Fresenius Medical Care AG 6-K, filed May 7, 2024
Fresenius Medical Care AG (FMS)
About this 6-K
Fresenius Medical Care AG filed this 6-K on May 7, 2024.
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 6-K
REPORT OF FOREIGN PRIVATE ISSUER
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
For the month of May 2024
Commission file number: 001-32749
FRESENIUS MEDICAL CARE AG
(Translation of registrant's name into English)
Else-Kröner Strasse 1
61346 Bad Homburg
Germany
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.
| Form 20-F x | Form 40-F ¨ |
On May 7, 2024, Fresenius Medical Care AG (the “Company”) issued a Press Release announcing its first quarter results for the period ending March 31, 2024. A copy of the Press Release is furnished as Exhibit 99.1 and the corresponding financial figures as Exhibit 99.2.
The attached Press Release contains non-GAAP financial measures. For purposes of Regulation G, a non-GAAP financial measure is a numerical measure of a company’s performance, financial position, or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with generally accepted accounting principles. To supplement our first quarter 2024 consolidated financial results presented in accordance with International Financial Reporting Standards, or IFRS, we have used non-GAAP financial measures, including (a) EBITDA, or operating income excluding interest, taxes, depreciation and amortization, (b) free cash flow, (c) net leverage ratio (ratio of net debt to adjusted EBITDA) and (d) results presented in constant currency and as adjusted for special items identified in the Press Release and associated tables. These non-GAAP measures are provided to enhance the user’s overall understanding of our current financial performance and our prospects for the future. In addition, because we have historically reported certain non-GAAP financial measures in our financial results, we believe the inclusion of these non-IFRS financial measures provides consistency and comparability in our financial reporting to prior periods for which these non-GAAP financial measures were previously reported. These non-GAAP financial measures should not be used as a substitute for or be considered superior to GAAP financial measures. Reconciliation of the non-GAAP financial measures to the most comparable IFRS financial measures are included in the attached Financial Statements. As the reconciliation of amounts stated in Constant Currency is inherent in the disclosure included in the Press Release, we believe that a separate reconciliation would not provide any additional benefit.
The Exhibits attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities and Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that section, nor shall they be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, regardless of any general incorporation language in such filing.
EXHIBITS
The following exhibits are being furnished with this Report:
| Exhibit 99.1 | Press release issued on May 7, 2024. |
| Exhibit 99.2 | Complete overview of the first quarter 2024. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
DATE: May 7, 2024
| Fresenius Medical Care AG |
| By: | /s/ Helen Giza | |
| Name: | Helen Giza | |
| Title: | Chief Executive Officer and Chair of the Management Board |
| By: | /s/ Martin Fischer | |
| Name: | Martin Fischer | |
| Title: | Chief Financial Officer and member of the Management Board |
Exhibit 99.1
| Press Release | Media contact |
| Christine Peters | |
| T +49 160 60 66 770 | |
| christine.peters@freseniusmedicalcare.com | |
| Contact for analysts and investors | |
| Dr. Dominik Heger | |
| T +49 6172 609 2601 | |
| dominik.heger@freseniusmedicalcare.com | |
| www.freseniusmedicalcare.com |
Fresenius Medical Care starts the year with strong earnings growth
| · | Solid revenue1 growth of 4% driven by both segments Care Delivery and Care Enablement |
| · | Operating income1 margin improved in both segments |
| · | Care Enablement delivered strong sequential margin improvement with significant progress towards the 2025 target margin band |
| · | Execution of transformation continues at pace, contributing additional FME25 savings of EUR 52 million |
| · | Portfolio optimization program progresses in Care Delivery with signed or closed divestments in all our Latin American markets, and closed divestments in Turkiye and of Cura Day Hospitals Group in Australia |
| · | FY 2024 outlook confirmed |
Bad Homburg (May 7, 2024) – Helen Giza, Chief Executive Officer of Fresenius Medical Care, said: “The first quarter of this year demonstrates that we are executing on our strategy as planned. Both segments expanded their respective margins compared to the prior year. Especially for Care Enablement, the first quarter was an inflection point as our transformation efforts, higher pricing and FME25 savings drove a solid margin improvement. We are also executing with speed our strategic portfolio optimization program. We have started the year with a slightly more favorable operating income phasing than planned and confirm our financial outlook for the full year 2024. We would not be here without the great work of our employees, whom I would like to thank for their hard work and dedication.”
| 1 | Revenue and operating income outlook, as referred to in the 2024 outlook, are both at constant currency, excluding special items as well as the business impact from closed divestitures in 2023 and the settlement agreement with the U. S. government (Tricare) in Q4 2023. For FY 2023 and 2024, special items include costs related to the FME25 program, the Humacyte remeasurements, the legal form conversion costs and effects from legacy portfolio optimization. For further details please see the reconciliation attached to the Press Release. |
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Key figures (unaudited)
| Q1 2024 | Q1 2023 | Growth | Growth | |||||||||||||
| EUR m | EUR m | yoy | yoy, cc | |||||||||||||
| Revenue | 4,725 | 4,704 | 0 | % | +2 | % | ||||||||||
| on outlook base1 | 4,822 | 4,619 | +4 | % | ||||||||||||
| Operating income | 246 | 261 | -6 | % | -4 | % | ||||||||||
| on outlook base1 | 416 | 338 | +23 | % | ||||||||||||
| Net income2 | 71 | 86 | -18 | % | -17 | % | ||||||||||
| on outlook base1 | 198 | 146 | +35 | % | ||||||||||||
| Basic EPS (EUR) | 0.24 | 0.29 | -18 | % | -17 | % | ||||||||||
| on outlook base1 | 0.67 | 0.50 | +35 | % | ||||||||||||
yoy = year-on-year, cc = at constant currency, EPS = earnings per share
Focused execution against the strategic plan continues into 2024
Fresenius Medical Care successfully executed on its operational efficiency and turnaround plans. In the first quarter, the FME25 transformation program continued its momentum, delivering EUR 52 million additional sustainable savings while related one-time costs amounted to EUR 28 million. The Company is well on track to achieve the targeted additional sustainable savings of EUR 100 to 150 million by year end 2024, totaling to EUR 650 million by year end 2025.
Moreover, Fresenius Medical Care is executing its portfolio optimization plan to exit non-core and dilutive assets. As announced during the first quarter, the Company entered into agreements to divest its dialysis clinic networks in Brazil, Colombia, Chile and Ecuador. Special items associated with portfolio optimization amounted to negative EUR 143 million in the first quarter. Subject to regulatory approvals in Brazil, Colombia and Ecuador, the transactions represent another milestone in Fresenius Medical Care’s portfolio optimization program, with each expected to close throughout 2024.
After further signing the divestments of its dialysis clinic networks in Guatemala, Peru and Curacao, Fresenius Medical Care has now signed or closed the exit from all of its dialysis clinics operations in Latin America. The Company moreover closed the divestment of its dialysis clinic network in Turkiye and the Cura Day Hospitals Group, Australia, during April. All transactions that are currently signed as part of the Company’s portfolio optimization plan are estimated to negatively impact Fresenius Medical Care by around EUR 250 million in the full year 2024 and will be treated as special items in operating income. The transactions listed above are expected to generate cash proceeds of around EUR 650 million upon closing.
| 2 | Net income attributable to shareholders of Fresenius Medical Care AG |
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Revenue development driven by solid organic growth
Revenue remained almost unchanged with EUR 4,725 million in the first quarter (+2% at constant currency, +5% organic). Revenue on outlook base1, i.e. at constant currency, excluding special items and the business impacts from closed divestitures during 2023, increased by 4%.
Care Delivery revenue increased by 1% (+3% at constant currency, +6% organic) and by 5% on outlook base1.
In Care Delivery U.S., revenue increased by 3% (+5% at constant currency, +6% organic) and by 6% on outlook base1. A growing value-based care business, reimbursement rate increases and a favorable payor mix had a positive impact, compensating negative exchange rate effects and the effect of closed or sold operations. In line with expectations, elevated missed treatments growth compared unfavorably to last year, in part due to adverse Q1 2024 weather events and an unusually mild 2023 flu season, capacity constraints in clinics in some metropolitan areas, and the remaining annualization effects from excess mortality, that weigh on U.S. same market treatment growth. Adjusted for the exit from less profitable acute care contracts (-0.4%), U.S. same market treatment growth came in as expected at -0.3%.
In Care Delivery International, revenue declined by 9% (-4% at constant currency, +4% organic), while they grew by 2% on outlook base1. The effect of closed or sold operations and a negative exchange rate effect were partially offset by organic growth. Same market treatment growth was positive at 1.4%.
Care Enablement revenue declined by 1% (+1% at constant currency, +2% organic), while they grew by 2% on outlook base1. Positive impacts from pricing were offset by negative exchange rate effects and negative volume growth compared to prior year, in the absence of sales of critical care products in China as part of a Covid-related government initiative in the first quarter 2023.
Within Inter-segment eliminations, revenue for products transferred between the operating segments at fair market value remained stable at negative EUR 360 million (+1% at constant currency).3
Better than expected earnings development driven by phasing of value-based care business
Operating income decreased by 6% to EUR 246 million (-4% at constant currency), resulting in a margin of 5.2% (Q1 2023: 5.5%). Operating income on outlook base1, i.e. at constant currency, excluding special items and the business impacts from closed divestitures during 2023, increased by 23% to EUR 416 million, resulting in a margin of 8.6% (Q1 2023: 7.3%).
| 3 | The Company transfers products between segments at fair market value. The associated internal revenues and expenses and all other consolidation of transactions are included within “Inter-segment eliminations”. |
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Operating income in Care Delivery decreased by 34% (-34% at constant currency), resulting in a margin of 5.0% (Q1 2023: 7.6%). Operating income on outlook base1 increased by 25%, resulting in a margin of 9.3% (Q1 2023: 7.8%). The operating income development was driven by positive effects from pricing, the value-based care business and FME25 savings, while expected labor and inflationary cost increases impacted the earnings development.
Operating income in Care Enablement amounted to EUR 70 million (Q1 2023: EUR -24 million), resulting in a margin of 5.4% (Q1 2023: -1.9%). Operating income on outlook base1 increased by 23%, resulting in a margin of 6.0% (Q1 2023: 5.0%). The improvement compared to the previous year’s quarter was mainly driven by savings from the FME25 program and improved pricing. These positive effects were partially offset by inflationary cost increases and unfavorable foreign currency transaction effects.
Operating income for Corporate amounted to EUR -14 million (Q1 2023: EUR 10 million). Operating income on outlook base1 amounted to EUR -19 million (Q1 2023: EUR -5 million), mainly due to higher costs related to certain global functions.
Net income2 decreased by 18% to EUR 71 million (-17% at constant currency). Net income on outlook base1 increased by 35%.
Basic earnings per share (EPS) decreased by 18% to EUR 0.24 (-17% at constant currency). EPS on outlook base1 increased by 35%.
Strong cash flow development
In the first quarter, Fresenius Medical Care generated EUR 127 million of operating cash flow (Q1 2023: EUR 143 million), resulting in a margin of 2.7% (Q1 2023: 3.0%). The operating cash flow development was negatively impacted by EUR 58 million resulting from a cyber incident at Change Healthcare, one of our U.S. service providers, in February.
Free cash flow4 amounted to EUR -2 million in the first quarter (Q1 2023:EUR 2 million).
Outlook
Fresenius Medical Care confirms its outlook for fiscal 2024 and expects revenue to grow by a low- to mid-single digit percent rate compared to prior year. The Company expects operating income to grow by a mid- to high-teens percent rate compared to prior year.
| 4 | Net cash provided by / used in operating activities, after capital expenditures, before acquisitions, investments, and dividends |
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The expected growth rates for 2024 are at constant currency, excluding special items as well as the business impacts from closed divestitures in 2023 and the settlement agreement with the U.S. government (Tricare) in Q4 2023. The 2023 basis for the revenue outlook is EUR 19,049 million and for the operating income outlook is EUR 1,540 million.
The Company also reconfirms its targets to achieve an operating income margin of 10% to 14% by 2025. This excludes impacts from portfolio changes.
Patients, clinics and employees
As of March 31, 2024, Fresenius Medical Care treated 324,884 patients in 3,862 dialysis clinics worldwide and had 117,128 employees (headcount) globally, compared to 119,845 employees as of December 31, 2023.
Conference call
Fresenius Medical Care will host a conference call to discuss the results of the first quarter on May 7, 2024, at 2:00 p.m. CEST / 8:00 a.m. EDT. Details will be available on the Fresenius Medical Care website in the “Investors” section. A replay will be available shortly after the call.
Please refer to our statement of earnings included at the end of this news and to the attachments as separate PDF files for a complete overview of the results of the first quarter of 2024. Our 6-K disclosure provides more details.
About Fresenius Medical Care:
Fresenius Medical Care is the world's leading provider of products and services for individuals with renal diseases of which around 4.1 million patients worldwide regularly undergo dialysis treatment. Through its network of 3,862 dialysis clinics, Fresenius Medical Care provides dialysis treatments for approx. 325,000 patients around the globe. Fresenius Medical Care is also the leading provider of dialysis products such as dialysis machines or dialyzers. Fresenius Medical Care is listed on the Frankfurt Stock Exchange (FME) and on the New York Stock Exchange (FMS).
For more information visit the Company’s website at www.freseniusmedicalcare.com.
Disclaimer:
This release contains forward-looking statements that are subject to various risks and uncertainties. Actual results could differ materially from those described in these forward-looking statements due to various factors, including, but not limited to, changes in business, economic and competitive conditions, legal changes, regulatory approvals, impacts related to the COVID-19 pandemic results of clinical studies, foreign exchange rate fluctuations, uncertainties in litigation or investigative proceedings, and the availability of financing. These and other risks and uncertainties are detailed in Fresenius Medical Care’s reports filed with the U.S. Securities and Exchange Commission. Fresenius Medical Care does not undertake any responsibility to update the forward-looking statements in this release.
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Exhibit 99.2
Fresenius Medical Care AG
COMPLETE OVERVIEW OF THE FIRST QUARTER 2024
May 7, 2024
Investor Relations
phone: +49 6172 609 2525
email: ir@freseniusmedicalcare.com
| Content: | |
| Statement of earnings | page 2 |
| Segment information | page 3 |
| Balance sheet | page 4 |
| Cash flow | page 5 |
| Revenue development by segment | page 6 |
| Key metrics | page 7 |
| Reconciliation results (outlook base) | page 8 |
| Outlook 2024 | page 9 |
Disclaimer
This release contains forward-looking statements that are subject to various risks and uncertainties. Actual results could differ materially from those described in these forward-looking statements due to various factors, including, but not limited to, changes in business, economic and competitive conditions, legal changes, regulatory approvals, impacts related to COVID-19, results of clinical studies, foreign exchange rate fluctuations, uncertainties in litigation or investigative proceedings, and the availability of financing. These and other risks and uncertainties are detailed in Fresenius Medical Care AG’s reports filed with the U.S. Securities and Exchange Commission. Fresenius Medical Care AG does not undertake any responsibility to update the forward-looking statements in this release.
Rounding adjustments applied to individual numbers and percentages may result in these figures differing immaterially from their absolute values. Furthermore, totals and subtotals in tables may differ slightly from unrounded figures due to rounding in accordance with commercial rounding conventions.
Copyright by Fresenius Medical Care AG
Statement of earnings
| in € million, except share data, unaudited | Three months ended March 31, | |||||||||||||||
| 2024 | 2023 | Change | Change at cc | |||||||||||||
| Total revenue | 4,725 | 4,704 | 0.4 | % | 2.5 | % | ||||||||||
| Total revenue (outlook base) 1 | 4,822 | 4,619 | 4.4 | % | ||||||||||||
| Costs of revenue | 3,551 | 3,555 | -0.1 | % | 1.9 | % | ||||||||||
| Selling, general and administrative expense | 776 | 782 | -0.8 | % | 0.7 | % | ||||||||||
| Research and development expense | 48 | 56 | -14.3 | % | -13.9 | % | ||||||||||
| Income from equity method investees | (29 | ) | (28 | ) | 4.8 | % | 4.8 | % | ||||||||
| Other operating income | (113 | ) | (117 | ) | -3.4 | % | -3.9 | % | ||||||||
| Other operating expense | 246 | 195 | 26.2 | % | 30.5 | % | ||||||||||
| Operating income | 246 | 261 | -5.7 | % | -4.4 | % | ||||||||||
| Operating income (outlook base) 1 | 416 | 338 | 23.0 | % | ||||||||||||
| Interest income | (16 | ) | (12 | ) | 29.6 | % | 37.0 | % | ||||||||
| Interest expense | 104 | 95 | 9.7 | % | 12.6 | % | ||||||||||
| Interest expense, net | 88 | 83 | 6.8 | % | 9.1 | % | ||||||||||
| Income before income taxes | 158 | 178 | -11.5 | % | -10.6 | % | ||||||||||
| Income tax expense | 40 | 45 | -11.2 | % | -10.8 | % | ||||||||||
| Net income | 118 | 133 | -11.6 | % | -10.6 | % | ||||||||||
| Net income attributable to noncontrolling interests | 47 | 47 | -0.3 | % | 0.9 | % | ||||||||||
| Net income attributable to shareholders of FME AG | 71 | 86 | -17.8 | % | -16.9 | % | ||||||||||
| Net income attributable to shareholders of FME AG (outlook base) 1 | 198 | 146 | ||||||||||||||
| Weighted average number of shares | 293,413,449 | 293,413,449 | 35.3 | % | ||||||||||||
| Basic earnings per share | € | 0.24 | € | 0.29 | -17.8 | % | -16.9 | % | ||||||||
| Basic earnings per ADS | € | 0.12 | € | 0.15 | -17.8 | % | -16.9 | % | ||||||||
| Operating income | 246 | 261 | -5.7 | % | -4.4 | % | ||||||||||
| Depreciation, amortization and impairment loss | 512 | 438 | 17.0 | % | 20.7 | % | ||||||||||
| EBITDA | 758 | 699 | 8.5 | % | 11.3 | % | ||||||||||
| In percent of revenue | ||||||||||||||||
| Operating income margin | 5.2 | % | 5.5 | % | ||||||||||||
| Operating income margin (outlook base) 1 | 8.6 | % | 7.3 | % | ||||||||||||
| EBITDA margin | 16.1 | % | 14.9 | % | ||||||||||||
1 Outlook base as referred to the 2024 outlook, presented at constant currency, excluding special items, business impacts from closed divestitures in 2023 and the Tricare settlement in Q4 2023. For a reconciliation please refer to the table on page 8.
| Statement of earnings | page 2 of 9 | May 7, 2024 |
Segment information
| unaudited | Three months ended March 31, | |||||||||||||||
| 2024 | 2023 | Change | Change at cc | |||||||||||||
| Total | ||||||||||||||||
| Revenue in € million | 4,725 | 4,704 | 0.4 | % | 2.5 | % | ||||||||||
| Revenue in € million (outlook base) 1 | 4,822 | 4,619 | 4.4 | % | ||||||||||||
| Operating income in € million | 246 | 261 | -5.7 | % | -4.4 | % | ||||||||||
| Operating income in € million (outlook base) 1 | 416 | 338 | 23.0 | % | ||||||||||||
| Operating income margin | 5.2 | % | 5.5 | % | ||||||||||||
| Operating income margin (outlook base) 1 | 8.6 | % | 7.3 | % | ||||||||||||
| Days sales outstanding (DSO) 2 | 76 | 76 | ||||||||||||||
| Employees (headcount) | 117,128 | 125,231 | ||||||||||||||
| Care Delivery segment | ||||||||||||||||
| Revenue in € million | 3,788 | 3,756 | 0.9 | % | 2.7 | % | ||||||||||
| Revenue in € million (outlook base) 1 | 3,859 | 3,669 | 5.2 | % | ||||||||||||
| Operating income in € million | 189 | 284 | -33.7 | % | -33.6 | % | ||||||||||
| Operating income in € million (outlook base) 1 | 357 | 287 | 24.5 | % | ||||||||||||
| Operating income margin | 5.0 | % | 7.6 | % | ||||||||||||
| Operating income margin (outlook base) 1 | 9.3 | % | 7.8 | % | ||||||||||||
| Days sales outstanding (DSO) 2 | 71 | 71 | ||||||||||||||
| Care Enablement segment | ||||||||||||||||
| Revenue in € million | 1,297 | 1,311 | -1.0 | % | 1.5 | % | ||||||||||
| Revenue in € million (outlook base) 1 | 1,330 | 1,303 | 2.1 | % | ||||||||||||
| Operating income in € million | 70 | (24 | ) | n.a. | n.a. | |||||||||||
| Operating income in € million (outlook base) 1 | 80 | 65 | 22.7 | % | ||||||||||||
| Operating income margin | 5.4 | % | -1.9 | % | ||||||||||||
| Operating income margin (outlook base) 1 | 6.0 | % | 5.0 | % | ||||||||||||
| Days sales outstanding (DSO) 2 | 92 | 92 | ||||||||||||||
| Inter-segment eliminations 3 | ||||||||||||||||
| Revenue in € million | (360 | ) | (363 | ) | -0.3 | % | 1.4 | % | ||||||||
| Revenue in € million (outlook base) 1 | (367 | ) | (353 | ) | 3.9 | % | ||||||||||
| Operating income in € million | 1 | (9 | ) | n.a. | n.a. | |||||||||||
| Operating income in € million (outlook base) 1 | (2 | ) | (9 | ) | -73.5 | % | ||||||||||
| Corporate | ||||||||||||||||
| Operating income in € million | (14 | ) | 10 | n.a. | n.a. | |||||||||||
| Operating income in € million (outlook base) 1 | (19 | ) | (5 | ) | 271.9 | % | ||||||||||
| 1 | Outlook base as referred to the 2024 outlook, presented at constant currency, excluding special items, business impacts from closed divestitures in 2023 and the Tricare settlement in Q4 2023. For a reconciliation please refer to the table on page 8. |
| 2 | Includes receivables related to assets held for sale. |
| 3 | The Company transfers products between segments at fair market value. The associated internal revenues and expenses and all other consolidation of transactions are included within “Inter- segment eliminations”. |
cc = constant currency. Changes in revenue, operating income and net income attributable to shareholders of FME AG include the impact of changes in foreign currency exchange rates. We calculate and present these financial measures using both IFRS Accounting Standards and at constant exchange rates to show changes in these metrics and other items without giving effect to period-to-period currency fluctuations. Under IFRS Accounting Standards, amounts received in local (non-euro) currency are translated into euro at the average exchange rate for the period presented. Once we translate the local currency for the constant currency, we then calculate the change, as a percentage, of the current period using the prior period exchange rates versus the prior period. The single quarter results are calculated as the variance between the current year-to-date results less the preceding quarter’s year-to-date which makes the single quarter subject to further foreign exchange fluctuation. This resulting percentage is a non-IFRS measure referring to a change as a percentage at constant currency. These currency-adjusted financial measures are identifiable by the designated term "Constant Currency".
| Segment information | page 3 of 9 | May 7, 2024 |
Balance sheet
| in € million, except for net leverage ratio, unaudited | March 31, | December 31, | ||||||
| 2024 | 2023 | |||||||
| Assets | ||||||||
| Cash and cash equivalents | 1,148 | 1,403 | ||||||
| Trade accounts and other receivables from unrelated parties | 4,000 | 3,471 | ||||||
| Inventories | 2,216 | 2,179 | ||||||
| Other current assets | 1,919 | 1,648 | ||||||
| Goodwill and intangible assets | 16,036 | 16,012 | ||||||
| Right-of-use assets | 3,634 | 3,671 | ||||||
| Other non-current assets | 5,383 | 5,546 | ||||||
| Total assets | 34,336 | 33,930 | ||||||
| Liabilities and equity | ||||||||
| Accounts payable to unrelated parties | 725 | 762 | ||||||
| Other current liabilities | 5,479 | 5,350 | ||||||
| Non-current liabilities | 13,000 | 12,991 | ||||||
| Total equity | 15,132 | 14,827 | ||||||
| Total liabilities and equity | 34,336 | 33,930 | ||||||
| Equity/assets ratio | 44 | % | 44 | % | ||||
| Debt and lease liabilities | ||||||||
| Short-term debt from unrelated parties | 109 | 457 | ||||||
| Current portion of long-term debt | 796 | 487 | ||||||
| Current portion of lease liabilities from unrelated parties | 592 | 593 | ||||||
| Current portion of lease liabilities from related parties | 25 | 24 | ||||||
| Long-term debt, less current portion | 7,017 | 6,960 | ||||||
| Lease liabilities from unrelated parties, less current portion | 3,386 | 3,419 | ||||||
| Lease liabilities from related parties, less current portion | 106 | 110 | ||||||
| Debt and lease liabilities included within liabilities directly associated with assets held for sale | 162 | 137 | ||||||
| Total debt and lease liabilities | 12,193 | 12,187 | ||||||
| Minus: Cash and cash equivalents1 | (1,192 | ) | (1,427 | ) | ||||
| Total net debt and lease liabilities | 11,001 | 10,760 | ||||||
| Reconciliation of annualized adjusted EBITDA and net leverage ratio to the most directly comparable IFRS Accounting Standards financial measures | ||||||||
| Net income | 717 | 732 | ||||||
| Income tax expense | 296 | 301 | ||||||
| Interest income | (92 | ) | (88 | ) | ||||
| Interest expense | 434 | 424 | ||||||
| Depreciation and amortization | 1,588 | 1,613 | ||||||
| Adjustments2 | 502 | 409 | ||||||
| Annualized adjusted EBITDA | 3,445 | 3,391 | ||||||
| Net leverage ratio | 3.2 | 3.2 | ||||||
1 Includes cash and cash equivalents included within assets held for sale.
2 Acquisitions and divestitures made for the last twelve months with a purchase price above a €50 M threshold as defined in the Syndicated Credit Facility (2024: -€14 M; 2023: -€35 M), non-cash charges, primarily related to pension expense (2024: €56 M; 2023: €56 M), impairment loss (2024: €238 M; 2023: €139 M) and special items, including costs related to the FME25 Program (2024: €108 M; 2023: €106 M), Legal Form Conversion Costs (2024: €30 M; 2023: €30 M), Legacy Portfolio Optimization (2024: €95 M; 2023: €128 M) and Humacyte Remeasurements (2024: -€11 M; 2023: -€15 M).
| Balance sheet | page 4 of 9 | May 7, 2024 |
Cash flow statement
| in € million, unaudited | Three months ended March 31, | |||||||
| 2024 | 2023 | |||||||
| Operating activities | ||||||||
| Net income | 118 | 133 | ||||||
| Depreciation, amortization and impairment loss | 512 | 438 | ||||||
| Change in trade accounts and other receivables from unrelated parties | (669 | ) | (406 | ) | ||||
| Change in inventories | (41 | ) | (88 | ) | ||||
| Change in other working capital and non-cash items | 207 | 66 | ||||||
| Net cash provided by (used in) operating activities | 127 | 143 | ||||||
| In percent of revenue | 2.7 | % | 3.0 | % | ||||
| Investing activities | ||||||||
| Purchases of property, plant and equipment and capitalized development costs | (134 | ) | (142 | ) | ||||
| Proceeds from sale of property, plant and equipment | 5 | 1 | ||||||
| Capital expenditures, net | (129 | ) | (141 | ) | ||||
| Free cash flow | (2 | ) | 2 | |||||
| In percent of revenue | 0.0 | % | 0.0 | % | ||||
| Acquisitions and investments, net of cash acquired, and purchases of intangible assets | 0 | (4 | ) | |||||
| Investments in debt securities | 0 | (45 | ) | |||||
| Proceeds from divestitures | 40 | 12 | ||||||
| Proceeds from sale of debt securities | 21 | 15 | ||||||
| Free cash flow after investing activities | 59 | (20 | ) | |||||
| Cash flow | page 5 of 9 | May 7, 2024 |
Revenue development by segment
| Same market | ||||||||||||||||||||||||
| Change | Organic | treatment | ||||||||||||||||||||||
| in € million, unaudited | 2024 | 2023 | Change | at cc | growth | growth 1 | ||||||||||||||||||
| Three months ended March 31, | ||||||||||||||||||||||||
| Total revenue | 4,725 | 4,704 | 0.4 | % | 2.5 | % | 4.8 | % | ||||||||||||||||
| Care Delivery segment | 3,788 | 3,756 | 0.9 | % | 2.7 | % | 5.9 | % | 0.0 | % | ||||||||||||||
| Thereof: U.S. | 3,102 | 3,003 | 3.3 | % | 4.5 | % | 6.2 | % | -0.7 | % | ||||||||||||||
| Thereof: International | 686 | 753 | -8.8 | % | -4.4 | % | 4.4 | % | 1.4 | % | ||||||||||||||
| Care Enablement segment | 1,297 | 1,311 | -1.0 | % | 1.5 | % | 1.6 | % | ||||||||||||||||
| Inter-segment eliminations | (360 | ) | (363 | ) | -0.3 | % | 1.4 | % | ||||||||||||||||
1 Same market treatment growth = organic growth less price effects
Health care services and health care products revenue by segment
| 2024 | 2023 | ||||||||||||||||||||||||
| Care | Inter- | Care | Inter- | ||||||||||||||||||||||
| in € million, unaudited | Care Delivery segment | Enablement segment | segment eliminations | Total | Care Delivery segment | Enablement segment | segment eliminations | Total | |||||||||||||||||
| Three months ended March 31, | |||||||||||||||||||||||||
| Health care services revenue | 3,748 | — | — | 3,748 | 3,713 | — | — | 3,713 | |||||||||||||||||
| Health care products revenue | 40 | 937 | — | 977 | 43 | 948 | — | 991 | |||||||||||||||||
| Inter-segment revenue | — | 360 | (360 | ) | — | — | 363 | (363 | ) | — | |||||||||||||||
| Revenue | 3,788 | 1,297 | (360 | ) | 4,725 | 3,756 | 1,311 | (363 | ) | 4,704 | |||||||||||||||
| Revenue development by segment | page 6 of 9 | May 7, 2024 |
Key metrics Care Delivery segment
| unaudited | Three months ended March 31, 2024 | |||||||||||||||||||||||||||
| Growth in % | Net change in | Growth in % | Growth in % | |||||||||||||||||||||||||
| Clinics | yoy | clinics 1 | Patients | yoy | Treatments | yoy | ||||||||||||||||||||||
| Total | 3,862 | -5 | % | (63 | ) | 324,884 | -5 | % | 12,277,650 | -4 | % | |||||||||||||||||
| Thereof: U.S. | 2,617 | -1 | % | 2 | 205,610 | 0 | % | 7,630,349 | -1 | % | ||||||||||||||||||
| Thereof: International | 1,245 | -13 | % | (65 | ) | 119,274 | -13 | % | 4,647,301 | -9 | % | |||||||||||||||||
1 Net change in clinics (acquired, de novo, combined, closed and sold) in comparison to December 31, 2023.
yoy = year-on-year
| Key metrics | page 7 of 9 | May 7, 2024 |
Reconciliation of non-IFRS financial measures to the most directly comparable IFRS Accounting Standards financial measures for comparability with the Company´s outlook (outlook base)
| Special items | Special items | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
| in € million, except share data, unaudited | Results 2024 | FME25 Program | Legal Form Conversion Costs | Legacy Portfolio Optimization1 | Humacyte
Remeasurements | Sum
of special items | Results 2024 excl. special items | Currency
translation effects | Results
2024 (outlook base) | Results 2023 | FME25 Program | Legal Form Conversion Costs | Legacy Portfolio Optimization1 | Humacyte Remeasurements | Divestitures2 | Sum
of special items and divestitures | Results 2023 (outlook base) | Change at cc (outlook base) | |||||||||||||||||||||||||||||||||||||
| Three months ended March 31, | |||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Total revenue | 4,725 | — | — | — | — | — | 4,725 | 97 | 4,822 | 4,704 | — | — | — | — | (85 | ) | (85 | ) | 4,619 | 4.4 | % | ||||||||||||||||||||||||||||||||||
| Care Delivery segment | 3,788 | — | — | — | — | — | 3,788 | 71 | 3,859 | 3,756 | — | — | — | — | (87 | ) | (87 | ) | 3,669 | 5.2 | % | ||||||||||||||||||||||||||||||||||
| Thereof: U.S. | 3,102 | — | — | — | — | — | 3,102 | 37 | 3,139 | 3,003 | — | — | — | — | (41 | ) | (41 | ) | 2,962 | 6.0 | % | ||||||||||||||||||||||||||||||||||
| Thereof: International | 686 | — | — | — | — | — | 686 | 34 | 720 | 753 | — | — | — | — | (46 | ) | (46 | ) | 707 | 1.7 | % | ||||||||||||||||||||||||||||||||||
| Care Enablement segment | 1,297 | — | — | — | — | — | 1,297 | 33 | 1,330 | 1,311 | — | — | — | — | (8 | ) | (8 | ) | 1,303 | 2.1 | % | ||||||||||||||||||||||||||||||||||
| Inter-segment eliminations | (360 | ) | — | — | — | — | — | (360 | ) | (7 | ) | (367 | ) | (363 | ) | — | — | — | — | 10 | 10 | (353 | ) | 3.9 | % | ||||||||||||||||||||||||||||||
| EBITDA | 758 | 26 | 1 | 27 | (15 | ) | 39 | 797 | 19 | 816 | 699 | 22 | 2 | 60 | (19 | ) | (16 | ) | 49 | 748 | 9.1 | % | |||||||||||||||||||||||||||||||||
| Total operating income | 246 | 28 | 1 | 143 | (15 | ) | 157 | 403 | 13 | 416 | 261 | 26 | 2 | 84 | (19 | ) | (16 | ) | 77 | 338 | 23.0 | % | |||||||||||||||||||||||||||||||||
| Care Delivery segment | 189 | 12 | — | 147 | — | 159 | 348 | 9 | 357 | 284 | 17 | — | 1 | — | (15 | ) | 3 | 287 | 24.5 | % | |||||||||||||||||||||||||||||||||||
| Care Enablement segment | 70 | 16 | — | 0 | (10 | ) | 6 | 76 | 4 | 80 | (24 | ) | 10 | — | 83 | — | (4 | ) | 89 | 65 | 22.7 | % | |||||||||||||||||||||||||||||||||
| Inter-segment eliminations | 1 | — | — | (4 | ) | — | (4 | ) | (3 | ) | 1 | (2 | ) | (9 | ) | — | — | — | — | — | — | (9 | ) | -73.5 | % | ||||||||||||||||||||||||||||||
| Corporate | (14 | ) | 0 | 1 | 0 | (5 | ) | (4 | ) | (18 | ) | (1 | ) | (19 | ) | 10 | (1 | ) | 2 | — | (19 | ) | 3 | (15 | ) | (5 | ) | 271.9 | % | ||||||||||||||||||||||||||
| Interest expense, net | 88 | — | — | — | — | — | 88 | 2 | 90 | 83 | — | — | — | — | 0 | 0 | 83 | 8.8 | % | ||||||||||||||||||||||||||||||||||||
| Income tax expense | 40 | 8 | 0 | 36 | (4 | ) | 40 | 80 | 0 | 80 | 45 | 6 | 1 | 23 | (5 | ) | (5 | ) | 20 | 65 | 22.9 | % | |||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | 47 | — | — | — | — | — | 47 | 1 | 48 | 47 | — | — | — | — | (3 | ) | (3 | ) | 44 | 9.2 | % | ||||||||||||||||||||||||||||||||||
| Net income3 | 71 | 20 | 1 | 107 | (11 | ) | 117 | 188 | 10 | 198 | 86 | 20 | 1 | 61 | (14 | ) | (8 | ) | 60 | 146 | 35.3 | % | |||||||||||||||||||||||||||||||||
| Basic earnings per share | € | 0.24 | € | 0.07 | € | 0.00 | € | 0.37 | € | (0.04 | ) | € | 0.40 | € | 0.64 | € | 0.03 | € | 0.67 | € | 0.29 | € | 0.07 | € | 0.00 | € | 0.21 | € | (0.04 | ) | € | (0.03 | ) | € | 0.21 | € | 0.50 | 35.3 | % | ||||||||||||||||
1 2024: mainly comprise the impairment of intangible and tangible assets resulting from the measurement of assets held for sale (primarily Brazil, Colombia, Ecuador, Turkiye) as well as losses from divestitures (driven by the divestment of Chile renal dialysis operations); 2023: mainly comprise the derecognition of capitalized development costs and the impairment of intangible assets (licenses and distribution rights) as well as termination costs (including certain contractual obligation expenses) related to a dialysis cycler development program which was discontinued in the first quarter of 2023.
2 Business impacts from closed divestitures in 2023.
3 Attributable to shareholders of FME AG.
| Reconciliation results (outlook base) | page 8 of 9 | May 7, 2024 |
Outlook 2024
| Outlook 2024 | |||||||
| Results 2023 | (at Constant Currency) | ||||||
| Revenue1 | €19,049 M | Low to mid-single digit percentage rate growth | |||||
| Operating income1 | €1,540 M | Mid to high-teens percentage rate growth |
1 Outlook 2024 is based on the assumptions outlined in the earnings release for the fourth quarter and full year of 2023 and excludes special items. Special items include the costs related to the FME25 Program, the Legal Form Conversion Costs, the impacts from Legacy Portfolio Optimization, the Humacyte Remeasurements and other effects that are unusual in nature and have not been foreseeable or not foreseeable in size or impact at the time of providing the outlook. The growth rates are based on the results 2023 excluding the costs related to the FME25 Program (€ 153 M for operating income), the Legal Form Conversion Costs (€30 M for operating income), the impacts from Legacy Portfolio Optimization (€204 M for operating income) and the Humacyte Remeasurements (-€15 M for operating income). Additionally, the results 2023 were adjusted for the Tricare settlement (-€191 M for revenue and -€181 M for operating income) and for the business impacts from closed divestitures in 2023 (-€214 M for revenue and -€20 M for operating income).
| Outlook 2024 | page 9 of 9 | May 7, 2024 |