Fresenius Medical Care Ag · XETR:FME

Fresenius Medical Care — Q2 2019 Earnings Presentation

37 slides from Fresenius Medical Care's earnings presentation, Jul 30, 2019

  1. Slide 1: Q2 2019 Conference Call

    Q2 2019 CONFERENCE CALL JULY 30, 2019 Rice Powell – CEO Mike Brosnan – CFO © Copyright

  2. Slide 2: Safe harbor statement

    Safe harbor statement: This presentation includes certain forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Act of 1934, as amended. Forward-looking statements are inherently subject to risks and uncert

  3. Slide 3: Agenda

    1 BUSINESS UPDATE AGENDA 2 FINANCIALS & OUTLOOK 3 Q&A

  4. Slide 4: Growth continued

    Q2 2019: GROWTH CONTINUED +5% Clinics +4% Patients 3,996 339,550 Quality remains +4% Treatments on a consistently 12,958,732 high level © │ Conference Call │ Q2 2019 7/30/2019 Page 4

  5. Slide 5: Quality outcomes remain on high level

    Q2 2019: QUALITY OUTCOMES REMAIN ON HIGH LEVEL1 NORTH AMERICA EMEA LATIN AMERICA ASIA-PACIFIC % of patients Q2 2019 Q2 2018 Q2 2019 Q2 2018 Q2 2019 Q2 2018 Q2 2019 Q2 2018 Kt/V ≥ 1.2 97 98 94 95 90 91 96 96 Hemoglobin = 10–12 g/dl 71 73 82 83 50 52 56 57 Calcium = 8.4–10.2 mg/dl 84 85 79 79 77 78 73

  6. Slide 6: Update

    Q2 2019: UPDATE ▪ Underlying Q2 business development in line with expectations ▪ Healthy growth of U.S. dialysis business ▪ Negative effect from ESCOs, based on reports for prior plan years ▪ Execution of investment plan for home dialysis, cost optimization program, GEP II and expansion in China on

  7. Slide 7: Solid second quarter

    Q2 2019: SOLID SECOND QUARTER1 Q2 2019 Q2 2018 Growth Growth € million € million in % in %cc ▪ Tailwind from FX Revenue 4,345 4,214 3 0 effects Revenue adjusted 4,284 3,956 8 5 ▪ Strong adjusted revenue growth continued Operating income (EBIT) 521 1,401 -63 -65 ▪ Development of net income impacted b

  8. Slide 8: Strong organic growth continued

    Q2 2019: STRONG ORGANIC GROWTH CONTINUED NORTH AMERICA € million Latin America 4% Revenue 3,061 -3%cc Organic growth 4% Asia-Pacific 11% North America EMEA € million €m 70% Revenue 648 0%cc 4,345 EMEA +4%1 Organic growth -1% 15% ASIA-PACIFIC € million Revenue 458 7%cc Organic growth 7% ▪ North Ameri

  9. Slide 9: Services: healthy organic growth continued

    Q2 2019 SERVICES: HEALTHY ORGANIC GROWTH CONTINUED Organic Same market Q2 2019 Q2 2018 Growth Growth € million € million in % in %cc growth growth in % in % ▪ North America Total 3,455 3,385 2 -2 5 4 growth negatively North America 2,789 2,761 1 -5 4 4² impacted by Care of which Care Coordination 27

  10. Slide 10: Products: strong growth

    Q2 2019 PRODUCTS: STRONG GROWTH Organic Q2 2019 Q2 2018 Growth Growth € million € million in % in %cc growth in % ▪ North America Total Health Care Products 890 829 7 6 2 supported by NxStage acquisition Dialysis Products 873 811 8 6 2 ▪ EMEA North America 2721 210 29 21 4 lower revenue EMEA 296 319

  11. Slide 11: President Trump's Executive Order

    PRESIDENT TRUMP´S EXECUTIVE ORDER ▪ Executive Order confirms company strategy for – increasing home treatments and – value-based compensation models ▪ One mandatory and four voluntary models ▪ Some very relevant details have not been disclosed yet ▪ We will use the lessons learned from our ESCO expe

  12. Slide 12: Agenda

    1 BUSINESS UPDATE AGENDA 2 FINANCIALS & OUTLOOK 3 Q&A

  13. Slide 13: Revenue and net income growth

    Q2 2019: REVENUE AND NET INCOME GROWTH REVENUE ADJUSTED, € MILLION – TARGET: 3–7%CC GROWTH 5%cc 79 4,345 -18 4,214 4,144 140 -258 188 3,956 Q2 2018 Sound Q2 2018 Business growth cc Q2 2019 FX IFRS 16 NxStage Operations Q2 2019 Revenue reported Revenue adjusted Revenue adjusted Revenue reported NET I

  14. Slide 14: Investment year

    Q2 2019: INVESTMENT YEAR GROUP EBIT AND MARGIN DEVELOPMENT 33.3% Reported margin drivers: - Divestiture of Core Coordination activities 1,401 reported - Higher personnel expense - ESCO effect + IFRS 16 12.0% 14.1% 521 Adjusted margin drivers: reported 11.5% - Higher personnel expense 558 491 - ESCO

  15. Slide 15: Cash flow, net leverage ratio & current ratings

    Q2 2019: CASH FLOW, NET LEVERAGE RATIO & CURRENT RATINGS Q2 2019 Q2 2018 € million € million Operating cash flow 852 656 in % of revenue 19.6 15.6% Capital expenditures, net -293 -227 Free cash flow 559 429 Free cash flow, after net acquisitions and investments, incl. net investments in securities 4

  16. Slide 16: Outlook confirmed

    OUTLOOK CONFIRMED1 TARGETS 2019 2018 BASE (cc) (in € million) Revenue growth adjusted 3 to 7% 16,026 Net income growth adjusted (2) to 2% 1,341 (cc) TARGETS 2020 Revenue growth adjusted Mid to high single digit growth rate Net income growth adjusted Mid to high single digit growth rate 1 Targets for

  17. Slide 17: Agenda

    1 BUSINESS UPDATE AGENDA 2 FINANCIALS & OUTLOOK 3 Q&A

  18. Slide 18: Regional margin profile

    Q2 2019: REGIONAL MARGIN PROFILE NORTH AMERICA (71% OF EBIT1) 43.3% DIALYSIS BUSINESS MARGIN OF 15.4% ▪ Positive: Higher utilization of oral based ancillaries, 1,286 favorable effects from the IFRS 16 implementation reported ▪ Negative: Higher personnel expense, costs associated with NxStage, prior

  19. Slide 19: Regional margin profile

    Q2 2019: REGIONAL MARGIN PROFILE Operating income margin development reflects 105 96 ▪ Positive: IFRS 16 implementation, favorable outcome EMEA from legal proceedings and impact from acquisitions 16.1% 21.1% 14.9% (16% of EBIT1) 17.1% ▪ Negative: Lower product sales, unfavorable impact from inventor

  20. Slide 20: Q2 2019: Profit and loss

    Q2 2019: PROFIT AND LOSS1 Q2 2019 Q2 2018 Growth Growth € million € million in % in %cc Revenue 4,345 4,214 3 0 Revenue adjusted 4,284 3,956 8 5 EBIT 521 1,401 -63 -65 EBIT margin in % 12.0 33.3 -21.3pp -21.5pp EBIT adjusted 491 558 -12 -17 EBIT adjusted margin in % 11.5 14.1 -2.6pp -2.9pp Net inter

  21. Slide 21: Reconciliation adjustments

    Q2 2019: RECONCILIATION ADJUSTMENTS RECONCILIATION OF NON-IFRS FINANCIAL MEASURES TO THE MOST DIRECTLY COMPARABLE IFRS FINANCIAL MEASURES Q2 2019 Q2 2018 € million € million Revenue 4,345 4,214 IFRS 16 implementation 18 NxStage operations -79 Sound Q2 20181 -258 Revenue adjusted 4,284 3,956 Net inco

  22. Slide 22: H1 2019: Profit and loss

    H1 2019: PROFIT AND LOSS H1 2019 H1 2018 Growth Growth € million € million in % in %cc Revenue 8,478 8,189 4 (1) Revenue adjusted 8,409 7,680 9 5 EBIT 1,058 1,898 -44 -47 EBIT margin in % 12.5 23.2 -10.7pp 10.8pp EBIT adjusted 1,042 1,064 -2 -7 EBIT adjusted margin in % 12.4 13.9 -1.5pp -1.6pp Net i

  23. Slide 23: H1 2019: Reconciliation adjustments

    H1 2019: RECONCILIATION ADJUSTMENTS RECONCILIATION OF NON-IFRS FINANCIAL MEASURES TO THE MOST DIRECTLY COMPARABLE IFRS FINANCIAL MEASURES H1 2019 H1 2018 € million € million Revenue 8,478 8,189 IFRS 16 implementation 40 NxStage operations -109 Sound H1 20181 -509 Revenue adjusted 8,409 7,680 Net inc

  24. Slide 24: H1 2019 Services

    H1 2019 SERVICES Organic Same market H1 2019 H1 2018 Growth Growth € million € million in % in %cc growth growth in % in % Total 6,773 6,594 3 -2 6 4 North America 5,469 5,351 2 -5 5 4 of which Care Coordination 586 1,045 -44 -48 0 EMEA 659 629 5 6 5 4 Asia-Pacific 409 375 9 5 5 7 of which Care Coor

  25. Slide 25: H1 2019 Products

    H1 2019 PRODUCTS Organic H1 2019 H1 2018 Growth Growth € million € million in % in %cc growth in % Total Health Care Products 1,705 1,595 7 5 3 Dialysis Products 1,669 1,557 7 5 3 North America 479 395 21 13 5 EMEA 642 659 -3 -2 -2 Asia-Pacific 477 439 9 7 8 Latin America 98 95 4 10 10 Non-Dialysis

  26. Slide 26: Debt

    DEBT RECONCILIATION OF NON-IFRS FINANCIAL MEASURES TO THE MOST DIRECTLY COMPARABLE IFRS FINANCIAL MEASURES Q2 2019 € million excl. IFRS 16 Q2 2019 2018 2017 Debt Short term debt 1,358 1,358 1,205 760 + Short term debt from related parties 77 77 189 9 + Current portion of long-term debt 1,516 1,509 1

  27. Slide 27: EBITDA

    EBITDA RECONCILIATION OF NON-IFRS FINANCIAL MEASURES TO THE MOST DIRECTLY COMPARABLE IFRS FINANCIAL MEASURES Q2 2019 € million excl. IFRS 16 Q2 2019 2018 2017 EBITDA1 Last twelve month operating income (EBIT) 2,178 2,653 2,215 2,372 + Last twelve month depreciation and amortization 802 1,141 716 731

  28. Slide 28: Acquisitions & investments and capital expenditures

    ACQUISITIONS & INVESTMENTS AND CAPITAL EXPENDITURES RECONCILIATION OF NON-IFRS FINANCIAL MEASURES TO THE MOST DIRECTLY COMPARABLE IFRS FINANCIAL MEASURES € million Q2 2019 Q2 2018 Acquisitions and investments Acquisitions, investments and net purchases -94 -164 of intangible assets - Proceeds from d

  29. Slide 29: Q2 2019: Effects according to IFRS 16

    Q2 2019: EFFECTS ACCORDING TO IFRS 16 EFFECTS INCLUDING NXSTAGE June 30, 2019 Q2 2019 Q2 2019 Balance Sheet € million Profit and loss statement € million Cash flow statement € million Assets 4,172 Revenue -18 Cash provided by 151 operating activities Right-of-use assets 4,227 Profit from sale-leaseb

  30. Slide 30: Update: Estimated effects according to IFRS 16

    UPDATE: ESTIMATED EFFECTS ACCORDING TO IFRS 16 ESTIMATED EFFECTS INCLUDING NXSTAGE Impact 2019e Impact 2019e Impact 2019e Balance Sheet ~ € million Profit and loss statement ~ € million Cash flow statement ~ € million Assets Revenue -110 Cash provided by 620 operating activities Right-of-use assets

  31. Slide 31: NxStage: excluded from the targets 2019 and 2020

    NXSTAGE: EXCLUDED FROM THE TARGETS 2019 AND 2020 EFFECTS FROM THE NXSTAGE ACQUISITION ▪ All effects from the NxStage acquisition are excluded from the company’s communicated targets 2019 and 2020. ▪ Total integration costs of around EUR 50 to EUR 75 million over the three years following the closing

  32. Slide 32: Basis for targets 2019

    BASIS FOR TARGETS 2019 2018 BASE FOR TARGETS 2019 ON A QUARTERLY BASIS EUR million FY 2018 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Revenue 16,547 3,976 4,214 4,058 4,300 Sound H1 20181 -521 -251 -258 -7 -5 Revenue adjusted 16,026 3,725 3,956 4,051 4,295 EBIT 3,038 497 1,401 527 613 Sound H1 20181 -14 -4 -10

  33. Slide 33: H1 2019: Revenue and net income growth

    H1 2019: REVENUE AND NET INCOME GROWTH REVENUE ADJUSTED, € MILLION – TARGET: 3-7%CC GROWTH 5%cc -40 109 8,478 8,189 8,079 330 -509 399 7,680 H1 2018 Sound H1 2018 Business growth cc H1 2019 Revenue FX IFRS 16 NxStage operations H1 2019 Revenue reported Revenue adjusted adjusted Revenue reported NET

  34. Slide 34: Exchange rates, U.S. dialysis days per quarter, definitions

    EXCHANGE RATES, U.S. DIALYSIS DAYS PER QUARTER, DEFINITIONS EXCHANGE RATES U.S. DIALYSIS DAYS PER QUARTER Euro vs. H1 2019 H1 2018 FY 2018 Q1 Q2 Q3 Q4 Full year €:$ Period end 1.138 1.166 1.145 2019 76 78 79 80 313 Average 1.130 1.210 1.181 2018 77 78 78 80 313 2017 77 78 79 79 313 €:CNY Period end

  35. Slide 35: H1 2019: Patients, treatments, clinics

    H1 2019: PATIENTS, TREATMENTS, CLINICS Patients Treatments Clinics Patients Treatments Clinics as of June 30, as of June 30, as of June 30, as of June 30, H1 2019 H1 2018 2019 2019 2018 2018 North America 208,019 15,698,880 2,583 199,527 15,134,388 2,439 Growth in % 4 4 6 3 3 4 EMEA 65,871 4,976,025

  36. Slide 36: Financial calendar 2019

    FINANCIAL CALENDAR 20191 REPORTING DATES & AGM July 30 Report on 2nd quarter 2019 October 29 Report on 3rd quarter 2019 November 14 Quarterly financial report within the 2nd half-year (Q3) CONFERENCES & MEET THE MANAGMENT August 27 Commerzbank Sector Conference, Frankfurt September 04 Goldman Sachs

  37. Slide 37: Contacts

    CONTACTS FME INVESTOR RELATIONS Else-Kröner-Str. 1 61352 Bad Homburg v.d.H. DR. DOMINIK HEGER ROBERT ADOLPH PHILIPP GEBHARDT Germany Head of Investor Relations and Vice President Director Corporate Communications Investor Relations Investor Relations TICKER: FME or FMS (NYSE) +49(0) 6172–609–2601 +4

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