Fresenius Medical Care (FME) Q1 2022 earnings summary

Executive summary

• Q1 revenue rose 8% to €4.55bn as reported (+5% at constant exchange rates); operating income fell 27% to €348m and net income fell 37% to €157m.

• COVID-related excess patient mortality, higher labor and inflation-linked costs, FME25 expenses, and Ukraine-related impacts weighed on earnings; management said the quarter closed within expectations.

• The 2022 outlook was confirmed, with growth targets excluding special items and ROIC expected at 5.0% or higher.

Financial highlights

• Revenue was €4,548m, up 8% reported and 5% at constant currencies; healthcare services rose 8% reported, while healthcare products rose 6%.

• Gross profit increased 4% to €1,258m, but gross margin declined to 27.7% from 28.7%; operating margin fell to 7.6% from 11.3%.

• Operating income decreased 27% to €348m (-30% at constant currencies); net income attributable to shareholders fell 37% to €157m (-39% constant currencies), and diluted EPS was €0.54 versus €0.85.

• Excluding FME25 and Ukraine-related special items, operating income was €403m versus €477m (-15% reported; -19% constant currencies) and net income was €200m versus €251m (-20%; -23%).

• Healthcare-services revenue growth included a 1% benefit from partial reversal of a revenue adjustment for legally disputed receivables; associated companies' earnings declined 62% to €10m.

Outlook and guidance

• 2022 guidance was reaffirmed: revenue, operating income, and net income growth each targeted in the low-to-mid single-digit range at constant currencies; ROIC target is at least 5.0%.

• Guidance excludes additional FME25 costs, Ukraine-related impacts, and other unusual or unforeseeable items; growth comparisons use 2021 results excluding FME25 costs.

• Expected 2022 capital expenditure and capitalized development costs are €0.9bn–€1.1bn; acquisitions and investments are expected at €0.4bn–€0.6bn, excluding debt instruments.

• The proposed value-based kidney-care venture was expected to close in H2 2022 subject to regulatory review; any resulting gain would be treated as a special item.