Fresenius Medical Care (FME) Q1 2020 earnings summary

Executive summary

• Q1 revenue rose 9% reported and 7% at constant currency to €4.49bn; operating income was €555m and attributable net income €283m.

• Growth in North America and health care products offset lower operating income in EMEA, Asia-Pacific and Latin America; COVID-19 was estimated to reduce attributable net income by €40m.

• 2020 guidance remained for growth excluding COVID-19 and special items, while liquidity strengthened through operating cash flow and additional committed credit lines.

Financial highlights

• Revenue €4,488m vs €4,133m, up 9% reported and 7% at constant currency; services rose 8% and products 10% reported.

• Operating income €555m vs €537m, up 3% reported; margin 12.4% vs 13.0%. Gross margin increased to 31.4% from 30.6%.

• Attributable net income €283m vs €271m, up 4%; basic EPS €0.95 vs €0.88, up 8%. Adjusted 2020 net income was €283m vs €286m adjusted for 2019.

• Dialysis treatments increased 5% to 13.18m; same-market treatment growth was 3.4% vs 3.5%.

• COVID-19 was estimated to reduce Q1 attributable net income by €40m; health care services revenue benefited from a partial reversal of an accounts-receivable revenue adjustment.

Outlook and guidance

• FY2020 guidance, excluding COVID-19 and special items, targeted mid-to-high single-digit constant-currency growth in revenue, operating income, delivered operating income and attributable net income.

• EPS growth to be assessed based on expected net income and shares outstanding; capex €1.1–€1.3bn and acquisitions/investments €0.5–€0.7bn, excluding debt securities.

• Cash flow targets: operating cash flow above 12.5% of revenue and free cash flow above 5% of revenue; net leverage below 3.5 and ROIC at least 6.0%.

• R&D expense guidance was €210m–€230m; employee target above 124,000 FTEs.