Fresenius Medical Care Ag · XETR:FME

Fresenius Medical Care — Q3 2019 Earnings Presentation

35 slides from Fresenius Medical Care's earnings presentation, Oct 29, 2019

  1. Slide 1: Q3 2019 Conference Call

    Q3 2019 CONFERENCE CALL OCTOBER 29, 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 & OUTLOOK AGENDA 2 FINANCIALS 3 Q&A

  4. Slide 4: Growth continued

    Q3 2019: GROWTH CONTINUED +3% Clinics +4% Patients 4,003 342,488 Quality remains +5% Treatments on a consistently 13,237,546 high level © │ Conference Call │ Q3 2019 10/29/2019 Page 4

  5. Slide 5: Quality outcomes remain on high level

    Q3 2019: QUALITY OUTCOMES REMAIN ON HIGH LEVEL1 NORTH AMERICA EMEA LATIN AMERICA ASIA-PACIFIC % of patients Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Q3 2019 Q3 2018 Kt/V ≥ 1.2 97 97 94 94 91 91 95 96 Hemoglobin = 10–12 g/dl 71 72 82 82 50 53 52 58 Calcium = 8.4–10.2 mg/dl 82 85 79 80 77 75 71

  6. Slide 6: Forward momentum

    Q3 2019: FORWARD MOMENTUM ▪ Continued strong organic growth across all regions ▪ North America: – Robust growth of dialysis business with record growth in home – Strong product growth supported by NxStage – Care Coordination with negative effect from ESCOs ▪ Asia-Pacific: 4008A launched in China in

  7. Slide 7: Growth continued

    Q3 2019: GROWTH CONTINUED1 Q3 2019 Q3 2018 Growth Growth € million € million in % in %cc Revenue 4,419 4,058 9 6 Revenue adjusted 4,375 4,051 8 5 ▪ 5.2% organic revenue growth ▪ Continued tailwind Operating income (EBIT) 595 527 13 9 from FX effects EBIT adjusted 599 592 1 -3 ▪ Adjusted revenue and

  8. Slide 8: Robust growth across all regions

    Q3 2019: ROBUST GROWTH ACROSS ALL REGIONS NORTH AMERICA € million Latin America 4% Revenue 3,073 3%cc Organic growth 3% Asia-Pacific 11% North America EMEA € million €m 70% Revenue 683 9%cc 4,419 EMEA +5%1 Organic growth 9% 15% ASIA-PACIFIC € million Revenue 475 9%cc Organic growth 8% ▪ Organic busi

  9. Slide 9: Q3 2019 Services: continued solid growth

    Q3 2019 SERVICES: CONTINUED SOLID GROWTH ▪ North America Same market Q3 2019 Q3 2018 Growth Growth Organic treatment Growth driven by growth same market € million € million in % in %cc in % growth Revenue in % treatment growth but negatively affected by Health Care Services 3,492 3,258 7 4 4 4 adjus

  10. Slide 10: Q3 2019 Products: strong contributions from all segments

    Q3 2019 PRODUCTS: STRONG CONTRIBUTIONS FROM ALL SEGMENTS Organic Q3 2019 Q3 2018 Growth Growth growth ▪ North America € million € million in % in %cc Revenue in % NxStage acquisition Health Care Products 927 800 16 13 10 drives dialysis product revenues Dialysis Products 907 782 16 13 9 ▪ EMEA North

  11. Slide 11: Outlook

    OUTLOOK1 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 2019 and 2

  12. Slide 12: Agenda

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

  13. Slide 13: Revenue and net income growth

    Q3 2019: REVENUE AND NET INCOME GROWTH REVENUE ADJUSTED, € MILLION – TARGET: 3 TO 7%CC GROWTH 5%cc 134 -35 79 4,419 190 4,241 4,058 -7 4,051 Q3 2018 Revenue H1 Sound Q3 2018 Growth cc Q3 2019 Revenue FX IFRS 16 NxStage Operations Q3 2019 reported Revenue adjusted adjusted Revenue reported NET INCOME

  14. Slide 14: Investment year continued

    Q3 2019: INVESTMENT YEAR CONTINUED GROUP EBIT AND MARGIN DEVELOPMENT Main margin drivers Reported: 595 599 592 + Prior year accrual for FCPA related charge 527 + Remeasurement effect on the fair value of Humacyte investment + Higher utilization of oral based ancillaries 14.6% - Higher personnel expe

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

    Q3 2019: CASH FLOW, NET LEVERAGE RATIO & CURRENT RATINGS Q3 2019 Q3 2018 € million € million Operating cash flow 868 753 in % of revenue 19.7 18.6 Capital expenditures, net -284 -257 Free cash flow 584 496 Free cash flow, after net acquisitions and investments, incl. net investments in securities 51

  16. Slide 16: Agenda

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

  17. Slide 17: Regional margin profile

    Q3 2019: REGIONAL MARGIN PROFILE NORTH AMERICA (70% OF EBIT1) DIALYSIS BUSINESS MARGIN OF 17.9% ▪ Positive: Remeasurement effect on the fair value of Humacyte, Inc., higher utilization of oral based 525 515 ancillaries with favorable margins 477 485 ▪ Negative: Higher personnel expense, revenue reco

  18. Slide 18: Regional margin profile

    Q3 2019: REGIONAL MARGIN PROFILE Operating income margin development reflects 100 88 ▪ Positive: Higher product sales, favorable foreign EMEA currency transaction effects 14.1% 14.6% 14.1% 14.6% (15% of EBIT1) ▪ Negative: Higher bad debt expense, higher personnel expense in certain countries Q3 2018

  19. Slide 19: Profit and loss

    Q3 2019: PROFIT AND LOSS1 Q3 2019 Q3 2018 Growth Growth € million € million in % in %cc Revenue 4,419 4,058 9 6 Revenue adjusted 4,375 4,051 8 5 EBIT 595 527 13 9 EBIT margin in % 13.5 13.0 0.5pp 0.4pp EBIT adjusted 599 592 1 -3 EBIT adjusted margin in % 13.7 14.6 -0.9pp -1.0pp Net interest expense

  20. Slide 20: Reconciliation adjustments

    Q3 2019: RECONCILIATION ADJUSTMENTS RECONCILIATION OF NON-IFRS FINANCIAL MEASURES TO THE MOST DIRECTLY COMPARABLE IFRS FINANCIAL MEASURES Q3 2019 Q3 2018 € million € million Revenue 4,419 4,058 IFRS 16 implementation 35 NxStage operations -79 H1 Sound1 -7 Revenue adjusted 4,375 4,051 Net income2 333

  21. Slide 21: 9M 2019: Profit and loss

    9M 2019: PROFIT AND LOSS 9M 2019 9M 2018 Growth Growth € million € million in % in %cc Revenue 12,897 12,247 5 1 Revenue adjusted 12,784 11,731 9 5 EBIT 1,653 2,425 -32 -35 EBIT margin in % 12.8 19.8 -7.0pp -7.1pp EBIT adjusted 1,641 1,656 -1 -5 EBIT adjusted margin in % 12.8 14.1 -1.3pp -1.4pp Net

  22. Slide 22: 9M 2019: Reconciliation adjustments

    9M 2019: RECONCILIATION ADJUSTMENTS RECONCILIATION OF NON-IFRS FINANCIAL MEASURES TO THE MOST DIRECTLY COMPARABLE IFRS FINANCIAL MEASURES 9M 2019 9M 2018 € million € million Revenue 12,897 12,247 IFRS 16 implementation 75 NxStage operations -188 H1 Sound1 -516 Revenue adjusted 12,784 11,731 Net inco

  23. Slide 23: 9M 2019 Services

    9M 2019 SERVICES Same market Organic 9M 2019 9M 2018 Growth Growth treatment growth Revenue € million € million in % in %cc in % growth in % Total 10,265 9,852 4 0 5 4 North America 8,264 7,979 4 -3 4 4 of which Care Coordination 859 1,345 -36 -40 -4 EMEA 1,002 943 6 7 6 4 Asia-Pacific 632 569 11 7

  24. Slide 24: 9M 2019 Products

    9M 2019 PRODUCTS Organic 9M 2019 9M 2018 Growth Growth Revenue € million € million in % in %cc growth in % Total Health Care Products 2,632 2,395 10 8 5 Dialysis Products 2,576 2,339 10 8 5 North America 757 610 24 17 7 EMEA 926 909 2 2 2 Asia-Pacific 728 666 9 8 8 Latin America 149 144 4 8 7 Non-Di

  25. Slide 25: Debt

    DEBT RECONCILIATION OF NON-IFRS FINANCIAL MEASURES TO THE MOST DIRECTLY COMPARABLE IFRS FINANCIAL MEASURES Q3 2019 € million excl. IFRS 16 Q3 2019 2018 2017 Debt Short term debt 1,566 1,566 1,205 760 + Short term debt from related parties 358 358 189 9 + Current portion of long-term debt 965 971 1,1

  26. Slide 26: EBITDA

    EBITDA RECONCILIATION OF NON-IFRS FINANCIAL MEASURES TO THE MOST DIRECTLY COMPARABLE IFRS FINANCIAL MEASURES Q3 2019 € million excl. IFRS 16 Q3 2019 2018 2017 EBITDA1 Last twelve month operating income (EBIT) 2,233 2,523 2,215 2,372 + Last twelve month depreciation and amortization 849 1,365 716 731

  27. Slide 27: 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 Q3 2019 Q3 2018 Acquisitions and investments Acquisitions, investments and net purchases -101 -462 of intangible assets - Proceeds from

  28. Slide 28: Effects according to IFRS 16

    Q3 2019: EFFECTS ACCORDING TO IFRS 16 EFFECTS INCLUDING NXSTAGE September Q3 2019 Q3 2019 30, 2019 Profit and loss statement € million Cash flow statement € million Balance Sheet € million Revenue -35 Cash provided by 153 Assets 4,319 operating activities Profit from sale-leaseback -21 Cash used in

  29. Slide 29: 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

  30. Slide 30: 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

  31. Slide 31: 9M 2019: Revenue and net income growth

    9M 2019: REVENUE AND NET INCOME GROWTH REVENUE ADJUSTED, € MILLION – TARGET: 3 TO 7%CC GROWTH 5%cc 464 -75 188 12,897 12,247 -516 589 12,320 11,731 9M 2018 Revenue H1 Sound 9M 2018 Revenue Growth cc 9M 2019 Revenue FX IFRS 16 NxStage operations 9M 2019 Revenue reported adjusted adjusted reported NET

  32. Slide 32: 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. 9M 2019 9M 2018 FY 2018 Q1 Q2 Q3 Q4 Full year €:$ Period end 1.089 1.158 1.145 2019 76 78 79 80 313 Average 1.124 1.194 1.181 2018 77 78 78 80 313 2017 77 78 79 79 313 €:CNY Period end

  33. Slide 33: 9M 2019: Patients, treatments, clinics

    9M 2019: PATIENTS, TREATMENTS, CLINICS Patients Treatments Clinics Patients Treatments Clinics as of September as of September as of September as of September 9M 2019 9M 2018 30, 2019 30, 2019 30, 2018 30, 2018 North America 209,633 23,872,968 2,585 201,220 22,867,793 2,486 Growth in % 4 4 4 3 3 5 E

  34. Slide 34: Financial calendar 2019

    FINANCIAL CALENDAR 20191 REPORTING DATES & AGM November 14 Quarterly financial report within the 2nd HY (Q3) February 20, 2020 Report on FY 2019 CONFERENCES & MEET THE MANAGMENT November 5 HSBC Global Investment Forum, New York November 6-7 Morningstar Conference, Chicago November 11 HSBC Healthcare

  35. Slide 35: 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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