Company aims at strong growth in 2018 – Mid-term targets through 2020 confirmed – Growth initiatives for the next decade put in place

If no timeframe is specified, information refers to fiscal year 2017.

Fiscal year 2017:

• Sales €33.9 billion (+15%, +16% in constant currency)
• EBIT¹ (adjusted) €4,890 million (+14%, +15% in constant currency)
• Net income^2,3 (adjusted) €1,859 million (+19%, +21% in constant currency)
• Net income³ (before special items) €1,816 million (+16%, +18% in constant currency)
• Net income³ €1,814 million (+16%, +18% in constant currency)
• Dividend proposal €0.75 per share (+21%)

Q4/2017:

• Sales €8.7 billion (+11%, +17% in constant currency)
• EBIT¹ (adjusted) €1,354 million (+9%, +14% in constant currency)
• Net income^2,3 (adjusted) €520 million (+18%, +22% in constant currency)
• Net income³ (before special items) €487 million (+10%, +15% in constant currency)
• Net income³ €511 million (+16%, +21% in constant currency)

 

¹ Before acquisition-related expenses, expenditures for further development of biosimilars business and FCPA provision
² Consistent with scope of original guidance: before acquisition-related expenses, expenditures for further development of biosimilars business, book gain from U.S. tax reform and FCPA provision
³ Net income attributable to shareholders of Fresenius SE & Co. KGaA

 

Stephan Sturm, CEO of Fresenius, said: “At Fresenius, 2017 was a year of tremendous accomplishments. Our dedicated doctors and nurses treated 17 million patients in our hospitals – and helped bring over 70,000 babies into the world. Over 320,000 dialysis patients received more than 48 million life-saving treatments in our clinics. And healthcare systems benefited as we launched over 90 new generic – and therefore less expensive – drugs. All of this was achieved by the more than 270,000 people whom it was our privilege to employ last year. Our business results reflect our successful work for people. Record sales and earnings in 2017, along with the company’s strong guidance for this year and through 2020, show that our uncompromising focus on patients and quality also pays for our investors.”

Investigation into alleged breaches of FDA data integrity requirements at Akorn, Inc.
Fresenius is conducting an independent investigation, using external experts, into alleged breaches of FDA data integrity requirements relating to product development at Akorn, Inc. The Management and Supervisory Boards of Fresenius will assess the findings of that investigation. The consummation of the transaction may be affected if the closing conditions under the merger agreement are not met. Fresenius does not intend to provide further updates as the investigation proceeds. Fresenius continues to seek FTC clearance.

Strong Group guidance¹ for 2018
For 2018, Fresenius projects sales growth² of 5% to 8% 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/EBITDA⁶ ratio by year-end 2018.

Mid-term growth targets 2020 confirmed⁷
Based on the strong financial results 2017, Fresenius confirms the 2020 mid-term growth targets. Group sales are expected to grow with a compounded annual growth rate (CAGR) in the range of 7.1% to 10.3% (Mid-point: 8.7%). Group net income³ is projected to increase with a CAGR in the range of 8.3% to 12.6% (Mid-point: 10.5%).

25th consecutive dividend increase proposed
Based on the strong financial results, the Management Board will propose to the Supervisory Board a dividend increase of 21% to €0.75 per share (2016: €0.62). The expected dividend distribution to the shareholders of Fresenius SE & Co. KGaA is €416 million.

 

 

¹ Excluding pending acquisitions of Akorn and NxStage
² 2017 adjusted for IFRS 15 (€486 million at Fresenius Medical Care)
³ Net income attributable to shareholders of Fresenius SE & Co. KGaA
⁴ Base 2017: €1,816 million; 2018 before special items (before acquisition-related expenses); including expenditures for further development of biosimilars business (€43 million after tax in FY/17 and ~€120 million after tax in FY/18)
⁵ Base 2017: €1,859 million; 2018 before special items (before acquisition-related expenses)
⁶ Calculated at expected annual average exchange rates, for both net debt and EBITDA; excluding pending acquisitions of Akorn and NxStage; excluding further potential acquisitions; at current IFRS rules
⁷ At February 2017 exchange rates and IFRS rules; including small and mid-size acquisitions

 

16% sales growth in constant currency
Group sales increased by 15% (16% in constant currency) to €33,886 million (2016: €29,471 million). Organic sales growth was 6%. Acquisitions contributed 10%. Negative currency translation effects (1%) were mainly driven by the devaluation of the US dollar and the Chinese yuan against the euro. In Q4/2017, Group sales increased by 11% (17% in constant currency) to €8,695 million (Q4/2016: €7,820 million). Organic sales growth was 6%. Acquisitions contributed 11%.

Group sales by region:

¹ Calculated on the basis of contribution to consolidated sales
² Including effects of agreement with the U.S. Departments of Veterans Affairs and Justice (VA agreement)

21% adjusted net income^1,2 growth in constant currency
Group EBITDA³ increased by 14% (15% in constant currency) to €6,267 million (2016: €5,517 million). Adjusted Group EBIT⁴ increased by 14% (15% in constant currency) to €4,890 million (2016: €4,302 million). The adjusted EBIT margin⁴ was 14.4% (2016: 14.6%). In Q4/2017, adjusted Group EBIT⁴ increased by 9% (14% in constant currency) to €1,354 million (Q4/2016: €1,244 million), the adjusted EBIT margin⁴ was 15.6% (Q4/2016: 15.9%). Group EBIT³ before special items increased by 12% (14% in constant currency) to €4,830 million (2016: €4,302 million). The EBIT margin³ was 14.3% (2016: 14.6%). In Q4/2017, Group EBIT³ increased by 5% (11% in constant currency) to €1,308 million (Q4/2016: €1,244 million), the EBIT margin³ was 15.0% (Q4/2016: 15.9%).

Group net interest³ reached -€636 million (2016: -€582 million). The increase is mainly driven by the financing of the Quirónsalud acquisition, partly offset by positive effects from refinancing activities.

The Group tax rate before special items was 28.2% (2016: 28.1%). The U.S. tax reform, which went into effect on January 1, 2018, triggered a revaluation of deferred tax liabilities. This resulted in a one-time book gain of €103 million in 2017. Accordingly, the group tax rate after special items decreased to 23.0%.

Noncontrolling interest³ was €1,194 million (2016: €1,116 million), of which 95% was attributable to the noncontrolling interest in Fresenius Medical Care.

Adjusted Group net income^1,2 increased by 19% (21% in constant currency) to €1,859 million (2016: €1,560 million). Adjusted earnings per share^1,2 increased by 18% (19% in constant currency) to €3.35 (2016: €2.85). In Q4/2017, adjusted Group net income^1,2 increased by 18% (22% in constant currency) to €520 million (Q4/2016: €442 million). Adjusted earnings per share^1,2 increased by 16% (20% in constant currency) to €0.93 (Q4/2016: €0.81).

 

 

 

¹ Net income attributable to shareholders of Fresenius SE & Co. KGaA
² Consistent with scope of original guidance: before acquisition-related expenses, expenditures for further development of biosimilars business, book gain from U.S. tax reform and FCPA provision
³ Before special items
⁴ Consistent with scope of original guidance: before acquisition-related expenses, expenditures for further development of biosimilars business and FCPA provision

For a detailed overview of special items and adjustments please see the reconciliation tables on pages 18-19 in the pdf document.

 

Group net income before special items¹ increased by 16% (18% in constant currency) to €1,816 million (2016: €1,560 million). Earnings per share^1,2 increased by 15% (16% in constant currency) to €3.28 (2016: €2.85). In Q4/2017, Group net income^1,2 increased by 10% (15% in constant currency) to €487 million (Q4/2016: €442 million). Earnings per share^1,2 increased by 9% (13% in constant currency) to €0.88 (Q4/2016: €0.81).

Group net income¹ increased by 16% (18% in constant currency) to €1,814 million
(2016: €1,560 million). Earnings per share¹ increased by 15% (16% in constant currency) to €3.27 (2016: €2.85). In Q4/2017, Group net income¹ increased by 16% (21% in constant currency) to €511 million (Q4/2016: €442 million). Earnings per share¹ increased by 14% (19% in constant currency) to €0.92 (Q4/2016: €0.81).

Continued investment in growth
Spending on property, plant and equipment was €1,828 million (2016: €1,633 million), primarily for the modernization and expansion of dialysis clinics, production facilities as well as hospitals and day clinics. This corresponds to 5.4% of sales.

Total acquisition spending of €6,852 million (2016: €926 million) was mainly related to the acquisitions of Quirónsalud and Merck KGaA’s biosimilars business.

Excellent cash flow development
Operating cash flow increased by 10% to €3,937 million (2016: €3,585 million) with a margin of 11.6% (2016: 12.2%). The excellent cash flow was driven by Fresenius Medical Care and a record cash flow at Fresenius Kabi.

Free cash flow before acquisitions and dividends increased by 13% to €2,232 million (2016: €1,969 million), with a margin of 6.6% (2016: 6.7%). Free cash flow after acquisitions and dividends was €-4,557 million (2016: €746 million) reflecting the acquisitions of Quirónsalud and Merck KGaA’s biosimilars business.

 

¹ Net income attributable to shareholders of Fresenius SE & Co. KGaA
² Before special items

 

 

 

Solid balance sheet structure
The Group’s total assets increased by 14% (21% in constant currency) to €53,133 million (Dec. 31, 2016: €46,697 million), driven primarily by the acquisition of Quirónsalud. Current assets grew by 7% (15% in constant currency) to €12,604 million (Dec. 31, 2016: €11,744 million). Non-current assets increased by 16% (23% in constant currency) to €40,529 million (Dec. 31, 2016: € 34,953 million).

Total shareholders’ equity increased by 4% (14% in constant currency) to €21,720 million (Dec. 31, 2016: €20,849 million). The equity ratio decreased to 40.9% (Dec. 31, 2016: 44.6%).

Group debt increased by 29% (35% in constant currency) to €19,042 million (Dec. 31, 2016: € 14,780 million), mainly driven by the acquisition financing of Quirónsalud. Group net debt increased by 32% (37% in constant currency) to € 17,406 million (Dec. 31, 2016: € 13,201 million.

As of December 31, 2017, the net debt/EBITDA ratio was 2.84^1,2 (September 30, 2017: 2.97^1,2; December 31, 2016: 2.33¹; pro forma Quirónsalud 3.09¹).

 

 

¹ At LTM average exchange rates for both net debt and EBITDA; pro forma acquisitions
² Before special items

Increased number of employees
As of December 31, 2017, the number of employees increased by 17% to 273,249 (Dec. 31, 2016: 232,873).

 

 

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 December 31, 2017, Fresenius Medical Care was treating 320,960 patients in 3,752 dialysis clinics. Along with its core business, the company focuses on expanding the range of medical services in the field of Care Coordination.

• 9% sales growth in constant currency, 7% adjusted net income growth in constant currency^3,4
• 13% operating cash flow growth
• 2018 outlook: ~8% sales growth⁵ in constant currency and 13 to 15% net income growth^3,6 in constant currency expected

Sales¹ increased by 7% (9% in constant currency) to €17,784 million (2016: €16,570 million). Organic sales growth was 7%. Acquisitions and divestitures increased sales by net 2%. Currency translation effects reduced sales by 2%. In Q4/2017, sales of €4,429 million (Q4/2016: €4,417 million) were on the prior-year level (increased by 8% in constant currency).

Health Care services sales (dialysis services and care coordination) increased by 8% (10% in constant currency) to €14,532 million (2016: €13,505 million). Dialysis product sales increased by 6% (7% in constant currency) to €3,252 million (2016: €3,064 million).

In North America, sales increased by 7% to €12,879 million (2016: €12,030 million). Health Care services sales grew by 7% to €12,036 million (2016: €11,214 million). Dialysis product sales increased by 3% to €843 million (2016: €816 million).

Sales outside North America increased by 8% (9% in constant currency) to €4,890 million (2016: €4,527 million). Health Care services sales increased by 9% (11% in constant currency) to €2,496 million (2016: €2,292 million). Dialysis product sales increased by 6% (7% in constant currency) to €2,315 million (2016: €2,185 million).

¹Excluding agreement with the United States Depatment of Veterans Affairs and Justice (VA agreement): €17,689 million
²Before natural disaster costs, VA agreement and FCPA provision
³Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
⁴Before book gain from U.S. tax reform, natural disaster costs, VA agreement and FCPA provision
⁵Reported sales 2017 of €17,784 million, adjusted for IFRS 15 (€486 million)
⁶Base 2017: €1,280 million; 2018 including recurring benefits from U.S. tax reform of €140 million to €160 million

EBIT decreased by -2% (0% in constant currency) to €2,362 million (2016: €2,409 million). Adjusted EBIT¹ increased by 4% (5% in constant currency) to €2,493 million (2016: €2,409 million), mainly due to the strong business performance in North America and in Asia-Pacific. The adjusted EBIT¹ margin was 14.1% (2016: 14.5%). In Q4/2017, EBIT decreased by -29% (-22% in constant currency) to €519 million (2016: €730 million). In Q4/2017, adjusted EBIT¹ of €726 million (Q4/2016: €730 million) was slighty below the prior-year level (increased by 6% in constant currency). The adjusted EBIT margin¹ was 16.4% (Q4/2016: 16.5%).

Net income² increased by 12% (14% in constant currency) to €1,280 million (2016: €1,144 million). Consistent with the original scope of guidance, i.e. excluding the effects of the VA agreement, natural disaster costs, the book gain from the US tax reform and the FCPA provision, net income² increased by 7% in constant currency. In Q4/2017, net income² increased by 8% (increased 16% in constant currency) to €394 million (Q4/2016: €363 million). Excluding the effects of the VA agreement, natural disaster costs, the book gain from the US tax reform and the FCPA provision, net income² increased by 6% in constant currency.

Operating cash flow increased by 13% to €2,192 million (2016: €1,932 million). The cash flow margin was 12.3% (2016: 11.7%).

For 2018, Fresenius Medical Care expects sales to grow by ~8%³ in constant currency. The 2018 guidance is based on 2017 sales adjusted for the effect of the IFRS 15 implementation. Net income² is expected to increase by 13% to 15%⁴ in constant currency in 2018, including recurring benefits from U.S tax reform of €140 million to €160 million.

¹Before natural disaster costs, effects of VA agreement and FCPA provision
²Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
³Reported sales 2017 of €17,784 million, adjusted for effect from IFRS 15 (€486 million)
⁴Base 2017: €1,280 million

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

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.

• 7% organic sales growth, 8% EBIT² growth in constant currency
• Operating cash flow at all-time high
• 2018 outlook: 4% to 7% organic sales growth and -3% to -6% EBIT growth⁵ in constant currency expected (~2% to 5%⁶ excl. biosimilars expenses)

¹Before special items
²Consistent with scope of original guidance: before acquisition-related expenses and expenditures for further development of biosimilars business
³Net income attributable to shareholders of Fresenius SE & Co. KGaA
⁴Consistent with scope of original guidance: before acquisition-related expenses, expenditures for further development of biosimilars business and book gain from U.S. tax reform
⁵Base 2017: €1,177 million; 2018 before special items (before acquisition-related expenses), including expenditures for further development of biosimilars business (€60 million in FY/17 and expected expenditures of ~€160 million in FY/18)
⁶Base: 2017: €1,237 million; 2018 before special items (before acquisition-related expenses)

Sales increased by 6% (7% in constant currency) to €6,358 million (2016: €6,007 million). Organic sales growth was 7%. Negative currency translation effects (-1%) were mainly related to the devaluation of the US dollar and the Chinese yuan against the Euro. In Q4/2017, sales increased by 3% (8% in constant currency) to €1,594 million (Q4/2016: €1,550 million). Organic sales growth was 8%.

Sales in Europe grew by 4% (organic growth: 5%) to €2,214 million (2016: €2,135 million). In Q4/2017, sales increased by 2% (3% organic) to €579 million (Q4/2016: €566 million).

Sales in North America increased by 6% (8% organic) to €2,290 million (2016: €2,170 million). In Q4/2017, sales increased by 2% (11% organic) to €554 million (Q4/2016: €542 million).

Sales in Asia-Pacific increased by 8% (11% organic) to €1,196 million (2016: €1,108 million). In Q4/2017, sales increased by 5% (11% organic) to €302 million (Q4/2016: €287 million). Sales in Latin America/Africa increased by 11% (10% organic) to €658 million (2016: €594 million). In Q4/2017, sales increased by 3% (10% organic) to €159 million (Q4/2016: €155 million).

Adjusted EBIT¹ increased by 6% (8% in constant currency) to €1,237 million (2016: €1,171 million). The adjusted EBIT margin¹ was 19.5% (2016: 19.5%). In Q4/2017, adjusted EBIT¹ increased by 3% (9% in constant currency) to €318 million (Q4/2016: €308 million). The adjusted EBIT margin¹ was 19.9% (Q4/2016: 19.9%).

EBIT before special items increased by 1% (3% in constant currency) to €1,177 million (2016: €1,171 million). The EBIT margin before special items was 18.5% (2016: 19.5%). In Q4/2017, EBIT before special items decreased by -12% ( 6% in constant currency) to €272 million (Q4/2016: €308 million). The EBIT margin before special items decreased to 17.1% (Q4/2016: 19.9%) due to expenditures for the further development of biosimilars business.

Adjusted net income^2,3 increased by 10% (13% in constant currency) to €745 million (2016: €675 million). In Q4/2017, adjusted net income^2,3 increased by 4% (10% in constant currency) to €191 million (Q4/2016: €184 million).
Operating cash flow reached an all-time high of €1,010 million (2016: €1,004 million). The cash flow margin was 15.9% (2016: 16.7%).

For 2018, Fresenius Kabi expects organic sales growth of 4% to 7% and EBIT growth in constant currency of -3% to -6%⁴. Excluding expenditures for the further development of the biosimilars business EBIT is expected to grow by ~2% to 5%⁵ in constant currency.

¹Consistent with scope of original guidance: before acquisition-related expenses and expenditures for further development of biosimilars business
²Net income attributable to shareholders of Fresenius SE & Co. KGaA
³Consistent with scope of original guidance: before acquisition-related expenses, expenditures for further development of biosimilars business and book gain from U.S. tax reform
⁴Base 2017: €1,177 million; 2018 before special items (before acquisition-related expenses), including expenditures for further development of biosimilars business (€60 million in FY/17 and expected expenditures of ~€160 million in FY/18)
⁵Base: 2017: €1,237 million; 2018 before special items (before acquisition-related expenses)

Fresenius Helios
Fresenius Helios is Europe's leading private hospital operator. The company comprises Helios Germany and Helios Spain (Quirónsalud). Helios Germany operates 111 hospitals, thereof 88 acute care clinics and 23 post-acute care clinics, and treats more than 5.3 million patients annually. Quirónsalud operates 45 hospitals, 55 outpatient centers and around 300 occupational risk prevention centers, and treats approximately 11.6 million patients per year.

• 4% organic sales growth
• 54% EBIT increase (6% excluding Quirónsalud)
• 2018 outlook: 3% to 6% organic sales growth and EBIT growth of 7% to 10% expected

Fresenius Helios increased sales by 48% to €8,668 million (2016: €5,843 million). Organic sales growth was 4%. Acquisitions, mainly Quirónsalud, increased sales by 44%. In Q4/2017, sales increased by 54% to €2,246 million (Q4/2016: €1,461 million), organic sales growth was 3%.

Sales of Helios Germany increased by 4% (4% organic) to €6,074 million (2016: €5,843 million). In Q4/2017, sales increased by 3% (3% organic) to €1,512 million (Q4/2016: €1,461 million). Helios Spain (Quirónsalud) has been consolidated since February 1, 2017 and generated sales of €2,594 million (thereof €734 million in Q4/2017).

Fresenius Helios grew EBIT by 54% to €1,052 million (2016: €683 million). The EBIT margin increased to 12.1% (2016: 11.7%). In Q4/2017, EBIT increased by 61% to €283 million (Q4/2016: €176 million). The EBIT margin increased to 12.6% (Q4/2016: 12.0%).
EBIT of Helios Germany increased by 6% to €725 million (2016: €683 million) with a margin of 11.9% (2016: 11.7%). In Q4/2017, EBIT of Helios Germany was on the prior-year level with €176 million (Q4/2016: €176 million). The margin was 11.6% (2016: 12.0%).
EBIT of Helios Spain was €327 million (thereof €107 million in Q4/2017) with a margin of 12.6% (Q4/2017: 14.6%).

Net income¹ increased by 34% to €728 million (2016: €544 million). In Q4/2017, net income¹ increased by 42% to €202 million (Q4/2016: €142 million).

Operating cash flow increased by 18% to €733 million (2016: €622 million) driven by the first-time consolidation of Quirónsalud and an excellent operating result. The margin was 8.5% (2016: 10.6%).

For 2018, Fresenius Helios expects organic sales growth of 3% to 6% and EBIT growth of 7% to 10%.

¹Net 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. The portfolio ranges along the entire value chain: from project development, planning, and turnkey construction, via maintenance and technical management, to total operational management.

• 6% organic sales growth, 10% EBIT growth
• Order intake of €1,096 million at all-time high
• 2018 outlook: 5% to 10% organic sales growth and 5% to 10% EBIT growth expected

Sales increased by 6% (6% in constant currency) to €1,228 million (2016: €1,160 million). Organic sales growth was 6%. Sales in the project business increased by 2% to €606 million (2016: €594 million). Sales in the service business grew by 10% to €622 million (2016: €566 million). In Q4/2017, sales increased by 14% to €480 million (Q4/2016: €420 million). Organic sales growth was 14%.

EBIT grew by 10% to €76 million (2016: €69 million). The EBIT margin increased to 6.2% (2016: 5.9%). In Q4/2017, EBIT increased by 16% to €44 million (Q4/2016: €38 million). The EBIT margin increased to 9.2% (2016: 9.0%).

Net income¹ grew by 11% to €50 million (2016: €45 million). In Q4/2017, net income¹ increased by 21% to €29 million (Q4/2016: €24 million).

Order intake increased to €1,096 million (2016: €1,017 million), reaching an all-time high. As of December 31, 2017, order backlog was €2,147 million (Dec. 31, 2016: €1,961 million).

For 2018, Fresenius Vamed expects organic sales growth in the range of 5% to 10% and EBIT growth of 5% to 10%.

¹Net income attributable to shareholders of VAMED AG

Press Conference
As part of the publication of the results for fiscal year 2017, a press conference will be held on February 27, 2018 at 10 a.m. CET. You are cordially invited to follow the press conference in a live broadcast over the Internet at www.fresenius.com/media-calendar. Following the press conference, a replay will be available on our website.

For additional information on the performance indicators used please refer to our website www.fresenius.com/alternative-performance-measures.
For a detailed overview of special items and adjustments, please see the reconciliation tables in the pdf file on page 18-19.

• Targets 2017 achieved
• Strong revenue growth of 9% at constant currency
• Net income growth of 14% at constant currency
• Record dividend of EUR 1.06 for fiscal year 2017 proposed
• Strong net income growth for 2018 targeted

Key figures (IFRS) – fourth quarter and full year 2017

¹ Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
cc = at constant currency

For a reconciliation of adjusted figures, please refer to the PDF.

 

“In 2017 we continued the success story of Fresenius Medical Care with another set of record results. We managed an unusual number of severe natural disasters, have delivered on our financial targets, and again we are able to propose the highest dividend in our Company’s history,” said Rice Powell, Chief Executive Officer of Fresenius Medical Care. “With the acquisition of the Cura Group in Australia and our planned acquisition of NxStage we are setting the course for future periods beyond our published 2020 outlook. We will continue improving our cost base with the implementation of the second phase of our Global Efficiency Program, GEP II. In 2018, we intend to continue the profitable growth track and further optimize our portfolio in the core dialysis as well as in the Care Coordination business.”

High net income growth for 2018 targeted
For 2018, Fresenius Medical Care expects revenue growth of around 8% at constant currency. The 2018 targets are based on 2017 revenue adjusted for the effect of the IFRS 15 implementation. Net income is expected to increase by 13 to 15% at constant currency including recurring benefits from the U.S. tax reform of EUR 140 to 160 million. The targets do not include effects from the NxStage acquisition. Fresenius Medical Care reconfirms the mid-term outlook for 2020, excluding the effect from IFRS 15 implementation and the recurring benefits from the U.S. tax reform in the years 2018 to 2020.

² Numbers at constant currency
³ Reported revenue 2017 of EUR 17,784 million adjusted for effect from IFRS 15 implementation of EUR 486 million
⁴ Targets 2018: including recurring benefits from U.S. tax reform of EUR 140 to 160 million

21st consecutive dividend increase proposed
Based on the strong results for full year 2017, a dividend of EUR 1.06 per share, representing a dividend increase of 10%, will be proposed to the Annual General Meeting in May.

 

 

Strong underlying revenue and net income growth in 2017
Revenue in the fourth quarter 2017 – strongly impacted by headwinds from foreign exchange rates – came in at the level of the previous year’s quarter with EUR 4,429 million. At constant currency, revenue increased by 8% (+8% excluding the VA Agreement). Health Care Services revenue reached EUR 3,581 million and Health Care Products revenue came in at EUR 848 million. Both increased by 8% at constant currency.

Revenue for full year 2017 increased by 9% at constant currency to EUR 17,784 million (+9% excluding the VA Agreement). Health Care Services revenue increased by 10% at constant currency to EUR 14,532 million, mainly due to strong underlying organic growth and contributions from acquisitions. Health Care Products revenue increased by 7% at constant currency to EUR 3,252 million. This growth was primarily driven by higher sales of dialyzers, non-dialysis products in the acute business, machines and peritoneal dialysis products.

Corporate cost in the fourth quarter 2017 amounted to EUR 289 million. The strong increase compared to the fourth quarter 2016 (EUR 82 million) is mainly driven by the recognition of a charge of EUR 200 million based on ongoing discussions toward a settlement with the U.S. Securities and Exchange Commission and the U.S. Department of Justice that would avoid litigation over government demands under the Foreign Corrupt Practices Act related to certain identified conduct, including certain legal expenses and other related costs or asset impairments (“FCPA related charge”). In 2012, Fresenius Medical Care voluntarily advised the U.S. Department of Justice and the U.S. Securities Exchange Commission about its investigations into this conduct.

Operating income (EBIT) in the fourth quarter 2017 reached EUR 519 million. Adjusted EBIT increased by 6% at constant currency and reached EUR 726 million. For full year 2017, EBIT was EUR 2,362 million. On an adjusted basis EBIT increased by 5% at constant currency to EUR 2,493 million, mainly due to the strong business performance in North America and in Asia-Pacific.

Net interest expense in the fourth quarter 2017 was EUR 80 million, compared to EUR 90 million in the fourth quarter 2016. For full year 2017 net interest expense was EUR 354 million, a decrease of 3% year over year. The decrease was positively influenced by the replacement of interest bearing bonds, repaid in 2016 and 2017 by debt instruments at lower interest rates.

Income tax expense in the fourth quarter 2017 benefited from a book gain from the U.S. tax reform of EUR 236 million. Mainly for this reason, full year 2017 income tax expense decreased by 27% to EUR 454 million.

This decrease mainly resulted from the U.S. tax reform. Excluding (i) the impact from the VA Agreement, (ii) the effects associated with natural disaster costs, (iii) the FCPA related charge of EUR 200 million which was not tax effected and (iv) the U.S. tax reform, the 2017 effective tax rate increased to 31.0%, an increase of 50 basis points compared to the same period of 2016.

 

 

 

Net income⁵ for the fourth quarter of 2017 increased by 16% at constant currency to EUR 394 million. Adjusted for the impact from (i) the unfavorable effects of the VA Agreement (EUR 1 million), (ii) natural disaster costs in North America (EUR 3 million), (iii) FCPA related charge (EUR 200 million), as well as (iv) the benefit from the U.S. tax reform (EUR 236 million), net income was EUR 362 million (0%, +6% at constant currency). Based on approximately 306.9 million shares (weighted average number of shares outstanding), basic earnings per share (EPS) improved by 8%, to EUR 1.28. Adjusted for the effects described before, EPS was EUR 1.18 (0%, +6% at constant currency).

For 2017 net income⁵ increased by 14% at constant currency to EUR 1,280 million. Excluding the four effects described in the previous paragraph ((i) EUR +51 million, (ii) EUR -11 million, (iii) EUR -200 million, and (iv) EUR +236 million), net income increased to EUR 1,204 million (+5%, +7% at constant currency). Based on approximately 306.6 million shares, basic EPS increased from EUR 3.74 to EUR 4.17 (+12%). Excluding the effects described above, EPS increased to EUR 3.93 (+5%, +7% at constant currency).

⁵ Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA

 

North America with strong growth supported by Care Coordination
In the fourth quarter 2017, the North America segment generated revenue of EUR 3,164 million (+8% at constant currency), strongly influenced by currency headwinds. Health Care Services revenue came in at EUR 2,950 million (+8% at constant currency), of which Care Coordination contributed EUR 715 million (+24% at constant currency) driven by significant organic revenue growth of 19%. Dialysis Care revenue reached EUR 2,235 million (+3% at constant currency). With $352, revenue per treatment in the United States was slightly down (-1%) due to lower revenue with commercial payors.

 

Cost per treatment increased by 3% to $276, largely driven by higher bad debt expenses, higher personnel expense and various other costs. The strong growth of the Health Care Products revenue (EUR 214 million, +9% at constant currency) was mainly driven by higher sales of machines, renal drugs and peritoneal dialysis products.

Operating income in North America in the fourth quarter reached EUR 608 million (+11% at constant currency). The operating income margin of 19.2% came in above last year’s strong fourth quarter margin of 18.4%. The improvement was triggered by an extraordinarily high contribution from Care Coordination which achieved an EBIT margin of 12.5%. The improvement was mainly driven by higher revenue including an acceleration of earnings from the Bundled Payment for Care Improvements (BPCI) initiative for previous reporting periods combined with increased volumes for hospital-related physician services, lower bad debt expense and the gain from the sale of Shiel Medical Laboratory. The Dialysis EBIT in North America reached EUR 519 million (-6% at constant currency), impacted by higher bad debt and personnel expenses, lower revenue with commercial payors, higher costs such as rent and insurance, the impact from natural disasters and higher costs for health care supplies.

For full year 2017, North America revenue increased by 9% at constant currency to EUR 12,879 million. Health Care Services revenue grew by 10% at constant currency to EUR 12,036 million, driven by higher Dialysis Care revenue (+5% at constant currency to EUR 9,227 million) and increased Care Coordination revenue (+28% at constant currency to EUR 2,809 million). Operating income increased in line with revenue growth to EUR 2,086 million (+10% at constant currency). As of the end of 2017, we had 197,356 patients being treated at the 2,393 clinics in North America. Dialysis treatments increased by 3%.

Solid Health Care Products and Health Care Services growth in EMEA
Revenue in the EMEA segment increased by 6% at constant currency to EUR 660 million in the fourth quarter 2017. Health Care Services revenue increased by 4% at constant currency to EUR 312 million. This was mainly the result of growth in same market treatments and contributions from acquisitions. Health Care Products revenue in EMEA increased by 7% at constant currency and reached EUR 348 million. The growth in Dialysis Products revenue was driven by higher sales of products for acute care, products for peritoneal dialysis and machines, partially offset by lower sales of dialyzers. Non-dialysis products increased due to higher sales of acute cardiopulmonary products. Operating income in the EMEA segment decreased by 7% at constant currency to EUR 110 million in the fourth quarter 2017. The operating income margin decreased year-over-year to 16.7% (Q4 2016: 19.0%) mainly due to further investments in Xenios and unfavorable foreign currency transaction effects.

For full year 2017, EMEA revenue increased by 6% at constant exchange rates to EUR 2,547 million and operating income decreased to EUR 444 million (-6% at constant currency). As of the end of 2017, we had 62,490 patients being treated at 746 clinics in EMEA. Dialysis treatments increased by 5%.

Growth in Asia-Pacific fuelled by acquisitions
Asia-Pacific revenue grew strongly by 12% at constant currency to EUR 418 million in the fourth quarter 2017. With EUR 191 million in Health Care Services revenue the region recorded growth of 17% at constant currency, mainly driven by the acquisition impact from Cura Group in Australia. The 7% constant currency growth in Health Care Products revenue to EUR 227 million was mainly supported by higher sales of dialyzers, bloodlines and products for peritoneal dialysis. Operating income reached EUR 76 million (-8% at constant currency). The operating income margin was 18.2% (Q4 2016: 21.8%). This was primarily driven by cost related to the build-up of dialysis services and peritoneal dialysis product business in China, the impact from foreign currency transaction effects and unfavorable mix effects related to acquisitions with lower margins.

For full year 2017, Asia-Pacific revenue grew by 13% at constant currency to EUR 1,623 million and operating income increased by 10% at constant currency to EUR 313 million. Operating income margin was stable on a high level of 19.3% (FY 2016: 19.6%). As of the end of 2017, we had 29,739 patients being treated at 381 clinics in Asia-Pacific. Dialysis treatments increased by 6%.

Improved contribution from Latin America
Latin America delivered revenue of EUR 185 million in the fourth quarter 2017, an increase of 16% at constant currency. Health Care Services revenue increased by 16% at constant currency to EUR 128 million and was driven by higher organic revenue per treatment. Health Care Products revenue increased by 15% at constant currency to EUR 57 million, mainly due to higher sales of machines, dialyzers and concentrates. Operating income came in at EUR 14 million (-12% at constant currency). The operating margin was 7.4% (Q4 2016: 9.7%), impacted by unfavorable foreign currency transaction effects, higher manufacturing costs primarily related to inflation, higher overhead costs and only partially offset by reimbursement rate increases that mitigate inflationary cost increases.

For full year 2017, Latin America revenue grew by 15% at constant currency to EUR 720 million and operating income increased by 3% at constant currency to EUR 58 million. Operating income margin was at 8.1% (FY 2016: 9.2%). As of the end of 2017, we had 31,375 patients being treated at 232 clinics in Latin America. Dialysis treatments increased by 2%.

Solid operating cash flow
In the fourth quarter 2017, the company generated net cash provided by operating activities of EUR 528 million, representing 11.9% of revenue (Q4 2016: EUR 772 million). The decrease was primarily attributable to a less favorable DSO (days sales outstanding) effect this year and higher income tax payments.

In full year 2017, the company generated net cash provided by operating activities of EUR 2,192 million, compared to EUR 1,932 million for full year 2016. This represents 12.3% of revenue, clearly reaching our 2017 target of more than 10%. The increase in net cash provided by operating activities was largely driven by the payment from the U.S. Departments of Veterans Affairs and Justice for reimbursement, the impact of the 2016 discretionary contribution of EUR 90 million to pension plan assets in the U.S. and the impact of other working capital items, partially offset by higher income tax payments. Free cash flow was also very strong at EUR 1,351 million, compared to EUR 1,017 million for full year 2016. DSO as of December 31, 2017 was 67 days, a decrease of 3 days compared to the previous year.

Global Efficiency Program phase II
Fresenius Medical Care has launched the second phase of its Global Efficiency Program (GEP II) in 2018. The program’s objectives are to identify and realize further efficiency potential and enhance the overall competitiveness of Fresenius Medical Care. Starting in 2018, GEP II targets to achieve sustained cost improvements of EUR 100 to 200 million per annum by 2020.

NxStage acquisition to foster home penetration
In August 2017, Fresenius Medical Care signed a merger agreement to acquire NxStage Medical, Inc., a U.S.-based medical technology and services company. The planned acquisition has a total transaction volume of approximately EUR 1.7 billion (USD 2.0 billion). On October 27, shareholders of NxStage approved the acquisition by Fresenius Medical Care. The completion of the acquisition is subject to regulatory approvals and other customary closing conditions. Closing is expected to occur in 2018.

Press Conference
Fresenius Medical Care will hold a press conference at its headquarters in Bad Homburg, Germany to discuss the results of the fourth quarter and full year 2017 on Tuesday, February 27, 2018, at 10 am CET. The press conference will be webcasted at the company's website. A replay will be available shortly after the conference.

Conference call
Fresenius Medical Care will hold a conference call to discuss the results of the fourth quarter and full year 2017 on Tuesday, February 27, at 3:30 p.m. CET / 9:30 a.m. EDT. The company invites investors to follow the live webcast of the call on the company’s website. A replay will be available shortly after the call.

 

 

Please refer to the PDF for a complete overview of the results for the fourth quarter and full year 2017.

 

 

 

 

Standard & Poor’s has revised Fresenius’ corporate credit outlook to positive from stable in late December 2017. The corporate credit rating was affirmed. Hence, Fresenius is now rated BBB- with positive outlook by Standard & Poor’s. Fresenius is rated investment grade by all of the three leading rating agencies Standard & Poor’s, Moody's and Fitch.

VAMED Vitality World has been named the “World’s Best Thermal Spa & Medical Wellness Operator 2017” at the World Spa Awards. Three VAMED Vitality World facilities – St. Martins Thermal Spa & Lodge and Thermal Spa Laa Hotel & Spa, both in Austria, and Aquaworld Resort Budapest in the Hungarian capital – also won in their individual categories. VAMED Vitality World, part of Fresenius Vamed, operates a total of nine spa and health resorts in Austria and Hungary.

Fresenius expects meaningful positive effects from the tax reform legislation signed into law in the United States today. The new law goes into effect on January 1, 2018.

The new legislation triggers the revaluation of deferred tax liabilities. This results in a one-time book gain of approximately EUR 90 million, to be reflected in Fresenius’ 2017 Group net income*. Thereof, approximately EUR 30 million are attributable to Fresenius Kabi and approximately EUR 60 million** to Fresenius Medical Care.

Fresenius will report FY17 results and provide FY18 guidance including details on recurring tax effects resulting from the US tax reform on February 27, 2018.

*Net income attributable to shareholders of Fresenius SE & Co. KGaA
**Based on Fresenius’ 31% shareholding in Fresenius Medical Care AG & Co. KGaA

 

Fresenius Medical Care, the world’s largest provider of dialysis products and services, expects material positive effects from the tax reform legislation signed into law in the United States today. The new law goes into effect on January 1, 2018.

In particular, the new legislation triggers the re-evaluation of deferred tax liabilities. This results in a one-time book gain of around 200 million Euros, to be reflected in 2017 Earnings After Tax.

On February 27, 2018 the company will release its 2017 business results and discuss the ongoing tax effect as part of its guidance for 2018.

Fresenius Medical Care, the world’s largest provider of dialysis products and services, today announced the closing of the divestment of Shiel Medical Laboratory, Inc. to Quest Diagnostics, Inc. as of December 7, 2017. This milestone follows the expiration of the comment period under the Hart-Scott-Rodino Antitrust Improvements Act.

Shiel provided comprehensive non-dialysis laboratory services in the New York-New Jersey metropolitan area. Its divestment is aligned with Fresenius Medical Care’s goal of further optimizing the company’s Care Coordination portfolio. Spectra Labs, the dialysis-related laboratory services business of Fresenius Medical Care, is not affected by the divestiture.

If no timeframe is specified, information refers to Q1-3/2017

Q3/2017:

• Sales: €8.3 billion (+12%, +15% in constant currency)
• EBIT¹: €1,129 million (+5%, +9% in constant currency)
• Net income^2,3 (adjusted): €423 million (+11%, +14% in constant currency)
• Net income²: €396 million (+4%, +7% in constant currency)

Q1-3/2017:

• Sales: €25.2 billion (+16%, +16% in constant currency)
• EBIT¹: €3,522 million (+15%, +15% in constant currency)
• Net income^2,3 (adjusted): €1,339 million (+20%, +20% in constant currency)
• Net income²: €1,303 million (+17%, +17% in constant currency)

Stephan Sturm, CEO of Fresenius, said: “We can report another very good quarter, once again boosted by strong sales and earnings growth. The prospects for our businesses remain excellent. We are therefore confirming our guidance and are heading towards yet another record year. From this position of strength, we intend to swiftly close and integrate our strategically important acquisitions. Thus, we are expanding our range of high-quality, affordable healthcare products and services for the benefit of our patients and our company.“

¹ Before acquisition-related expenses
² Net income attributable to shareholders of Fresenius SE & Co. KGaA
³ Consistent with scope of original guidance: before acquisition-related expenses; before expenditures for further development of biosimilars business

For a detailed overview of adjustments, please see the reconciliation tables on page 15-16 in the pdf document.

2017 Group guidance confirmed

Fresenius confirms its guidance for 2017. Group sales are expected to increase by 15% to 17% in constant currency. Group net income^1,2,3 is expected to grow by 19% to 21% in constant currency.

Including the acquisition of Merck KGaA’s biosimilars business and pro forma the acquisition of Akorn, the net debt/EBITDA⁴ ratio is expected to be approximately 3.3 at the end of 2017.

16% sales growth in constant currency

Group sales increased by 16% (16% in constant currency) to €25,191 million (Q1-3/2016: €21,651 million). Organic sales growth was 6%⁵ while acquisitions contributed 10%. In Q3/2017, Group sales increased by 12% (15% in constant currency) to €8,297 million (Q3/2016: €7,433 million). Negative currency translation effects (-3%) were mainly related to the devaluation of the US dollar. Organic sales growth was 6% while acquisitions contributed 9%.

 

¹ Net income attributable to shareholders of Fresenius SE & Co. KGaA
² Before acquisition-related expenses of ~€50 m
³ Before expected expenditures for further development of biosimilars business of ~€60 m
⁴ Net debt and EBITDA at FY average exchange rates; before acquisition-related expenses of ~€50 m; excluding further potential acquisitions
⁵ Excluding effects of Fresenius Medical Care’s agreement with the United States Departments of Veterans Affairs and Justice (VA agreement)

For a detailed overview of adjustments, please see the reconciliation tables on page 15-16 in the pdf document.

 

Group sales by region:

 

20% adjusted net income^2,3 growth in constant currency

Group EBITDA⁴ increased by 16% (16% in constant currency) to €4,579 million (Q1-3/2016: €3,959 million). Group EBIT⁴ increased by 15% (15% in constant currency) to €3,522 million (Q1-3/2016: €3,058 million) with an EBIT margin⁴ of 14.0% (Q1-3/2016: 14.1%). In Q3/2017, Group EBIT⁴ increased by 5% (9% in constant currency) to €1,129 million (Q3/2016: €1,071 million) with an EBIT margin⁴ of 13.6% (Q3/2016: 14.4%).

Group net interest⁴ reached -€484 million (Q1-3/2016: -€433 million). The increase is mainly driven by the financing of the Quirónsalud acquisition.

 

¹ Including effects of VA agreement
² Net income attributable to shareholders of Fresenius SE & Co. KGaA
³ Consistent with scope of original guidance: before acquisition-related expenses; before expenditures for further development of biosimilars business
⁴ Before acquisition-related expenses

For a detailed overview of adjustments, please see the reconciliation tables on page 15-16 in the pdf document.

The Group tax rate¹ was 28.1% (Q1-3/2016: 28.2%). In Q3/2017, the Group tax rate¹ decreased to 27.4% (Q3/2016: 27.9%), mainly driven by a re-evaluation of estimated future tax payments at Fresenius Medical Care.

Noncontrolling interest increased to €854 million (Q1-3/2016: €768 million), of which 95% was attributable to the noncontrolling interest in Fresenius Medical Care.

Adjusted Group net income^2,3 increased by 20% (20% in constant currency) to €1,339 million (Q1-3/2016: €1,118 million). Adjusted earnings per share^2,3 increased by 19% (19% in constant currency) to €2.42 (Q1-3/2016: €2.04). In Q3/2017, adjusted Group net income^2,3 increased by 11% (14% in constant currency) to €423 million (Q3/2016: €382 million). Adjusted earnings per share^2,3 increased by 11% (14% in constant currency) to €0.77 (Q3/2016: €0.69).

Group net income before acquisition-related expenses^1,2 increased by 19% (19% in constant currency) to €1,329 million (Q1-3/2016: €1,118 million). Earnings per share^1,2 increased by 18% (18% in constant currency) to €2.40 (Q1-3/2016: €2.04). In Q3/2017, Group net income^1,2 increased by 8% (11% in constant currency) to €413 million (Q3/2016: €382 million). Earnings per share^1,2 increased by 8% (11% in constant currency) to €0.75 (Q3/2016: €0.69).

Group net income² increased by 17% (17% in constant currency) to €1,303 million (Q1-3/2016: €1,118 million). Earnings per share² increased by 15% (15% in constant currency) to €2.35 (Q1-3/2016: €2.04). In Q3/2017, Group net income² increased by 4% (7% in constant currency) to €396 million (Q3/2016: €382 million). Earnings per share² increased by 3% (6% in constant currency) to €0.71 (Q3/2016: €0.69).

 

¹ Before acquisition-related expenses
² Net income attributable to shareholders of Fresenius SE & Co. KGaA
³ Consistent with scope of original guidance: before acquisition-related expenses; before expenditures for further development of biosimilars business

For a detailed overview of adjustments, please see the reconciliation tables on page 15-16 in the pdf document.

Continued investment in growth

Spending on property, plant and equipment was €1,137 million (Q1-3/2016: €1,059 million), primarily for the modernization and expansion of dialysis clinics, production facilities as well as hospitals and day clinics. Total acquisition spending of €6,662 million (Q1-3/2016: €592 million) was mainly related to the acquisitions of Quirónsalud and Merck KGaA’s biosimilars business.

Strong operating cash flow

Operating cash flow increased by 24% to €2,821 million (Q1-3/2016: €2,273 million). The cash flow margin increased to 11.2% (Q1-3/2016: 10.5%). In Q3/2017, operating cash flow increased by 21% to €1,138 million (Q3/2016: €940 million), with a margin of 13.7% (Q3/2016: 12.6%).

Free cash flow before acquisitions and dividends increased by 41% to €1,705 million (Q1-3/2016: €1,206 million). Free cash flow after acquisitions and dividends was -€5,233 million (Q1-3/2016: €252 million).

Solid balance sheet structure

The Group’s total assets increased by 14% (20% in constant currency) to €53,097 million (Dec. 31, 2016: €46,697 million), mainly due to the acquisition of Quirónsalud. Current assets grew by 10% (16% in constant currency) to €12,870 million (Dec. 31, 2016: €11,744 million). Non-current assets increased by 15% (22% in constant currency) to €40,227 million (Dec. 31, 2016: € 34,953 million).

Total shareholders’ equity grew by 2% (10% in constant currency) to €21,167 million (Dec. 31, 2016: €20,849 million). The equity ratio was 39.9% (Dec. 31, 2016: 44.6%).

Group debt increased by 32% (37% in constant currency) to €19,496 million (Dec. 31, 2016: € 14,780 million), mainly driven by the acquisition financing of Quirónsalud. As of September 30, 2017, the net debt/EBITDA ratio was 2.97^1,2 (Dec. 31, 2016: 2.33¹; pro forma Quirónsalud 3.09¹).

 

¹ Net debt and EBITDA at LTM average exchange rates
² Before acquisition-related expenses

For a detailed overview of adjustments, please see the reconciliation tables on page 15-16 in the pdf document.

Increased number of employees
As of September 30, 2017, the number of employees increased by 17% to 271,676 (Dec. 31, 2016: 232,873).

Business Segments

Fresenius Medical Care

Fresenius Medical Care is the world's largest provider of products and services for individuals with chronic kidney failure. As of September 30, 2017, Fresenius Medical Care was treating 317,792 patients in 3,714 dialysis clinics. Along with its core business, the company seeks to expand the range of medical services in the field of care coordination.

• Solid Q3 despite impact from natural disasters in North America
• 8% constant currency sales growth in Q3
• 2017 outlook confirmed²

Sales increased by 10% (10% in constant currency, 7% organic) to €13,355 million (Q1-3/2016: €12,153 million). Acquisitions and the agreement with the United States Departments of Veterans Affairs and Justice (VA agreement) contributed 3% in total. In Q3/2017, sales increased by 3% (8% in constant currency, 6% organic) to €4,336 million (Q3/2016: €4,211 million).

Health Care Services sales (dialysis services and care coordination) increased by 11% (10% in constant currency) to €10,950 million (Q1-3/2016: €9,910 million). Product sales increased by 7% (7% in constant currency) to €2,404 million (Q1-3/2016: €2,244 million).

In North America, sales increased by 10% (10% in constant currency) to €9,715 million (Q1-3/2016: €8,828 million). Health Care Services sales grew by 10% (10% in constant currency) to €9,086 million (Q1-3/2016: €8,224 million). Product sales increased by 4% (4% in constant currency) to €629 million (Q1-3/2016: €604 million).

Sales outside North America increased by 9% (10% in constant currency) to €3,628 million (Q1-3/2016: €3,315 million). Health Care Services sales increased by 11% (11% in constant currency) to €1,864 million (Q1-3/2016: €1,686 million). Product sales increased by 8% (8% in constant currency) to €1,764 million (Q1-3/2016: €1,630 million).

¹ Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
² Excluding effects of VA agreement and natural disaster costs

 

EBIT increased by 10% (10% in constant currency) to €1,843 million (Q1-3/2016: €1,679 million). The EBIT margin was 13.8% (Q1-3/2016: 13.8%). In Q3/2017, EBIT was on the prior-year level (increased by 4% in constant currency) at €608 million (Q3/2016: €611 million). Foreign currency effects, lower contributions from the vascular business, higher costs in the pharmacy services business and natural disaster costs in North America negatively impacted EBIT, while organic growth and lower research and development expenses contributed positively. The EBIT margin was 14.0% (Q3/2016: 14.5%).

Net income¹ increased by 13% (14% in constant currency) to €886 million (Q1-3/2016: €781 million). Consistent with the original scope of guidance, i.e. excluding the effects of the VA agreement and natural disaster costs, net income¹ increased by 8% in constant currency. In Q3/2017, net income¹ grew by 2% (6% in constant currency) to €309 million (Q3/2016: €304 million). Excluding the effects of the VA agreement and natural disaster costs, net income¹ increased by 5% (8% in constant currency).

Operating cash flow increased by 43% to €1,664 million (Q1-3/2016: €1,160 million). The cash flow margin increased to 12.5% (Q1-3/2016: 9.5%). In Q3/2017, operating cash flow increased by 56% to €612 million (Q3/2016: €393 million) with a cash flow margin of 14.1% (Q3/2016: 9.3%). The increase is primarily attributable to last year’s cash contribution to a pension plan in the United States as well as other working capital items.

Fresenius Medical Care confirms its outlook for 2017. The company expects sales to grow by 8% to 10%² in constant currency. Net income^1,3 is expected to increase by 7% to 9% in constant currency.

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 Excluding effects of VA agreement
³ Excluding effects of VA agreement and natural disaster costs

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.

• 7% organic sales growth in Q3; positive contributions from all regions
• 11% adjusted EBIT growth² in constant currency in Q3
• 2017 outlook confirmed

Sales increased by 7% (7% in constant currency, 7% organic) to €4,764 million (Q1-3/2016: €4,457 million). Acquisitions/divestitures had no meaningful impact on sales. In Q3/2017, sales increased by 3% (7% in constant currency, 7% organic) to €1,562 million (Q3/2016: €1,511 million). Negative currency translation effects (-4%) were mainly related to the devaluation of the US dollar and the Chinese yuan against the Euro.

Sales in Europe increased by 4% (5% organic) to €1,635 million (Q1-3/2016: €1,569 million). In Q3/2017, sales increased by 3% (4% organic) to €538 million (Q3/2016: €521 million).

Sales in North America increased by 7% (6% organic) to €1,736 million (Q1-3/2016: €1,628 million). In Q3/2017, sales increased by 1% (7% organic) to €549 million (Q3/2016: €542 million).

Sales in Asia-Pacific increased by 9% (11% organic) to €894 million (Q1-3/2016: €821 million). In Q3/2017, sales increased by 8% (12% organic) to €312 million (Q3/2016: €290 million).

Sales in Latin America/Africa increased by 14% (10% organic) to €499 million (Q1-3/2016: €439 million). In Q3/2017, sales increased by 3% (8% organic) to €163 million (Q3/2016: €158 million).

 

¹ Before acquisition-related expenses
² Consistent with scope of original guidance: before acquisition-related expenses; before expenditures for further development of biosimilars business
³ Net income attributable to shareholders of Fresenius SE & Co. KGaA

For a detailed overview of adjustments, please see the reconciliation tables on page 15-16 in the pdf document.

 

Adjusted EBIT¹ increased by 6% (7% in constant currency) to €919 million (Q1-3/2016: €863 million). The adjusted EBIT margin¹ was 19.3% (Q1-3/2016: 19.4%). In Q3/2017, adjusted EBIT¹ increased by 6% (11% in constant currency) to €297 million (Q3/2016: €281 million), despite expenses related to hurricane Maria on Puerto Rico. The adjusted EBIT margin¹ increased to 19.0% (Q3/2016: 18.6%).

EBIT² increased by 5% (6% in constant currency) to €905 million (Q1-3/2016: €863 million). The EBIT margin² was 19.0% (Q1-3/2016: 19.4%). In Q3/2017, EBIT² increased by 1% (6% in constant currency) to €283 million (Q3/2016: €281 million). Given the €14 million expenditure for the further development of the biosimilars business, the EBIT margin² decreased to 18.1% (Q3/2016: 18.6%).

Adjusted net income^1,3 increased by 13% (14% in constant currency) to €554 million (Q1-3/2016: €491 million). In Q3/2017, adjusted net income^1,3 increased by 13% (19% in constant currency) to €175 million (Q3/2016: €155 million).

While operating cash flow reached a very strong €640 million, it could not match the exceptional prior-year figure (Q1-3/2016: €661 million). The same applied to the strong margin of 13.4% (Q1-3/2016: 14.8%). In Q3/2017, operating cash flow reached a healthy €245 million (Q3/2016: €322 million) despite a cash prepayment for the biosimilars business and adverse currency translation effects. The cash flow margin was 15.7% (Q3/2016: 21.3%). Excluding the prepayment, operating cash flow was €290 with a margin of 18.6%.

Fresenius Kabi confirms its outlook for 2017 and expects 5% to 7% organic sales growth and EBIT growth in constant currency of 6% to 8%^4,5.

 

¹ Consistent with scope of original guidance: before acquisition-related expenses; before expenditures for further development of biosimilars business
² Before acquisition-related expenses
³ Net income attributable to shareholders of Fresenius SE & Co. KGaA
⁴ Before acquisition-related expenses of ~€50 m
⁵ Before expected expenditures for further development of biosimilars business of ~€60 m

For a detailed overview of adjustments, please see the reconciliation tables on page 15-16 in the pdf document.

Fresenius Helios

Fresenius Helios is Europe's leading private hospital operator. The company comprises Helios Kliniken in Germany and Quirónsalud in Spain. Helios Kliniken operates 111 hospitals, thereof 88 acute care clinics and 23 post-acute care clinics, and treats more than 5.2 million patients annually. Quirónsalud operates 44 hospitals, 44 outpatient centers and around 300 occupational risk prevention centers, and treats approximately 9.7 million patients per year.

 

• 47% sales growth (4% excluding Quirónsalud) in Q3
• 33% EBIT increase (9% excluding Quirónsalud) in Q3
• 2017 outlook confirmed

Fresenius Helios increased sales by 47% (4% organic) to €6,422 million (Q1-3/2016: €4,382 million). Acquisitions, mainly Quirónsalud, increased sales by 43%. In Q3/2017, sales increased by 47% (4% organic) to €2,166 million (Q3/2016: €1,470 million).

Sales of Helios Kliniken² increased by 4% (4% organic) to €4,562 million (Q1-3/2016: €4,382 million). In Q3/2017, sales increased by 4% (4% organic) to €1,524 million (Q3/2016: €1,470 million). Quirónsalud has been consolidated since February 1, 2017 and generated sales of €1,860 million (thereof €642 million in Q3/2017).

Fresenius Helios grew EBIT by 52% to €769 million (Q1-3/2016: €507 million). The EBIT margin increased to 12.0% (Q1-3/2016: 11.6%). In Q3/2017, EBIT increased by 33% to €232 million (Q3/2016: €175 million). The EBIT margin decreased to 10.7% (Q3/2016: 11.9%) due to the anticipated lower contribution of Quirónsalud during the summer months.

EBIT of Helios Kliniken² increased by 8% to €549 million (Q1-3/2016: €507 million) with a margin of 12.0% (Q1-3/2016: 11.6%). In Q3/2017, EBIT of Helios Kliniken² increased by 9% to €190 million (Q3/2016: €175 million) with a margin of 12.5% (Q3/2016: 11.9%). EBIT of Quirónsalud was €220 million (thereof €42 million in Q3/2017) with a margin of 11.8% (Q3/2017: 6.5%).

Fresenius Helios increased net income¹ by 31% to €526 million (Q1-3/2016: €402 million). In Q3/2017, net income¹ increased by 9% to €153 million (Q3/2016: €140 million).

Operating cash flow increased by 28% to €560 million (Q1-3/2016: €437 million) driven by the first-time consolidation of Quirónsalud. The margin was 8.7% (Q1-3/2016: 10.0%).

Fresenius Helios confirms its outlook for 2017 and projects organic sales growth of 3% to 5%² and sales of ~€8.6 billion (thereof Quirónsalud ~€2.5 billion³). EBIT is expected to increase to €1,020 to €1,070 million (thereof Quirónsalud €300 to 320 million³).

¹ Net income attributable to shareholders of Fresenius SE & Co. KGaA
² Helios Kliniken Germany, excluding Quirónsalud
³ Quirónsalud consolidated for 11 months

Fresenius Vamed

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

• 9% sales growth in service business in Q3
• Project business with strong order intake of €285 million in Q3
• 2017 outlook confirmed

Sales increased by 1% (1% organic) to €748 million (Q1-3/2016: €740 million). Sales in the project business decreased by 7% to €301 million (Q1-3/2016: €325 million). Sales in the service business grew by 8% to €447 million (Q1-3/2016: €415 million). In Q3/2017, sales remained stable at €267 million (Q3/2016: €268 million).

EBIT increased by 3% to €32 million (Q1-3/2016: €31 million). The EBIT margin increased to 4.3% (Q1-3/2016: 4.2%). In Q3/2017, EBIT of €15 million (margin 5.6%) remained unchanged from previous year’s quarter.

Net income¹ remained stable at €21 million (Q1-3/2016: €21 million). In Q3/2017, net income¹ remained unchanged at €10 million (Q3/2016: €10 million).

Order intake reached a strong €697 million (Q1-3/2016: €674 million). In Q3/2017 order intake increased by 36% to €285 million. As of September 30, 2017, order backlog grew to an all-time high of €2,345 million (December 31, 2016: €1,961 million).

Fresenius Vamed confirms its outlook for 2017 and expects both organic sales growth and EBIT growth in the range of 5% to 10%.

¹ Net income attributable to shareholders of VAMED AG

 

 

Conference Call

As part of the publication of the results for the first nine months of 2017, a conference call will be held on November 2, 2017 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, please refer to our website www.fresenius.com/alternative-performance-measures.

 

 

• Revenue growth of 3% (+8% at constant currency)
• Operating income stable (+4% at constant currency)
• North American business impacted by natural disasters
• North America Care Coordination activities grow by 20% (+26% at constant currency), margin expands significantly to 7%
• FY 2017 outlook confirmed

 

 

Key figures (IFRS)

EUR million	Q3 2017	Growth yoy	Growth yoy at constant currency
Revenue	4,336	3%	8%
Adjusted revenue1	4,339	3%	8%
Operating income (EBIT)	609	0%	4%
Adjusted operating income (EBIT)1,2	624	2%	6%
Net income3	309	2%	6%
Adjusted net income1,2,3	319	5%	8%
Basic earnings per share (in EUR)	1.01	1%	6%
Adjusted basic earnings per share (in EUR)1,2	1.04	5%	8%

 

 

 

 

¹ Adjusted for the exchange rate impact on the effects of the agreement with the U.S. Departments of Veterans Affairs and Justice on outstanding payments
² Adjusted for the cost effects, net of anticipated recoveries from natural disasters in North America (natural disaster costs)
³ Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA

Rice Powell, Chief Executive Officer of Fresenius Medical Care, stated: “This was a very challenging quarter for many of our patients and employees in North America. Thanks to the spirit and commitment of our employees, we were able to provide dialysis to patients under extreme circumstances in the disaster areas. I am very proud of what our team has achieved in helping both patients and employees. We delivered a solid quarter despite the effects from several natural disasters.”

Revenue & Earnings

Revenue for the third quarter improved by 3% to EUR 4,336 million (+8% at constant currency). Health Care Services revenue of EUR 3,532 million (+8% at constant currency) was supported by an increase in organic revenue from Care Coordination, same-market treatment growth in dialysis services and contributions from acquisitions. Health Care Products revenue increased by 4% to EUR 804 million (+8% in constant currency) in the third quarter, mainly driven by higher sales of dialyzers, machines, peritoneal dialysis products, renal pharmaceuticals, bloodlines and products for acute care. Revenue in the first nine months of 2017 increased by 10% to EUR 13,355 million. Health Care Services revenue grew by 11% (+10% at constant currency), while Health Care Products revenue increased by 7% (+7% at constant currency).

In the third quarter, operating income (EBIT) was stable at EUR 609 million (+4% at constant currency). Foreign currency effects had a negative impact on the performance worldwide. In addition, lower contributions from the vascular business, higher costs in the pharmacy services business and natural disaster costs in North America negatively impacted EBIT, while organic growth and lower research and development expenses had a positive impact. The EBIT margin fell by 50 basis points to 14.0%. For the year’s first nine months, EBIT increased by 10% to EUR 1,843 million.

Net interest expense in the third quarter was EUR 86 million, compared to EUR 90 million in the third quarter of 2016. The reduction was driven by a favorable foreign currency translation effect. At constant exchange rates, net interest expense remained stable. For the first nine months of 2017, net interest expense decreased by 1% to EUR 274 million.

Income tax expense was stable at EUR 152 million in the third quarter. This translates into an effective tax rate of 29.0%, a decrease of 20 basis points compared with the third quarter of 2016 (29.2%). Income taxes in both periods were favorably impacted by adjustments of tax liabilities which are regularly reviewed to reflect resolved matters or new information. For the first nine months of 2017, income tax expense increased to EUR 484 million, translating into an effective tax rate of 30.8% (+40 basis points).

Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA increased by 2% to EUR 309 million in the third quarter (+6% at constant currency). Excluding the 2017 impact from (i) the adjustment for the exchange rate impact on the effects of the agreement with the U.S. Departments of Veterans Affairs and Justice, and (ii) the impact from natural disaster costs in North America, net income increased to EUR 319 million (+5%, +8% at constant currency) in the third quarter. Based on approximately 306.6 million shares (weighted average number of shares outstanding), basic earnings per share (EPS) increased from EUR 0.99 to EUR 1.01 (+1%). EPS excluding the two effects described above increased to EUR 1.04 (+5%).

For the first nine months of 2017, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA increased by 13% to EUR 886 million. Adjusted for the impact from the agreement with the U.S. Departments of Veterans Affairs and Justice and the natural disaster costs, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA was at EUR 842 million (+8%). Basic EPS improved by the same rate, to EUR 2.89. Adjusted for the two effect described before, EPS was at EUR 2.75 (+8%).

Segment development

In the third quarter, North America revenue increased by 2% to EUR 3,115 million. Health Care Services revenue grew by 2% to EUR 2,904 million (+8% at constant currency), of which Care Coordination contributed EUR 705 million (+20%, 26% at constant currency), supported by significant organic revenue growth. Dialysis care revenue decreased by 2% to EUR 2,199 million (+3% at constant currency). Dialysis treatments increased by 3%. Revenue per treatment in the United States was up by $2 to $352 while cost per treatment increased $6 to $284, largely driven by higher personnel expense, the impact from natural disaster costs and a higher bad debt expense. Health Care Products revenue grew by 1% to EUR 211 million (+6% at constant currency). The growth at constant currency was mainly driven by higher sales of peritoneal dialysis products, machines and renal drugs.

Operating income in North America came in 1% lower at EUR 483 million (+4% at constant currency). The operating income margin of 15.5% (16.0% adjusted for natural disaster costs) was ahead of the second quarter of 2017, but weaker than the previous year’s third quarter (-60 basis points). This decline was attributable to natural disaster costs, higher personnel expense and increased costs for supply, rent and bad debt, as well as lower income from equity method investees, partially offset by lower costs for healthcare supplies and the prior-year cost impact related to the vesting of long-term incentive grants. The EBIT margin in Care Coordination came in at 6.6% (6.7% adjusted for natural disaster costs), a strong increase of 150 basis points over the third quarter of 2016.

For the first nine months of 2017, North America revenue increased by 10% to EUR 9,715 million (+10% at constant currency). Operating income increased in line with revenue growth to EUR 1,478 million (+9% at constant currency).

EMEA revenue increased by 5% to EUR 632 million (+6% at constant currency). Health Care Services revenue for the EMEA segment increased by 4% to EUR 311 million (+5% at constant currency). This was mainly the result of growth in same market treatments and contributions from acquisitions, partially offset by decreases in organic revenue per treatment. Dialysis treatments increased by 4%. Health Care Products revenue increased by 5% (+7% at constant currency) to EUR 321 million. The growth in dialysis products was driven by higher sales of dialyzers and products for peritoneal dialysis and acute care. Non-dialysis products grew by 58% to EUR 19 million principally due to the acquisition of Xenios.

Operating income in the EMEA segment decreased by 5% to EUR 106 million in the third quarter (+6% at constant currency) due to planned investments in Xenios, foreign currency transaction losses and lower income from equity method investees, as well as pressure on reimbursement in some countries partially offset by the favorable impact from a legal settlement and lower bad debt expense. The operating income margin decreased to 16.8% (-180 basis points).

For the first nine months of 2017, EMEA revenue increased by 6% to EUR 1,888 million (+6% at constant currency) and operating income decreased by 6% to EUR 333 million (+6% at constant currency).

Asia-Pacific revenue grew by 7% (+14% at constant currency) to EUR 411 million in the third quarter. With growth of +12% (+21% at constant currency) the region recorded EUR 194 million in Health Care Services revenue, mainly driven by the acquisition impact from Cura Group in Australia. Dialysis treatments increased by 7%. With a 4% growth in revenue to EUR 217 million (+9% at constant currency), the Health Care Product business increased sales of machines, dialyzers, bloodlines and peritoneal dialysis products.

Operating income showed a slight increase (+1%) to EUR 77 million (+7% at constant currency). The operating income margin was at 18.8% (-110 basis points). This was primarily driven by an unfavorable mix effect related to acquisitions with lower margins and the impact from foreign currency transaction effects.

For the first nine months of 2017, Asia-Pacific revenue grew by 12% to EUR 1,206 million (+13% at constant currency) and operating income increased by 17% to EUR 237 million (+18% at constant currency).

Latin America delivered revenue of EUR 175 million, an increase of 2% (+11% at constant currency). Health Care Services revenue decreased by 1% to EUR 123 million. The growth of 11% at constant currency was a result of higher organic revenue per treatment and contributions from acquisitions. Dialysis treatments increased by 1%.

Health Care Products revenue increased by 9% to EUR 52 million (+13% at constant currency), as a result of higher sales of machines and disposables, partially offset by lower sales of renal pharmaceuticals.

Operating income came in at the previous year’s level of EUR 18 million (+6% at constant currency), impacted by unfavorable foreign currency effects and higher costs primarily related to inflation but mainly compensated by higher reimbursement rates. The operating margin was at last year’s level of 10.2% (-20 basis points).

For the first nine months of 2017, Latin America revenue grew by 15% to EUR 535 million (+15% at constant currency) and operating income increased by 6% to EUR 45 million (+10% at constant currency).

Cash flow

In the third quarter of 2017, the company generated EUR 612 million (Q3 2016: EUR 393 million) in net cash provided by operating activities, representing a strong improvement to 14.1% of revenue (Q3 2016: 9.3%). The increase is primarily attributable to last year’s cash contribution to a pension plan in the United States, as well as other working capital items. Free cash flow was also very strong at EUR 386 million, compared to EUR 182 million for the third quarter of 2016.

In the first nine months of 2017, the company generated net cash provided by operating activities of EUR 1,664 million, representing 12.5% of revenue.

Employees

As of September 30, 2017, Fresenius Medical Care had 113,648 employees (full-time equivalents) worldwide, compared with 108,851 employees at the end of September 2016. This increase of 4% was primarily attributable to our continued organic growth and acquisitions.

Recent events

In August 2017, Fresenius Medical Care signed a merger agreement to acquire NxStage Medical, Inc., a U.S.-based medical technology and services company. The planned acquisition has a total transaction volume of approximately EUR 1.7 billion (USD 2.0 billion). On October 27, shareholders of NxStage approved the acquisition by Fresenius Medical Care. The completion of the acquisition is subject to regulatory approvals and other customary closing conditions. Closing is currently expected to occur in 2018.

In September 2017, Fresenius Medical Care announced the divestment of Shiel Medical Laboratory, which provides non-renal lab services. Closing of the transaction is subject to regulatory approvals and anticipated in the fourth quarter of 2017.

Outlook 2017 confirmed

Excluding the effects from natural disaster costs and the effects of the agreement with the U.S. Departments of Veterans Affairs and Justice, Fresenius Medical Care confirms its full-year outlook 2017. The company expects revenue growth between +8% and +10% at constant currency. Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA is expected to increase by +7% to +9% at constant currency over the previous year

Conference call

Fresenius Medical Care will hold a conference call to discuss the results of the third quarter & first nine months of 2017 on Thursday, November 2, 2017 at 3:30 p.m. CET/ 10:30 a.m. EDT. The company invites investors to follow the live webcast of the call on the company’s website www.freseniusmedicalcare.com in the “Investors/Events” section. A replay will be available shortly after the call.

 

 

 

 

 

At today’s Special Meeting, the stockholders of NxStage Medical, Inc. approved the adoption of the previously announced merger agreement with Fresenius Medical Care, with approximately 72% of outstanding shares having voted in favor of the transaction. This corresponds to approximately 94% of the votes cast at the Special Meeting. The approval of the merger agreement fulfills an important condition for the full acquisition of NxStage Medical, Inc. The transaction remains subject to additional customary closing conditions, including regulatory review under the Hart-Scott-Rodino Antitrust Improvements Act in the United States.

Through the acquisition of NxStage, Fresenius Medical Care aims at further growth in home dialysis and in the critical care area. On August 7, 2017, Fresenius Medical Care announced it would acquire NxStage (NASDAQ: NXTM), a U.S.-based medical technology company focused on advancing renal care, for USD 30.00 per share, equivalent to a total transaction value of approximately EUR* 1.7 billion (USD 2.0 billion).

*Based on an exchange rate of 0.849 USD/EUR as per 5 August 2017.