Fresenius Medical Care (FME) Q3 2019 earnings summary

Executive summary

• Q3 revenue rose 9% reported (6% at constant currency); operating income increased 13% and net income attributable to shareholders rose 17%.

• Nine-month reported operating income fell 32% and shareholder net income fell 45%, primarily reflecting the much smaller gain on Care Coordination divestitures versus 2018.

• Underlying business growth continued; the 2019 outlook was reaffirmed despite an unplanned negative ESCO impact.

Financial highlights

• Q3 revenue was €4.419B, up 9% reported and 6% at constant currency; health care services rose 7% and products 16%.

• Q3 operating income was €595M, up 13%; margin was 13.5% versus 13.0%. Shareholder net income was €333M, up 17%; basic EPS was €1.10 versus €0.93.

• 9M revenue was €12.897B, up 5% reported; operating income was €1.653B versus €2.425B, and shareholder net income was €857M versus €1.557B.

• Adjusted 9M results, excluding specified items including IFRS 16, NxStage, cost optimization and divestiture effects, showed revenue of €12.784B and operating income of €1.641B; adjusted EPS was €3.16.

Outlook and guidance

• 2019 outlook, at constant exchange rates and adjusted for comparability, was reaffirmed: revenue growth of 3–7%; operating income and Delivered EBIT growth of (1)–3%.

• 2020 outlook called for mid-to-high single-digit growth in revenue, operating income, Delivered EBIT and shareholder net income at constant exchange rates.

• 2019 capital expenditure guidance was €1.0–€1.2B; acquisitions and investments, excluding securities, were expected at €0.4–€0.6B.

• NxStage estimates, excluding IFRS 16 and integration costs, included 2019 revenue of €240–€260M and operating loss of €30–€20M; 2020 revenue of €310–€330M and operating income of €20–€30M.