Fresenius Medical Care Ag · XETR:FME
Fresenius Medical Care — Q4 2020 Earnings Presentation
43 slides from Fresenius Medical Care's earnings presentation, Oct 30, 2020
Slide 1: Q4 2020 Conference Call
Q4 2020 CONFERENCE CALL FEBRUARY 23, 2021 Rice Powell - CEO Franklin W. Maddux, MD - CMO Helen Giza - CFO © Copyright
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
Slide 3: Agenda
1 STRATEGY AGENDA 2 MEDICAL UPDATE 3 BUSINESS UPDATE 4 FINANCIALS & OUTLOOK
Slide 4: Quality on a consistently high level
FY 2020 | QUALITY ON A CONSISTENTLY HIGH LEVEL +2% Clinics +0% Patients 4,092 346,553 Quality remains +3% Treatments on a consistently 53,575,255 high level As of December 31, 2020 © │ Conference Call │ Q4 2020 02/23/2021 Page 4
Slide 5: Key drivers for our core dialysis business remain intact
KEY DRIVERS FOR OUR CORE DIALYSIS BUSINESS REMAIN INTACT ADDRESSING GLOBAL HEALTH CARE CHALLENGES AGEING GLOBAL DIALYSIS POPULATION HYPERTENSION DIABETES PATIENTS Global population People living People living People on main- aged 65+1 with hypertension2 with diabetes3 tenance dialysis4 1.0 578 >6 20
Slide 6: 2025 Mid-term strategy
2025 | MID-TERM STRATEGY LEVERAGING OUR CORE COMPETENCIES VALUE-BASED CARE CKD AND TRANSPLANTATION Create medical value while keeping care Treat patients holistically across affordable the Renal Care Continuum NEW RENAL CARE MODELS RENAL CARE INNOVATIONS Transforming renal care Disrupt the way we wi
Slide 7: 2020 Sustainability progress
2020 SUSTAINABILITY PROGRESS ON TRACK TO ACHIEVE CONTINUOUS IMPROVEMENTS Commitment Performance Transparency Global standards defined New global KPI defined >100 KPI included in for patient care, human for patient feedback, Non-financial Report & labor rights and product quality, supplier management
Slide 8: Agenda
1 STRATEGY AGENDA 2 MEDICAL UPDATE 3 BUSINESS UPDATE 4 FINANCIALS & OUTLOOK
Slide 9: Confirmed COVID-19 cases throughout 2020
CONFIRMED COVID-19 CASES THROUGHOUT 2020 GLOBAL | COVID-19 CASES FME | COVID-19 CASES GLOBALLY 700.000 2.500 600.000 2.000 500.000 400.000 1.500 300.000 1.000 200.000 500 100.000 0 0 Jan-20 Apr-20 Jul-20 Oct-20 Jan-21 Dec-19 Mar-20 Jun-20 Sep-20 Dec-20 Rolling 7-day average of daily new confirmed CO
Slide 10: Q4 2020 Quality of care on a high level
Q4 2020 | QUALITY OF CARE ON A HIGH LEVEL NORTH AMERICA EMEA LATIN AMERICA ASIA-PACIFIC % of patients Q4 2020 Q4 2019 Q4 2020 Q4 2019 Q4 2020 Q4 2019 Q4 2020 Q4 2019 Kt/V ≥ 1.2 97 97 93 94 91 91 94 95 Hemoglobin = 10–12 g/dl 71 71 82 82 48 50 52 56 Calcium = 8.4–10.2 mg/dl 81 81 78 79 73 76 72 74 Al
Slide 11: Pattern of excess deaths due to COVID 2020 vs. 2019
PATTERN OF EXCESS DEATHS DUE TO COVID | 2020 VS. 2019 Δ = 3,705 Δ = 2,934 Δ = 2,739 Excess deaths due Δ = 1,001 to COVID-19 were 10,379 in 2020 compared to traditional seasonal trends for 2019 Q1 Q2 Q3 Q4 TOTAL: 2019 TOTAL: 2020 © │ Conference Call │ Q4 2020 02/23/2021 Page 11
Slide 12: Impact on the demographics of our patients
WHAT WAS THE IMPACT ON THE DEMOGRAPHICS OF OUR PATIENTS? 2020 2019 2018 NORTH AMERICA ▪ This does not yet support a hypothesis Age (years) 62.8 62.8 62.6 that the mortality Diabetes % 64.0 63.7 62.9 rate will be less than the pre-pandemic baseline EMEA 2020 2019 2020 ▪ The demographics of the popula
Slide 13: Percent of population vaccinated by region
GENERAL PERCENT OF POPULATION VACCINATED BY REGION North 8 America 6 Europe ▪ Population (or “herd”) immunity requires 70-85% of the 4 population to have immunity from either South vaccination or 2 America exposure Asia 0 1-Jan 8-Jan 15-Jan 22-Jan 29-Jan 5-Feb 12-Feb Cumulative COVID-19 vaccination
Slide 14: Agenda
1 STRATEGY AGENDA 2 MEDICAL UPDATE 3 BUSINESS UPDATE 4 FINANCIALS & OUTLOOK
Slide 15: FY 2020 Maintaining growth in a challenging year
FY 2020 | MAINTAINING GROWTH IN A CHALLENGING YEAR > Financial targets for 20201 achieved > Q4 impacted by: > Goodwill impairment in Latin America and > Accelerated COVID-19-related excess mortality in North America and EMEA > Growth in home dialysis in the U.S. on track > 24th consecutive dividend
Slide 16: Q4 2020 COVID-19 increasingly burdensome for earnings
Q4 2020 | COVID-19 INCREASINGLY BURDENSOME FOR EARNINGS Q4 2020 Q4 2019 Growth Growth € million € million in % in %cc Revenue 4,400 4,580 (4) 4 ▪ COVID-19 negatively affecting Operating income 462 616 (25) (18) top-line growth ▪ Increased costs for Excl. special items / PPE and higher 657 663 (1) 5
Slide 17: FY 2020 Strong net income performance
FY 2020 | STRONG NET INCOME PERFORMANCE 2019 Basis 2020 Results for Targets Growth Growth Guidance 2020 € million 2020 in % in %cc € million Mid to high single digit Revenue 17,859 17,477 2 5 cc growth Net income 1,164 1,200 (3) (1) Excl. special items / Mid to high single digit 1,359 1,236 10 12 ad
Slide 18: Dividend increase planned to be proposed
DIVIDEND INCREASE PLANNED TO BE PROPOSED DIVIDEND PER SHARE IN EUR +11.7% 1.341 DIVIDEND 5Y-CAGR +10.9% 1.20 1.17 ▪ 24th consecutive 1.06 dividend increase planned to be 0.96 proposed ▪ Planned dividend 0.80 proposal would assure dividend continuity despite COVID-19 challenges 2015 2016 2017 2018 20
Slide 19: 2021 Tail- and headwinds
2021 | TAIL- AND HEADWINDS TAILWINDS • Growth in value-based care programs • Medicare Advantage • Higher adoption of home dialysis • Effect from completion of cost optimization measures FME25 Transformation of global operating HEADWINDS model to sustainably • Impact from COVID-19 on treatment volume
Slide 20: Agenda
1 STRATEGY AGENDA 2 MEDICAL UPDATE 3 BUSINESS UPDATE 4 FINANCIALS & OUTLOOK
Slide 21: 2020 Targets achieved
2020 TARGETS ACHIEVED 5% Revenue growth cc Reported 1,092 18,395 -174 17,859 -536 17,477 Targets 2020 2019 revenue basis Business growth cc Net COVID- 2020 revenue FX 2020 revenue for targets 2020 19 effect cc target achievement Achieved our target 2020 for revenue 12% Net Income growth cc and excee
Slide 22: Q4 2020 Organic growth on a global basis
Q4 2020 | ORGANIC GROWTH ON A GLOBAL BASIS NORTH AMERICA € million Revenue 2,983 (6%) NORTH AMERICA Organic growth (1%) EMEA 68% 16% EMEA 4,400 € million €m ASIA-PACIFIC Revenue 715 1% 12% +1% Organic growth 5% (Organic) ASIA-PACIFIC € million LATIN AMERICA 4% Revenue 517 4% Organic growth 8% ▪ Nort
Slide 23: Q4 2020 Services: more pronounced impact by COVID-19
Q4 2020 SERVICES | MORE PRONOUNCED IMPACT BY COVID-19 Same market Organic Q4 2020 € million Q4 2019 € million Growth in % Growth in %cc growth treatment growth Drivers in % Revenue in % Health Care Services 3,406 3,607 (6) 2 0 1 + Negative prior year North America 2,704 2,893 (7) 1 (1) 0 revenue eff
Slide 24: Q4 2020 Products: strong underlying organic growth
Q4 2020 PRODUCTS | STRONG UNDERLYING ORGANIC GROWTH Organic Q4 2020 Q4 2019 Growth Growth € million € million in % in %cc growth Revenue in % Health Care Products 994 973 2 9 8 Dialysis Products 968 953 2 8 7 Drivers North America 279 281 (1) 7 6 + Products for acute care treatments EMEA 353 337 5 1
Slide 25: Q4 2020 Impairment weighing on profitability
Q4 2020 | IMPAIRMENT WEIGHING ON PROFITABILITY Operating income in €m and margins in % 20.6% Q4 margin drivers n/a 18.7% + Negative prior year earnings effect 107 -186 10.5% 17.9% + Continued benefit from lower G&A spend 134 ‒ Impairment loss Latin America % ‒ COVID-19 related excess mortality and 5
Slide 26: Q4 2020 Decreasing net leverage
Q4 2020 | DECREASING NET LEVERAGE Q4 2020 Q4 2019 € million € million Operating cash flow 584 771 in % of revenue 13.3 16.8 Capital expenditures, net (306) (337) Free cash flow 283 434 Free cash flow after investing activities 130 230 NET LEVERAGE RATIO (NET DEBT/EBITDA)1 Current ratings5 S&P Moody’
Slide 27: 2021 Targets
2021 TARGETS Assumptions: REVENUE NET INCOME • Excess mortality to continue to (constant currency (constant currency accumulate in the first half of 2021 growth in %) decline in %) • COVID-19-related additional costs in the Dialysis Services business to remain on + - • high level Besides the extende
Slide 28: Head- and tailwinds to our targets 2021
HEAD- AND TAILWINDS TO OUR TARGETS 2021 Revenue: Low to mid single-digit growth 17,859 2020 revenue Business growth Value-Based Care Medicare COVID-19 effect Calcimimetics 2021 Advantage revenue at cc Net Income: High-teens to mid-twenties decline 1,359 2020 net Business Value- Medicare Home & COVID
Slide 29: Transformation of the operating model FME25
TRANSFORMATION OF THE OPERATING MODEL | FME25 > To support our 2025 strategy, further strengthen profitability and compensate for the COVID-19 effects, FME25 to be launched in 2021 > Invest up to €500m by 2025 to sustainably reduce the cost base and minimally improve operating income by the same amo
Slide 30: Mid-term targets 2020-2025
MID-TERM TARGETS 2020-2025 Assumptions: It is assumed that FME25 compensates REVENUE NET INCOME for the anticipated COVID-19 related (CAGR, constant (CAGR, constant effects currency growth in %) currency growth in %) Excluding special items: Mid-single digit High-single digit Special items include c
Slide 31: Your Questions Are Welcome!
ad ~ FRESENIUS MEDICAL CARE ) Your Questions Are Welcome!
Slide 32: Q4 2020 Profit and loss
Q4 2020 | PROFIT AND LOSS Q4 2020 Q4 2019 Growth Growth € million € million in % in %cc Revenue 4,400 4,580 (4) 4 Operating income 462 616 (25) (18) Operating income margin in % 10.5 13.5 Operating income excl. special items / adjusted 657 663 (1) 5 Operating income margin excl. special items / adj.
Slide 33: FY 2020 Profit and loss
FY 2020 | PROFIT AND LOSS FY 2020 FY 2019 Growth Growth € million € million in % in %cc Revenue 17,859 17,477 2 5 Operating income 2,304 2,270 2 4 Operating income margin in % 12.9 13.0 Operating income excl. special items / adjusted 2,499 2,356 6 8 Operating income margin excl. special items / adj.
Slide 34: FY 2020 Services
FY 2020 | SERVICES FY 2020 FY 2019 Growth Growth Organic Same market growth growth € million € million in % in %cc in % in % Total 14,114 13,872 2 5 3 2 North America 11,364 11,157 2 4 2 1 of which Care Coordination 1,307 1,184 10 13 17 EMEA 1,365 1,354 1 4 3 1 Asia-Pacific 876 862 2 2 3 8 of which
Slide 35: FY 2020 Products
FY 2020 | PRODUCTS FY 2020 FY 2019 Growth Growth Organic growth € million € million in % in %cc in % Total Health Care Products 3,745 3,605 4 7 5 Dialysis Products 3,644 3,529 3 7 4 North America 1,113 1,038 7 9 4 EMEA 1,303 1,263 3 6 4 Asia-Pacific 1,013 997 2 4 4 Latin America 199 210 (5) 17 16 No
Slide 36: Debt
DEBT RECONCILIATION OF NON-IFRS FINANCIAL MEASURES TO THE MOST DIRECTLY COMPARABLE IFRS FINANCIAL MEASURES FY 2020 FY 2019 FY 2018 € million € million € million Debt Short term debt from unrelated parties 63 1,150 1,205 + Short term debt from related parties 17 22 189 + Current portion of long-term
Slide 37: EBITDA
EBITDA RECONCILIATION OF ANNUALIZED ADJUSTED EBITDA AND NET LEVERAGE RATIO TO THE MOST DIRECTLY COMPARABLE IFRS FINANCIAL MEASURES FY 2020 FY 2019 FY 2018 € million € million € million Net income 1,435 1,439 2,226 + Income tax expense 501 402 511 − Interest income (42) (62) (147) + Interest expense
Slide 38: 2020 base for targets 2021, reconciliation adjustments
2020 BASE FOR TARGETS 2021, RECONCILIATION ADJUSTMENTS FY 2020 Q1 2020 Q2 2020 Q3 2020 Q4 2020 € million € million € million € million € million Revenue 17,859 4,488 4,557 4,414 4,400 Net income excl. special items 1,359 283 351 354 372 RECONCILIATION OF NON-IFRS FINANCIAL MEASURES TO THE MOST DIREC
Slide 39: Return on invested capital (ROIC)
RETURN ON INVESTED CAPITAL (ROIC) ▪ Long-term value 12.4% rep. creation based on accretive acquisitions and organic growth 8.6% ▪ 2018 positive impact 7.8% 8.0% adj. 8.0% adj. from Sound 7.1% divestiture 6.6% excl. special item 6.1% rep. ▪ 2019 negative 5.8% rep. impact from 2015 2016 2017 2018 2019
Slide 40: 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. 2020 2019 2018 Q1 Q2 Q3 Q4 Full year €:$ Period end 1.227 1.123 1.145 2021 77 78 79 79 313 Average 1.142 1.119 1.181 2020 77 78 79 79 313 2019 76 78 79 80 313 €:CNY Period end 8.023 7.8
Slide 41: FY 2020 Patients, treatments, clinics
FY 2020 | PATIENTS, TREATMENTS, CLINICS Patients Treatments Clinics Patients Treatments Clinics as of Dec. 30, as of Dec. 30, as of Dec. 30, as of Dec. 30, as of Dec. 30, as of Dec. 30, 2020 2020 2020 2019 2019 2019 North America 210,260 32,843,592 2,639 211,064 32,138,448 2,579 Growth in % 0 2 2 3
Slide 42: Financial calendar
FINANCIAL CALENDAR 2020 REPORTING DATES & AGM May 6 Q1 2021 Earnings Release and Conference Call May 20 Annual General Meeting 2021 (Virtal) July 30 Q2 2021 Earnings Release and Conference Call November 2 Q3 2021 Earnings Release and Conference Call CONFERENCES & MEET THE MANAGMENT March 2 Virtual E
Slide 43: 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, Vice President Director Strategic Development & Investor Relations Investor Relations Communications | EVP TICKER: FME or FMS (NYSE) +49(0)
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