant currency basis and reflects an adjustment for those effects that are as per FMC’s view not related to FMC’s operating business performance such as, for example, the effects of IFRS 16, sizeable portfolio changes like the divestiture of Sound Inpatient Physicians Holdings or the pending acquisition of NxStage Medical Inc. or other effects of one-time nature like FCPA-related charges or the cost of the 2018 U.S. ballot initiatives. For the preliminary indicative 2019 guidance the “comparable” 2018 basis translates roughly at current currencies for sales in a range of €15,850 – 16,050 million and for net income in a range of €1,350 – 1,365 million. This is subject to fluctuations in the currency rates in the fourth quarter of 2018.
⁵Before special items, including expenses for the further development of the biosimilars business
⁶Before transfer of German post-acute care business from Fresenius Helios
⁷Net income attributable to shareholders of Fresenius SE & Co. KGaA; before special items
⁸Net income attributable to shareholders of Fresenius SE & Co. KGaA; in constant currency, before special items, incl. expenses for the further development of the biosimilars business, H2/17 adjusted for divestitures of Care Coordination activities

• For 2019, an indicative and preliminary assumption of
  • solid revenue growth on a comparable basis¹
  • net income² at around the FY 2018 level on a comparable basis¹
• Use of cash currently under evaluation

Fresenius Medical Care, the world’s largest provider of dialysis products and services, has decided to update the market early by providing its indicative preliminary assumptions for the business development in 2019.

“With the pending acquisition of NxStage Medical Inc., the corresponding build out of our home dialysis services infrastructure in the United States as well as investments in future growth markets in the Products as well as the Services business such as China, we have an investment year ahead of us,” said Rice Powell, Chief Executive Officer of Fresenius Medical Care. ”We would like to share as an early indication that 2019 will have a clear focus on preparing the company for future sustainable, profitable growth. For 2019, we currently broadly assume solid comparable¹ revenue growth and the comparable¹ net income to be around the level of FY 2018.”

Fresenius Medical Care remains committed to a continuous optimization of its business, weighing future sustainable, profitable growth opportunities of potential investments and implied risks. From a global perspective, Fresenius Medical Care invests in new products as well as growth markets such as China. From an operational perspective, the company invests to increase the global home dialysis penetration and from an innovation perspective, the company makes investments such as in Humacyte Inc. to meet unmet medical needs.

Fresenius Medical Care is reviewing all factors as part of its budgeting process and plans to publish the guidance for 2019, at the usual level of detail, along with the company’s fiscal year 2018 results, which are planned to be released on February 20, 2019.

Targets 2020
Fresenius Medical Care intends to reset its 2020 constant currency targets to also reflect the IFRS accounting changes, the divestiture of Sound Inpatient Physicians Holdings and the pending acquisition of NxStage Medical Inc., all as highlighted in the previous quarter. The reset targets are scheduled to be published along with the company’s fiscal year 2018 results, which are planned to be released on February 20, 2019.

Conference call
Fresenius Medical Care will host a conference call on December 7, 2018, at 9:00 a.m. CET / 3:00 a.m. EST. Details will be available on the company’s website www.freseniusmedicalcare.com in the “Investors/Events” section. A replay will be available on the same day of the call.

¹“comparable” is on a constant currency basis and reflects an adjustment for those effects that are as per the company´s view not related to the company´s operating business performance such as, for example, the effects of IFRS 16, sizeable portfolio changes like the divestiture of Sound Inpatient Physicians Holdings or the pending acquisition of NxStage Medical Inc. or other effects of one-time nature like FCPA-related charges or the cost of the 2018 U.S. ballot initiatives. For the preliminary indicative 2019 guidance the “comparable” 2018 basis translates roughly at current currencies for revenue in a range of 15,850 – 16,050 EUR million and for net income in a range of 1,350 – 1,365 EUR million. This is subject to fluctuations in the currency rates in the fourth quarter of 2018.
²Net income attributable to shareholders of FMC AG & Co. KGaA

Fresenius Medical Care, the world’s largest provider of dialysis products and services, continues to expand its dialysis care network through the acquisition of further dialysis centers and renal hospitals in China. The company acquired a 70% share of Guangzhou KangNiDaiSi Medical Investment Co., Ltd, which focuses on dialysis and related chronic disease services. KangNiDaiSi has three independent hemodialysis centers under construction in the cities of Guangzhou and Zhaoqing in Guangdong province, which borders Hong Kong in southeast China. A proposed fourth center in Guangzhou awaits government approval.

Fresenius Medical Care also acquired 55% stakes in Henan Aishen Hospital Management Co. Ltd (Henan Aishen) and Aishen Beijing Hospital Management Co., Ltd (Aishen Beijing). Henan Aishen and Aishen Beijing are building 13 dialysis centers and a grade I renal hospital to complement the dialysis care network that will cover Henan, Shandong, Guangdong and Hainan provinces. There are further plans to expand into new locations in the future. In addition, the company has taken a 60% share of Daqing Kangda Dialysis Center Co., Ltd in Heilongjiang province.

The acquisitions follow the purchase of Yunnan Kunming Wuhua Healthcare Hospital in April 2017, and the acquisition of a 70% share of Sichuan Hejiang Kangcheng Renal Hospital in June 2018 as well as the acquisition of a 70% share of Sichuan Ziyang Zhongxin Hospital, both located in the Sichuan province.

Rice Powell, CEO of Fresenius Medical Care, said: “Fresenius Medical Care is committed to improving access to world-leading dialysis technology and chronic disease management services for the more than 120 million people in China who are living with chronic kidney disease. These acquisitions mark an important strategic step in our business development in China. As the second largest product market, China is already today an important business growth driver for Fresenius Medical Care. We have been continuously investing in enhancing our product range within the local market. We have also started to enter the provider business to introduce advanced dialysis services and operations management in China.”

“As a leading provider of dialysis products and services in China, we are eager to work with other companies that are dedicated to elevating the treatment of kidney disease in this huge country. In particular, we focus on increasing access to treatment in rural areas, where there have traditionally been fewer options for patients,” said Harry de Wit, CEO of Fresenius Medical Care Asia-Pacific. “We strive to introduce our world-leading chronic disease management system and high-quality dialysis treatment services throughout the country. And we will continue to search for opportunities to partner with institutions from the public and private sectors and invest in new dialysis centers and renal hospitals.” 

The prevalence of chronic kidney disease (CKD) in China is 10.8% of the adult population, which equates to more than 120 million people. According to research conducted by the Chinese Society of Nephrology, there currently are one million ESRD patients registered in China, but only around 500,000 receive dialysis treatment. 

A recent study places Fresenius among the top 500 companies in terms of career training programs in Germany. Criteria used for judgement were the quality of supervision, in-house training, company engagement, success rate and innovative teaching methods. The companies were rated by the business magazine Capital and the internet portal, ausbildung.de. Fresenius received a best possible five-star rating for its on-the-job training and dual-studies, a combination of theory and on-the-job training, programs. The company trains more than 4,000 apprentices and dual-studies interns.

Fresenius Medical Care, the world’s largest provider of dialysis products and services, today released the following statement in response to the defeat of the ballot initiative Proposition 8 in California.

“We are pleased that California voters have rejected Proposition 8 in yesterday’s ballot election. This is a big win for California dialysis patients,” said Rice Powell, CEO of Fresenius Medical Care. “Proposition 8 was a deeply flawed measure that would have dangerously reduced access for dialysis patients in California by setting arbitrary limits on what insurance companies are required to pay for dialysis care. We at Fresenius Medical Care are committed to offering high-quality products and services to our patients and will continue to do so in California and around the world.”

• Patient growth continues across all regions
• Operating margin in North America improved to 18.5% in the third quarter
• Dialysis Care revenue growth in North America of 6% (+5% at constant currency)
• Decline in Care Coordination revenue following Sound divestiture
• Outlook 2018 reflects lower than expected growth acceleration in Q3 and anticipation of soft business development in Q4 2018

¹ For a detailed reconciliation, please refer to the table at the end of the press release
² Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA

Rice Powell, Chief Executive Officer of Fresenius Medical Care, said: “Our third quarter was affected by several developments whose combined impact on our results was greater than expected. Growth did not accelerate to the extent previously projected. We anticipate the impact from the current level of growth and less acquisitions to continue in the fourth quarter. We have identified countermeasures and have begun implementation. Fresenius Medical Care’s growth will continue.”

Growth in Dialysis Care revenue

Revenue in the third quarter 2018 decreased by 6% to EUR 4,058 million (-6% at constant currency), mainly driven by the higher comparable base which included the Q3 2017 revenue contribution from Sound Inpatient Physicians (“Sound”) of EUR 253 million as well as the impact from the IFRS 15 implementation (“IFRS 15”) of EUR 117 million. Excluding these two effects, revenue increased by 2% on a comparable basis (+3% at constant currency), mainly driven by an increase in same market treatments in North America of 3%.

Health Care Services revenue decreased by 8% to EUR 3,258 million (-8% at constant currency), primarily driven by the two effects described above (Sound and IFRS 15). On a comparable basis, Health Care Services revenue increased by 3%, mainly driven by organic growth in Dialysis Care revenue resulting from higher volumes, partly offset by the largely anticipated revenue decline in Care Coordination. Care Coordination revenue declined by 53% to EUR 354 million (-56% at constant currency), mainly resulting from the sale of Sound and the IFRS 15 implementation. On a comparable basis, Care Coordination revenue declined by 22% (-27% at constant currency). This decline was mainly the result of the shift of calcimimetic drugs into the clinical environment and a higher prior-year revenue contribution due to the initial revenue recognition for the new 2017 ESCOs. Health Care Products revenue was flat at EUR 800 million (+1% at constant currency), mainly impacted by the difficult economic environment in certain emerging countries in the EMEA and Latin America regions. At constant currency, Dialysis Products revenue increased by 2% driven by higher sales of renal pharmaceuticals and products for acute care treatments, partially offset by lower sales of chronic hemodialysis products.

In the first nine months of 2018, revenue decreased by 8% to EUR 12,247 (-2% at constant currency), mainly driven by the effects of Sound and IFRS 15. On a comparable basis, revenue decreased by 4%, impacted by negative foreign currency effects (+3% at constant currency).

Operating income (EBIT) impacted by one-time effects

Total EBIT reached EUR 527 million in the third quarter of 2018, a decrease of 13% (-20% at constant currency). The strong decrease was mainly attributable to the higher comparable base which included the EBIT contribution from Sound of EUR 20 million. In addition, the increased provision for the FCPA related charge in the amount of EUR 75 million and the contributions to the opposition to the ballot initiatives in the U.S. of EUR 23 million (both not tax effected) as well as a EUR 10 million favourable foreign currency translation effect related to the divestitures of Care Coordination activities affected the EBIT growth. The increase of the FCPA provision reflects an understanding with the U.S. Government on the financial aspects of a potential settlement and an update of ongoing legal costs to continue settlement discussions. However, significant non-financial matters are still under discussion with the government and must be resolved to the company’s satisfaction for a settlement to occur. In addition, EBIT was negatively impacted by the difficult economic situation in certain emerging countries, including hyperinflation in Argentina. On a comparable basis, EBIT increased by 5% (+4% at constant currency).

In the first nine months of 2018, EBIT increased by 32% (+39% at constant currency). The strongest contributor to this increase was the gain related to the divestitures of Care Coordination activities. On a comparable basis, EBIT decreased by 7% (-2% at constant currency).

Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA decreased by 8% to EUR 285 million in the third quarter of 2018 (-17% at constant currency). On a comparable basis net income increased by 20% to EUR 364 million (+19% at constant currency). Based on the number of approximately 306.5 million shares (weighted average number of shares outstanding), basic earnings per share (EPS) amounted to EUR 0.93 (-8%). On a comparable basis the company generated an EPS of EUR 1.19, representing an increase of 20% (+19% at constant currency).

In the first nine months of 2018, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA increased by 76% (+86% at constant currency) to EUR 1,557 million, mainly driven by the gain related to the divestitures of Care Coordination activities. On a comparable basis, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA reached EUR 969 million, an increase of 10% (+16% at constant currency).

Patient growth continues across all regions

North America revenue, which represents 70% of total revenue in the third quarter of 2018, decreased by 9% to EUR 2,843 million (-11% at constant currency) and increased by 4% on a comparable basis (+1% at constant currency). Organic growth in North America was 2%.

Dialysis Care revenue increased by 6% to EUR 2,328 million (+5% at constant currency). This increase was mainly driven by an increase in organic revenue per treatment, same market treatment growth of 3% in the U.S. and contributions from acquisitions, to some extent diluted by the implementation of IFRS 15 and the effect of 1 less dialysis day. Volume growth in North America was positively impacted by a strong increase in home dialysis in the third quarter, leading to a home penetration rate in the U.S. of 12.4%. On a comparable basis, Dialysis Care revenue increased by 9%, partly compensated by negative growth in the acute services business following the termination of unprofitable contracts as well as the delay of certain de novo clinics. Care Coordination revenue decreased by 57% to EUR 300 million (-61% at constant currency), mainly driven by the prior-year revenue contribution from Sound as well as the implementation of IFRS 15. On a comparable basis, Care Coordination revenue decreased by 25% (-32% at constant currency). This decrease was mainly driven by the shift of calcimimetic drugs into the clinical environment as well as a higher prior-year revenue contribution due to the initial revenue recognition for the new 2017 ESCOs.

In the U.S., the average revenue per treatment, adjusted for the implementation of IFRS 15 and excluding the 2017 impact of the VA Agreement, increased by USD 15 from USD 341 to USD 356. The increase was mainly driven by the shift of calcimimetic drugs into the clinical environment, partially offset by lower revenue from commercial payors.

Cost per treatment in the U.S., adjusted for the implementation of IFRS 15 and prior-year natural disaster cost, increased by USD 19 from USD 271 to USD 290. This increase was largely a result of the introduction of calcimimetic drugs in the clinical environment, increased property and other occupancy related costs as well as the impact from one less dialysis day.

Dialysis Products revenue in North America increased by 2% to EUR 215 million (+1% at constant currency) due to higher sales of renal pharmaceuticals, peritoneal dialysis products, partially offset by lower sales of chronic hemodialysis products.

Total EBIT for the North America segment was EUR 525 million in the third quarter, an increase of 9% (+2% at constant currency). On a comparable basis, EBIT was EUR 538 million, an increase of 16%. The EBIT margin increased to 18.5% (18.9% on a comparable basis). The increase in EBIT margin on a comparable basis was mainly due to lower personnel expenses and the positive impact from income attributable to a consent agreement on certain pharmaceuticals.

In the first nine months of 2018, North America revenue decreased by 12% to EUR 8,589 million (-5% at constant currency). On comparable basis, revenue decreased by 5% (+1% at constant currency). Mainly driven by the gain related to divestitures of Care Coordination activities, EBIT went up by 47% (+57% at constant currency) to EUR 2,173 million in the first nine months of 2018.

As of the end of September 2018, the company was treating 201,220 patients (+3%) at its 2,486 clinics (+5%) in North America. Dialysis treatments increased by 3%.

EMEA revenue decreased by 2% (+1% at constant currency) to EUR 620 million in the third quarter of 2018, mainly driven by the positive development in Health Care Services revenue which increased by 4% at constant currency. The increase in Health Care Services revenue was driven by same-market treatment growth (+3%) and acquisitions, partially offset by the effect of sold and closed clinics as well as one less dialysis day. Health Care Products revenue decreased by 5% (-3% at constant currency) to EUR 306 million. Dialysis Products revenue decreased by 5% (-2% at constant currency), mainly due to lower sales of dialyzers, partially offset by higher sales of machines.

EBIT was EUR 88 million in the third quarter of 2018, a decrease of 18% (-16% at constant currency). The EBIT margin decreased from 16.8% to 14.1%, mainly due to the favorable prior-year impact from a legal settlement, higher personnel costs in certain countries, the impact of one less dialysis day and unfavorable foreign currency translation effects.

In the first nine months of 2018, EMEA revenue increased by 1% to EUR 1,908 million (+4% at constant currency), while EBIT of EUR 302 million was 10% below the prior year´s level (-9% at constant currency).

As of the end of September 2018, the company had 64,539 patients (+4%) being treated at 769 clinics (+5%) in the EMEA region. Dialysis treatments increased by 4%.

Asia-Pacific revenue grew by 3% to EUR 421 million (+4% at constant currency) in the third quarter of 2018. Dialysis Products showed again a solid business performance, with revenue growing 4% to EUR 227 million (+6% at constant currency). This growth was mainly driven by higher sales of hemodialysis products and products for acute care, particularly in China and Indonesia. Health Care Services revenue in the region increased by 1% to EUR 194 million (+1% at constant currency). Care Coordination revenue increased by 4% to EUR 54 million (+7% at constant currency). The growth in Care Coordination revenue in Asia Pacific was mainly related to a strong organic revenue growth and acquisitions. EBIT decreased by 14% to EUR 66 million (-14% at constant currency). The EBIT margin decreased to 15.7%, driven by unfavorable foreign currency transaction effects and increased costs for business growth.

In the first nine months of 2018, Asia-Pacific revenue increased by 2% to EUR 1,235 million (+8% at constant currency). EBIT decreased by 8% to EUR 218 million (-5% at constant currency).

As of the end of September 2018, the company had 31,152 patients (+3%) being treated at 390 clinics in Asia-Pacific (0%). Dialysis treatments increased by 2%.

Latin America delivered revenue of EUR 171 million in the third quarter of 2018, a decrease of 2%, but an increase of 27% at constant currency. The growth at constant currency was mainly due to a strong growth in Health Care Services (+34% at constant currency) driven by an increase in organic revenue per treatment mainly due to hyperinflation in Argentina, acquisitions and growth in same market treatments (+1%). Health Care Products revenue in Latin America decreased by 5% to EUR 49 million, but increased by 9% at constant currency. The increase in constant currency was due to higher sales of machines and products for acute care. EBIT in the third quarter was negative at EUR -1 million following the effects of hyperinflation in Argentina as well as unfavorable foreign currency transaction effects and higher bad debt expense. The EBIT margin was therefore also negative (-1%).

In the first nine months of 2018, Latin America revenue decreased by 6% to EUR 505 million, but increased by 18% at constant currency. EBIT was EUR 24 million, a decrease of 47% (-56% at constant currency).

As of the end of September 2018, the company was treating 32,174 patients (+5%) at 227 clinics in Latin America (-1%). Dialysis treatments increased by 4%.

Corporate cost in the third quarter were EUR 76 million on a comparable basis (flat at constant currency). Including the increased provision for the FCPA related charge in the amount of EUR 75 million, corporate cost amounted to EUR 151 million.

Net interest expense was EUR 74 million compared to EUR 86 million in the third quarter of 2017, a decrease of 14% (-14% at constant currency). The decrease was driven by a decreased debt level and interest income from the investment of the Sound proceeds. Income tax expense was EUR 104 million in the third quarter of 2018, which translates into an effective tax rate of 22.9%, compared to last year’s Q3 tax rate of 29.0%. The strong reduction was largely driven by the U.S. Tax Reform and the gain related to divestitures of Care Coordination activities, partly offset by non-tax-deductible expenses (mainly 2018 FCPA related charges and U.S. ballot initiatives).

Cash flow

In the third quarter of 2018, the company generated EUR 609 million of operating cash flow, compared to EUR 612 million in the previous year’s third quarter. This slight decrease was mainly driven by higher tax payments and discretionary contributions to pension plan assets in the U.S., almost fully offset by decreases in accounts receivable. Operating cash flow in percent of revenue was 15.0% in the third quarter of 2018. The number of days sales outstanding decreased sequentially by five days compared with Q2 2018 to reach 77 days. Free cash flow (Net cash used in operating activities, after capital expenditures, before acquisitions and investments) amounted to EUR 352 million for the three months ended September 30, 2018 compared to EUR 386 million for the same period of 2017. Free cash flow in percent of revenue was 8.7% and 8.9% for the three months ended September 2018 and 2017, respectively.

Outlook 2018

The company expects revenue³ growth between 2% and 3% at constant currency. Net income on a comparable basis⁴ is expected to increase by 11% to 12% at constant currency and on an adjusted basis^4,5  to increase by 2% to 3% at constant currency.

The targets exclude the effect from the planned acquisition of NxStage Medical.

³ 2017 adjusted for the effect of IFRS 15 implementation and the contribution of Sound Physicians in H2 2017
⁴ Attributable to shareholders of Fresenius Medical Care AG & Co. KGaA, adjusted for the contribution from Sound Physicians in H2 2017 and gain/loss related to divestitures of Care Coordination activities, 2018 FCPA related charge and U.S. Ballot Initiatives.
⁵ VA Agreement, Natural Disaster Costs, 2017 FCPA related charge, U.S. Tax Reform

Other updates

Regarding the planned acquisition of NxStage Medical, Inc. the parties have agreed to extend their closing deadline to February 5, 2019, but continue to expect closing within this year.

As of September 30, 2018, Fresenius Medical Care had 112,134 employees (full-time equivalents) worldwide, compared to 113,648 employees at the end of September 2017. This decrease was mainly attributable to the divestiture of Sound.

There will be a change to the composition of the Supervisory Board. Deborah Doyle McWhinney will resign effective November 1, 2018 due to private reasons. A replacement process has been initiated.

Conference call

Fresenius Medical Care will host a conference call to discuss the results of the third quarter on October 30, 2018, at 3:30 p.m. CET / 10:30 a.m. EDT. Details will be available on the company’s website www.freseniusmedicalcare.com in the “Investors/Events” section. A replay will be available shortly after the call.