Fresenius Medical Care, the world’s largest provider of dialysis products and services, today announced that the request of Fresenius Medical Care to appoint Prof. Dr. Gregor Zünd as new member of the Supervisory Board of Fresenius Medical Care AG & Co. KGaA has been granted by the responsible court. As requested, the term of office of Professor Zünd is limited until the end of the next ordinary Annual General Meeting in May 2019. The Supervisory Board of Fresenius Medical Care AG & Co. KGaA believes that his extensive experience and outstanding expertise qualify Professor Zünd for this position and will propose the next Annual General Meeting to approve his appointment to the Supervisory Board. 

Professor Zünd, 59, is Chief Executive Officer of the University Hospital of Zürich since 2016. As Director of Research and Education he has been member of the hospital’s Executive Board since 2008. In parallel, he has been Managing Director of the Center for Clinical Research and Head of the Surgical Research department at University Hospital Zurich. Until 2001, Professor Zünd was Senior Physician at the Clinic for Cardiovascular Surgery at University Hospital Zurich. He spent several years at Texas Medical Center, Houston, and at Harvard Medical School, Boston. Gregor Zünd is Professor ad personam at the University of Zurich. 

The special election became necessary after the previous Chairman of the Supervisory Board of Fresenius Medical Care & Co. KGaA, Dr. Gerd Krick, stepped down from the Supervisory Board at the end of this year’s Annual General Meeting. The Supervisory Board subsequently elected Dr. Dieter Schenk, previously the Deputy Chairman of the Supervisory Board, as Chairman.

• Excellent performance of Fresenius Kabi across all regions and product categories 
• Fresenius Medical Care’s sales and earnings growth below the Company’s expectations
• Preparatory initiatives for expected regulatory requirements and decline in admissions impact Helios Germany; Helios Spain with steady yet dynamic growth 
• Strong momentum in both Vamed’s project and service businesses 

Group guidance for 2018 confirmed and narrowed

As announced on October 16, 2018 Fresenius confirms and narrows its Group guidance¹  for FY/18. This is mainly driven by an excellent development of Fresenius Kabi, which partially offset the lower than expected sales and earnings contributions of Fresenius Medical Care and Helios Germany. Group sales are expected to increase at the low end of the original 5% to 8%² guidance range (in constant currency). Fresenius expects net income^1,3,4  growth at the low end of the original 6% to 9% guidance range (in constant currency). Excluding expenditures for the further development of the biosimilars business, net income^1,3,5  growth is projected at the low end of the original ~10% to 13% guidance range (in constant currency). 

¹ 2018 before special items (excluding effects related to the Akorn and NxStage transactions, gains from divestitures of Care Coordination activities and increase of FCPA provision)
² FY/17 base adjusted for IFRS 15 adoption (-€486 million) and divestitures of Care Coordination activities (-€558 million) at Fresenius Medical Care
³ Net income attributable to shareholders of Fresenius SE & Co. KGaA
⁴ FY/17 base: €1,804 million; FY/18 before special items; including contributions to the campaigns in the U.S. opposing state ballot initiatives at Fresenius Medical Care; including expenditures for further development of the biosimilars business at Fresenius Kabi (€43 million after tax in FY/17 and ~€120 million after tax in FY/18)
⁵ FY/17 base: €1,847 million; FY/18 before special items; including contributions to the campaigns in the U.S. opposing state ballot initiatives at Fresenius Medical Care; excluding expenditures for further development of the biosimilars business at Fresenius Kabi (€43 million after tax in FY/17 and ~€120 million after tax in FY/18)

If no timeframe is specified, information refers to Q1-3/18

Q3/18:

• Sales: €8.2 billion (+3%¹, +4% in constant currency¹)
• EBIT²: €1,112 million (+0%, +0% in constant currency)
• EBIT²: (excl. biosimilars business): €1,153 million (+3%, +2% in constant currency)
• Net income^2,3: €445 million (+8%, +8% in constant currency)
• Net income^2,3: €474 million (+13%, +13% in constant currency)
  (excl. biosimilars business)

Q1-3/18:

• Sales: €24.7 billion (+1%1, +5% in constant currency¹)
• EBIT²: €3,311 million (-5%, -1% in constant currency)
• EBIT²: (excl. biosimilars business): €3,424 million (-3%, +2% in constant currency) 
• Net income^2,3: €1,367 million (+3%, +7% in constant currency)
• Net income^2,3: €1,449 million (+8%, +12% in constant currency)
  (excl. biosimilars business)

¹ Growth rates adjusted for IFRS 15 adoption and divestitures of Care Coordination activities (Q3/17 base: €7,927 million; Q1-3/17 base: €24,551 million)
² Before special items (before expenses related to the Akorn transaction, gains from divestitures of Care Coordination activities and increase of FCPA provision); growth rates: 2017 base adjusted for divestitures of Care Coordination activities
³ Net income attributable to shareholders of Fresenius SE & Co. KGaA 
For a detailed overview of special items please see the reconciliation tables on pages 19-20 in the PDF document.

Stephan Sturm, CEO of Fresenius, said: “In the third quarter, Fresenius again achieved healthy sales growth and drove earnings growth even a touch stronger. Fresenius Kabi, Fresenius Vamed and Quirónsalud delivered a truly excellent performance. At the same time, Fresenius Medical Care and our German Helios hospitals will enhance their efforts to further improve and adapt to changing market conditions. From an overall position of strength, we are in the closing stretch for yet another record year.”

5% sales growth in constant currency¹

Group sales increased by 1%¹ (5%¹ in constant currency) to €24,695 million (Q1-3/17: €25,191 million). Organic sales growth was 4%. Acquisitions/divestitures contributed net 1% to growth. Negative currency translation effects of 4% were mainly driven by the devaluation of the U.S. dollar and the Chinese yuan against the euro. In Q3/18, Group sales increased by 3%¹ (4%¹ in constant currency) to €8,192 million (Q3/17: €8,297 million). Organic sales growth was 4%. Acquisitions/divestitures had no net contribution to growth. Currency translation effects reduced sales by 1%.

¹ Growth rates adjusted for IFRS 15 adoption and divestitures of Care Coordination activities at Fresenius Medical Care (Q1-3/17 base: €24,551 million; Q3/17 base: €7,927 million)

Group sales by region:

7% net income^1,2,3 growth in constant currency

Group EBITDA² decreased by 4%³ (0%³ in constant currency) to €4,375 million (Q1-3/17: €4,579 million). Group EBIT² decreased by 5%³ (-1%³ in constant currency) to €3,311 million (Q1-3/17: €3,522 million). The EBIT margin² was 13.4% (Q1 3/17: 14.0%). Group EBIT² before expenses for the further development of the biosimilars business decreased by 3%³ (increased 2%³ in constant currency) to €3,424 million. In the prior-year period the compensation for treatments of U.S. war veterans (“VA agreement”) contributed €88 million as a one-time effect. Group EBIT² excluding the VA agreement and expenses for the further development of the biosimilars business increased by 4% in constant currency. 

In Q3/18, Group EBIT³ was broadly stable year-over-year³ (broadly stable³ in constant currency) at €1,112 million (Q3/17: €1,129 million), with an EBIT margin² of 13.6% (Q3/17: 13.6%). Group EBIT² excluding the prior-year VA agreement and expenses for the further development of the biosimilars business increased by 2%³ in constant currency.

Group net interest² was -€436 million (Q1-3/17: -€484 million). The decrease is mainly driven by currency effects as well as refinancing activities and the divestitures of Care Coordination activities. 

The decrease of the Group tax rate before special items to 22.0% (Q1-3/17: 28.1%) was mainly due to the U.S. tax reform and some one time effects in Q3 at Fresenius Medical Care and Fresenius Kabi. In Q3/18, the Group tax rate² was 21.4% (Q3/17: 27.4%).

Noncontrolling interest² was €876 million (Q1-3/17: €854 million), of which 95% was attributable to the noncontrolling interest in Fresenius Medical Care.

¹ Net income attributable to shareholders of Fresenius SE & Co. KGaA
² Before special items 
³ Base 2017 base adjusted for divestitures of Care Coordination activities
For a detailed overview of special items please see the reconciliation tables on pages 19-20 in the PDF document.
 

Group net income^1,2  increased by 3%³  (7%³ in constant currency) to €1,367 million (Q1 3/17: €1,329 million). Earnings per share^1,2 increased by 3%³ (7%³ in constant currency) to €2.46 (Q1-3/17: €2.40). In Q3/18, Group net income^1,2 increased by 8%³ (8%³ in constant currency) to €445 million (Q3/17: €413 million). Earnings per share^1,2 increased by 7%³ (7%³ in constant currency) to €0.80 (Q3/17: €0.75).

Group net income^1,2,4  before expenses for the further development of the biosimilars business increased by 8%³ (12%³ in constant currency) to €1,449 million (Q1-3/17: €1,339 million). Earnings per share^1,2,4 increased by 8%³ (12%³ in constant currency) to €2.61 (Q1-3/17: €2.42). In Q3/18, Group net income^1,2,4 increased by 13%³ (13%³ in constant currency) to €474 million (Q3/17: €423 million). Earnings per share^1,2,4 increased by 12%³ (12%³ in constant currency) to €0.85 (Q3/17: €0.77).

Group net income^2,5 after special items increased by 16% (by 21% in constant currency) to €1,511 million (Q1-3/17: €1,303 million), mainly due to gains related to divestitures in Care Cordination activities at Fresenius Medical Care. Earnings per share^2,5  increased by 16% (21% in constant currency) to €2.72 (Q1-3/17: €2.35). In Q3/18, Group net income^2,5 increased by 6% (4% in constant currency) to €419 million (Q3/17: €396 million). Earnings per share^2,5 increased by 6% (4% in constant currency) to €0.75 (Q3/17: €0.71).

¹ Before special items 
² Net income attributable to shareholders of Fresenius SE & Co. KGaA
³ 2017 base adjusted for divestitures of Care Coordination activities
⁴ Before expenses for the further development of the biosimilars business
⁵ After special items
For a detailed overview of special items please see the reconciliation tables on pages 19-20 in the PDF document.
 

Continued investment in growth 

Spending on property, plant and equipment was €1,370 million (Q1-3/17: €1,137 million), primarily for the modernization and expansion of dialysis clinics, production facilities as well as hospitals and day clinics. This corresponds to 5.5% of sales.

Total acquisition spending was €876 million (Q1-3/17: €6,662 million). The prior-year period included the acquisition of Quirónsalud.

Cash flow development

Group operating cash flow decreased by 15% to €2,405 million (Q1-3/17: €2,821 million) with a margin of 9.7% (Q1-3/2017: 11.2%). The decrease is mainly due to two effects at Fresenius Medical Care in North America: Receipt of a ~€200 million payment under the VA agreement in the prior-year period as well as increased accounts receivable related to the addition of calcimimetics into the Medicare ESRD payment bundle. In addition, negative currency translation effects weighed on the cash flow development in Q1-3/18. Operating cash flow in Q3/18 increased by 1% to €1,149 million (Q3/17: €1,138 million), with a margin of 14.0% (Q3/17: 13.7%). 

Given the effects described above and growing investments, free cash flow before acquisitions and dividends decreased to €1,049 million (Q1-3/17: €1,705 million). Free cash flow after acquisitions and dividends was €1,172 million (Q1-3/17: -€5,233 million).

Solid balance sheet structure

The Group’s total assets increased by 5% (4% in constant currency) to €55,723 million (Dec. 31, 2017: €53,133 million). Current assets grew by 16% (16% in constant currency) to €14,593 million (Dec. 31, 2017: €12,604 million). Non-current assets increased by 1% (broadly stable in constant currency) to €41,130 million (Dec. 31, 2017: € 40,529 million).

Total shareholders’ equity increased by 10% (9% in constant currency) to €23,998 million (Dec. 31, 2017: €21,720 million). The equity ratio increased to 43.1% (Dec. 31, 2017: 40.9%). 

Group debt was broadly stable unchanged (decreased by 1% in constant currency) at €18,961 million (Dec. 31, 2017: € 19,042 million). Group net debt decreased by 5% (-6% in constant currency) to € 16,505 million (Dec. 31, 2017: € 17,406 million) mainly due to the proceeds from divestitures of Care Coordination activities. 

As of September 30, 2018, the net debt/EBITDA ratio was 2.75^1,2  (December 31, 2017: 2.84^1,2). Excluding the proceeds from divestitures of Care Coordination activities the net debt/EBITDA ratio was 2.96^1,2. At year-end 2018, Fresenius now expects the FY/18 net debt/EBITDA^1,2 ratio to be on a comparable level to year-end 2017.

¹ At LTM average exchange rates for both net debt and EBITDA; pro forma closed acquisitions/divestitures, excluding Akorn and NxStage transactions 
² Before special items 

Increased number of employees 

As of September 30, 2018, the number of employees was 277,318 (Dec. 31, 2017: 273,249).

Business Segments

Fresenius Medical Care 

Fresenius Medical Care is the world's largest provider of products and services for individuals with renal diseases. As of September 30, 2018, Fresenius Medical Care was treating 329,085 patients in 3,872 dialysis clinics. Along with its core business, the company provides related medical services in the field of Care Coordination.

• 3% comparable¹ sales growth in constant currency in Q3
• -2% adjusted^4,6 net income decrease in constant currency in Q3
• Outlook for FY/18 adjusted

Sales decreased by 8% (-2% in constant currency) to €12,247 million (Q1-3/17: €13,355 million). Organic sales growth was 3%. Currency translation effects reduced sales by 7%. The adoption of IFRS 15 reduced sales by 3%. Q1-3/17 base additionally adjusted for divestitures of Care Coordination activities, sales decreased by 4% (increased by 3% in constant currency). 

¹ Adjusted for IFRS 15 implementation; base adjusted for divested Care Coordination activities
² Excluding VA agreement Q3: 3%; Q1-3: 4%
³ Excluding gains from divestitures of Care Coordination activities, increase of FCPA provision, ballot initiatives, divested Care Coordination activities in Q3/2017; including Natural disaster costs and VA agreement
⁴ Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
⁵ Consistent with guidance, i.e. excluding gains from divestitures of Care Coordination activities, increase of FCPA provision, ballot initiatives, , divested Care Coordination activities; including Natural disaster costs, the effect of the U.S. Tax Reform and including VA agreement
⁶ Consistent with guidance, i.e. excluding gains from divestitures of Care Coordination activities, the effect of the U.S. Tax Reform, VA agreement, FCPA provision, ballot initiatives, divested Care Coordination activities, Natural disaster costs

In Q3/18, sales decreased by 6% (-6% in constant currency) to €4,058 million (Q3/17: €4,336 million). Organic sales growth was 3%. The adoption of IFRS 15 reduced sales by 3%. Q3/17 base additionally adjusted for divestitures of Care Coordination activities, sales in Q3/18 increased by 2% (increased by 3% in constant currency).

Health Care services sales (dialysis services and care coordination) decreased by 4%¹ (increased by 3%¹  in constant currency) to €9,852 million (Q1-3/17: €10,950 million). With €2,395 million (Q1-3/17: €2,405 million), Health Care product sales were on prior-year’s level (increased by 5% in constant currency).  

In North America, sales decreased by 5%¹ (increased by 1%¹ in constant currency) to €8,589 million (Q1-3/17: €9,715 million). Health Care services sales decreased by 6%¹ (increased by 1%¹ in constant currency) to €7,978 million (Q1-3/17: €9,086 million). Excluding the 2017 effect from the VA Agreement (€96 million), Health Care services sales increased by 2%¹ in constant currency. Health Care product sales decreased by 3% (increased by 4% in constant currency) to €610 million (Q1-3/17: €629 million). 

Sales outside North America increased by 1% (7% in constant currency) to €3,648 million (Q1-3/17: €3,628 million). 

Health Care services sales increased by 1% (9% in constant currency) to €1,873 million (Q1-3/17: €1,864 million). Health Care product sales increased by 1% (5% in constant currency) to €1,774 million (Q1-3/17: €1,764 million). 

Fresenius Medical Care’s EBIT increased by 32% (39% in constant currency) to €2,425 million (Q1-3/17: €1,843 million), driven by the divestitures of Care Coordination activities. The EBIT margin increased to 19.8% (Q1-3/17: 13.8%). EBIT on a comparable basis decreased by 2% in constant currency and EBIT margin was 13.9% (Q1-3/17: 14.3%). 

In Q3/18, EBIT decreased by 13% (-20% in constant currency) to €527 million (Q3/17: €609 million). The EBIT margin decreased to 13.0% (Q3/17: 14.0%). EBIT on a comparable basis increased by 5% (increased by 4% in constant currency) and EBIT margin increased to 15.1% (Q3/17: 14.8%). 

¹ Growth rate adjusted for IFRS 15 implementation and divested Care Coordination activities 
 
Net income¹ increased by 76% (86% in constant currency) to €1,557 million (Q1-3/17: €886 million). Adjusted net income¹ growth was 4% in constant currency. Net income¹ growth on a comparable basis was 16% in constant currency. 

In Q3/18, net income¹ decreased by 8% (-17% in constant currency) to €285 million (Q3/17: €309 million). Adjusted net income¹ growth was -2% in constant currency. Net income¹ growth on a comparable basis was 19% in constant currency.

Operating cash flow was €1,220 million (Q1-3/17: €1,664 million). The cash flow margin was 10.0% (Q1-3/17: 12.5%). The decrease is mainly due to two effects in North America: Receipt of a ~€200 million payment under the VA agreement in the prior-year period as well as increased accounts receivable related to the addition of calcimimetics into the Medicare ESRD payment bundle. In Q3/18, operating cash flow was €609 million (Q3/17: €612 million), 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. The cash flow margin was 15.0% (Q3/17: 14.1%).

Fresenius Medical Care revised its outlook for FY/18 as the business development in Q3/18 was below the company’s expectations. Fresenius Medical Care now expects sales growth of 2% to 3%²  in constant currency (previously: 5% to 7%²). On a comparable basis³, Fresenius Medical Care now expects FY/18 net income¹ to increase by 11% to 12%³ in constant currency (previously: 13% to 15%³). On an adjusted basis⁴, Fresenius Medical Care now expects FY/18 net income¹ to increase by 2% to 3%⁴ in constant currency (previously: 7% to 9%⁴).

For further information, please see Fresenius Medical Care’s Investor News at www.freseniusmedicalcare.com.  

¹ Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
² 2017 base: €16,739 million (adjusted for IFRS 15 adoption (-€486 million) and divestitures of Care Coordination activities (-€558 million))
³ 2017 base: €1,242 million, excluding H2/17 net income of divestited Care Coordination activities (-€38 million); 2018 including benefits of the U.S. tax reform but excluding gains from divestitures of Care Coordination activities, contributions to the campaigns in the U.S. opposing state ballot initiatives at Fresenius Medical Care and FCPA provision
⁴ 2017 base: €1,162 million, excluding H2/17 net income of divested Care Coordination activities (-€38 million), the effect of the U.S. tax reform, natural disaster costs, FCPA provision and effects of the agreement with the U.S. Departments of Veterans Affairs and Justice (VA agreement); 2018 excluding benefits of the U.S. tax reform, gains from divestitures of Care Coordination activities, contributions to the campaigns in the U.S. opposing state ballot initiatives and FCPA provision 
 

Fresenius Kabi

Fresenius Kabi offers intravenously administered generic drugs, clinical nutrition and infusion therapies for seriously and chronically ill patients in the hospital and outpatient environments. The company is also a leading supplier of medical devices and transfusion technology products. In the biosimilars business, we are developing products with a focus on oncology and autoimmune diseases.

• 8% organic sales growth and 14% EBIT¹ growth in constant currency (excl. biosimilars expenses) in Q3
• Sales outlook confirmed and strengthened: top end of 4% to 7% organic sales growth expected
• EBIT outlook raised: 1% to 3%⁵  EBIT growth in constant currency expected (~9% to 11%⁶ excl. biosimilars expenses) 

Sales increased by 2% (increased by 7% in constant currency) to €4,857 million (Q1-3/17: €4,764 million). Organic sales growth was 7%. Strong negative currency translation effects (-5%) were mainly related to the devaluation of the U.S. dollar, the Brazilian real and the Argentinian peso against the euro. In Q3/18, sales increased by 6% (8% in constant currency) to €1,650 million (Q3/17: €1,562 million). Organic sales growth was 8%.

Sales in Europe grew by 1% (organic growth: 3%) to €1,658 million (Q1-3/17: €1,635 million). In Q3/18, sales were unchanged (organic growth: 1%) at €538 million. 

¹ Before special items 
² Before expenses for the further development of the biosimilars business: Q3/18: 14%; Q1-3/18: 11%
³ Net income attributable to shareholders of Fresenius SE & Co. KGaA
⁴ Before expenses for the further development of the biosimilars business: Q3/18: 31%; Q1-3/18: 22% 
⁵ FY/17 base: €1,177 million; before special items, including expenditures for the further development of the biosimilars business (€60 million in FY/17 and ~€160 million in FY/18)
⁶ FY/17 base: €1,237 million; before special items, excluding expenditures for the further development of the biosimilars business (€60 million in FY/17 and ~€160 million in FY/18)
For a detailed overview of special items please see the reconciliation tables on pages 19-20 in the PDF document.
 

Sales in North America increased by 1% (organic growth: 8%) to €1,760 million (Q1-3/17: €1,736 million). In Q3/18, sales increased by 13% (organic growth: 12%) to €620 million (Q3/17: €549 million). 

Sales in Asia-Pacific increased by 8% (organic growth: 12%) to €964 million (Q1-3/17: €894 million). In Q3/18, sales increased by 8% (organic growth: 9%) to €337 million (Q3/17: €312 million). Sales in Latin America/Africa decreased by 5% (organic growth: 11%) to €475 million (Q1-3/17: €499 million). In Q3/18, sales decreased by 5% (organic growth increased by 13%) to €155 million (Q3/17: €163 million).

EBIT¹ decreased by 6% (increased by 1% in constant currency) to €854 million (Q1-3/17: €905 million) with an EBIT margin¹ of 17.6% (Q1-3/17: 19.0%). In Q3/18, EBIT¹ increased by 5% (5% in constant currency) to €297 million (Q3/17: €283 million) with an EBIT margin¹ of 18.0% (Q3/17: 18.1%).

EBIT¹ before expenses for the further development of the biosimilars business increased by 5% (11% in constant currency) to €967 million (Q1-3/17: €919 million) with an EBIT margin¹ of 19.9% (Q1-3/17: 19.3%). In Q3/18, EBIT¹ before expenses for the further development of the biosimilars business increased by 14% (14% in constant currency) to €338 million (Q3/17: €297 million) with an EBIT margin¹ of 20.5% (Q3/17: 19.0%).

Net income^1,2  increased by 2% (9% in constant currency) to €554 million (Q1-3/17: €544 million). In Q3/18, net income^1,2 increased by 21% (21% in constant currency) to €199 million (Q3/17: €165 million).

Operating cash flow increased by 28% to €820 million (Q1-3/17: €640 million). The cash flow margin grew to 16.9% (Q1-3/17: 13.4%). In Q3/18, operating cash flow increased by 49% to €366 million (Q3/17: €245 million) with a cash flow margin of 22.2% (Q3/2017: 15.7%) mainly driven by a strong operational performance and working capital improvements. 

¹ Before special items
² Net income attributable to shareholders of Fresenius SE & Co. KGaA 
For a detailed overview of special items please see the reconciliation tables on pages 19-20 of the PDF document.
 
Based on the strong development in Q3/18 Fresenius Kabi confirms and strengthens its organic sales growth guidance of 4% to 7% and now expects to reach the top end of this range. 

Fresenius Kabi has increased its FY/18 EBIT outlook and now expects 1% to 3%¹ growth in constant currency (previously: -2% to +1%¹). The increase is driven by a strong development across all product lines and regions with North America standing out. FY/18 EBIT excluding expenditures for the further development of the biosimilars business is now expected to grow by ~9% to 11%² in constant currency (previously: ~6% to 9%²).

¹ 2017 base: €1,177 million; before special items, including expenditures for the further development of the biosimilars business (€60 million in FY/17 and ~€160 million in FY/18)
² 2017 base: €1,237 million; before special items, excluding expenditures for the further development     of the biosimilars business (€60 million in FY/17 and ~€160 million in FY/18) 
For a detailed overview of special items please see the reconciliation tables on pages 19-20 of the PDF document.
 

Fresenius Helios

Fresenius Helios is Europe's leading private hospital operator. The company comprises Helios Germany and Helios Spain (Quirónsalud). Helios Germany operates 87 hospitals, 89 outpatient centers and treats approximately 5.2 million patients annually. Quirónsalud operates 46 hospitals, 56 outpatient centers and around 300 occupational risk prevention centers, and treats approximately 11.6 million patients annually.

• 2% organic sales growth in Q3
• Preparatory initiatives for expected regulatory requirements and decline in admissions impact financial performance of Helios Germany 
• Helios Spain with steady yet dynamic growth
• 2018 sales outlook confirmed and narrowed, EBIT outlook adjusted: 0% to 2% (previously: 5% to 8%) 

As of July 1, 2018 Fresenius Helios transferred its German post-acute care business to Fresenius Vamed and adjusted its outlook accordingly. For a like-for-like comparison, we also provide sales and EBIT growth rates adjusted for the effects of this transaction. 

Fresenius Helios increased sales by 5% (7%¹) to €6,762 million (Q1-3/17: €6,422 million). Organic sales growth was 3%. In Q3/18, sales decreased by 4% (increased by 2%¹; organic growth: 2%) to €2,088 million (Q3/17: €2,166 million).

Sales of Helios Germany decreased by 1% (grew 2%¹; organic growth: 2%) to €4,531 million (Q1-3/17: €4,562 million). In Q3/18, sales decreased by 7% (0%¹; organic growth: 0%) to €1,410 million (Q3/17: €1,524 million). Sales are impacted by a decline in admissions, inter alia due to a trend towards outpatient treatments. To counter this trend, Helios Germany is expanding outpatient services offerings in a separate division. Helios Spain increased sales by 20% (organic growth: 5%) to €2,231 million (Q1-3/17: €1,860 million), mainly due to the additional month of consolidation compared to the prior-year period (Quirónsalud is consolidated since February 1, 2017). In Q3/18 Helios Spain increased sales by 6% (organic growth: 5%) to €678 million (Q3/17: €642 million). 

¹ Adjusted for German post-acute care business transferred to Fresenius Vamed
² Net income attributable to shareholders of Fresenius SE & Co. KGaA

Fresenius Helios grew EBIT by 1% (3%¹) to €775 million (Q1-3/17: €769 million) with a margin of 11.5% (Q1-3/17: 12.0%). In Q3/18, EBIT decreased by 12% (-6%¹) to €204 million (Q3/17: €232 million) with a margin of 9.8% (Q3/17: 10.7%).

EBIT of Helios Germany decreased by 11% (-8%¹) to €488 million (Q1-3/17: €549 million) with a margin of 10.8% (Q1-3/17: 12.0%). In Q3/18, EBIT decreased by 25% (-17%¹) to €143 million (Q3/17: €190 million) with a margin of 10.1% (Q3/17: 12.5%). Given a  significant fixed cost base, top line performance impacs EBIT over-proportionately. Additionally, EBIT development of Helios Germany is negatively affected by catalogue effects, preparatory initiatives for expected regulatory requirements (i.e. clustering) as well as a lack of privatization opportunities in the German market. 

EBIT of Helios Spain increased by 30% to €286 million (Q1-3/17: €220 million), mainly due to the strong operating performance and the additional month of consolidation compared to the prior-year period, with a margin of 12.8% (Q1-3/17: 11.8%). In Q3/18, from a moderate base, EBIT increased by 40% to €59 million (Q3/17: €42 million) with a margin of 8.7% (Q3/17: 6.5%).

Net income² of Fresenius Helios decreased by 2% to €516 million (Q1-3/17: €526 million). In Q3/18, net income² decreased by 16% to €128 million (Q3/17: €153 million).

Operating cash flow was €387 million (Q1-3/17: €560 million) with a margin of 5.7% (Q1-3/17: 8.7%). 
Fresenius Helios confirmed and narrowed its FY/18 organic sales growth outlook, and now projects growth at the low end of the original 3% to 6% range. Based on the Q3/18 business development in Germany, Fresenius Helios adjusts its FY/18 EBIT outlook and now expects 0% to 2% growth (previously: 5% to 8%). 

¹ Adjusted for German post-acute care business transferred to Fresenius Vamed
² Net income attributable to shareholders of Fresenius SE & Co. KGaA

Fresenius Vamed

Fresenius Vamed manages projects and provides services for hospitals and other health care facilities worldwide and is a post-acute care provider in Central Europe. The portfolio ranges along the entire value chain: from project development, planning, and turnkey construction, via maintenance and technical management, to total operational management.

• Excellent organic sales growth of 30% in Q3/18
• Both service and project businesses contributed to strong growth in Q3/18
• FY/18 outlook confirmed

As of July 1, 2018 Fresenius Helios transferred the post-acute care business to Fresenius Vamed. Fresenius Vamed adjusted its outlook accordingly. For a like-for-like comparison, we also provide sales and EBIT growth rates adjusted for the effects of this transaction. 

Sales increased by 32% (17%¹; 33% in constant currency) to €991 million (Q1-3/17: €748 million). Organic sales growth was 14% with a strong momentum in both the project and service businesses as well as increased sales from services for Fresenius Helios. Sales of the project business increased by 17% to €352 million (Q1-3/17: €301 million). Sales in the service business grew by 43% (17%¹) to €639 million (Q1-3/17: €447 million). In Q3/18, sales increased by 110% (32%¹; organic growth: 24%) to €315 million (Q3/17: €150 million).

EBIT increased by 53% (6%¹) to €49 million (Q1-3/17: €32 million) with a margin of 4.9% (Q1-3/17: 4.3%). In Q3/18, EBIT increased by 107% (7%¹) to €31 million (Q3/17: €15 million) with a margin of 6.5% (Q3/17: 5.6%).

Net income² increased by 57% to €33 million (Q1-3/17: €21 million). In Q3/18, net income² increased by 120% to €22 million (Q1-3/17: €10 million).

Order intake decreased by 19% to €567 million (Q1-3/17: €697 million). As of September 30, 2018, order backlog was €2,315 million (December 31, 2017: €2,147 million).

Fresenius Vamed has confirmed its outlook for 2018 and expects organic sales growth in the range of 5% to 10% and EBIT growth of 32% to 37%.

¹ Without German post-acute care business transferred from Fresenius Helios
² Net income attributable to shareholders of VAMED AG

Conference Call 

As part of the publication of the results for the third quarter / first nine month of 2018, a conference call will be held on October 30, 2018 at 2 p.m. CET (9 a.m. EDT). All investors are cordially invited to follow the conference call in a live broadcast over the Internet at www.fresenius.com/media-calendar. Following the call, a replay will be available on our website.

For additional information on the performance indicators used please refer to our website. 
 

Fresenius confirms and narrows its Group guidance¹ for FY/18. Group sales are expected to increase at the low end of the original 5% to 8%² guidance range (in constant currency). Fresenius expects net income^3,4 growth at the low end of the original 6% to 9% guidance range (in constant currency). Excluding expenditures for the further development of the biosimilars business, net income^3,5 growth is projected at the low end of the original ~10% to 13% guidance range (in constant currency). Narrowing the Group guidance ranges is due to updated expectations at Fresenius Medical Care, Fresenius Kabi and Fresenius Helios.

Fresenius Medical Care adjusts its outlook for FY/18 as the business development in Q3/18 was below the company’s expectations. Fresenius Medical Care now expects sales growth of 2% to 3%⁶ in constant currency (previously: 5% to 7%⁶). Whilst Fresenius Kabi confirms its guidance of 4% to 7% organic sales growth, it now expects to reach the top end of this range. Fresenius Kabi sees a strong development across all product lines and regions with North America standing out. Fresenius Helios confirms and narrows its FY/18 organic sales growth outlook, and now projects growth at the low end of the original 3% to 6% range. The business development in Germany in Q3/18 was below the company’s expectations mainly due to a decline in admissions and additional catalogue effects. In line with market development in Germany, Fresenius Helios sees a trend towards outpatient treatments leading to fewer admissions in its hospitals.

On a comparable basis⁸, Fresenius Medical Care now expects FY/18 net income⁷ to increase by 11% to 12%⁸ in constant currency (previously: 13% to 15%⁸). On an adjusted basis⁹, Fresenius Medical Care now expects FY/18 net income⁷ to increase by 2% to 3%⁹ in constant currency (previously: 7% to 9%⁹). Fresenius Kabi increases its FY/18 EBIT outlook and now expects 1% to 3%¹⁰ growth in constant currency (previously: -2% to +1%¹⁰). The increase is driven by a strong development across all product lines and regions with North America standing out. FY/18 EBIT excluding expenditures for the further development of the biosimilars business is now expected to grow by ~9% to 11%¹¹ in constant currency (previously: ~6% to 9%¹¹). Fresenius Helios adjusts its FY/18 EBIT outlook and now expects 0% to 2% growth (previously: 5% to 8%), driven by lower sales growth in Germany. Moreover, preparatory structural activities for anticipated regulatory requirements (e.g. clustering), as well as a lack of privatization opportunities in the German market continue to weigh on earnings growth.

Fresenius Vamed confirms its outlook for FY/18 and expects organic sales growth in the range of 5% to 10% and FY/18 EBIT growth of 32% to 37%. The integration of the inpatient post-acute care business acquired from Helios Germany is fully on track.

Q3/2018 preliminary financial results

In Q3/18, Fresenius Group sales increased by ~3%¹² (~4%¹² in constant currency) to ~€8.2 billion (Q3/2017: €8.297 billion). Group net income³ before special items¹³ increased by ~8% (~8% in constant currency) to ~€445 million (Q3/2017: €413 million). Fresenius Medical Care has increased the provision for the FCPA (Foreign Corrupt Practices Act) related charge by €75 million (not tax deductible). As in 2017, this charge is treated as a special item. Group net income³ before special items¹³ and before expenses for the further development of the biosimilars business increased by ~13% (~13% in constant currency) to ~€474 million (Q3/2017: €423 million).

Fresenius will publish its detailed Q3/18 and Q1-Q3/18 financial results on October 30, 2018.

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¹Excluding effects related to the Akorn and NxStage transactions, gains from divestitures of Care Coordination activities and FCPA provision
²2017 base adjusted for IFRS 15 adoption (deduction of €486 million at Fresenius Medical Care) and divestitures of Care Coordination activities (deduction of €558 million at Fresenius Medical Care)
³Net income attributable to shareholders of Fresenius SE & Co. KGaA
⁴2017 base: €1,804 million; 2018 before special items (i.e. expenses related to the Akorn and NxStage transactions, gains from divestitures of Care Coordination activities and FCPA provision; including contributions to the campaigns in the U.S. opposing state ballot initiatives at Fresenius Medical Care and including expenditures for further development of the biosimilars business at Fresenius Kabi (€43 million after tax in FY/17 and ~€120 million after tax in FY/18))
⁵2017 base: €1,847 million; 2018 before special items (i.e. expenses related to the Akorn and NxStage transactions, gains from divestitures of Care Coordination activities and FCPA provision; including contributions to the campaigns in the U.S. opposing state ballot initiatives at Fresenius Medical Care excluding the expenditures for further development of the biosimilars business at Fresenius Kabi (€43 million after tax in FY/17 and ~€120 million after tax in FY/18))
⁶2017 base: €16,739 million (adjusted for IFRS 15 adoption (-€486 million) and divestitures of Care Coordination activities (-€558 million))
⁷Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
⁸2017 base: €1,242 million, excluding H2/17 net income of divestitures of Care Coordination activities (-€38 million); 2018 including benefits of the U.S. tax reform but excluding gains from divestitures of Care Coordination activities, contributions to the campaigns in the U.S. opposing state ballot initiatives at Fresenius Medical Care and FCPA provision
⁹2017 base: €1,162 million, excluding divestitures of Care Coordination activities (-€38 million), the effect of the U.S. tax reform, natural disaster costs, FCPA provision and effects of the agreement with the U.S. Departments of Veterans Affairs and Justice (VA agreement)
¹⁰2017 base: €1,177 million; 2017 & 2018 before special items, including expenditures for the further development of the biosimilars business (€60 million in FY/17 and ~€160 million in FY/18)
¹¹2017 base: €1,237 million; 2017 & 2018 before special items, excluding expenditures for the further development of the biosimilars business (€60 million in FY/17 and ~€160 million in FY/18)
¹²Growth rates adjusted for IFRS 15 adoption and divestitures of Care Coordination activities (Q3/17 base: €7,927 million)
¹³Before expenses related to the Akorn transaction, gains from divestitures of Care Coordination activities and FCPA provision, but including contributions to the campaigns in the U.S. opposing state ballot initiatives at Fresenius Medical Care

• Anticipated revenue decrease of around 6% on a reported basis and an increase of around 2% on a comparable basis¹ (+3% at constant currency)
• Net income development affected by
  • Weaker than expected Dialysis Services business
  • Contributions to the campaigns in the U.S. opposing state ballot initiatives
  • Year-to-date adjustments for hyperinflation in Argentina
  • Increased provision for the ongoing FCPA settlement discussion
• Targets for full year 2018 revised:
  • Revenue growth on a comparable basis¹: 2 to 3% (from 5 to 7%)
  • Net income growth on a comparable basis¹: 11 to 12% (from 13 to 15%)

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

“The underlying growth trends and business drivers remain intact. While we were able to improve profitability in North America, the growth acceleration in the region did not materialize as fast as anticipated. In addition, the business performance in some emerging countries was muted due to a challenging economic environment. Based on these developments, which are not expected to be fully recovered in the fourth quarter, we adjust our targets for fiscal 2018,” said Rice Powell, Chief Executive Officer of Fresenius Medical Care. “To protect the access of our patients to dialysis care, we contributed to the opposition to the ballot initiatives in the U.S.”

Revenue
Revenue in the third quarter 2018 is anticipated to decline by around 6% to approx. EUR 4,058 million (a decrease of around 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. Excluding these two effects, revenue is expected to increase by around 2% on a comparable basis (~3% at constant currency), mainly driven by an increase in treatment volumes in North America. The increase in revenue is anticipated to come in below expectations due to an overall weaker than expected Health Care Services business in North America and the difficult economic environment in certain emerging countries, including currency fluctuations. The lower than expected increase in North America was mainly driven by an unfavorable payor mix as well as lower than expected volumes in the Dialysis Services and Care Coordination businesses.

Operating income (EBIT)
Total operating income (EBIT) is expected to reach approx. EUR 527 million in the third quarter of 2018, a decrease of around 13% (a decrease of around 20% at constant currency). The anticipated strong decrease was mainly attributable to the higher comparable base which included the Q3 2017 EBIT contribution from Sound of EUR 20 million. In addition, the contributions to the opposition to the ballot initiatives in the U.S. of EUR 23 million (not tax effected) in the third quarter affected the operating income growth. We have also increased the provision for the FCPA related charge by EUR 75 million (not tax effected). This increase reflects an understanding with the U.S. Government on the financial aspects of a potential settlement and an update of ongoing legal costs to reach closure. However, significant non-financial matters are still under discussion and must be resolved to the company’s satisfaction for a settlement to occur.

Excluding the effects of Sound, the contributions to the ballot initiatives as well as the FCPA related charge, EBIT is expected to increase by around 5% on a comparable basis (around 4% at constant currency). The assumed lower than expected EBIT increase on a comparable basis was driven by the weaker Dialysis Services business in North America due to higher patient care and supply cost, in particular for home dialysis. The development was also negatively impacted by charges for hyperinflation in Argentina of around EUR 17 million at constant currency (not tax effected), transactional exchange rate losses and higher bad debt associated with the development in certain emerging countries. These developments could not be fully mitigated in the quarter.

Net income
Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA is expected to decrease by around 8% to approx. EUR 285 million in the third quarter of 2018 (a decrease of around 17% at constant currency). On a comparable basis net income is expected to increase by around 20% to approx. EUR 364 million (around 19% at constant currency). The contributions to the opposition to the ballot initiatives in the U.S., the hyperinflationary adjustment for Argentina and the increase of the provision for the FCPA related charge have not been tax effected.

Outlook 2018
Fresenius Medical Care adjusts its targets for the financial year 2018 as the business development in the third quarter 2018 was below the company’s expectations. The company now expects revenue growth of 2 to 3% at constant currency (previously: 5 to 7%). Net income on a comparable basis is expected to increase by 11 to 12% (previously: 13 to 15%) at constant currency. On an adjusted basis, net income is expected to increase by 2 to 3% (previously: 7 to 9%) at constant currency.

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

Final Q3 2018 results and conference call
All figures in this press release are still preliminary. The company will publish its Q3 and 9 months 2018 financial results, as scheduled, on October 30, 2018. 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 / 9:30 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.

In the lawsuit by Akorn, Inc. against Fresenius for the consummation of the April 2017 merger agreement the Court of Chancery in the U.S. state of Delaware today ruled in favor of Fresenius. The judgment is not yet final.

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.

The price increase for hospital services in Germany has been set at 2.65% for 2019. This is in line with the level of past years.

Fresenius Medical Care, the world’s largest provider of dialysis products and services, has been recognized for the 10th consecutive year as a sustainability leader with inclusion in the Dow Jones Sustainability Index (DJSI Europe). The DJSI Europe index represents the top 20 percent of the largest 600 European companies in the S&P Global BMI, based on the international investment company RobecoSAM’s analysis of their economic, environmental and social performance.

This year, Fresenius Medical Care scored particularly highly for its reporting on environmental and social issues as well as its materiality analysis, which identifies issues in the economy, environment and society that may significantly affect a company’s performance. With publication of its first non-financial group report in 2018, Fresenius Medical Care has also established a global sustainability governance structure. This will further improve the coordination and management of sustainability topics across all regions.

Rice Powell, Chief Executive Officer of Fresenius Medical Care and head of the company’s Sustainability Decision Board, said: “Over the past years, we have continuously built up our sustainability efforts, as we are convinced that acting in a responsible and sustainable manner goes hand in hand with our commercial success. Being included in the renowned Dow Jones Sustainability Index for 10 years in a row makes us proud, and confirms that we are on the right track by putting patients first.”

If no timeframe is specified, information refers to H1/2018

Q2/2018:

• Sales: €8.4 billion (-2%, +5% in constant currency¹)
• EBIT²: €1,145 million (-3%, +2% in constant currency)
• EBIT² (excl. biosimilars business): €1,182 million (0%, +5% in constant currency)
• Net income^2,3: €472 million (+3%, +7% in constant currency)
• Net income^2,3 (excl. biosimilars business): €499 million (+9%, +12% in constant currency)

H1/2018:

• Sales: €16.5 billion (-2%, +6% in constant currency¹)
• EBIT²: €2,199 million (-8%, -2% in constant currency)
• EBIT²: (excl. biosimilars business) €2,271 million (-5%, +1% in constant currency)
• Net income^2,3: €922 million (+1%, +7% in constant currency)
• Net income^2,3 (excl. biosimilars business): €975 million (+6%, +12% in constant currency)

^{1 Growth rate adjusted for IFRS 15 adoption (Q2/17 base: €8,401 million; H1/2017 base: €16,624 million)2 Before special items (i.e., expenses related to the Akorn transaction, gains related to divestitures of Care Coordination activities)3 Net income attributable to shareholders of Fresenius SE & Co. KGaA}For a detailed overview of special items please see the reconciliation tables on pages 19 - 20 in the PDF document.

Stephan Sturm, CEO of Fresenius, said: “The first half of 2018 was a very good one for Fresenius. After our successful start, we have delivered a strong second quarter with continued healthy growth in sales and earnings. All four business segments contributed to this, and all four business segments display outstanding prospects for the future. For Fresenius Kabi, we are even a bit more optimistic than before. We are therefore fully on track to achieve our ambitious growth targets as we steer toward another excellent year for Fresenius.”

Group guidance¹ for 2018 confirmed

Fresenius confirms its guidance for 2018. Group sales are expected to increase by 5% to 8%² in constant currency. Net income^3,4 is expected to grow by 6% to 9% in constant currency. Excluding expenditures for the further development of the biosimilars business, net income^3,5 is expected to grow by ~10% to 13% in constant currency.

Fresenius expects to further reduce its net debt/EBITDA ratio⁶ by year-end 2018.

6% sales growth in constant currency⁷

Group sales decreased by 1%⁷ (increased by 6%⁷ in constant currency) to €16,503 million (H1/2017: €16,894 million). Organic sales growth was 4%. Acquisitions/divestitures contributed net 2% to growth. Negative currency translation effects (7%) were mainly driven by the devaluation of the U.S. dollar and the Chinese yuan against the euro. In Q2/2018, Group sales were nearly unchanged⁷ (increased 5%⁷ in constant currency) at €8,382 million (Q2/2017: €8,532 million). Organic sales growth was 4%. Acquisitions/divestitures contributed net 1% to growth.

^{1 Excluding expenses related to the Akorn and NxStage transactions and gains from divestitures of Care Coordination activities 2 2017 base adjusted for IFRS 15 adoption (deduction of €486 million at Fresenius Medical Care) and divestitures of Care Coordination activities (deduction of €558 million at Fresenius Medical Care) 3 Net income attributable to shareholders of Fresenius SE & Co. KGaA4 2017 base: €1,804 million; 2018 before special items; including expenditures for further development of biosimilars business (€43 million after tax in FY/17 and ~€120 million after tax in FY/18)5 2017 base: €1,847 million; 2018 before special items6 Calculated at expected annual average exchange rates for both net debt and EBITDA; excluding effects of the Akorn and NxStage transactions and gains from divestitures of Care Coordination activities; excluding further potential acquisitions; at current IFRS rules7 Growth rates adjusted for IFRS 15 adoption (H1/17 base: €16,624 million; Q2/17 base: €8,401 million)}

Group sales by region:

7% net income^1,2 growth in constant currency

Group EBITDA² decreased by 6% (0% in constant currency) to €2,912 million (H1/2017: €3,098 million). Group EBIT² decreased by 8% (-2% in constant currency) to €2,199 million (H1/2017: €2,393 million). The prior-year period saw the compensation for treatments of U.S. war veterans (“VA agreement”) contributing €91 million as a one-time effect. Excluding the VA agreement, EBIT² increased by 2% in constant currency in H1/2018. The EBIT margin² was 13.3% (13.1% before IFRS 15; H1/17: 14.2%). Group EBIT² before expenses for the further development of the biosimilars business decreased by 5% (increased 1% in constant currency) to €2,271 million. Group EBIT² excluding the VA agreement and expenses for the biosimilars business increased by 5% in constant currency.

In Q2/2018, Group EBIT² decreased by 3% (increased 2% in constant currency) to €1,145 million (Q2/2017: €1,177 million), with an EBIT margin² of 13.7% (13.4% before IFRS 15; Q2/2017: 13.8%). Group EBIT² excluding expenses for the biosimilars business increased by 5% in constant currency.

^{1 Net income attributable to shareholders of Fresenius SE & Co. KGaA2 Before special items}For a detailed overview of special items please see the reconciliation tables on pages 19-20 in the PDF document.

Group net interest² was -€297 million (H1/2017: -€326 million). The decrease is mainly driven by currency effects and reduced interest following refinancing activities.

The decrease of the Group tax rate before special items to 22.3% (H1/2017: 28.5%) was mainly due to the U.S. tax reform. In Q2/2018, the Group tax rate² was 23.4% (Q2/2017: 27.9%).

Noncontrolling interest² was €556 million (H1/2017: €562 million), of which 95% was attributable to the noncontrolling interest in Fresenius Medical Care.

Group net income^1,2 increased by 1% (7% in constant currency) to €922 million (H1/2017: €916 million). Earnings per share^1,2 increased by 1% (7% in constant currency) to €1.66 (H1/2017: €1.65). In Q2/2018, Group net income^1,2 increased by 3% (7% in constant currency) to €472 million (Q2/2017: €459 million). Earnings per share^1,2 increased by 3% (7% in constant currency) to €0.85 (Q2/2017: €0.82).

Group net income^1,2 before expenses for the further development of the biosimilars business increased by 6% (12% in constant currency) to €975 million (H1/2017: €916 million). Earnings per share^1,2 before expenses for the further development of the biosimilars business increased by 6% (12% in constant currency) to €1.76 (H1/2017: €1.65). In Q2/2018, Group net income^1,2 before expenses for the further development of the biosimilars business increased by 9% (12% in constant currency) to €499 million (Q2/2017: €459 million). Earnings per share^1,2 before expenses for the further development of the biosimilars business increased by 9% (12% in constant currency) to €0.90 (Q2/2017: €0.82).

Group net income¹ after special items increased by 20% (29% in constant currency) to €1,092 million (H1/2017: €907 million), mainly due to gains related to divestitures in Care Cordination activities at Fresenius Medical Care. Earnings per share¹ after special items increased by 20% (29% in constant currency) to €1.97 (H1/2017: €1.64). In Q2/2018, Group net income¹ after special items increased by 45% (54% in constant currency) to €652 million (Q2/2017: €450 million). Earnings per share¹ after special items increased by 45% (54% in constant currency) to €1.18 (Q2/2017: €0.81).

^{1 Net income attributable to shareholders of Fresenius SE & Co. KGaA2 Before special items}For a detailed overview of special items please see the reconciliation tables on pages 19-20 in the PDF document.

Continued investment in growth

Spending on property, plant and equipment was €831 million (H1/2017: €709 million), primarily for the modernization and expansion of dialysis clinics, production facilities as well as hospitals and day clinics. This corresponds to 5.0% of sales.

Total acquisition spending was €386 million (H1/2017: €6,421 million). The prior-year period included the acquisition of Quirónsalud.

Cash flow development

Operating cash flow decreased by 25% to €1,256 million (H1/2017: €1,683 million) with a margin of 7.6% (H1/2017: 10.0%). The decrease is mainly due to two effects at Fresenius Medical Care in North America: Receipt of a ~€200 million payment under the VA agreement in the prior-year period as well as increased accounts receivable related to the addition of calcimimetics into the Medicare ESRD payment bundle. Moreover negative currency translation effects weighed on the cash flow development in H1/2018. Operating cash flow in Q2/2018 decreased by 15% to €1,020 million (Q2/2017: €1,207 million), with a margin of 12.2% (Q2/2017: 14.1%). Negative currency translation effects weighed on the cash flow development in Q2/2018.

Given the effects described above and growing investments, free cash flow before acquisitions and dividends decreased to €425 million (H1/2017: €998 million). Free cash flow after acquisitions and dividends was €942 million (H1/2017: -€5,645 million).

Solid balance sheet structure

The Group’s total assets increased by 3% (3% in constant currency) to €54,982 million (Dec. 31, 2017: €53,133 million). Current assets grew by 13% (13% in constant currency) to €14,287 million (Dec. 31, 2017: €12,604 million). Non-current assets were nearly unchanged (decreased by 1% in constant currency) at €40,695 million (Dec. 31, 2017: € 40,529 million).

Total shareholders’ equity increased by 7% (6% in constant currency) to €23,269 million (Dec. 31, 2017: €21,720 million). The equity ratio increased to 42.3% (Dec. 31, 2017: 40.9%).

Group debt was nearly unchanged (decreased by 1% in constant currency) at €18,989 million (Dec. 31, 2017: € 19,042 million). Group net debt decreased by 4% (-5% in constant currency) to € 16,722 million (Dec. 31, 2017: € 17,406 million) mainly due to the proceeds from divestitures of Care Coordination activities.

As of June 30, 2018, the net debt/EBITDA ratio was 2.80^1,2 (December 31, 2017: 2.84^1,2). Excluding the proceeds from divestitures of Care Coordination activities the net debt/EBITDA ratio was 3.02^1,2.

^{1 At LTM average exchange rates for both net debt and EBITDA; pro forma closed acquisitions/divestitures, excluding Akorn and NxStage transactions2 Before special items}For a detailed overview of special items please see the reconciliation tables on pages 19-20 in the PDF document.

Increased number of employees

As of June 30, 2018, the number of employees was 273,632 (Dec. 31, 2017: 273,249).


Business Segments

Fresenius Medical Care

Fresenius Medical Care is the world's largest provider of products and services for individuals with renal diseases. As of June 30, 2018, Fresenius Medical Care was treating 325,188 patients in 3,815 dialysis clinics. Along with its core business, the company provides related medical services in the field of Care Coordination.

• Q2/2018 reported results significantly positively influenced by divestitures of Care Coordination activities
• 5% adjusted^1,2 sales growth in constant currency in Q2
• 6% adjusted^4,6 net income growth in constant currency in Q2
• 22% net income growth in constant currency on a comparable basis^4,7 in Q2

Reported sales were strongly impacted by headwinds from foreign exchange rates and by the already anticipated decline in Fresenius Medical Care North America’s pharmacy business. Sales decreased by 9% (increased by 3%¹ in constant currency) to €8,189 million (H1/2017: €9,019 million). Organic sales growth was 3%. Currency translation effects reduced sales by 9%. Adoption of IFRS 15 reduced sales by 3%. Excluding the VA agreement in the prior-year quarter, sales growth¹ was 4% in constant currency.

^{1 Growth rate adjusted for IFRS 15 implementation (Q2/17 base: €4,340 million; H1/17 base: €8,749 million)2 Excluding VA agreement: Q2/2018: 5%; H1/2018: 4%3 Adjusted for gains from divestitures of Care Coordination activities: Q2/2018: 4%;}H1/2018: -5%^{4 Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA5 Adjusted for gains from divestitures of Care Coordination activities and the effect of the U.S. Tax Reform: Q2/2018: 8%; H1/2018: -3%6 Consistent with guidance, i.e. excluding gains from divestitures of Care Coordination activities, excluding the effect of the U.S. Tax Reform and excluding VA agreement7 Consistent with guidance, i.e. excluding gains from divestitures of Care Coordination activities, including the effect of the U.S. Tax Reform and including VA agreement}

In Q2/2018, sales decreased by 6% (increased 5%¹ in constant currency) to €4,214 million (Q2/2017: €4,471 million). Organic sales growth was 4%. Currency translation effects reduced sales by 8%. Adoption of IFRS 15 reduced sales by 3%.

Health Care services sales (dialysis services and care coordination) decreased by 8%¹ (increased by 3%¹ in constant currency) to €6,594 million (H1/2017: €7,418 million). With €1,595 million (H1/2017: €1,601 million), Health Care product sales were on prior-year’s level (increased by 6% in constant currency).

In North America, sales decreased by 9%¹ (increased by 1%¹ in constant currency) to €5,746 million (H1/2017: €6,600 million). Health Care services sales decreased by 9%¹ (increased by 1%¹ in constant currency) to €5,351 million (H1/2017: €6,182 million). Excluding the 2017 effect from the VA Agreement (€98 million), Health Care services sales increased by 3%¹ in constant currency. Health Care product sales decreased by 5% (increased by 6% in constant currency) to €395 million (H1/2017: €418 million).

Sales outside North America increased by 1% (8% in constant currency) to €2,436 million (H1/2017: €2,410 million). Health Care services sales increased by 1% (10% in constant currency) to €1,243 million (H1/2017: €1,236 million). Health Care product sales increased by 2% (7% in constant currency) to €1,193 million (H1/2017: €1,174 million).

Fresenius Medical Care’s EBIT increased by 54% (68% in constant currency) to €1,898 million (H1/2017: €1,235 million), driven by the divestitures of Care Coordination activities in Q2/18. The EBIT margin increased to 23.2% (H1/2017: 13.7%). Adjusted for the implementation of IFRS 15 and excluding the gains from divestitures of Care Coordination activities and the VA agreement in the prior-year period, EBIT increased by 3% in constant currency and EBIT margin was 13.2% (H1/2017: 13.2%). In Q2/2018, EBIT increased by 140% (increased by 162% in constant currency) to €1,401 million (Q2/2017: €583 million). The EBIT margin increased to 33.3% (Q2/2017: 13.0%). Adjusted for the adoption of IFRS 15 and excluding the gains from divestitures of Care Coordination activities, EBIT increased by 4% in constant currency and EBIT margin increased to 13.5%.  

^{1 Growth rate adjusted for IFRS 15 implementation (Q2/17: -€131 million; H1/17: -€270 million)}

Net income¹ increased by 121% (141% in constant currency) to €1,273 million (H1/2017: €577 million). Consistent with full-year guidance, i.e. excluding the gains from divestitures of Care Coordination activities, the effect of the U.S. Tax Reform and the VA agreement in the prior-year period, net income growth¹ was 7% in constant currency. Net income¹ growth on a comparable basis, i.e. excluding the gains from divestitures of Care Coordination activities, but including the effect of the U.S. Tax Reform and the VA agreement in the prior-year period, was 13% in constant currency.

In Q2/2018, net income¹ grew by 270% (303% in constant currency) to €994 million (Q2/2017: €269 million). Consistent with full-year guidance, i.e. excluding the gains from divestitures of Care Coordination activities, the effect of the U.S. Tax Reform and the VA agreement in the prior-year period, net income growth¹ was 6% in constant currency. Net income¹ growth on comparable basis, i.e. excluding the gains from divestitures of Care Coordination activities, but including the effect of the U.S. Tax Reform and the VA agreement in the prior-year period was 22% in constant currency.

Operating cash flow was €611 million (H1/2017: €1,052 million). The cash flow margin was 7.5% (H1/2017: 11.7%). The decrease is mainly due to two effects in North America: Receipt of a ~€200 million payment under the VA agreement in the prior-year period as well as increased accounts receivable related to the addition of calcimimetics into the Medicare ESRD payment bundle. In Q2/2018, operating cash flow was €656 million (Q2/2017: €882 million) with a cash flow margin of 15.6% (Q2/2017: 19.7%).

Fresenius Medical Care confirms its outlook for 2018 and expects sales growth of 5 to 7%² in constant currency and net income¹ comparable growth of 13% to 15%³ in constant currency (7% to 9%⁴ adjusted net income growth).

The 2018 growth targets are based on 2017 figures and exclude effects from the planned acquisition of NxStage Medical and gains from divestitures of Care Coordination activities.

For further information, please see Fresenius Medical Care’s Press Release at www.freseniusmedicalcare.com.

¹ Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
² 2017 base: €16,739 million (adjusted for IFRS 15 adoption (-€486 million) and excluding Sound´s revenue for H2/2017 (-€558 million))
³ 2017 base: €1,242 million, excluding Sound´s H2/17 net income (-€38 million); 2018 including benefits from U.S. tax reform but excluding gains from divestitures of Care Coordination activities
⁴ Excluding gains from divestitures of Care Coordination activities, excluding the effect of the U.S. Tax Reform natural disaster, FCPA related charge and excluding VA agreement
 

Fresenius Kabi

Fresenius Kabi offers intravenously administered generic drugs, clinical nutrition and infusion therapies for seriously and chronically ill patients in the hospital and outpatient environments. The company is also a leading supplier of medical devices and transfusion technology products. In the biosimilars business, we are developing products with a focus on oncology and autoimmune diseases.

• 6% organic sales growth and 11% EBIT¹ growth in constant currency (excluding biosimilars business) in Q2
• European Commission confirms marketing authorizations of HES subject to the implementation of risk minimization measures
• Sales outlook confirmed: 4% to 7% organic sales growth expected
• EBIT outlook raised: -2% to +1%⁵ EBIT growth in constant currency expected (~6% to 9%⁶ excl. biosimilars expenses)

Sales of €3,207 million (H1/2017: €3,202 million) were on prior-year level (increased by 7% in constant currency). Organic sales growth was 7%. Strong negative currency translation effects (-7%) were mainly related to the devaluation of the U.S. dollar, the Brazilian real and the Chinese yuan against the euro. In Q2/2018, sales of €1,604 million were nearly unchanged (increased by 6% in constant currency) from the prior-year level (Q2/2017: €1,598 million). Organic sales growth was 6%.

Sales in Europe grew by 2% (organic growth: 3%) to €1,120 million (H1/2017: €1,097 million). In Q2/2018, sales increased by 2% (organic growth: 3%) to €563 million (Q2/2017: €553 million).

Sales in North America decreased by 4% (organic growth: 7%) to €1,140 million (H1/2017: €1,187 million). In Q2/2018, sales decreased by 3% (organic growth: 4%) to €549 million (Q2/2017: €568 million).

^{1 Before special items2 Before expenses for the further development of the biosimilars business: Q2/2018: 11%; H1/2018: 10%3 Net income attributable to shareholders of Fresenius SE & Co. KGaA4 Before expenses for the further development of the biosimilars business: Q2/2018: 19%; H1/2018: 17%5 2017 base: €1,177 million; 2017 & 2018 before special items, including expenditures for the further development of the biosimilars business (€60 million in FY/17, and expected expenditures of ~€160 million in FY/18)6 2017 base: €1,237 million; 2017 & 2018 before special items}For a detailed overview of special items please see the reconciliation tables on pages 19-20 in the PDF document.

Sales in Asia-Pacific increased by 8% (organic growth: 13%) to €627 million (H1/2017: €582 million). In Q2/2018, sales increased by 8% (organic growth: 11%) to €326 million (Q2/2017: €302 million). Sales in Latin America/Africa decreased by 5% (organic growth: 10%) to €320 million (H1/2017: €336 million). In Q2/2018, sales decreased by 5% (organic growth: 10%) to €166 million (Q2/2017: €175 million).

EBIT¹ decreased by 10% (-1% in constant currency) to €557 million (H1/2017: €622 million) with an EBIT margin¹ of 17.4% (H1/2017: 19.4%). In Q2/2018, EBIT¹ decreased by 6% (-1% in constant currency) to €289 million (Q2/2017: €309 million) with an EBIT margin¹ of 18.0% (Q2/2017: 19.3%).

EBIT¹ before expenses for the further development of the biosimilars business increased by 1% (10% in constant currency) to €629 million (H1/2017: €622 million) with an EBIT margin¹ of 19.6% (H1/2017: 19.4%). In Q2/2018, EBIT¹ before expenses for the further development of the biosimilars business increased by 6% (11% in constant currency) to €326 million (Q2/2017: €309 million) with an EBIT margin¹ of 20.3% (Q2/2017: 19.3%).

Net income^1,2 decreased by 6% (increased by 4% in constant currency) to €355 million (H1/2017: €379 million). In Q2/2018, net income^1,2 decreased by 2% (increased by 5% in constant currency) to €185 million (Q2/2017: €188 million).

Operating cash flow increased by 15% to €454 million (H1/2017: €395 million). The cash flow margin grew to 14.2% (H1/2017: 12.3%). In Q2/2018, operating cash flow increased by 12% to €228 million (Q2/2017: €203 million) with a cash flow margin of 14.2% (Q2/2017: 12.7%).

^{1 Before special items2 Net income attributable to shareholders of Fresenius SE & Co. KGaA}For a detailed overview of special items please see the reconciliation tables on pages 19-20 in the PDF document.

Based on the strong development of Fresenius Kabi in H1/2018 and the reversal of some HES¹ associated risk adjustments, Fresenius Kabi raises its EBIT outlook for 2018 by 4%-points and now expects EBIT growth in constant currency of -2% to +1%² (previously: -6% to -3%² in constant currency). Excluding expenditures for the further development of the biosimilars business, EBIT is now expected to grow by ~6% to 9%³ in constant currency (previously: ~2% to 5%³ in constant currency). Fresenius Kabi confirms its sales guidance of 4% to 7% organic growth.

^{1 Hydroxyethyl starch (HES)2 2017 base: €1,177 million; 2017 & 2018 before special items, including expenditures for the further development of the biosimilars business (€60 million in FY/17 and expected expenditures of ~€160 million in FY/18)3 2017 base: €1,237 million; 2017 & 2018 before special items}For a detailed overview of special items please see the reconciliation tables on pages 19-20 in the PDF document.

Fresenius Helios

Fresenius Helios is Europe's leading private hospital operator. The company comprises Helios Germany and Helios Spain (Quirónsalud). Helios Germany operates 87 acute care hospitals, 89 outpatient centers and treats approximately 5.2 million patients annually. Quirónsalud operates 45 hospitals, 56 outpatient centers and around 300 occupational risk prevention centers, and treats approximately 11.6 million patients annually.

• 4% organic sales growth in Q2
• DRG catalogue effects and preparatory structural activities for anticipated regulatory measures weigh on financial performance of Helios Germany
• Helios Spain with accelerated growth: 8% organic sales growth and 19% EBIT growth in Q2
• 2018 outlook confirmed

Fresenius Helios increased sales by 10% to €4,674 million (H1/2017: €4,256 million). Organic sales growth was 4%. In Q2/2018, sales increased by 5% (organic growth: 4%) to €2,343 million (Q2/2017: €2,238 million).

Sales of Helios Germany increased by 3% (organic growth: 3%) to €3,121 million (H1/2017: €3,038 million). In Q2/2018, sales increased by 2% (organic growth: 3%) to €1,547 million (Q2/2017: €1,510 million). Helios Spain increased sales by 28% (organic growth: 5%) to €1,553 million (H1/2017: €1,218 million), mainly due to the additional month of consolidation compared to the prior-year period (Quirónsalud is consolidated since February 1, 2017). In Q2/2018 Helios Spain increased sales by 9% (organic growth: 8%) to €796 million (Q2/2017: €728 million).

Fresenius Helios grew EBIT by 6% to €571 million (H1/2017: €537 million) with a margin of 12.2% (H1/2017: 12.6%). In Q2/2018, EBIT increased by 4% to €293 million (Q2/2017: €282 million) with a margin of 12.5% (Q2/2017: 12.6%).

EBIT of Helios Germany decreased by 4% to €345 million (H1/2017: €359 million) with a margin of 11.1% (H1/2017: 11.8%). The decline is mainly due to additional catalogue effects, preparatory structural activities for anticipated regulatory requirements (i.e. clustering) as well as a lack of privatization opportunities in the German market. In Q2/2018, EBIT decreased by 6% to €168 million (Q2/2017: €178 million) with a margin of 10.9% (Q2/2017: 11.8%).

EBIT of Helios Spain increased by 28% to €227 million (H1/2017: €178 million), mainly due to the additional month of consolidation compared to the prior-year period, with a margin of 14.6% (H1/2017: 14.6%). In Q2/2018, EBIT increased by 19% to €124 million (Q2/2017: €104 million) with a margin of 15.6% (Q2/2017: 14.3%).

Net income¹ of Fresenius Helios increased by 4% to €388 million (H1/2017: €373 million). In Q2/2018, net income¹ increased by 3% to €197 million (Q2/2017: €192 million).
Operating cash flow was €259 million (H1/2017: €304 million) with a margin of 5.5% (H1/2017: 7.1%).

The already announced transfer of the in-patient post-acute care business from Fresenius Helios to Fresenius Vamed has become effective as of July 1, 2018. As a consequence, Fresenius Helios’ EBIT growth outlook for 2018 was adjusted to 5% to 8% (previously: 7% to 10%).

Fresenius Helios confirms its outlook for 2018 and expects organic sales growth of 3% to 6% and EBIT growth of 5% to 8%.

¹ Net income attributable to shareholders of Fresenius SE & Co. KGaA
 

Fresenius Vamed

Fresenius Vamed manages projects and provides services for hospitals and other health care facilities worldwide and is a post-acute care provider in Central Europe. The portfolio ranges along the entire value chain: from project development, planning, and turnkey construction, via maintenance and technical management, to total operational management.

• Service business with continued good momentum: 11% sales growth in Q2
• Project business with good order intake of €195 million in Q2
• Transfer of inpatient post-acute care business from Helios Germany to Vamed as of July 1, 2018
• 2018 outlook confirmed

Sales increased by 7% (7% in constant currency) to €515 million (H1/2017: €481 million). Organic sales growth was 5%. Sales in the project business increased by 4% to €191 million (H1/2017: €184 million). Sales in the service business grew by 9% to €324 million (H1/2017: €297 million). In Q2/2018, sales increased by 3% (organic growth: 1%) to €266 million (Q2/2017: €258 million).

EBIT increased by 6% to €18 million (H1/2017: €17 million) with a margin of 3.5% (H1/2017: 3.5%). In Q2/2018, EBIT increased by 9% to €12 million (Q2/2017: €11 million) with a margin of 4.5% (Q2/2017: 4.3%).

Net income¹ of €11 million was unchanged from prior-year’s level. In Q2/2018, net income¹ was also unchanged at €7 million.

Order intake increased by 10% to €455 million (H1/2017: €412 million). As of June 30, 2018, order backlog was €2,372 million (December 31, 2017: €2,147 million).

The already announced transfer of the in-patient post-acute care business from Fresenius Helios to Fresenius Vamed has become effective as of July 1, 2018. As a consequence, Fresenius Vamed’s EBIT growth outlook for 2018 was adjusted to 32% to 37% (previously: 5% to 10%).

Fresenius Vamed confirms its outlook for 2018 and expects organic sales growth in the range of 5% to 10% and EBIT growth of 32% to 37%.

^{1 Net income attributable to shareholders of VAMED AG}

Conference Call

As part of the publication of the results for the second quarter / first half of 2018, a conference call will be held on July 31, 2018 at 2 p.m. CET (8 a.m. EST). All investors are cordially invited to follow the conference call in a live broadcast over the Internet at www.fresenius.com/media-calendar. Following the call, a replay will be available on our website.

For additional information on the performance indicators used please refer to our website https://www.fresenius.com/alternative-performance-measures.

• Healthy organic growth across the board, North American Products business continues strong growth
• Underlying Care Coordination margin improved
• Results continue to be impacted by strong currency headwinds
• Calcimimetics continue to evolve
• Divestiture of Sound Inpatient Physicians successfully closed
• NxStage acquisition expected to close in the second half of 2018

^{1 For a detailed reconciliation, please refer to the table at the end of the press release2 Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA}

Rice Powell, Chief Executive Officer of Fresenius Medical Care, stated: “In the second quarter, we have seen solid growth resulting in a strong net income increase of 22 percent at constant currency – excluding the positive impact of the successful and efficient closing of the Sound Inpatient Physicians divestment. On the back of the strong development of our Products business and continued growth of our Services business, we expect growth to further accelerate in the second half of 2018.”

Strong Products growth
Revenue in the second quarter of 2018 was again significantly impacted by foreign currency effects, resulting in a 2% increase at constant currency to EUR 4,214 million (-6% at current rates). Adjusting the second quarter of 2017 for the impact from the IFRS 15 implementation, revenue in the second quarter of 2018 was up by 5% at constant currency. Health Care Services revenue increased by 1% at constant currency to EUR 3,385 million, driven by growth in same market treatments and contributions from acquisitions, partially offset by the effects from the implementation of IFRS 15. Excluding the negative effects from the implementation of IFRS 15 Health Care Service revenue increased by 4% at constant currency. Health Care Products revenue grew by 6% at constant currency to EUR 829 million. The increase was driven by higher sales of hemodialysis products and renal pharmaceuticals. Organic growth for Health Care Services was 3% and for Health Care Products 6%. Dialysis treatments increased by 3%, mainly as a result of growth in same-market treatments.

In the first half of 2018, revenue was stable at constant currency with EUR 8,189 million (-9% at current rates). Excluding the effect from the implementation of IFRS 15 revenue was up by 3% at constant currency. Health Care Services revenue decreased by 1% at constant currency (-11% at current rates) based on a strong comparable first half of 2017 and unfavourably affected by the implementation of IFRS 15 and the VA Agreement. Health Care Products revenue increased by 6% at constant currency (flat at current rates).

Significant contribution from divestitures of Care Coordination activities
Total operating income (EBIT) reached EUR 1,401 million, an increase of 162% at constant currency (+140% at current rates) in the second quarter of 2018. The strongest contributor was the gain related to the divestitures of Care Coordination activities. The significant contribution of EUR 833 million also includes the positive effect of gains from currency translation adjustments. Adjusting for the gain as well as the prior year impact from the VA Agreement, EBIT grew by 2% at constant currency (-4% at current rates) with an EBIT margin of 13.5%.

In the first half of 2018, EBIT increased by 68% at constant currency to EUR 1,898 million (+54% at current rates). Adjusted for the effects described above, EBIT increased by 3% at constant currency (-6% at current rates) and the EBIT margin was 13.2%.

Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA was exceptionally strong in the second quarter of 2018 with EUR 994 million (+270% at current rates), mainly driven by the gain related to the divestitures of Care Coordination activities. Excluding the gain related to the divestitures of Care Coordination activities, the increase in net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA was 22% at constant currency (+15% at current rates). Further adjusting for the prior year impact from the VA Agreement and the positive effect from the U.S. Tax Reform, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA grew by 6% on a constant currency basis to EUR 273 million (flat at current rates). Based on the number of approximately 306.4 million shares (weighted average number of shares outstanding), basic earnings per share (EPS) amounted to EUR 3.24 (+270% at current rates). On a comparable basis the company generated an EPS of EUR 1.00, up by 22% at constant currency and 15% at current rates. On an adjusted basis EPS increased by 6% to EUR 0.89 at constant currency (flat at current rates).

For the first half of 2018, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA increased by 141% at constant currency (+121% at current rates) to EUR 1,273 million, mainly driven by the gain related to the divestitures of Care Coordination activities. Adjusted for this effect, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA reached EUR 599 million, an increase of 13% at constant currency (+4% at current rates). Further adjusting for the prior year impact from the VA Agreement and the positive effect from the U.S. Tax Reform, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA reached EUR 517 million in the first half of 2018, an increase of 7% at constant currency (-1% at current rates).

Organic growth across all Reporting Segments
North America revenue, which represents 71% of total revenue in the second quarter of 2018, was stable at constant currency and reached EUR 2,971 million (-8% at current rates). Excluding the effect from the implementation of IFRS 15 revenue was up by 4% at constant currency. Organic growth was 3%.

Dialysis Care revenue increased by 4% to EUR 2,232 million at constant currency (-4% at current rates). The growth at constant currency was mainly driven by an increase in organic revenue per treatment, same market treatment growth and contributions from acquisitions, to some extent diluted by the implementation of IFRS 15 and the VA Agreement in the prior year. Adjusted for the implementation of IFRS 15, Dialysis Care revenue increased by 7% at constant currency. Organic revenue per treatment increased by 4%, same-market treatments grew by 2% and acquisitions contributed 1%. At constant currency, Care Coordination revenue decreased by 18% (-24% at current rates), driven by the shift of calcimimetic drugs into the clinical environment and the implementation of IFRS 15, partially offset by improved performance in certain services prior to divestiture. Excluding the effect from the implementation of IFRS 15 Care Coordination revenue decreased by 10% at constant currency.

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 13 from USD 341 to USD 354. The increase was mainly driven by the introduction of calcimimetic drugs in the clinical environment, which is still evolving. The increase was partially offset by lower revenue from commercial payors, as expected, and higher implicit price concessions (IFRS 15).

Cost per treatment in the U.S., adjusted for the implementation of IFRS 15, increased by USD 14 from USD 272 to USD 286. This development was largely a result of the introduction of calcimimetic drugs in the clinical environment as well as increased property and other occupancy related costs, partially offset by lower costs for health care supplies.
At constant currency, Health Care Products revenue showed a strong increase of 10% to EUR 210 million due to higher sales of renal pharmaceuticals, machines and hemodialysis concentrates. Lower external sales in peritoneal dialysis products affected the overall positive development.

Total operating income for the North America segment was EUR 1,286 million in the second quarter of 2018, an increase of 200% at constant currency (+174% at current rates). This increase was mainly driven by the gain related to divestitures of Care Coordination activities. Adjusted for this impact and the 2017 effects from the VA Agreement, operating income (EBIT) was EUR 453 million compared to EUR 471 million in the second quarter of 2017. The adjusted operating income margin was stable at 15.2%.

For the first half of 2018, North America revenue decreased by 3% at constant currency to EUR 5,746 million (-13% at current rates). Adjusted for the implementation of IFRS 15 (EUR 270 million), revenue increased by 1% at constant currency (-9% at current rates). Mainly driven by the gain related to divestitures of Care Coordination activities operating income went up by 83% at constant currency (+66% at current rates) to EUR 1,648 million in the first half of 2018.

As of the end of June 2018, the company was treating 199,527 patients (+3%) at its 2,439 clinics (+4%) in North America. Dialysis treatments increased by 3%.

EMEA revenue increased by 5% at constant currency (+2% at current rates) to EUR 652 million in the second quarter of 2018, mainly driven by the positive development in Health Care Services revenue and Health Care Products revenue, which increased by 5% and 4%, respectively, at constant currency. The increase in Health Care Services revenue was driven by same-market treatment growth and acquisitions. Dialysis Products revenue grew by 5% at constant currency (+2% at current rates) to EUR 319 million, due to higher sales of dialyzers, machines, bloodlines, products for acute care treatments and renal pharmaceuticals.

Non-dialysis Products revenue decreased by 8% at constant currency (-8 % at current rates) to EUR 18 million, primarily due to slightly lower sales volumes.

Operating income was EUR 105 million in the second quarter of 2018. The operating income margin decreased from 17.6% to 16.1%, mainly due to unfavorable impacts from lower income from equity method investees, higher personnel costs in certain countries and an increase in bad debt expenses.

For the first half of 2018, EMEA revenue increased by 5% at constant currency to EUR 1,288 million (+3% at current rates), while operating income of EUR 214 million was 5% below last year´s level at constant currency (-6% at current rates).

As of the end of June 2018, the company had 63,589 patients (+4%) being treated at 758 clinics (+4%) in the EMEA region. Dialysis treatments increased by 4%.

Asia-Pacific revenue grew by 7% at constant currency to EUR 422 million (+1% at current rates) in the second quarter of 2018. Health Care Services revenue in the region increased by 7% at constant currency to EUR 191 million (flat at current rates). Care Coordination activities contributed EUR 49 million (+32% at constant currency, +24% at current rates) to Health Care Services revenue. This strong Care Coordination growth in Asia Pacific was mainly related to acquisitions and a strong organic revenue growth. Health Care Products showed again a solid business performance, growing 6% at constant currency to revenues of EUR 231 million (+2% at current rates). This growth was mainly driven by higher sales of hemodialysis products, partially offset by lower sales of products for acute care treatments. Operating income reached the same level as the previous year’s quarter (EUR 78 million). The operating income margin decreased slightly to 18.4%, driven by unfavorable foreign currency impacts and increased costs for the business growth, mainly in China.

For the first half of 2018, Asia-Pacific revenue increased by 10% at constant currency to EUR 814 million. Operating income decreased by 1% at constant currency with EUR 152 million (-5% at current rates).

As of the end of June 2018, the company had 30,578 patients (+2%) being treated at 385 clinics in Asia-Pacific. Dialysis treatments increased by 2%.

Latin America delivered revenue of EUR 164 million in the second quarter of 2018, an improvement of 11% at constant currency (-10% at current rates). This growth was mainly driven by a strong growth in Health Care Services (+15% at constant currency) due to an increase in organic revenue per treatment, acquisitions and growth in same market treatments. Health Care Products revenue in Latin America increased by 2% at constant currency to EUR 46 million, due to higher sales of machines and peritoneal dialysis products and negatively affected by lower sales of dialyzers. With an operating income of EUR 11 million the segment generated an operating income on previous year’s level. The operating income margin remained at 6.8%.

For the first half of 2018, Latin America revenue increased by 14% at constant currency to EUR 334 million (-7% at current rates). Operating income was EUR 25 million, an increase of 5% at constant currency (-6% at current rates).

As of the end of June 2018, the company was treating 31,494 patients (+4%) at 233 clinics in Latin America (+1%). Dialysis treatments increased by 4%.

Net interest expense was EUR 84 million compared to EUR 95 million in the second quarter of 2017, a decrease of 6% at constant currency (-11% at current rates). The decrease was driven by a replacement of high interest-bearing senior notes by debt instruments at lower rates as well as a decreased debt level. Income tax expense was EUR 262 million for the second quarter of 2018, which translates into an effective tax rate of 19.9%, compared to last year’s Q2 with a tax rate of 30.8%. The strong reduction was largely driven by the U.S. Tax Reform and the gain related to divestitures of Care Coordination activities.

Strong cash flow generation
In the second quarter of 2018, the company generated EUR 656 million of operating cash flow, compared to EUR 883 million provided by operating activities in last year’s second quarter. This decrease was mainly driven by increased accounts receivable related to the addition of calcimimetics into the Medicare ESRD payment bundle and unfavorable foreign currency effects. The number of days sales outstanding (DSOs) decreased sequentially by three days compared with Q1 2018 to reach 82 days. Free cash flow (Net cash used in operating activities, after capital expenditures, before acquisitions and investments) amounted to EUR 429 million for the three months ended June 30, 2018 compared to EUR 690 million for the same period of 2017. Free cash flow in percent of revenue was 10.2% and 15.4% for the three months ended June 2018 and 2017, respectively.

Sound Physicians divestiture successfully closed
On June 28, Fresenius Medical Care announced the closing of the divestiture of Sound Inpatient Physicians Holdings, LLC to an investment consortium led by Summit Partners. In the second half of 2017, the Sound Physicians business generated revenue of EUR 559 million and a net income of EUR 38 million. The 2017 basis has been adjusted accordingly for measuring the performance against the 2018 outlook.

Closing of NxStage Medical acquisition expected for second half 2018
In August 2017, Fresenius Medical Care signed an agreement with NxStage Medical, a U.S.-based medical technology and services company, to acquire all outstanding shares of NxStage Medical through a merger. The merger, which has been approved by NxStage’s board, NxStage stockholders and authorities in Germany, is still subject to regulatory approval by the Federal Trade Commission under the Hart-Scott-Rodino Act. Fresenius Medical Care has exercised its contractual right under the merger agreement to extend the original closing deadline by 90 days from August 7, 2018 to November 5, 2018. Fresenius Medical Care expects to close the transaction in 2018.

Employees
As of June 30, 2018, Fresenius Medical Care had 111,263 employees (full-time equivalents) worldwide, compared to 112,163 employees at the end of June 2017. This decrease was mainly attributable to divestitures of certain Care Coordination activities.

Outlook 2018
The company expects revenue¹ growth between 5% and 7% at constant currency. Net income on a comparable basis² is expected to increase by 13% to 15% at constant currency and on an adjusted basis^2,3 to increase by 7% to 9% at constant currency.

The targets exclude the effect from the planned acquisition of NxStage Medical and the gain (loss) related to divestitures of Care Coordination activities.

^{1 2017 adjusted for the effect of IFRS 15 implementation and the contribution of Sound Physicians in H2 20172 Attributable to shareholders of Fresenius Medical Care AG & Co. KGaA, adjusted for the contribution from Sound Physicians in H2 20173 VA Agreement, Natural Disaster Costs, FCPA related charge, U.S. Tax Reform}

Conference call
Fresenius Medical Care will host a conference call to discuss the results of the second quarter today at 3:30 p.m. CEDT / 9:30 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.

Please refer to the PDF for a complete overview of the results for the second quarter and first half year 2018.

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Fresenius Medical Care, the world’s largest provider of dialysis products and services, today successfully placed notes with an aggregate principal amount of €500 million. The notes have a maturity of 7 years and an annual coupon of 1.5%. The issue price is 99.704% and the resulting yield amounts to 1.545%.

The transaction was very well received by investors and substantially oversubscribed. The proceeds will be used for general corporate purposes, including the refinancing of upcoming maturities.

This is the first issuance of the company since it was upgraded to Investment Grade by the three leading rating agencies Standard & Poor’s, Moody’s and Fitch. The notes were drawn under the newly established European Medium Term Note (EMTN) Program by Fresenius Medical AG & Co. KGaA. The program allows for standardized issuances of notes in various currencies and maturities.

Fresenius Medical Care has applied to the Luxembourg Stock Exchange to admit the notes to trading on its regulated market.