Fresenius Medical Care (FME) Q3 2020 earnings summary

Executive summary

• Q3 revenue was €4,414m, flat reported and up 6% at constant currency; operating income and shareholder net income each rose 6%, and basic EPS increased 9%.

• Nine-month revenue rose 4% reported and 6% at constant currency; operating income increased 11% and shareholder net income grew 15%.

• FY 2020 outlook was confirmed; COVID-19’s net income impact through September was immaterial, with the 9M operating-income effect neutral.

Financial highlights

• Q3 revenue was €4,414m versus €4,419m; operating income was €632m, up 6% reported and 11% at constant currency; shareholder net income was €354m, up 6%, and basic EPS was €1.21, up 9%.

• On an adjusted basis, Q3 operating income was €632m versus €620m (+2%); adjusted net income was €354m versus €332m (+7%).

• 9M revenue was €13,459m, up 4%; operating income was €1,843m, up 11%; shareholder net income was €987m, up 15%; basic EPS rose 19% to €3.35.

• On an adjusted basis, 9M operating income was €1,843m versus €1,693m (+9%); adjusted net income was €987m versus €868m (+14%).

• 9M gross margin increased to 31.1% from 30.6%; SG&A as a share of revenue declined to 17.0% from 17.4%. Gross profit was €4,189m, up 6%.

Outlook and guidance

• FY 2020 revenue, operating income, delivered operating income and shareholder net income growth targets were confirmed at mid- to high-single-digit rates, at constant currency, excluding special items and inclusive of anticipated COVID-19 effects.

• Targets include operating cash flow above 12.5% of revenue, free cash flow above 5%, net leverage below 3.5 and ROIC of at least 6.0%; EPS growth is assessed based on expected net income and share count.

• FY20 capex guidance was €1.1B–€1.3B; acquisitions and investments were €0.5B–€0.7B, excluding debt securities; R&D expense guidance fell to €200M–€220M from €210M–€230M.