Fresenius : Q2 2023 Investor News

Investor News

August 2, 2023

Markus Georgi

Senior Vice President

Investor Relations

Fresenius SE & Co. KGaA

Else-Kröner-Straße 1

61352 Bad Homburg

Germany

1. [phone] F [phone] [e-mail] www.fresenius.com

Progress on #FutureFresenius: Operating Companies showing consistent performance; Group simplification delivered

• Excellent Group revenue growth of 7% in constant currency to €10.4 billion; Operating Companies with very strong 8% organic growth
• Group EBIT increased 15%1 in constant currency reflecting strong performance of Operating Companies and operational turnaround at Fresenius Medical Care
• Fresenius Kabi's EBIT margin within structural band at 14.2% driven by operating leverage and well progressing cost savings
• Fresenius Helios with very strong organic revenue growth of 7% driven primarily by excellent activity levels in Spain
• Structural productivity savings ramping up, ~€280 million already achieved in H1/23
• Deconsolidation of Fresenius Medical Care on track with overwhelmingly positive votes at Extraordinary General Meeting
• Fresenius Vamed's transformation initiated
• Group revenue outlook excluding Fresenius Medical Care improved, Group EBIT outlook excluding Fresenius Medical Care confirmed

1 According to FY/23 guidance, excluding Provider Relief Fund (PRF) at Fresenius Medical Care. In 2022, Fresenius Medical Care's EBIT was supported by €277 million (H1/22: €177 million and Q2/22: €161 million) of Provider Relief Funding from the U.S. government (at current currency). Accordingly, the 2022 basis was adjusted. There is no additional U.S. governmental support assumed for 2023.

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If no timeframe is specified, information refers to Q2/2023.

							Growth					Growth
€ in millions		Q2 / 2023		Growth		in constant	H1 / 2023		Growth		in constant
		currency				currency
Revenue		10,359		3%		7%		20,584		4%		6%
EBIT1		956		-5%		-4%/15%2		1,864		-7%		-7%/2%2
EBIT ex FME3			555	-1%	0%		1,109	-4%	-4%

Michael Sen, CEO of Fresenius: "We are keeping a quick and consistent pace in implementing our #FutureFresenius program. And the effects are becoming tangible. Our Operating Companies, Fresenius Helios and Fresenius Kabi, have top market positions, and are bringing innovations to patients every day. Both delivered solid second quarter results, including stronger than expected revenue growth. Both are within their respective margin bands, which we established earlier this year as part of our new financial framework. At Fresenius Medical Care, we also saw a positive business development in the second quarter. On July 14, at the Extraordinary General Meeting, shareholders overwhelmingly approved the deconsolidation of Fresenius Medical Care, paving the way for a new chapter. The challenges at our Investment Company, Vamed, are being dealt with rapidly, and we have initiated a comprehensive transformation to realign the company."

Group simplification progresses well

The deconsolidation of Fresenius Medical Care is moving ahead as planned. At the Extraordinary General Meeting (EGM) on July 14, 2023, more than 99% of Fresenius Medical Care's shareholders voted in favor for the conversion of Fresenius Medical Care from the legal form of a partnership limited by shares (Kommanditgesellschaft auf Aktien, KGaA) into a German stock corporation (Aktiengesellschaft, AG). In its constituting meeting following the EGM, the new Supervisory Board elected Fresenius Group CEO Michael Sen as its Chair, as well as Fresenius Group CFO Sara Hennicken as its Deputy Chair. This is a testament to Fresenius' close relationship with Fresenius Medical Care and its continued commitment to the Company. The simplified structure will lead, among others, to a more efficient and faster decision-making as it allows for a clearer focus on the

1. Before special items, Q1/22 and H1/22 restated following remeasurement Humacyte investment
2. According to FY/23 guidance, excluding Provider Relief Fund (PRF) at Fresenius Medical Care
3. Before special items

For a detailed overview of special items please see the reconciliation tables starting page 27.

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interests of the Fresenius Medical Care group and frees up management resources. Fresenius Medical Care will also have greater flexibility concerning its financial strategy. Subject to the registration with the commercial register, the conversion is expected to become effective by the end of the 2023.

Transformation Fresenius Vamed

Following the continued negative business performance, Fresenius announced as part of the presentation of the Q1/23 results, plans for an in-depth analysis of Fresenius Vamed's business model, its governance and relevant processes. At the same time, a comprehensive and far-reaching restructuring program has been initiated with the clear goal is to increase the company's profitability. Also, a comprehensive reassessment of the company organization was initiated which led to the reorganization of the VAMED management already at the end of June. The new Fresenius Management Board member Dr. Michael Moser will be responsible for Fresenius Vamed. The control function of the VAMED Supervisory Board was strengthened through new appointments and the establishment of an Audit Committee consisting of Sara Hennicken as Chair and Dr. Michael Moser as Deputy Chair, among others.

The restructuring program aims to adjust Fresenius Vamed's project business, especially in Germany. Moreover, the withdrawal of non-core service businesses in main markets outside Europe is intended. This includes the redimensioning of activities, and associated with this, achieving a significantly lower risk profile. In the future, Fresenius Vamed will focus on attractive businesses comprising:

• Health Facility Operations (HFO) centered on inpatient and outpatient rehabilitation and nursing
• High-EndServices (HES) for hospitals focused on the management of medical equipment, hospital operating technology and sterile supplies
• Health Tech Engineers (HTE) covering the project business for the healthcare sector

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In Q2/23, negative one-time items for closing down activities resulting in write- downs and provisions of €332 million were booked which are predominantly non- cash items. For further potential asset re-evaluations, charges for discontinued business activities as well as restructuring costs additional around €200 million to €250 million are anticipated as of today. Thereof, approximately €60 million to €80 million cash-effective restructuring costs are anticipated.

The operational turnaround is expected for the second half of 2023, with sequential improvement in Q3/23 and a positive EBIT in Q4/23. This recovery is mainly driven by the service business HES and the HFO business. By 2025, Fresenius Vamed is expected to reach the structural EBIT margin band of 4% to 6% set out in the #FutureFresenius Financial Framework.

Structural productivity improvements well advancing

The groupwide cost savings program is well progressing with Fresenius Medical Care and Fresenius Kabi being the largest contributors. Under the program, ~€280 million of structural cost savings at EBIT level were already achieved in H1/23, that is around 55% of the planned savings for 2023. In the same period, one-time costs of ~€110 million incurred to achieve these savings. These are treated as special items. Fresenius Medical Care realized ~€75 million of cost savings in Q2/22 and invested €25 million in the same period.

FY/23 Group guidance excluding Fresenius Medical Care

With the positive vote of Fresenius Medical Cares' shareholders in favor of the change of legal form, the structural simplification of the Fresenius Group has passed a major milestone. In order to reflect the deconsolidation of Fresenius Medical Care already now, Fresenius will provide the Group guidance for the fiscal year 2023 from now on solely excluding Fresenius Medical Care. This is a further step towards the implementation of #FutureFresenius, where Fresenius Medical Care will no longer be part of Fresenius' fully consolidated subsidiaries.

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For 2023, Fresenius expects Group organic revenue1 excluding Fresenius Medical care to grow in a mid-single-digit percentage range. Constant currency Group EBIT2 excluding Fresenius Medical Care is expected to remain broadly flat or decline up to a mid-single-digit percentage rate.

Fresenius expects the net debt/EBITDA3 ratio excluding Fresenius Medical Care to be below 4.0x by the end of 2023, therefore improving from 4.19x4 as of June 30, 2023 (December 31, 2022: 3.80x4). This assumption does not include potential divestment activities. The self-imposed target corridor for the leverage ratio remains unchanged at 3.0x to 3.5x.

Assumptions for guidance FY/23

For 2023, Fresenius assumes no further escalations of geopolitical tensions and challenges from COVID-19, and supply chain constraints continuing to ease. Fresenius expects that the general cost inflation will have a more negative effect on its business than in 2022 due to the annualization effect of cost increases occurred in H2/2022.

Fresenius will continue to closely monitor the potential further consequences of the ongoing challenging macroeconomic environment, including balance sheet valuations.

All of these assumptions are subject to considerable uncertainty.

1. FY/22 base: €21,532 million
2. FY/22 base: €2,187 million, before special items; FY/23: before special items
3. At LTM average exchange rates for both net debt and EBITDA; pro forma closed acquisitions/divestitures; excluding further potential acquisitions/divestitures; before special items; including lease liabilities
4. At LTM average exchange rates for both net debt and EBITDA; pro forma closed acquisitions/divestitures; before special items; including lease liabilities

For a detailed overview of special items please see the reconciliation tables starting page 27.

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