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Fresenius reports increase in fourth-quarter earnings for 2017
Fresenius Medical Care AG reported fourth-quarter earnings on Feb. 27 that showed improvements compared to 2016 for the quarter- and for the end-of-year dialysis care operations, both in the United States and abroad.
“In 2017, we continued the success story of Fresenius Medical Care with another set of record results,” Rice Powell, CEO of Fresenius Medical Care, said in a company press release. “We managed an unusual number of severe natural disasters, have delivered on our financial targets, and again we are able to propose the highest dividend in our company’s history. With the acquisition of the Cura Group in Australia and our planned acquisition of NxStage Medical, we are setting the course for future periods beyond our published 2020 outlook.”
For the remainder of 2018, Fresenius Medical Care expects revenue growth of around 8%. Net income is expected to increase by 13% to 15%, including recurring benefits from the U.S. tax reform.
Based on the results for full year 2017, a dividend increase of 10% will be proposed at the company’s annual general meeting in May, Powell said. Revenue in the fourth quarter of 2017 increased by 8% during the same period in 2016 and increased by 9% for the full year. Health care services revenue increased by 10%, mainly due to strong underlying organic growth and contributions from acquisitions. health care products revenue increased by 7%, primarily driven by higher sales of dialyzers, non-dialysis products in the acute business, machines and peritoneal dialysis products, according to the company release.
Corporate cost in the fourth quarter 2017 was up significantly compared to the same quarter in 2016 mainly due to the recognition of an anticipated charge of more than $200 million based on ongoing discussions toward a settlement with the U.S. Securities and Exchange Commission and the U.S. Department of Justice that would avoid litigation over government demands under the Foreign Corrupt Practices Act. The settlement would be related to company conduct and include certain legal expenses and other related costs or asset impairments. Fresenius said it voluntarily advised the U.S. Department of Justice and the U.S. Securities Exchange Commission about its investigations into the conduct in 2012.
Fresenius estimates that its full year 2017 income tax expense decreased by 27% as a result of the tax reform legislation approved in January.
In the fourth quarter 2017, the North America segment saw an 8% increase in revenue. At $352 per treatment, revenue in the United States was slightly down (-1%) due to lower revenue with commercial payers. Cost per treatment increased by 3% to $276, largely driven by higher bad debt expenses, higher personnel expense and various other costs, according to the company. The strong growth of the health care products revenue (9%) was mainly driven by higher sales of machines, renal drugs and peritoneal dialysis products.
For international dialysis care, Asia-Pacific revenue grew by 12% in the fourth quarter of 2017. Operating income was impacted 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, the company reported. As of the end of 2017, Fresenius had 29,739 patients being treated at 381 clinics in the Asia-Pacific. Dialysis treatments increased by 6%. Latin America delivered a 16% growth in revenue in the fourth quarter compared to the same period in 2016, driven by higher organic revenue per treatment. For the full year 2017, Latin America revenue grew by 15% and operating income increased by 3%. As of the end of 2017, Fresenius had 31,375 patients being treated at 232 clinics in Latin America. Dialysis treatments rose by 2%. –by Mark E. Neumann
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