DGAP-News: Fresenius Medical Care AG & Co. KGaA / Key word(s): Annual Results 
Fresenius Medical Care AG & Co. KGaA achieves 2020 targets, expects significant COVID-19 impact in 2021 and confirms 
2025 outlook 
2021-02-23 / 07:03 
The issuer is solely responsible for the content of this announcement. 
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- 2020 financial targets achieved: 5% revenue and 12% net income growth 
- Reported earnings in Q4 negatively impacted by impairment in the Latin America region and accelerated excess 
mortality due to COVID-19 
- Growth in home dialysis on track 
- 24^th consecutive dividend increase planned to be proposed 
- FME[25] - transforming global operating model to sustainably reduce cost 
Rice Powell, Chief Executive Officer of Fresenius Medical Care, said: "The COVID-19 pandemic might be the most decisive 
challenge the world has faced in recent decades. I am incredibly proud of our employees and their tireless efforts to 
provide our patients with their life-sustaining treatments. Accelerated infection rates at the end of 2020 resulted in 
significant excess mortality in the dialysis patient population and this is expected to continue into 2021. What 
saddens me deeply is the human tragedy - when people we have cared for are dying. With an increasing number of vaccines 
being approved, there is a way out of the pandemic, but it is far from over. By using all our levers, further driving 
our efficiency measures and with governmental support, we managed to almost compensate the financial effects of 
COVID-19 in 2020. But the effects of the recent significant increase in cases and subsequent excess mortality cannot be 
compensated and will affect our earnings development in 2021. To overcome the impact on our 2025 growth ambitions, we 
have decided to launch a material transformation of our global operating model while executing on our mid-term 
strategy." 
Key figures (IFRS) 
                                            Q4 2020 Q4 2019 Growth yoy Growth  FY 2020 FY 2019 Growth yoy Growth 
                                            EUR m   EUR m              yoy, cc EUR m   EUR m              yoy, cc 
Revenue                                     4,400   4,580   - 4%       + 4%    17,859  17,477  + 2%       + 5% 
Operating income                            462     616     - 25%      - 18%   2,304   2,270   + 2%       + 4% 
Net income^1                                177     343     - 48%      - 43%   1,164   1,200   - 3%       - 1% 
Net income^1                                372     368     + 1%       + 6%    1,359   1,236   + 10%      + 12% 
(2020 excl. special items/ 2019 adjusted)^2 
Basic EPS (EUR)                             0.61    1.14    - 47%      - 42%   3.96    3.96    +/- 0%     + 2% cc = at constant currency, EPS = earnings per share

COVID-19 pandemic affects business development

While the pandemic has not sustainably affected the fundamental development in the number of new patients starting dialysis, excess mortality of dialysis patients significantly accelerated in the U.S. and in EMEA, particularly in November and December 2020, and accumulated to approximately 10,000 patients over the pre-pandemic baseline.

In order to maintain safe operations in its more than 4,000 dialysis centers and 44 manufacturing sites, Fresenius Medical Care has taken comprehensive measures, including the provision of personal protective equipment for employees and patients as well as higher compensation for employees working in isolation clinics. These measures have resulted in significantly increased costs in the Dialysis Services business, which in 2020 was largely compensated by governmental support, in particular in the U.S., accelerated efficiency measures and a strong products business development.

Growth in home dialysis continued

In 2020, Fresenius Medical Care provided more than 14% of its dialysis treatments in the U.S. in a home setting. This implies a 14% increase in the number of home treatments compared to the previous year, with home hemodialysis growing at 37%. Dividend increase in line with sustainable distribution policy

Based on the strong results for 2020 and in line with the Company's dividend policy, it is planned to propose a dividend of EUR 1.34 per share to the Annual General Meeting in May 2021. This proposal would result in the 24^th consecutive dividend increase.

FME[25]: Transforming global operating model to strengthen profitability

To support its 2025 strategy, further strengthen profitability and compensate for the negative earnings effects of the COVID-19 pandemic, Fresenius Medical Care will launch the FME[25] program. The program will focus on the simplification of the Fresenius Medical Care operating model. This shall include streamlining and transforming the Company's global operating model, applying learnings from the "new normal" and accelerating the digitalization agenda. Until 2025 the Company plans to invest up to EUR 500 million in FME[25] to sustainably reduce the cost base. The Company expects for each euro invested in FME[25] to sustainably reduce the annual cost and minimally improve operating income by the same amount by 2025.^3

2021 targets and assumptions

Excess mortality of dialysis patients due to the COVID-19 pandemic is continuing in 2021 and is expected to have a significant adverse effect on treatment volumes and additional COVID-19 related costs. This additionally affects the utilization of Fresenius Medical Care's clinic network and thereby limits the ability to mitigate fixed cost and wage inflation.

Against this backdrop, Fresenius Medical Care expects revenue to grow at a low- to mid-single digit percentage rate and net income to decline at a high-teens to mid-twenties percentage rate against the higher than expected 2020 base.^4

These targets are based on the following assumptions:

- Excess mortality is expected to continue to accumulate for the first half of 2021, depending on the adoption and speed of the roll-out of vaccinations of our worldwide patient population.

- COVID-19-related additional costs, such as costs for personal protective equipment or increased personnel costs in the Dialysis Services business, are assumed to remain on a high level.

- Besides the extended suspension of the U.S. Medicare sequestration (until end of March 2021), no further public relief funding is assumed.

2025 targets confirmed

Fresenius Medical Care confirms its 2025 targets that are based on the Company's mid-term strategy. Fresenius Medical Care assumes that FME[25] compensates for the anticipated COVID-19-related effects. Until 2025 the company expects compounded annual average increases in the mid-single-digit percentage range for revenue and in the high-single-digit percentage range for net income.^5

Robust earnings growth in FY 2020 despite COVID-19 pandemic

Due to a sizable headwind from exchange rates, revenue declined by 4% in the fourth quarter and amounted to EUR 4,400 million (+4% at constant currency). Organic growth of 1% was realized including the expected negative impacts from lower reimbursement for calcimimetics ("calcimimetics effect") and COVID-19-related slower treatment growth.

Health Care Services revenue decreased by 6% to EUR 3,406 million (+2% at constant currency). This was only partially offset by the positive development in the Products business. Driven by strong organic growth, Health Care Products revenue grew by 2% to EUR 994 million (+9% at constant currency).

In the full year, revenue increased by 2% to EUR 17,859 million (+5% at constant currency), with organic growth of 3%. Health Care Services revenue grew by 2% to EUR 14,114 million (+5% at constant currency). This was mainly driven by organic growth of 3%, which was achieved despite the above-mentioned calcimimetics effect. Health Care Products revenue increased by 4% to EUR 3,745 million (+7% at constant currency). Important drivers were sales of products for acute care treatments and in-center disposables.

Operating income declined by 25% to EUR 462 million (-18% at constant currency), resulting in a margin of 10.5% (Q4 2019: 13.5%). This decrease was mainly due to a macro-economically driven impairment of goodwill and trade names in the Latin America segment, unfavorable COVID-19 effects and a lower reimbursement for calcimimetics. Excluding the Latin America impairment and on an adjusted 2019 basis^6, operating income decreased by 1% to EUR 657 million (+5% at constant currency), resulting in a margin of 14.9% (Q4 2019: 14.5%).

In the full year, operating income grew by 2% to EUR 2,270 million (+4% at constant currency), resulting in a margin of 12.9% (FY 2019: 13.0%). Excluding the Latin America impairment and on an adjusted 2019 basis, operating income increased by 6% to EUR 2,499 million (+8% at constant currency) resulting in a margin of 14.0% (FY 2019: 13.5%).

Net income^1 declined by 48% to EUR 177 million (-43% at constant currency); basic earnings per share (EPS) decreased by 47% to EUR 0.61 (-42% at constant currency). Excluding the Latin America impairment and on an adjusted 2019 basis, net income grew by 1% to EUR 372 million (+6% at constant currency). The resulting increase in EPS by 3% to EUR 1.27 (+8% at constant currency) was also supported by the Company's completed share buyback program.

In the full year, net income declined by 3% to EUR 1,164 million (-1% at constant currency). EPS remained stable at EUR 3.96 (+2% at constant currency). Excluding the Latin America impairment and on an adjusted 2019 basis, net income grew by 10% to EUR 1,359 million (+12% at constant currency), resulting in a 13% increase in EPS to EUR 4.62 (+15% at constant currency).

Strong operational cash-flow development in FY 2020

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February 23, 2021 01:04 ET (06:04 GMT)