DGAP-News: Fresenius Medical Care AG & Co. KGaA / Key word(s): Change in Forecast/Quarter Results
Fresenius Medical Care confirms net income growth target, adjusts 2018 revenue growth target and releases preliminary Q1 figures
22.04.2018 / 17:19
The issuer is solely responsible for the content of this announcement.
- Adjusted revenue growth target in 2018 of 5 to 7% at constant currency expected (previously around 8%) mainly due to recent reduction in dosing of calcimimetic drugs
-
Reconfirmed reported net income growth target of 13 to 15% at constant currency in 2018
-
Preliminary indicative first quarter 2018 results impacted by strong currency headwind and positive one-time effect in previous year
"First quarter results are impacted by a shift of calcimimetic drugs from our pharmacy business into the dialysis service business in the U.S. Due to a faster than expected reduction in dosing of those drugs in the controlled clinic environment, we are experiencing a headwind on revenue growth for fiscal 2018," said Rice Powell, CEO of Fresenius Medical Care. "Based on our solid underlying business and the planned phasing of net income growth we confirm our net income growth target for 2018."
Clinical introduction of calcimimetic drugs with impact on revenue growth 2018
The addition of Parsabiv as an injectable calcimimetic drug in the U.S. triggered the move of the corresponding reimbursement for Medicare patients from Part D to Part B. This resulted in a revenue decline in the Company's pharmacy business and a lower than assumed revenue increase in the dialysis service business driven by lower than expected dosing of calcimimetic drugs. It is imperative that drugs are delivered in an efficient and effective manner in Fresenius Medical Care's controlled clinic environment to the patients who benefit from the use of those drugs. The Company actively manages all classes of medications focusing on the quality outcomes for patients and the overall cost to the respective health care system.
Preliminary indicative key figures (IFRS) - first quarter 2018 compared to first quarter 2017, adjusted for IFRS 15
| EUR million | Q1 2018 | Growth
yoy | Growth
yoy at cc |
| Revenue |
3,976 |
(10%) |
2% |
| Revenue Q1 2017 excluding VA Agreement[1] | 3,976 | (8%) | 4% |
| Operating income (EBIT) |
497 |
(24%) |
(15%) |
Operating income (EBIT) adjusted for valuation of the Sound Physicians' share based payments [2]
and excluding VA Agreement Q1 20171 | 510
510 | (22%)
(8%) | (13%)
3% |
| Net income[3] |
279 |
(10%) |
0% |
Net income adjusted for valuation of the Sound Physicians' share based payments2
and excluding special items (VA Agreement1, U.S. Tax Reform) | 292
244 | (5%)
(2%) | 5%
8% |
For a detailed reconciliation, please refer to the table at the end of the press release.
Preliminary first quarter 2018 results
Revenue in the first quarter 2018 was strongly impacted by headwinds from foreign exchange rates, the expected decline in our North American Care Coordination business and the positive one-time effect in Q1 2017. Revenue came in below the level of the previous year's quarter with EUR 3,976 million. Adjusted for IFRS 15 and at constant currency, revenue increased by 2%, excluding the VA Agreement in Q1 2017 the first quarter growth was 4% at constant currency.
Operating income (EBIT) in the first quarter 2018 reached EUR 497 million. Adjusted for the first quarter effect of the valuation of Sound Physicians' share based payment program in connection with the divestiture of Sound Physicians and for the positive impact of the VA Agreement in Q1 2017 EBIT was up by 3% at constant currency.
Net income3 for the first quarter of 2018 was stable at constant currency at EUR 279 million. Adjusted for the first quarter effect of the valuation of Sound Physicians' share based payment program and the effect of the U.S. Tax Reform in 2018 and for the positive impact of the VA Agreement in Q1 2017, net income was 8% ahead in constant currency of last year's first quarter.
Outlook 2018
Mainly driven by the change in calcimimetic drugs Fresenius Medical Care expects reduced revenue growth of 5 to 7% (previously: around 8%) at constant currency. The company continues to expect reported net income growth of 13 to 15% at constant currency.
The targets are based on 2017 adjusted for the effect of the IFRS 15 implementation and exclude effects from major transactions such as the planned acquisition of NxStage Medical and the sale of Sound Physicians.
Publication and conference call
Fresenius Medical Care will publish the results of the first quarter, as scheduled, on Thursday, May 3, at 7:00 a.m. CET and hold a conference call to discuss the results of the first quarter at 3:30 p.m. CET / 9:30 a.m. EDT. Details will be available on the company's website www.freseniusmedicalcare.com in the "Investors/Events" section. A replay will be available shortly after the call.
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[1] Agreement with the United States Departments of Veterans Affairs and Justice
[2] Initial increase in valuation of the Sound Physicians' share based payment program caused by sale of Sound Physicians
[3] Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
Fresenius Medical Care is the world's largest provider of products and services for individuals with renal diseases of which around 3.2 million patients worldwide regularly undergo dialysis treatment. Through its network of 3,752 dialysis clinics, Fresenius Medical Care provides dialysis treatments for 320,960 patients around the globe. Fresenius Medical Care is also the leading provider of dialysis products such as dialysis machines or dialyzers. Along with the core business, the company focuses on expanding the range of related medical services in the field of Care Coordination. Fresenius Medical Care is listed on the Frankfurt Stock Exchange (FME) and on the New York Stock Exchange (FMS).
For more information visit the Company's website at www.freseniusmedicalcare.com.
Disclaimers
This release contains forward-looking statements that are subject to various risks and uncertainties. Actual results could differ materially from those described in these forward-looking statements due to certain factors, including changes in business, economic and competitive conditions, regulatory reforms, foreign exchange rate fluctuations, uncertainties in litigation or investigative proceedings, and the availability of financing. These and other risks and uncertainties are detailed in Fresenius Medical Care AG & Co. KGaA's reports filed with the U.S. Securities and Exchange Commission. Fresenius Medical Care AG & Co. KGaA does not undertake any responsibility to update the forward-looking statements in this release.
| Reconciliation of preliminary indicative non-IFRS financial measures to the most directly comparable IFRS financial measures |
| |
| in EUR million, unaudited |
Three months ended
March 31 |
| | 2018 | 2017 |
| |
|
|
| Operating performance excluding special items |
|
|
| |
|
|
| Revenue | 3,976 | 4,548 |
| Effect from IFRS 15 implementation |
- |
(139) |
| Revenue adjusted for the effect of IFRS 15 implementation | 3,976 | 4,409 |
| VA Agreement1 |
- |
(100) |
| Revenue excluding special items | 3,976 | 4,309 |
| |
|
|
| Operating income (EBIT) | 497 | 651 |
| VA Agreement1 |
- |
(99) |
| valuation of Sound Physicians' share based payments 2 |
13 |
- |
| Operating income (EBIT) excluding special items | 510 | 552 |
| |
|
|
| Net income3 | 279 | 308 |
| valuation of Sound Physicians' share based payments 2 |
13 |
- |
| Net income3 excluding valuation of Sound Physicians' share based payments | 292 | 308 |
| VA Agreement1 |
- |
(59) |
| U.S. Tax Reform4 |
(48) |
- |
| Net income3 excluding special items | 244 | 249 |
| 1 VA Agreement: Agreement with the United States Departments of Veterans Affairs and Justice |
| 2 Initial increase in valuation of Sound Physicians' share based payment program caused by sale of Sound Physicians |
| 3 Attributable to shareholders of FMC AG & Co. KGaA |
|
|
| 4 U.S. Tax Reform: impact from of U.S. Tax Reform |
|
|
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