Fresenius Medical Care
), the world's largest dialysis company, posted fourth-quarter 2011
earnings per share of $1.02, in line with the Zacks Consensus
Estimate while exceeding the year-ago earnings of 90 cents. Net
income (attributable to the company) shot up 14% year over year to
$310 million on the back of higher revenues.
For the year, earnings of $3.54 a share missed the Zacks
Consensus Estimate by a penny while surpassing the year-ago
earnings of $3.25. Profit (attributable to the company) climbed 9%
year over year to $1,071 million.
Net revenues rose 5% (up 6% at constant currency) year over year
to $3,323 million, but missed the Zacks Consensus Estimate of
$3,382 million. Organic revenue growth was 3% on a global basis.
For the full year, revenues rose 6% year over year to $12,795
million, also below the Zacks Consensus Estimate of $12,871
Geographically, revenues from the North American markets crept
up 1% to $2,096 million in the fourth quarter while overseas
revenues jumped 12% (up 14% at constant currency) to $1,223
International sales were boosted by double-digit growth in
dialysis product and services revenues while domestic revenues were
hurt by the negative impact of the implementation of the new
Medicare end-stage renal disease prospective payment system (the
"bundled rate" system), which resulted in lower reimbursement.
Dialysis services revenues nudged up 3% year over year to $2,435
million with domestic and international sales rising 1% and 13%,
respectively, to $1,882 million and $553 million. Average revenue
per treatment for domestic clinics declined to $351 from $355 a
year ago, impacted by reduced Medicare reimbursement.
Consolidated dialysis product revenues spiked 9% year over year
to $888 million. Dialysis product sales in domestic markets grew
just 2% to $214 million as higher sales of hemodialysis products
were, in part, neutralized by pricing cuts on renal drugs.
International dialysis product sales jumped 11% to $669 million,
boosted by higher sales of peritoneal dialysis products, dialyzers,
dialysis machines and products for acute care treatments.
Fresenius operated a network of 2,898 dialysis clinics (up 6%
year over year) across North America and the overseas markets at
the end of 2011. It has provided dialysis treatment to 233,156
patients (up 9% year over year) worldwide as of December 31, 2011.
During the year, the company provided roughly 34.39 million
dialysis treatments globally, up 9% year over year.
Operating margin rose to 17.7% from 17% a year ago. In North
America, operating margin climbed to 19.1% from 17.9% driven by
favorable pharma costs. Operating margin for overseas markets
increased to 18.7% from 18% helped by favorable currency exchange
movements and growth in Asia-Pacific.
Fresenius generated operating cash flows of $497 million
(roughly 15% of sales) in the fourth quarter, a 46% year-over-year
surge. The company spent $191 million on capital expenditure in the
quarter. Free cash flows (prior to acquisitions) soared 77% year
over year to $306 million. Fresenius spent $1,775 million on
acquisitions in 2011.
Fresenius, on October 1, 2011, closed its acquisition of U.S.
based American Access Care Holdings for $385 million. American
Access runs outpatient clinics, which serve the vascular access
needs of dialysis patients. The acquisition is expected to
contribute roughly $175 million in annual sales. Fresenius is
also on track to close its $1.7 billion acquisition (expected in
first-quarter 2012) of leading dialysis company Liberty Dialysis
Moving ahead, Fresenius envisions sales of roughly $14 billion
for 2012, taking into account certain accounting changes. This
represents a roughly 11% increase from the comparable sales of
2011. The current Zacks Consensus Estimate for 2012 is $14,359
Net income for the year is expected at $1.3 billion and net
income (attributable to shareholders) is pegged at $1.14 billion.
Operating margin is expected to be around 16.9%. The company
expects capital expenditure of roughly $700 million and expects to
spend around $1.8 billion on acquisitions.
Fresenius Medical, which employs 79,159 people globally, is the
largest provider of products and services for patients undergoing
dialysis treatment on the planet. The company's principal
competitor in the U.S. is
), which provides dialysis services for patients suffering from
chronic kidney failure or end stage renal disease.
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