Fresenius Medical Care : Annual Report 2023 (including consolidated financial statements and group management report in accordance with IFRS and non-financial group report for the fiscal year 2023)

02
Key Figures
2023	2022
19.45	19.40
Revenue in BN €	Revenue in BN €
0.76 1.19	0.73 1.12

Net income 1 excluding	Dividend per share	Net income 1 excluding spe-	Dividend per share
special items 2 in BN €	in € 3	cial items and PRF 2 in BN €	in €

119,845	128,044
Employees 4	Employees 4
332,548	344,687
Patients	Patients

• 1 Net income attributable to shareholders of Fresenius Medical Care AG.

• 2 2023: costs related to the FME25 program, Humacyte Investment Remeasurement, Legal Form Conversion Costs and impacts from Legacy Portfolio Optimization; 2022: costs related to the FME25 Program, Net Gain Related to InterWell Health, Humacyte Investment Remeasurement, Hyperinflation in Turkiye and Impacts Related to the War in Ukraine. Additionally, 2022 was adjusted for the Provider Relief Funding.

• 3 Proposal to be approved by the Annual General Meeting on May 16, 2024.

• 4 Headcount.

Fresenius Medical Care is the world's leading provider of products and services for individuals with kidney diseases, of whom around 4.1 million worldwide depend on dialysis treat-ment. Thanks to our decades of experience in dialysis, our innovative research, and our value-based care approach, we help our patients enjoy the very best quality of life.

SELECTED KEY FIGURES

Revenue in € BN Net income1 in € BN

Net income1 excl. special items and PRF2 in € BN Operating income in € BN

Operating income excl. special items and PRF 2 in € BN

Basic earnings per share in €

Basic earnings per share excl. special items and PRF2 in €

Net cash provided by (used in) operating activities in € BN

Free cash flow 3 in € BN

Capital expenditures, net in € BN

Acquisitions and investments

(excl. investments in debt securities) in € BN

Operating income margin excl. special items and PRF2 in %

Return on invested capital (ROIC) 4 in % Net leverage ratio 5

Equity ratio (equity/total assets) 6 in %

cc = at constant currency

• 1 Net income attributable to shareholders of Fresenius Medical Care AG.

• 2 2023: costs related to the FME25 program, Humacyte Investment Remeasurement, Legal Form Conversion Costs and impacts from Legacy Portfolio Optimization; 2022: costs related to the FME25 Program, Net Gain Related to InterWell Health, Humacyte Investment Remeasurement, Hyperinflation in Turkiye and Impacts Related to the War in Ukraine. Addi-tionally, 2022 was adjusted for the Provider Relief Funding.

• 3 Net cash provided by (used in) operating activities, after capital expenditures, before acquisitions and investments.

• 4 See calculation in the Group Management Report, chapter "Overview of the Group", section "Performance management system" starting on page 36.

• 5 See calculation in the Group Management Report, chapter "Economic Report", section "Results of operations, financial posi-tion and net assets - Financial position - Financing strategy" starting on page 56.

• 6 As of December 31 of the respective year.

2023	2022 19.40
19.45
0.50	0.67
0.76	0.73
1.37	1.51
1.74	1.54
1.70	2.30
2.58	2.49
2.63	2.17
1.96	1.48
(0.67)	(0.69)
(0.04)	(0.06)
8.9	7.9
2.8	3.3
3.2	3.4
43.7	43.2

Change 5% cc (24%) cc 6% cc (7%) cc 15% cc (24%) cc

6% cc 21% 32% (3%)

(40%)

Content

TO OUR SHAREHOLDERS

• 07 Letter to our Shareholders

• 11 Management Board

• 12 Report by the Supervisory Board

• 22 Capital Markets and Shares

GROUP

MANAGEMENT REPORT

• 30 General Information

• 31 Overview of the Group

• 48 Economic Report

• 66 Subsequent Events

• 66 Outlook

• 69 Risks and Opportunities Report

• 89 Corporate Governance FundamentalsNON-FINANCIAL GROUP REPORT

93 Sustainability Management

101 Patients

109 Employees

114 Environmental Protection

120 Compliance

123 Protecting Data

125 Supplier Management

126 Human Rights

127 About this Report

128 Other Key Figures

131 Independent Practitioner's Report

CORPORATE GOVERNANCE 134 Declaration on Corporate

Governance

155 Compensation Report

CONSOLIDATED FINANCIAL STATEMENTS 197 Consolidated Financial

Statements

206 Notes to Consolidated Financial Statements

305

Supervisory Board and Management Board

308 Independent Auditor's Report

FURTHER INFORMATION

316 Responsibility Statement

316 Regional Organization

318 Five-Year Summary

320 Financial Calendar, Imprint and Contact

06	FRESENIUS	TO OUR	GROUP	NON-FINANCIAL	CORPORATE	CONSOLIDATED	FURTHER
MEDICAL CARE 2023	SHAREHOLDERS	MANAGEMENT REPORT	GROUP REPORT	GOVERNANCE	FINANCIAL STATEMENTS	INFORMATION

CORPORATE GOVERNANCECONSOLIDATED FINANCIAL STATEMENTSFURTHER INFORMATION

Letter to our Shareholders

Dear Shareholders,

The year 2023 was a transformative one for Fresenius Medical Care, as we set out to achieve important structural, operational, and cultural changes. With your support, and thanks to the hard work and dedication of our employees around the world, I am proud to say that we successfully executed on our commitment of fundamental transformation and made progress against all facets of our strategic plan.

The structural changes we set out to achieve were no small undertaking. We introduced a new operating model, realigning our business into two distinct global segments: Care Delivery and Care Enablement. This then enabled us to implement a new financial reporting framework with enhanced transparency. And we significantly simplified our governance structure with the change of our legal form, which in turn strengthened the rights of our free float shareholders.

Critically, we achieved all of this in 2023 while driving a turnaround of the business and improving our operating and financial returns. I thank you - our shareholders - along with our employees and our patients, for your ongoing support and trust during this important year of level-setting.

08	FRESENIUS	TO OUR	GROUP	NON-FINANCIAL	CORPORATE	CONSOLIDATED	FURTHER
MEDICAL CARE 2023	SHAREHOLDERS	MANAGEMENT REPORT	GROUP REPORT	GOVERNANCE	FINANCIAL STATEMENTS	INFORMATION

Exceeding expectations: Our 2023 performance

Last year was not only a year of great structural change but also of opera-tional performance turnaround and improving financial key performance indicators. For fiscal year 2023, we delivered top- and bottom-line growth, even exceeding our twice-raised earnings outlook.

At the same time, we continued to successfully execute on our FME25 transformation program. We achieved annual sustainable savings of 346 million euros, ahead of our initial plan for the year (250 to 300 million euros). The program continues well on track to achieving the targeted 650 million euros of sustainable annual savings by year end 2025.

Additionally, we made significant progress on our turnaround efforts in Care Delivery in the U.S., driving operational efficiencies in labor productiv-ity and improving our clinic operating leverage.

We have been moving at speed on our portfolio optimization program to reduce distraction and focus on our core and higher margin businesses. In the first quarter of 2023 we ceased the development of a non-global dialy-sis cycler. Later in the year we announced and closed divestments of our clinic network and production sites in Argentina; our clinic network in Hun-gary; and National Cardiovascular Partners (NCP), our cardiovascular clinic network in the U.S. In 2023 we announced additional divestments that are subject to regulatory approval and are in the process of closing. These include our clinic network in Sub-Saharan Africa and Cura Day Hospital Group in Australia.

The divestments closed in 2023 accounted for 214 million euros of reve-nue and 20 million euros of operating income.

"I am proud to say that we successfully executed on our commitment of fundamental transformation, and made progress against all facets of our strategic plan."

09	FRESENIUS	TO OUR	GROUP	NON-FINANCIAL	CORPORATE	CONSOLIDATED	FURTHER
MEDICAL CARE 2023	SHAREHOLDERS	MANAGEMENT REPORT	GROUP REPORT	GOVERNANCE	FINANCIAL STATEMENTS	INFORMATION

CEO Helen Giza looks back on a strong performance in 2023.

In light of fully being on track for our deleveraging and as prescribed by our dividend policy, for 2023 the Supervisory Board and Management Board propose a dividend of 1.19 euros per share. This 6 percent increase is in line with our year-over-year adjusted net income growth.

Purpose-driven. Patient-centric.

At Fresenius Medical Care we are driving change and executing against our strategic priorities from a very privileged position.

As the leading vertically integrated kidney care company worldwide, our products serve roughly half of the world's dialysis patients. Those suffering from kidney disease count on us in the most fundamental ways. We are truly Creating a future worth living. For patients. Worldwide. Every day.

In 2023 we continued to make progress toward our sustainability goals. Underscoring our focus on high quality care, patient feedback measured by the Net Promoter Score resulted in an "excellent" designation of 72. Throughout 2023 we saw sequential stability in our clinical quality perfor-mance at a high level, another important measurement of patient service and care.

Disciplined capital allocation

Our strategic plan includes a stringent financial framework and a clear capital allocation priority to deleverage, strengthen our balance sheet, and create headroom for our strategy beyond our published 2025 plans.

I am very proud to report a 21 percent increase in operating cash flow. In line with our commitment to deleverage, we used proceeds from the Tri-care settlement, as well as 135 million euros in divestment proceeds, to reduce debt. Net financial as well as total debt including lease liabilities was meaningfully reduced by 1 billion euros in 2023.

We have been successful in reducing our net leverage ratio from 3.4x to 3.2x, putting us closer to the lower end of our self-imposed target range of 3.0x to 3.5x.

With our commitment to the Science Based Targets Initiative (SBTi), we underlined our goal to achieve climate neutrality in our operations by 2040, in line with the Paris Agreement.

Aligned with our commitment to increase the proportion of women in man-agement across the two levels below the Management Board, I am pleased to report the achievement of a four point increase in 2023 (34 percent in 2023 versus 30 percent in 2022). By the end of 2027 we aim to increase the share of women in the first level below the Management Board to 35 per-cent, and the share of women in the second level to 45 percent.

10	FRESENIUS	TO OUR	GROUP	NON-FINANCIAL	CORPORATE	CONSOLIDATED	FURTHER
MEDICAL CARE 2023	SHAREHOLDERS	MANAGEMENT REPORT	GROUP REPORT	GOVERNANCE	FINANCIAL STATEMENTS	INFORMATION

Focused execution: Our 2024 roadmap

2024 will be a year of continued disciplined execution and value, building on the critical foundational work accomplished in 2023. As we move fur-ther away from the COVID-19 pandemic, we anticipate a return to treat-ment volume growth in the U.S. over the course of the year.

Financially, in 2024 we expect to deliver revenue growth in the low- to mid-single digit percent range, and operating income growth in the mid-to high-teens percent range, compared to prior year.

Through on-going execution of our FME25 transformation plan, we expect to achieve an additional 100 to 150 million euros in sustain-able savings.

Portfolio optimization continues at speed throughout the year. At the beginning of the year, we announced the sale of our clinic network in Tur-kiye. In March we announced the sale of dialysis clinics in Brazil, Colom-bia, Chile, and Ecuador for a total transaction price of 300 million euros. The transactions represent further important milestones in our portfolio optimization program, with each expected to close throughout 2024.

Looking further ahead

We have re-confirmed our group margin target of 10 percent to 14 percent by 2025, with a detailed roadmap to achieve it. While it is critical that we remain focused on executing against our current strategic plan through 2025, in parallel, I am working with the Management Board and my Lead-ership team to shape the future of Fresenius Medical Care beyond 2025.

I am very excited by the opportunity to once again lead the market in kid-ney care innovation with the introduction of high volume hemodiafiltration ("high volume HDF") in the U.S.

Building on the success achieved in Europe, in February 2024 we announced receipt of the U.S. Food and Drug Administration clearance for our 5008x Hemodiafiltration system. This system, which is enabled by our expertise in membrane technology, delivers meaningful mortality reduc-tions and has the potential to be a game-changer for patients in the U.S.

and for our commercial success. Thanks to our vertically integrated busi-ness model, we are well positioned to once more set the new standard of care for our industry.

We are taking a holistic approach and remain long-term focused in shaping our strategy beyond 2025. Capital allocation and shareholder returns are crucial focus points in the definition of the strategy.

I would like to thank you for your ongoing trust in us and support as we continue to further strengthen our business and position ourselves to once again shape the future of kidney care.

Sincerely,

Helen Giza

Chief Executive Officer and Chair of the Management Board