Fresenius Medical Care delivers on commitments in a year of fundamental transformation
- Revenue growth of 5% in 2023 driven by favorable business development
- Operating income1 growth of 15% exceeding top end of outlook range, due to business growth, FME25 savings ahead of plan and contributions from the Tricare settlement
- Successful execution on turnaround plan resulting in significant labor productivity improvements in Care Delivery and positive pricing in Care Enablement
- Several key divestments announced as part of the ongoing Portfolio Optimization Program
- Strong cash flow performance and net financial leverage ratio reduced
- Dividend of €1.19 per share proposed
- For 2024 continued revenue growth and accelerated operating income growth projected
BAD HOMBURG,
Key figures (IFRS) |
|
|
|
|
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Q4 2023 |
Q4 2022 |
Growth |
Growth |
FY 2023 |
FY 2022 |
Growth |
Growth |
|
|
|
|
|
|
|
|
|
|
EUR m |
EUR m |
yoy |
yoy, cc |
EUR m |
EUR m |
yoy |
yoy, cc |
Revenue |
4,988 |
4,997 |
0 % |
+7 % |
19,454 |
19,398 |
0 % |
+5 % |
|
|
|
|
|
|
|
|
|
Operating |
4c28 |
352 |
+22 % |
+27 % |
1,369 |
1,512 |
-9 % |
-7 % |
excl. special |
555 |
489 |
+14 % |
+18 % |
1,741 |
1,540 |
+13 % |
+15 % |
|
|
|
|
|
|
|
|
|
Net income 2 |
188 |
139 |
+35 % |
+41 % |
499 |
673 |
-26 % |
-24 % |
excl. special |
259 |
248 |
+4 % |
+8 % |
756 |
729 |
+4 % |
+6 % |
|
|
|
|
|
|
|
|
|
Basic EPS |
0.64 |
0.47 |
+35 % |
+41 % |
1.70 |
2.30 |
-26 % |
-24 % |
excl. special |
0.88 |
0.85 |
+4 % |
+8 % |
2.58 |
2.49 |
+4 % |
+6 % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
yoy = year-on-year, cc = at constant currency, EPS = earnings per share |
Successful execution against the strategic plan
Structure: During fiscal year 2023,
Operational efficiency: In 2023, the company successfully executed on its operational efficiency improvement and turnaround plans. The FME25 transformation program reached annual sustainable savings of
Portfolio Optimization:
Capital Allocation: During 2023,
Sustainability: Fresenius Medical Care continued to make progress towards its Sustainability goals. Underscoring the Company's focus on high quality care, the patients' overall satisfaction with our services measured by the Net Promoter Score of 72 was at an even higher level than in previous years. With its recent submission of the commitment letter to the Science Based Targets Initiative (SBTi), the Company underlines its goal to achieve climate neutrality in its operations by 2040 in line with the Paris Agreement.
Revenue development driven by solid organic growth
In the fourth quarter 2023, revenue remained flat with
Care Delivery revenue remained flat with
In Care Delivery
In
+7% organic) as a negative exchange rate effect could only be partially offset by organic growth. Despite the annualization effect of COVID-19-related excess mortality, same market treatment growth was positive at 1.9%.
Care Enablement revenue declined slightly by 1% to
Within Inter-segment eliminations3, revenue for products transferred between the operating segments at fair market value declined by 5% to EUR -368 million in the fourth quarter 2023 (+2% at constant currency).
In full year 2023, revenue was stable at
Earnings development driven by labor productivity improvements and FME25 savings
In the fourth quarter 2023, operating income increased by 22% to EUR 428 million (+27% at constant currency), resulting in a margin of 8.6% (Q4 2022: 7.0%). Operating income excluding special items and
Operating income in Care Delivery rose by 13% to
Operating income in Care Enablement amounted to
Operating income for Corporate amounted to
In the full year 2023, operating income decreased by 9% to
Net income
2
increased by 35% to EUR 188 million (+41% at constant currency) in the fourth quarter 2023. Excluding special items and PRF1, net income2 increased by 4% to
In the full year 2023, net income2 declined by 26% to
Basic earnings per share (EPS) increased by 35% to
In the full year 2023, EPS declined by 26% to
Strong cash flow development
Free cash flow
4
increased by 21% to
Patients, clinics and employees
As of
Outlook5
In 2024,
The Company expects operating income to grow by a mid- to high-teens percent rate compared to prior year.
The expected growth rates for 2024 are at constant currency, excluding special items. The 2023 basis for the revenue outlook is
The Company reconfirms its targets to achieve an operating income margin of 10% to 14% by 2025. This excludes impacts from portfolio changes.
Press conference
Investor conference 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 fourth quarter and full year 2023. Our 20-F disclosure provides more details.
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 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
Implementation of measures as presented herein may be subject to information and consultation procedures with works councils and other employee representative bodies, as per local laws and practice. Consultation procedures may lead to changes on proposed measures.
1 For FY 2022, special items included costs related to the FME25 program, the impact of the war in
2 Net income attributable to shareholders of Fresenius Medical Care AG
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".
4 Net cash provided by / used in operating activities, after capital expenditures, before acquisitions, investments, and dividends
5 Revenue and operating income, as referred to in the outlook, are both on a constant currency basis and excluding special items.
Special items include 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 Investment Remeasurement (-€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 divestiture of the Argentinian business and NCP (-€214 M for revenue and -€20 M for operating income).
Media contact
Christine Peters
T +49 160 6066 770
christine.peters@freseniusmedicalcare.com
Contact for analysts
and investors
Dr.
T +49 6172 609-2601
dominik.heger@freseniusmedicalcare.com
Statement of earnings |
|
|||
in € million, except share data |
Three months ended |
|||
|
2023 |
2022 |
Change |
Change |
|
|
|
|
|
Revenue |
4,988 |
4,997 |
-0.2 % |
7.4 % |
|
|
|
|
|
Costs of revenue |
3,638 |
3,766 |
-3.4 % |
4.2 % |
Selling, general and administrative expenses |
845 |
805 |
5.0 % |
10.9 % |
Research and development expenses |
66 |
62 |
6.3 % |
8.1 % |
Income from equity method investees |
(23) |
(19) |
21.3 % |
21.8 % |
Other operating income |
(257) |
(152) |
68.7 % |
87.3 % |
Other operating expense |
291 |
185 |
57.7 % |
85.3 % |
Remeasurement Gain from |
— |
(2) |
|
|
Operating income |
428 |
352 |
21.5 % |
27.4 % |
Operating income excl. special items and PRF |
555 |
489 |
13.7 % |
18.4 % |
|
|
|
|
|
Interest expense, net |
85 |
75 |
12.3 % |
15.4 % |
Income before taxes |
343 |
277 |
24.0 % |
30.7 % |
Income tax expense |
86 |
83 |
4.1 % |
13.0 % |
Net income |
257 |
194 |
32.6 % |
38.2 % |
Net income attributable to noncontrolling interests |
69 |
55 |
25.4 % |
31.1 % |
Net income 1 |
188 |
139 |
35.4 % |
41.1 % |
Net income 1 excl. special items and PRF |
259 |
248 |
4.4 % |
8.0 % |
|
|
|
|
|
Weighted average number of shares |
293,413,449 |
293,413,449 |
|
|
|
|
|
|
|
Basic earnings per share |
€0.64 |
€0.47 |
35.4 % |
41.1 % |
Basic earnings per share excl. special items and PRF |
€0.88 |
€0.85 |
4.4 % |
8.0 % |
|
|
|
|
|
In percent of revenue |
|
|
|
|
Operating income margin |
8.6 % |
7.0 % |
|
|
Operating income margin excl. special items and PRF |
11.1 % |
9.8 % |
|
|
|
|
|
|
|
1
Attributable to shareholders of |
|
|
|
|
|
|
|
|
|
For a reconciliation of special items, please refer to the table at the end of the press release. |
Statement of earnings |
|
|||
in € million, except share data |
Twelve months ended |
|||
|
2023 |
2022 |
Change |
Change |
|
|
|
|
|
Revenue |
19,454 |
19,398 |
0.3 % |
5.5 % |
|
|
|
|
|
Costs of revenue |
14,529 |
14,504 |
0.2 % |
5.6 % |
Selling, general and administrative expenses |
3,196 |
3,170 |
0.8 % |
4.5 % |
Research and development expenses |
232 |
229 |
1.5 % |
2.5 % |
Income from equity method investees |
(122) |
(67) |
83.0 % |
83.2 % |
Other operating income |
(515) |
(550) |
-6.3 % |
7.0 % |
Other operating expense |
765 |
748 |
2.2 % |
22.0 % |
Remeasurement Gain from |
— |
(148) |
|
|
Operating income |
1,369 |
1,512 |
-9.4 % |
-7.5 % |
Operating income excl. special items and PRF |
1,741 |
1,540 |
13.1 % |
15.5 % |
|
|
|
|
|
Interest expense, net |
336 |
292 |
15.0 % |
16.0 % |
Income before taxes |
1,033 |
1,220 |
-15.3 % |
-13.1 % |
Income tax expense |
301 |
325 |
-7.5 % |
-4.5 % |
Net income |
732 |
895 |
-18.1 % |
-16.2 % |
Net income attributable to noncontrolling interests |
233 |
222 |
5.7 % |
8.4 % |
Net income 1 |
499 |
673 |
-25.9 % |
-24.3 % |
Net income 1 excl. special items and PRF |
756 |
729 |
3.7 % |
5.8 % |
|
|
|
|
|
Weighted average number of shares |
293,413,449 |
293,246,430 |
|
|
|
|
|
|
|
Basic earnings per share |
€1.70 |
€2.30 |
-25.9 % |
-24.3 % |
Basic earnings per share excl. special items and PRF |
€2.58 |
€2.49 |
3.6 % |
5.8 % |
|
|
|
|
|
In percent of revenue |
|
|
|
|
Operating income margin |
7.0 % |
7.8 % |
|
|
Operating income margin excl. special items and PRF |
8.9 % |
7.9 % |
|
|
|
|
|
|
|
1
Attributable to shareholders of |
|
|
|
|
|
|
|
|
|
For a reconciliation of special items, please refer to the table at the end of the press release. |
Reconciliation of non-IFRS financial measures to the most directly comparable IFRS Accounting Standards financial measures for comparability with the Company´s outlook |
||||
in € million |
|
|
|
|
|
|
|
|
|
|
Three months ended |
Twelve months ended |
||
|
2023 |
2022 |
2023 |
2022 |
|
|
|
|
|
Operating performance excl. special items |
|
|
|
|
These items are excluded to ensure comparability of the figures presented with the Company's financial targets which have been defined excluding special items. |
|
|
|
|
|
|
|
|
|
Revenue |
4,988 |
4,997 |
19,454 |
19,398 |
|
|
|
|
|
Operating income |
428 |
352 |
1,369 |
1,512 |
Special items: |
|
|
|
|
FME25 Program |
52 |
95 |
153 |
204 |
Legal Form Conversion Costs |
17 |
— |
30 |
— |
Legacy Portfolio Optimiza tion 1 |
57 |
— |
204 |
— |
Humacyte Investment Remeasurement |
1 |
24 |
(15) |
103 |
Net Gain Related to |
— |
0 |
— |
(56) |
Ukraine War 3 |
— |
25 |
— |
49 |
Hyperinflation in Turkiye |
— |
(1) |
— |
5 |
Provider Relief Funding (PRF) |
— |
(6) |
— |
(277) |
Sum of special items and PRF |
127 |
137 |
372 |
28 |
Operating income excl. special items and PRF |
555 |
489 |
1,741 |
1,540 |
|
|
|
|
|
Net income 4 |
188 |
139 |
499 |
673 |
Special items: |
|
|
|
|
FME25 Program |
37 |
70 |
109 |
149 |
Legal Form Conversion Costs |
12 |
— |
21 |
— |
Legacy Portfolio Optimization 1 |
21 |
— |
138 |
— |
Humacyte Investment Remeasurement |
1 |
18 |
(11) |
76 |
Net Gain Related to |
— |
1 |
— |
(37) |
Ukraine War 3 |
— |
26 |
— |
47 |
Hyperinflation in Turkiye |
— |
(1) |
— |
5 |
Provider Relief Funding |
— |
(5) |
— |
(184) |
Sum of special items and PRF |
71 |
109 |
257 |
56 |
Net income 4 excl. special items an d PRF |
259 |
248 |
756 |
729 |
|
||||
1 Impacts 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 and other impacts related to agreed upon-divestitures in 2023. |
||||
2
Remeasurement gain of the investment, prior to the transaction, in |
||||
3
B
ad debt expense in |
||||
4
Attributable to shareholders of |
View original content to download multimedia:https://www.prnewswire.com/news-releases/fresenius-medical-care-delivers-on-commitments-in-a-year-of-fundamental-transformation-302065990.html
SOURCE