Feb 24 2010
Fresenius Medical Care AG & Co. KGaA (NYSE:FMS)(FWB:FME):
Fresenius Medical Care AG & Co. KGaA (“the Company” or “FMC AG & Co.
KGaA”), the world’s largest provider of dialysis products and services,
today announced its results for the fourth quarter and full year of 2009.
4th-Quarter
2009:
Revenue
Net revenue for the fourth quarter of 2009 increased by 12% to
$3,035 million (8% at constant currency) compared to the fourth quarter
of 2008. Organic revenue growth worldwide was 8%. Dialysis Services
revenue grew by 12% to $2,226 million (11% at constant currency) in the
fourth quarter of 2009. Dialysis Product revenue increased by 10% to
$809 million (an increase of 3% at constant currency) in the same period.
North America revenue increased by 9% to $2,012 million. Organic
revenue growth was 9%. Dialysis Services revenue grew by 10% to $1,799
million. Average revenue per treatment for U.S. clinics increased to
$357 in the fourth quarter of 2009 compared to $335 for the
corresponding quarter in 2008 and $348 for the third quarter of 2009.
This development was attributable principally to reimbursement increases
and increased utilization of pharmaceuticals. Dialysis Product revenue
decreased by 3% to $213 million as a result of decreased sales of our
phosphate-binding drug PhosLo®, partially offset by sales of
our intravenous iron products, which increased by 14%, as well as
increased sales of dialyzers, solutions and concentrates.
International revenue increased by 18% to $1,023 million,
compared to the fourth quarter of 2008. Based on constant currency,
revenue grew by 8%. Organic revenue growth was 7%. Dialysis Services
revenue was $427 million, an increase of 22% (+12% at constant
currency). Dialysis Product revenue increased by 15% to $596 million
(+5% at constant currency), led by sales of products for acute care
treatments, sales of dialyzers, bloodlines and pharmaceuticals.
Earnings
Operating income (EBIT) for the fourth quarter of 2009 increased
by 13% to $491 million compared to the fourth quarter of 2008. The
operating margin increased from 15.9% in the fourth quarter of 2008 to
16.2% in the fourth quarter of 2009.
In North America, the operating margin increased from 16.7% in the
fourth quarter of 2008 to 17.7% in the fourth quarter of 2009. The
margin development was impacted favorably by an increase in revenue per
treatment and strong cost controls. The revenue per treatment improved
mainly due to increased commercial rates, an increase in the utilization
of pharmaceuticals and favorable development of the payor mix. The cost
per treatment was impacted favorably by a strong cost management and a
decrease in bad-debt expenses due to excellent cash collections on
receivables. This was offset partially by higher costs for
pharmaceuticals, mainly related to utilization, as well as the impact of
the launch of a generic version of PhosLo® in the U.S. market
and increased depreciation expense.
In the International segment, the operating margin decreased from 17.7%
to 17.6% due to higher bad-debt and R&D expenses, partially offset by
more favorable foreign exchange rate effects, lower production costs
resulting from lower prices for raw material and energy, as well as
economies of scale.
Net interest expense for the fourth quarter of 2009 was
$75 million compared to $85 million in the comparable quarter of 2008,
mainly due to lower short-term interest rates.
Income tax expense was $145 million for the fourth quarter of
2009 compared to $120 million in the fourth quarter of 2008, reflecting
effective tax rates of 34.9% and 34.3%, respectively.
Net income attributable to FMC AG & Co. KGaA for the
fourth quarter of 2009 was $247 million, an increase of 15% compared to
the fourth quarter of 2008.
Earnings per share (EPS) for the fourth quarter of
2009 rose by 15% to $0.82 per ordinary share. The weighted average
number of shares outstanding for the fourth quarter of 2009 was
approximately 299 million shares compared to 297.6 million shares for
the fourth quarter of 2008. The increase in shares outstanding resulted
from stock option exercises in the past 12 months.
Cash Flow
In the fourth quarter of 2009, the Company generated $458 million in cash
from operations, an increase of 52% compared to the fourth quarter
of 2008 and representing approximately 15% of revenue. The cash flow
performance was influenced positively by the favorable development of
the Days Sales Outstanding and increased earnings.
A total of $173 million was spent for capital expenditures, net
of disposals. Free Cash Flow before acquisitions was $285 million
compared to $120 million in the fourth quarter of 2008. A total of
$79 million in cash was used for acquisitions net of divestitures. Free
Cash Flow after acquisitions and divestitures was $206 million
compared to $32 million in the fourth quarter of the previous year.
Full Year 2009:
Revenue and Earnings
Net revenue was $11,247 million for the full year 2009, an
increase of 6% compared to 2008. At constant currency, net revenue rose
9%. Organic growth was 8% in 2009.
Operating income (EBIT) increased by 5% to $1,756 million in
2009. The operating margin for 2009 was 15.6% compared to 15.8% for 2008.
Net interest expense for the full year 2009 was $300 million
compared to $336 million in 2008, mainly due to lower short-term
interest rates.
Income tax expense was $491 million for the full year 2009
compared to $476 million in 2008, reflecting effective tax rates
of 33.7% and 35.6%, respectively. Tax expense was impacted positively by
increased non-taxable non-controlling interest in North America.
For the full year 2009, net income attributable to FMC AG & Co.
KGaA was $891 million, up 9% from 2008.
Earnings per ordinary share rose by 9% to $2.99 in 2009. The
weighted average number of shares outstanding during 2009 was
approximately 298.3 million.
Cash Flow
Cash from operations during 2009 was $1,339 million compared to
$1,016 million for 2008, representing approximately 11.9% of revenue.
The cash flow generation benefited from increased earnings and the
favorable development of the Days Sales Outstanding.
A total of $562 million was spent for capital expenditures,
net of disposals. Free Cash Flow before acquisitions for 2009 was
$777 million compared to $343 million in 2008. A total of $136 million
in cash was used for acquisitions net of divestitures. Free
Cash Flow after acquisitions and divestitures was $641 million
compared to $125 million in 2008.
Please refer to the attachments for a complete overview of the fourth
quarter and the full year of 2009 and the reconciliation of non-GAAP
financial measures included in this release to the most comparable GAAP
financial measures.
Patients – Clinics – Treatments
As of Dec. 31, 2009, Fresenius Medical Care treated 195,651 patients
worldwide, which represents a 6% increase compared to the previous year.
North America provided dialysis treatments for 132,262 patients, an
increase of 5%. Including 30 clinics managed by Fresenius Medical Care
North America, the number of patients in North America was 133,969. The
International segment served 63,389 patients, an increase of 9% over the
prior year.
As of Dec. 31, 2009, the Company operated a total of 2,553 clinics
worldwide. This is comprised of 1,784 clinics in North America (1,814
including managed clinics), an increase of 6%, and 769 clinics in the
International segment, an increase of 10%.
Fresenius Medical Care delivered approximately 29.43 million dialysis treatments
worldwide during 2009. This represents an increase of 6% year over year.
North America accounted for 19.87 million treatments, an increase of 4%,
and the International segment delivered 9.56 million treatments, an
increase of 10% over the previous year.
Employees
As of Dec. 31, 2009, Fresenius Medical Care had 67,988 employees
(full-time equivalents) worldwide compared to 64,666 employees at the
end of 2008. This increase of 3,322 employees is due to the overall
growth in the Company’s business.
Dividend
The Company will continue to follow an earnings-driven dividend policy.
For the 13th consecutive year, shareholders can expect to
receive an increased annual dividend for the fiscal year 2009. At
the Annual General Meeting to be held on May 11, 2010, shareholders will
be asked to approve a dividend of €0.61 per ordinary share, an increase
of 5% from 2008 (€0.58).
Debt/EBITDA Ratio
The ratio of debt to Earnings before Interest, Taxes, Depreciation and
Amortization (EBITDA) decreased from 2.69 at the end of 2008 to 2.46 at
the end of 2009.
Rating
There have been no rating changes in the fourth quarter 2009, Standard &
Poor’s Rating Services continued to rate the Company’s corporate credit
as ‘BB’ with a ‘stable’ outlook. Moody’s also affirmed its rating of the
Company’s corporate credit as ‘Ba1’ with a ‘stable’ outlook. Fitch rates
the Company’s corporate credit as ‘BB’ with a ‘stable’ outlook. For
further information on Fresenius Medical Care’s credit ratings, maturity
profiles and credit instruments, please visit our website at www.fmc-ag.com
/ Investor Relations / Credit Relations.
Issuance of Senior Notes
At the beginning of the first quarter of 2010 Fresenius Medical Care
issued senior notes due 2016 in the amount of €250 million. The coupon
is 5.5%. With a price at issuance of 98.6636% the yield to maturity at
issuance was 5.75%. Proceeds were used to repay short-term indebtedness
and for general corporate purposes. The senior notes are guaranteed on a
senior basis jointly and severally by the Company, Fresenius Medical
Care Holdings, Inc. and Fresenius Medical Care Deutschland GmbH.
Fresenius Medical Care Announces Management Board Changes
In December 2009, Fresenius Medical Care announced a transition to a new
management board structure drawing entirely on internal management
strength. The contract of Dr. Ben Lipps as chairman has been extended
until December 31, 2012 and Rice Powell has been appointed Deputy
Chairman of the Fresenius Medical Care Management Board. The Company has
also appointed Mike Brosnan as Chief Financial Officer. Kent Wanzek was
named to the new Fresenius Medical Care Management Board position for
Global Manufacturing Operations to provide stronger manufacturing
coordination on a global basis.
Outlook for 2010
For the full year of 2010, the Company expects to achieve revenue
of more than $12 billion.
Net income attributable to FMC AG & Co. KGaA is
expected to be between $950 and $980 million in 2010.
The Company expects to spend $550 to $650 million on capital
expenditures and up to $400 million on acquisitions. The debt/EBITDA
ratio is expected to be below 2.5 by the end of 2010.
Ben Lipps, chief executive officer of Fresenius Medical Care, said: “We
are very pleased to report excellent financial results for the fourth
quarter and full year of 2009. With this performance, we achieved the
top end of our earnings guidance for 2009. Cash flow from operations was
very strong and clearly ahead of our expectations. In 2010, we expect to
face similar challenges as we did in 2009 but we continue with
confidence to execute our strategic plan while maintaining vigilance as
to local health care trends. We remain committed to providing the best
quality of care to maximize patients overall health and well-being. Our
early stage experience with a comprehensive payment demonstration
concept, online Hemofiltration and nocturnal dialysis are particularly
encouraging in that they show a positive effect on total health care
costs while improving patient care outcomes. ”
SOURCE Fresenius Medical Care AG & Co. KGaA
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