Fresenius Medical Care Ag · XETR:FME
Fresenius Medical Care — Q1 2018 Earnings Presentation
35 slides from Fresenius Medical Care's earnings presentation, May 3, 2018
Slide 1: Q1 2018 Conference call
Q1 2018 Conference call | May 3, 2018 Rice Powell - CEO Mike Brosnan - CFO © │ Conference Call │ Q1 2018 1
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 uncer
Slide 3: Agenda – Q1 2018
AGENDA – Q1 2018 Business update 1 Financials & outlook 2 Q&A 3 © │ Conference Call │ Q1 2018 3
Slide 4: On track for another record year
Q1 2018: On track for another record year +4% Clinics: 3,790 +4% Patients: 322,253 +3% Treatments: 12,154,164 Highest Five-Star Quality Ratings in the industry Net income growth on track © │ Conference Call │ Q1 2018 4
Slide 5: Quality outcomes remain on high level
Q1 2018: Quality outcomes remain on high level1 North America EMEA Latin America Asia-Pacific Q1 Q1 Q1 Q1 Q1 Q1 Q1 Q1 % of patients 2018 2017 2018 2017 2018 2017 2018 2017 Kt/V > 1.2 98 98 95 95 92 93 96 96 Hemoglobin = 10–12 g/dl 72 72 83 82 52 52 57 59 Calcium = 8.4–10.2 mg/dl 85 84 80 77 78 78 74
Slide 6: Highlights
Q1 2018: Highlights Results impacted by strong currency headwind Strong start into the year with 6% growth in Health Care Products Anticipated revenue decline in Care Coordination – Pharmacy business Calcimimetics drugs moved from Part D to Part B Drugs going generic – Divestment of Shiel
Slide 7: Solid underlying growth trend continued
Q1 2018: Solid underlying growth trend continued1 Q1 2018 Q1 2017 Growth Growth € million € million in % in %cc Revenue 3,976 4,548 (13) (1) Revenue adjusted 3,976 4,409 (10) 2 Revenue adjusted and excl. special items 3,976 4,309 (8) 4 EBIT 497 651 (24) (15) EBIT adjusted 510 651 (22) (13) EBIT adju
Slide 8: Organic growth across all regions
Q1 2018: Organic growth across all regions North America € million EMEA € million Revenue 2,774 (5%)cc Revenue 636 +6%cc Organic growth +1% Organic growth +4% Asia-Pacific € million Latin America € million Revenue 392 +14%cc Revenue 170 +17%cc Organic growth +7% Organic growth +16% 4 3 Contributio
Slide 9: Health Care Services: Soft start into the year
Q1 2018 Health Care Services: Soft start into the year Same Organic market Q1 2018 Q1 2017 Growth Growth growth growth Revenue € million € million in % in %cc in % in % Total 3,209 3,769 (15) (3) 2 2 North America 2,590 3,165 (18) (6) 1 2 of which Care Coordination 515 691 (25) (14) (9) - EMEA 314 3
Slide 10: Products: Strong start into the year
Q1 2018 Products: Strong start into the year Q1 2018 Q1 2017 Growth Growth € million € million in % in %cc Total Health Care Products 767 779 (2) 6 Dialysis Products 747 758 (1) 7 North America 184 210 (12) 1 EMEA 302 290 4 7 Asia-Pacific 208 209 0 8 Latin America 49 45 9 25 Non-Dialysis Products 20
Slide 11: Best-positioned for value-based future
Best-positioned for value-based future Complexity Responsibility © │ Conference Call │ Q1 2018 11
Slide 12: Focusing of Care Coordination strategy
Focusing of Care Coordination strategy Vascular Broadened expertise in value- Access based care programs Hospitalist/ First participation in shared Outpatient facilities Intensivist savings program (BPCI) Gained experience in hospital patient coordination Physician Practice Pharmacy services R
Slide 13: Conclusion
Conclusion Solid underlying business growth Working towards closing of NxStage & Sound Physicians Continue to execute on Care Coordination strategy On track to deliver on net income growth target © │ Conference Call │ Q1 2018 13
Slide 14: Agenda – Q1 2018
AGENDA – Q1 2018 Business update 1 Financials & outlook 2 Q&A 3 © │ Conference Call │ Q1 2018 14
Slide 15: Net income growth as expected
Q1 2018: Net income growth as expected1 Q1 2018 Q1 2017 Growth Growth € million € million in % in %cc Revenue 3,976 4,548 (13) (1) Revenue adjusted 3,976 4,409 (10) 2 Revenue adjusted and excl. special items 3,976 4,309 (8) 4 EBIT 497 651 (24) (15) EBIT margin in % 12.5 14.3 (1.8)pp (2.0)pp EBIT adj
Slide 16: Revenue reconciliation
Q1 2018: Revenue reconciliation Revenue € million 4,548 +4%cc 139 185 100 4,309 518 3,976 Q1 2017 IFRS 15 VA Agreement Q1 2017 Business FX Q1 2018 reported adj. & excl. growth cc reported sp. items © │ Conference Call │ Q1 2018 16
Slide 17: Net income reconciliation
Q1 2018: Net income reconciliation Net income adjusted, € million – targets: 13 – 15%cc growth +5%cc 324 308 16 32 13 279 Q1 2017 Business growth cc Q1 2018 cc FX Initial Sound Q1 2018 reported reported adjusted Valuation impact Net income adjusted and excl. special items, € million – targets: 7 – 9
Slide 18: Regional margin profile
Q1 2018: Regional margin profile North America (65% of EBIT1) Solid Dialysis business margin of 15.4% reflects – Negative: prior year impact of the VA Agreement, higher implicit price concessions (IFRS 15), lower revenue from commercial payors and shift of 526 calcimimetic drugs – U.S. revenue per
Slide 19: Regional margin profile
Q1 2018: Regional margin profile EMEA (19% of EBIT1) Operating profit margin development reflects 114 109 – Negative: unfavorable foreign currency transaction 18.7% effects 17.1% – Positive: one additional dialysis day Q1 2017 Q1 2018 Asia-Pacific (13% of EBIT1) Operating profit margin developme
Slide 20: Cash flow & net leverage ratio
Q1 2018: Cash flow & net leverage ratio Q1 2018 Q1 2017 in € million in € million Operating cash flow (45) 1701 in % of revenue (1.1%) 3.7% Capital expenditures, net (218) (195) Free cash flow (263) (25) Free cash flow, after acquisitions and investments (444) (185) Days sales outstanding (DSO) at 8
Slide 21: Outlook
Outlook1 Targets 2018 2017 base (in € million) Revenue growth adjusted2 5 to 7% 17,298 Net income growth adjusted3 13 to 15% 1,280 Net income growth adjusted 7 to 9% 1,204 and excl. special items4 Targets 2020 20205 (2014-2020, avg. % p.a.) (in € billion) Revenue growth ~10% 24 Net income growth6 hi
Slide 22: Agenda – Q1 2018
AGENDA – Q1 2018 Business update 1 Financials & outlook 2 Q&A 3 © │ Conference Call │ Q1 2018 22
Slide 23: Your questions are welcome
Your questions are welcome Conference call | May 3, 2018 Rice Powell - CEO Mike Brosnan - CFO © │ Conference Call │ Q1 2018 23
Slide 24: Debt and EBITDA
Debt and EBITDA Reconciliation of non-IFRS financial measures to the most comparable IFRS measure € million Debt FY 2016 FY 2017 Q1 2018 Short term debt 572 760 1,011 + Short term debt from related parties 3 9 41 + Current portion of long-term debt and 724 884 872 capital lease obligations + Long-te
Slide 25: Cash Flow and Capital Expenditures
Cash Flow and Capital Expenditures Reconciliation of non-IFRS financial measures to the most comparable IFRS measure € million Cash Flow Q1 2017 Q1 2018 Acquisitions, investments and net purchases of (160) (181) intangible assets - Proceeds from divestitures - - = Acquisitions and investments, net o
Slide 26: Reconciliation special items
Q1 2018: Reconciliation special items Reconciliation of non IFRS financial measures to the most directly comparable IFRS financial measures Revenue excluding VA Agreement and adjusted for IFRS 15, operating performance excluding VA Agreement and adjusted for initial Sound Valuation impact and for ne
Slide 27: Basis for target 2018
Basis for target 2018 Reconciliation of non IFRS financial measures to the most directly comparable IFRS financial measures Revenue excluding IFRS 15, net income excluding VA Agreement and adjusted for the cost effects, net of anticipated recoveries from Natural Disasters in North America, FCPA char
Slide 28: Day sales outstanding (DSO)
Day sales outstanding (DSO) in days 160 140 Latin America 120 EMEA 100 Asia-Pacific 85 81 77 74 74 75 80 Total 60 North America 40 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Previous quarters adjusted for IFRS 9 & 15 implementation © │ Conference Call │ Q1 2018 28
Slide 29: Patients, treatments, clinics
Q1 2018: Patients, treatments, clinics Patients Treatments Clinics as of March 31, 2018 Q1 2018, in million as of March 31, 2018 North America 197,339 7,473,764 2,419 Growth in % 4 3 4 EMEA 63,114 2,387,160 754 Growth in % 5 5 4 Asia-Pacific 30,194 1,060,114 385 Growth in % 2 2 2 Latin America 31,60
Slide 30: U.S. dialysis days per quarter
U.S. dialysis days per quarter Q1 Q2 Q3 Q4 Full year 2015 76 78 79 79 312 2016 78 78 79 79 314 2017 77 78 79 79 313 2018 77 78 78 80 313 © │ Conference Call │ Q1 2018 30
Slide 31: Exchange rates
Exchange rates Q1 2017 FY 2017 Q1 2018 €:$ Period end 1.069 1.199 1.232 Average 1.065 1.130 1.229 €:CNY Period end 7.364 7.804 7.747 Average 7.335 7.629 7.815 €:RUB Period end 60.313 69.392 70.890 Average 62.522 65.938 69.865 €:ARS Period end 16.419 22.639 24.782 Average 16.694 18.754 24.219 €:BRL P
Slide 32: Definitions
Definitions cc Constant currency PD Peritoneal Dialysis Net income Net income attributable to shareholders of FME Initial Sound Valuation Initial increase in valuation of Sound Physicians‘ share based impact payment program caused by sale of Sound Physicians U.S. Tax Reform U.S. Tax Reform: impacts
Slide 33: Financial calendar 2018
Financial calendar 20181 May 17 Annual General Meeting, Frankfurt July 31 Report on 2nd quarter 2018 May 8 Deutsche Bank Healthcare Conference, Boston May 22 UBS Global Healthcare Conference, New York June 6-7 dbAccess Berlin Conference, Berlin June 12 Goldman Sachs Global Healthcare Conference, Ran
Slide 34: Contacts
Contacts FME Investor Relations Ticker: FME or FMS (NYSE) Else-Kröner-Str. 1 WKN: 578 580 61352 Bad Homburg v.d.H. ISIN: DE00057858002 Germany Dr. Dominik Heger Head of Investor Relations and Corporate Communications Tel.: +49–(0) 6172–609–2601 Email: dominik.heger@fmc-ag.com Robert Adolph Direc
Slide 35: Constant currency
Constant currency: Changes in revenue, operating income, net income attributable to shareholders of FMC AG & Co. KGaA and other items include the impact of changes in foreign currency exchange rates. We use the non-IFRS financial measure “at constant exchange rates” or constant currency in our filin
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