Press Release

Media Contact
Matthias Link
T +49 6172 609-2872
matthias.link@fresenius.com
Contact for analysts andinvestors
Dr. Dominik Heger
T +49 6172 609-2601
dominik.heger@fmc-ag.com
www.freseniusmedicalcare.com

February 26, 2018

Fresenius Medical Care achieves record results in 2017 and targets
strong net income growth in 2018•

Targets 2017 achieved•

Strong revenue growth of 9% at constant currency•

Net income growth of 14% at constant currency•

Record dividend of EUR 1.06 for fiscal year 2017 proposed•

Strong net income growth for 2018 targeted

Key figures (IFRS) – fourth quarter and full year 2017
EUR million

Q4
2017

Growthyoy

Growthyoy at cc

FY
2017

Growthyoy

Growthyoy at cc

Revenue

4,429

0%

+8%

17,784+7%+9%Adjusted revenue

4,430

0%

+8%

17,690+7%+9%Operating income (EBIT)

519

(29%)

(22%)

2,362

(2%)

0%

Adjusted operating income

726

0%

+6%

2,493

+4%

+5%

394

+8%

+16%

1,280

+12%

+14%

362

0%

+6%

1,204

+5%

+7%

Net income

1

Adjusted net income1

For a reconciliation of adjusted figures, please refer to the table at the end of the press
release.

1

Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA
cc = at constant currency

Page 1/11

“In 2017 we continued the success story of Fresenius Medical Care with another set ofrecord results. We managed an unusual number of severe natural disasters, havedelivered on our financial targets, and again we are able to propose the highest dividendin our Company’s history,” said Rice Powell, Chief Executive Officer of Fresenius Medical
Care. “With the acquisition of the Cura Group in Australia and our planned acquisition of
NxStage we are setting the course for future periods beyond our published 2020 outlook.
We will continue improving our cost base with the implementation of the second phase of
our Global Efficiency Program, GEP II. In 2018, we intend to continue the profitable
growth track and further optimize our portfolio in the core dialysis as well as in the Care
Coordination business.”

High net income growth for 2018 targeted
For 2018, Fresenius Medical Care expects revenue growth of around 8% at constantcurrency. The 2018 targets are based on 2017 revenue adjusted for the effect of the
IFRS 15 implementation. Net income is expected to increase by 13 to 15% at constantcurrency including recurring benefits from the U.S. tax reform of EUR 140 to 160 million.
The targets do not include effects from the NxStage acquisition. Fresenius Medical Carereconfirms the mid-term outlook for 2020, excluding the effect from IFRS 15
implementation and the recurring benefits from the U.S. tax reform in the years 2018 to
2020.
EUR million
Revenue growth 3
Net income growth 4

Targets 2018 2

2017 base~8%

17,29813 to 15%

1,280

21st consecutive dividend increase proposed
Based on the strong results for full year 2017, a dividend of EUR 1.06 per share,
representing a dividend increase of 10%, will be proposed to the Annual General Meetingin May.

Strong underlying revenue and net income growth in 2017
Revenue in the fourth quarter 2017 – strongly impacted by headwinds from foreignexchange rates – came in at the level of the previous year’s quarter with EUR 4,429
2
3

Numbers at constant currency

Reported revenue 2017 of EUR 17,784 million adjusted for effect from IFRS 15 implementation of EUR 486
million4
Targets 2018: including recurring benefits from U.S. tax reform of EUR 140 to 160 million

Page 2/11

million. At constant currency, revenue increased by 8% (+8% excluding the VA
Agreement). Health Care Services revenue reached EUR 3,581 million and Health Care
Products revenue came in at EUR 848 million. Both increased by 8% at constantcurrency.
Revenue for full year 2017 increased by 9% at constant currency to EUR 17,784 million(+9% excluding the VA Agreement). Health Care Services revenue increased by 10% atconstant currency to EUR 14,532 million, mainly due to strong underlying organic growthand contributions from acquisitions. Health Care Products revenue increased by 7% atconstant currency to EUR 3,252 million. This growth was primarily driven by higher salesof dialyzers, non-dialysis products in the acute business, machines and peritoneal dialysis
products.
Corporate cost in the fourth quarter 2017 amounted to EUR 289 million. The strong
increase compared to the fourth quarter 2016 (EUR 82 million) is mainly driven by therecognition of a charge of EUR 200 million based on ongoing discussions toward asettlement with the U.S. Securities and Exchange Commission and the U.S. Departmentof Justice that would avoid litigation over government demands under the Foreign
Corrupt Practices Act related to certain identified conduct, including certain legal
expenses and other related costs or asset impairments (“FCPA related charge”). In 2012,
Fresenius Medical Care voluntarily advised the U.S. Department of Justice and the U.S.
Securities Exchange Commission about its investigations into this conduct.
Operating income (EBIT) in the fourth quarter 2017 reached EUR 519 million.
Adjusted EBIT increased by 6% at constant currency and reached EUR 726 million. For
full year 2017, EBIT was EUR 2,362 million. On an adjusted basis EBIT increased by 5%at constant currency to EUR 2,493 million, mainly due to the strong businessperformance in North America and in Asia-Pacific.
Net interest expense in the fourth quarter 2017 was EUR 80 million, compared to EUR
90 million in the fourth quarter 2016. For full year 2017 net interest expense was EUR
354 million, a decrease of 3% year over year. The decrease was positively influenced by
the replacement of interest bearing bonds, repaid in 2016 and 2017 by debt instruments
at lower interest rates.

Page 3/11

Income tax expense in the fourth quarter 2017 benefited from a book gain from the
U.S. tax reform of EUR 236 million. Mainly for this reason, full year 2017 income tax
expense decreased by 27% to EUR 454 million.
This decrease mainly resulted from the U.S. tax reform. Excluding (i) the impact from the
VA Agreement, (ii) the effects associated with natural disaster costs, (iii) the FCPA
related charge of EUR 200 million which was not tax effected and (iv) the U.S. tax
reform, the 2017 effective tax rate increased to 31.0%, an increase of 50 basis points
compared to the same period of 2016.
Net income1 for the fourth quarter of 2017 increased by 16% at constant currency to
EUR 394 million. Adjusted for the impact from (i) the unfavorable effects of the VA
Agreement (EUR 1 million), (ii) natural disaster costs in North America (EUR 3 million),(iii) FCPA related charge (EUR 200 million), as well as (iv) the benefit from the U.S. tax
reform (EUR 236 million), net income was EUR 362 million (0%, +6% at constantcurrency). Based on approximately 306.9 million shares (weighted average number ofshares outstanding), basic earnings per share (EPS) improved by 8%, to EUR 1.28.
Adjusted for the effects described before, EPS was EUR 1.18 (0%, +6% at constantcurrency).
For 2017 net income1 increased by 14% at constant currency to EUR 1,280 million.
Excluding the four effects described in the previous paragraph ((i) EUR +51 million, (ii)
EUR -11 million, (iii) EUR -200 million, and (iv) EUR +236 million), net income increased
to EUR 1,204 million (+5%, +7% at constant currency). Based on approximately 306.6
million shares, basic EPS increased from EUR 3.74 to EUR 4.17 (+12%). Excluding theeffects described above, EPS increased to EUR 3.93 (+5%, +7% at constant currency).

North America with strong growth supported by Care Coordination
In the fourth quarter 2017, the North America segment generated revenue of EUR
3,164 million (+8% at constant currency), strongly influenced by currency headwinds.
Health Care Services revenue came in at EUR 2,950 million (+8% at constant currency),of which Care Coordination contributed EUR 715 million (+24% at constant currency)
driven by significant organic revenue growth of 19%. Dialysis Care revenue reached EUR
2,235 million (+3% at constant currency). With $352, revenue per treatment in the
United States was slightly down (-1%) due to lower revenue with commercial payors.
1

Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA

Page 4/11

Cost per treatment increased by 3% to $276, largely driven by higher bad debt
expenses, higher personnel expense and various other costs. The strong growth of the
Health Care Products revenue (EUR 214 million, +9% at constant currency) was mainly
driven by higher sales of machines, renal drugs and peritoneal dialysis products.
Operating income in North America in the fourth quarter reached EUR 608 million (+11%at constant currency). The operating income margin of 19.2% came in above last year’s
strong fourth quarter margin of 18.4%. The improvement was triggered by an
extraordinarily high contribution from Care Coordination which achieved an EBIT marginof 12.5%. The improvement was mainly driven by higher revenue including an
acceleration of earnings from the Bundled Payment for Care Improvements (BPCI)
initiative for previous reporting periods combined with increased volumes for hospitalrelated physician services, lower bad debt expense and the gain from the sale of Shiel
Medical Laboratory. The Dialysis EBIT in North America reached EUR 519 million (-6% atconstant currency), impacted by higher bad debt and personnel expenses, lower revenue
with commercial payors, higher costs such as rent and insurance, the impact fromnatural disasters and higher costs for health care supplies.
For full year 2017, North America revenue increased by 9% at constant currency to EUR
12,879 million. Health Care Services revenue grew by 10% at constant currency to EUR
12,036 million, driven by higher Dialysis Care revenue (+5% at constant currency to EUR
9,227 million) and increased Care Coordination revenue (+28% at constant currency to
EUR 2,809 million). Operating income increased in line with revenue growth to EUR
2,086 million (+10% at constant currency). As of the end of 2017, we had 197,356
patients being treated at the 2,393 clinics in North America. Dialysis treatments
increased by 3%.

Solid Health Care Products and Health Care Services growth in EMEA
Revenue in the EMEA segment increased by 6% at constant currency to EUR 660 million
in the fourth quarter 2017. Health Care Services revenue increased by 4% at constantcurrency to EUR 312 million. This was mainly the result of growth in same market
treatments and contributions from acquisitions. Health Care Products revenue in EMEA
increased by 7% at constant currency and reached EUR 348 million. The growth in
Dialysis Products revenue was driven by higher sales of products for acute care, products
for peritoneal dialysis and machines, partially offset by lower sales of dialyzers. Nondialysis products increased due to higher sales of acute cardiopulmonary products.
Operating income in the EMEA segment decreased by 7% at constant currency to EUR

Page 5/11

110 million in the fourth quarter 2017. The operating income margin decreased yearover-year to 16.7% (Q4 2016: 19.0%) mainly due to further investments in Xenios andunfavorable foreign currency transaction effects.
For full year 2017, EMEA revenue increased by 6% at constant exchange rates to EUR
2,547 million and operating income decreased to EUR 444 million (-6% at constantcurrency). As of the end of 2017, we had 62,490 patients being treated at 746 clinics in
EMEA. Dialysis treatments increased by 5%.

Growth in Asia-Pacific fuelled by acquisitions
Asia-Pacific revenue grew strongly by 12% at constant currency to EUR 418 million in
the fourth quarter 2017. With EUR 191 million in Health Care Services revenue the region
recorded growth of 17% at constant currency, mainly driven by the acquisition impact
from Cura Group in Australia. The 7% constant currency growth in Health Care Products
revenue to EUR 227 million was mainly supported by higher sales of dialyzers, bloodlines
and products for peritoneal dialysis. Operating income reached EUR 76 million (-8% atconstant currency). The operating income margin was 18.2% (Q4 2016: 21.8%). Thiswas primarily driven by cost related to the build-up of dialysis services and peritoneal
dialysis product business in China, the impact from foreign currency transaction effects
and unfavorable mix effects related to acquisitions with lower margins.
For full year 2017, Asia-Pacific revenue grew by 13% at constant currency to EUR 1,623
million and operating income increased by 10% at constant currency to EUR 313 million.
Operating income margin was stable on a high level of 19.3% (FY 2016: 19.6%). As ofthe end of 2017, we had 29,739 patients being treated at 381 clinics in Asia-Pacific.
Dialysis treatments increased by 6%.

Improved contribution from Latin America
Latin America delivered revenue of EUR 185 million in the fourth quarter 2017, anincrease of 16% at constant currency. Health Care Services revenue increased by 16% atconstant currency to EUR 128 million and was driven by higher organic revenue pertreatment. Health Care Products revenue increased by 15% at constant currency to EUR
57 million, mainly due to higher sales of machines, dialyzers and concentrates. Operating
income came in at EUR 14 million (-12% at constant currency). The operating margin
was 7.4% (Q4 2016: 9.7%), impacted by unfavorable foreign currency transaction
effects, higher manufacturing costs primarily related to inflation, higher overhead costs

Page 6/11

and only partially offset by reimbursement rate increases that mitigate inflationary cost
increases.
For full year 2017, Latin America revenue grew by 15% at constant currency to EUR 720
million and operating income increased by 3% at constant currency to EUR 58 million.
Operating income margin was at 8.1% (FY 2016: 9.2%). As of the end of 2017, we had
31,375 patients being treated at 232 clinics in Latin America. Dialysis treatments
increased by 2%.

Solid operating cash flow
In the fourth quarter 2017, the company generated net cash provided by operating
activities of EUR 528 million, representing 11.9% of revenue (Q4 2016: EUR 772
million). The decrease was primarily attributable to a less favorable DSO (days sales
outstanding) effect this year and higher income tax payments.
In full year 2017, the company generated net cash provided by operating activities
of EUR 2,192 million, compared to EUR 1,932 million for full year 2016. This represents
12.3% of revenue, clearly reaching our 2017 target of more than 10%. The increase in
net cash provided by operating activities was largely driven by the payment from the
U.S. Departments of Veterans Affairs and Justice for reimbursement, the impact of the2016 discretionary contribution of EUR 90 million to pension plan assets in the U.S. andthe impact of other working capital items, partially offset by higher income tax payments.
Free cash flow was also very strong at EUR 1,351 million, compared to EUR 1,017 million
for full year 2016. DSO as of December 31, 2017 was 67 days, a decrease of 3 days
compared to the previous year.

Global Efficiency Program phase II
Fresenius Medical Care has launched the second phase of its Global Efficiency Program(GEP II) in 2018. The program’s objectives are to identify and realize further efficiency
potential and enhance the overall competitiveness of Fresenius Medical Care. Starting in
2018, GEP II targets to achieve sustained cost improvements of EUR 100 to 200 million
per annum by 2020.

NxStage acquisition to foster home penetration
In August 2017, Fresenius Medical Care signed a merger agreement to acquire NxStage
Medical, Inc., a U.S.-based medical technology and services company. The planned
acquisition has a total transaction volume of approximately EUR 1.7 billion (USD 2.0

Page 7/11

billion). On October 27, shareholders of NxStage approved the acquisition by Fresenius
Medical Care. The completion of the acquisition is subject to regulatory approvals andother customary closing conditions. Closing is expected to occur in 2018.

Press Conference
Fresenius Medical Care will hold a press conference at its headquarters in Bad Homburg,
Germany to discuss the results of the fourth quarter and full year 2017 on Tuesday,
February 27, 2018, at 10 am CET. The press conference will be webcasted at thecompany's website www.freseniusmedicalcare.com in the Media center. A replay will beavailable shortly after the conference.

Conference callFresenius Medical Care will hold a conference call to discuss the results of the fourth
quarter and full year 2017 on Tuesday, February 27, at 3:30 p.m. CET / 9:30 a.m. EDT.
The company invites investors to follow the live webcast of the call on the company’s
website www.freseniusmedicalcare.com in the “Investors/Events” section. A replay will
be available shortly after the call.
Please refer to our statement of earnings included at the end of this news and to theattachments as separate excel- and PDF-files for a complete overview of the results forthe fourth quarter and full year 2017.
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 theleading provider of dialysis products such as dialysis machines or dialyzers. Along with thecore business, the company focuses on expanding the range of related medical services in thefield 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 anduncertainties. Actual results could differ materially from those described in these forwardlooking statements due to certain factors, including changes in business, economic andcompetitive conditions, regulatory reforms, foreign exchange rate fluctuations, uncertainties

Page 8/11

in litigation or investigative proceedings, and the availability of financing. These and otherrisks and uncertainties are detailed in Fresenius Medical Care AG & Co. KGaA's reports filedwith 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 thisrelease.
Fresenius Medical Care - Statement of earnings

in Euro million, except share data, audited

Three months ended
December 31,
2016
2017

ChangeChangeat constantcurrency

Health Care Services
Health Care Products
Revenue
Adjusted revenue

3,581
848
4,429
4,430

3,596
821
4,417
4,417

-0.4%
3.2%
0.3%
0.3%

8.0%
8.1%
8.1%
8.0%

Cost of revenue
Gross profit
Selling, general and administrative
Research and development
Income from equity method investees
Operating income (EBIT)
Adjusted operating income (adjusted EBIT)

2,936
1,493
954
36
(16)
519
726

2,864
1,553
788
39
(4)
730
730

2.5%
-3.9%
21.0%
-8.1%
310.1%-28.9%
-0.5%

10.7%
3.1%
28.5%
-5.3%
315.6%-22.2%
5.9%

Interest expense, net
Income before taxes
Income tax expense

Net income1

80
439
(30)
469
75
394

90
640
196
444
81
363

-11.6%-31.3%
n.a.
5.6%
-7.5%
8.5%

-5.1%
-24.7%
n.a.
13.2%
-0.2%
16.3%

Adjusted net income 1

362

363

-0.1%

6.1%

519
182
701
15.8%

730
188
918
20.8%

-28.9%-3.4%-23.6%-22.2%
2.9%-17.1%

8.2%
8.2%

15.9%
15.9%

Net income
Less: Net income attributable to noncontrolling interests

Operating income (EBIT)
Depreciation and amortization
EBITDAEBITDA margin
Weighted average number of shares
Basic earnings per share
Basic earnings per ADS
In percent of revenue
Costs of revenue
Gross profit
Operating income (EBIT)
Net income1
1

306,908,491 306,181,415
€1.28
€0.64

€1.19
€0.60

66.3%
33.7%
11.7%
8.9%

64.8%
35.2%
16.5%
8.2%

Attributable to shareholders of FMC AG & Co. KGaA

For a reconciliation of adjusted figures, please refer to the table at the end of the press release.

Page 9/11

Fresenius Medical Care - Statement of earnings

in Euro million, except share data, audited

Twelve months ended
December 31,
2016
2017

ChangeChangeat constantcurrency

Health Care Services
Health Care Products
Revenue
Adjusted revenue

14,532
3,252
17,784
17,69013,506
3,064
16,57016,570

7.6%
6.1%
7.3%
6.8%

9.8%
7.4%
9.3%
8.7%

Cost of revenue
Gross profit
Selling, general and administrative
Research and development
Income from equity method investees
Operating income (EBIT)
Adjusted operating income (adjusted EBIT)

11,780
6,004
3,578
131
(67)
2,362
2,493

10,954
5,616
3,119
147
(59)
2,409
2,409

7.5%
6.9%
14.7%
-10.8%
14.6%
-1.9%
3.5%

9.6%
8.8%
16.5%
-10.1%
14.9%
0.1%
5.5%

Interest expense, net
Income before taxes
Income tax expense

Net income1

354
2,008
454
1,554
274
1,280

366
2,043
623
1,420
276
1,144

-3.4%
-1.7%
-27.1%
9.5%
-0.5%
11.9%

-1.9%
0.5%
-25.7%
11.9%
1.5%
14.4%

Adjusted net income 1

1,204

1,144

5.3%

7.3%

Operating income (EBIT)
Depreciation and amortization
EBITDAEBITDA margin

2,362
736
3,098
17.4%

2,409
701
3,110
18.8%

-1.9%
4.8%
-0.4%

0.1%
6.3%
1.5%

306,563,400

305,748,381

€4.17
€2.09

€3.74
€1.87

11.6%
11.6%

14.1%
14.1%

66.2%
33.8%
13.3%
7.2%

66.1%
33.9%
14.5%
6.9%

Net income
Less: Net income attributable to noncontrolling interests

Weighted average number of shares
Basic earnings per share
Basic earnings per ADS
In percent of revenue
Costs of revenue
Gross profit
Operating income (EBIT)
Net income1
1

Attributable to shareholders of FMC AG & Co. KGaA

For a reconciliation of adjusted figures, please refer to the table at the end of the press release.

Page 10/11

Reconciliation of non IFRS financial measures to the most directlycomparable IFRS financial measures – adjustments for special items
The table below shows the reconciliation of: revenue excluding VA Agreement, operating
performance excluding VA Agreement and adjusted for the cost effects, net of anticipated
recoveries from Natural Disasters in North America and FCPA related charge and for net
income also excluding 2017 book gain from the U.S. tax reform.

Reconciliation of non-IFRS financial measures to the most directly comparable IFRS financial
measuresin € million, audited

Three months ended
December 31

Twelve months ended
December 31

2017

2016

2017

2016

Revenue
VA Agreement 1

4,429
1

4,417

17,784(94)

16,570Adjusted revenue(Revenue excluding special items)

4,430

4,417

17,69016,570Operating income (EBIT)
VA Agreement 1
Natural Disaster Costs2
FCPA related charge3

519
1
6
200

730

2,362
(87)
18
200

2,409

Adjusted operating income (adjusted EBIT)(Operating income (EBIT) excluding special items)

726

730

2,493

2,409

Net income4
VA Agreement 1
Natural Disaster Costs2
FCPA related charge3
U.S. Tax Reform5
Adjusted net income 4

394
1
3
200
(236)

363

1,280
(51)
11
200
(236)

1,144

(Net income 4 excluding special items)

362

363

1,204

1,144

1

VA Agreement = Agreement with the United States Departments of Veterans Affairs and Justice2

Natural Disaster C osts = three hurricanes and an earthquake

3

FC PA related charge = charges related to ongoing FC PA investigations

4

Attributable to shareholders of FMC AG & C o. KGaA

5

U.S. Tax Reform: re-measurement of deferred tax balances as a result of U.S. tax reform

Page 11/11