Fresenius Medical Care
) announced first quarter 2013 earnings per ordinary share of 74
cents which was 8% lower than the year-ago adjusted earnings per
share of 80 cents.
Net income attributable to the company dropped 39% year over
year to $225 million (or 74 cents per share) in the quarter.
Quarter in Detail
Net revenues edged up 7% (up 7% in terms of constant currency)
year over year to $3,464 million in the reported quarter. Organic
sales growth was 4% on a global basis.
On a geographic basis, revenues from the North American
markets rose 9% to $2,287 million in the quarter while overseas
revenues increased 3% (up 4% in terms of constant currency) to
Dialysis services revenues increased 8% (up 9% in terms of
constant currency) year over year to $2,678 million with U.S.
sales spurting 10% year over year to $2,104 million and
international sales ascending 3% (up 5% in terms of constant
currency) year over year to $574 million. Average revenue per
treatment for U.S. clinics grew to $359 from $353 a year ago.
Consolidated dialysis product revenues increased 2% (up 2% in
terms of constant currency) year over year to $786 million.
Dialysis product sales in the U.S. market decreased 2% to $183
million. International dialysis product sales increased 3% (up 3%
in terms of constant currency) to $595 million.
Fresenius operated a network of 3,180 dialysis clinics (up 2%
year over year) across North America and the overseas markets, as
of Mar 31, 2013. The number of clinics increased 2% in North
America while offshore dialysis clinics also increased 2% year
Fresenius provided dialysis treatment to 261,648 patients (up
3% year over year) on a global scale, as of Mar 31, 2013.
Patients in North America increased 3% whereas number of patients
in international markets also ascended 3% year over year.
The company provided 9.7 million dialysis treatments (up 5%
year over year) globally, during the quarter ending Mar 31, 2013.
Fresenius' North American franchise rose 7% while the
international segment improved 2% year over year.
Operating margin dropped to 14.2% from 15.5% in the prior year
quarter. In North America, operating margin was lower at 16.1%
from 16.5% a year ago while operating margin for overseas markets
decreased to 15.7% from 17.2% in the year-ago period.
Fresenius concluded the first quarter with cash from
operations of $315 million (9.1% of sales), representing a drop
of 34% year over year.
The company spent $146 million on capital expenditures in the
quarter. Free cash flow, prior to acquisitions, was $169 million
versus $359 million a year ago. The company spent $71 million on
acquisitions and investments, net of divestitures. Free cash
flow, post acquisitions, divestitures and investments, was $98
million compared with $(1167) million in the prior-year
Fresenius confirmed its forecast for 2013. The company
envisions sales of over $14,600 million for 2013, up 6% year over
year. Expected net income (for shareholders) for 2013 is about
$1,100 million to $1,200 million, up 5% to 15% (excluding
investment gain of $140 million in 2012). The company expects
capital expenditure of roughly $700 million and plans to spend
around $300 million on acquisitions.
Fresenius is a provider of products and services for patients
undergoing dialysis treatment. The company's principal competitor
in the U.S. is
DaVita HealthCare Partners Inc.
), which provides dialysis services for patients suffering from
chronic kidney failure or end stage renal disease. Fresenius also
Baxter International Inc.
Despite quarter-to-quarter fluctuations, the company continues
to register good operating results in the North American as well
as overseas markets. The integration of recent acquisitions is
also expected to be accretive to Fresenius' earnings in the near
term. However, the contagion of lingering economic problems in
Europe remains a matter of concern.
The stock carries a Zacks Rank #3 (Hold).
) carries a Zacks Rank #2 (Buy) and is expected to do well.
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