Fresenius hits revised fourth-quarter revenue targets, moves forward on merger with NxStage
Fresenius Medical Care AG said during an earnings call on Feb. 20 that it had met its revised fourth-quarter revenue targets and saw organic growth of 4% in 2018.
The German-based company, which manufacturers dialysis products and is the world’s largest provider, said it plans to propose its 22nd consecutive dividend increase - 10% in 2019 - and would spend more than a $1 billion during the next 2 years in buying back company shares.
“Our company’s growth continued in 2018, generating very solid cash flow that we are using for further investments in future growth and to create direct shareholder return,” Rice Powell, CEO of Fresenius Medical Care, said in a company press release. “We achieved a strong increase in earnings per share, steadily strengthened our core competencies and further positioned the company to meet the challenges of a rapidly evolving health care market.”
Chief financial officer retires
The company also announced the retirement of Michael Brosnan as its global chief financial officer. Fresenius expects to name a replacement by the end of this year.
“My career at Fresenius Medical Care has been a fulfilling and challenging part of my professional life,” Brosnan said. “I have worked with many wonderful people and I admire them for their dedication to the company and thank them for the strong company that has continued to grow with their contributions.” He has been the company CFO since January 2010. Previously, he served as CFO of Fresenius Medical Care North America for 7 years.
Powell said one of the company’s key growth areas for 2019 would be home dialysis. The company announced on Feb. 26 that it finalized the merger with NxStage Medical Inc., which manufactures the only FDA-approved portable machine for home hemodialysis and critical care applications in the United States. In 2017, NxStage had $394 million in revenue.
“The closing of this transaction is an important milestone in enhancing our patients’ choice of dialysis treatment modality,” Powell said in a statement. “By combining NxStage’s capabilities with our broad product and service offering, we can help patients to live even more independently. In addition to broadening our product portfolio, this acquisition positions Fresenius Medical Care to benefit from the growing trend toward home-based therapies.” The company has set a goal of 25% of patients on home therapy by 2022.
Fresenius said it now expects lower total integration costs of around $57 million to $85 million during the 3 years following the closing of the transaction.
The company said in the release that it will build more home training centers and redesign existing facilities as a result of the NxStage buy, “rolling out training courses, building up and scaling the home distribution infrastructure and optimizing facilities to meet increasing demand for home dialysis products and services.”
Increased presence in China
The company said it will also make a significant investment in China in 2019. The company noted in the release, “Given the company’s more than 15 years of experience in China on the product side, the strong growth of chronic diseases and the current development of the Chinese health care market, Fresenius Medical Care will invest in response to the strong growth impulse there and to participate actively in the market opportunity. Our target is to build a network of more than 100 clinics and to invest in home dialysis in China in the coming years.”
For 2019, Fresenius Medical Care said it expects adjusted revenue to grow between 3% and 7% and adjusted net income to develop “in the range of (2%) to 2%.” – by Mark E. Neumann