World's largest dialysis company
Fresenius Medical Care
) reported second quarter 2012 earnings per share of 91 cents
missing the Zacks Consensus Estimate by a penny and surpassing the
year-ago earnings of 86 cents per share. Adjusted income excludes
gain from investments.
Net income including the investment gain (attributable to the
company) edged up 11% year over year to $289 million. The increase
was backed by a non-taxable investment gain of $13 million
associated with the takeover of Liberty Dialysis Holdings.
Net revenues increased 9% (up 13% in terms of constant currency)
year over year to $3,428 million, trailing the Zacks Consensus
Estimate of $3,525 million. Organic revenue growth was 4% on a
On a geographic basis, revenues from the North American markets
improved 14% to $2,249 million in the quarter while overseas
revenues clambered 1% (up 11% in terms of constant currency) to
Dialysis services revenues soared 13% (up 16% in terms of
constant currency) year over year to $2,605 million with U.S. sales
rising 15% year over year to $2,043 million and international sales
ascending 5% (up 16% in terms of constant currency) year over year
to $562 million. Average revenue per treatment for U.S. clinics
grew to $351 from $348 a year ago.
Consolidated dialysis product revenues declined 1% (up 6% in
terms of constant currency) year over year to $823 million.
Dialysis product sales in the U.S. market increased 3% to $206
million primarily based on robust sales of hemodialysis products.
International dialysis product sales rose 3% to $609 million,
boosted by higher sales of dialysis machines and dialyzers.
Fresenius operated a network of 3,123 dialysis clinics (up 10%
year over year) across North America and the overseas markets, as
of June 30, 2012. It has provided dialysis treatment to 256,456
patients (up 14% year over year) on a global scale, as of June 30,
2012. The company provided 18.89 million dialysis treatments (up
14% year over year) globally, as of June 30, 2012.
Operating margin rose to 17.2% from 16.2% in the prior year
quarter. In North America, operating margin improved to 19.2% from
17.7% a year ago while operating margin for overseas markets
increased to 17.7% from 17.5% in the year-ago period.
Fresenius ended the second quarter with cash (from operations)
of $451 million (13.2% of sales) representing 45% year over year
surge. The cash flow generation was helped by development of
outstanding days sales.
The company spent $151 million on capital expenditures in the
quarter. Free cash flow, prior to acquisitions, was $300 million
versus $194 million a year ago. The company generated $6 million
from divestitures, net of acquisitions. Free cash flow, post
acquisitions, divestures and investments, was $306 million compared
with $(590) million in the prior-year period.
Fresenius reaffirmed its forecast for 2012. The company
continues to envision sales of roughly $14 billion for 2012.
Expected net income for 2012 remains unchanged at $1.3 billion and
net income (attributable to shareholders) is pegged at $1.14
billion. Net income excludes gain on investments of about $140
million for the first half of the year. The company expects capital
expenditure of roughly $700 million and plans to spend around $1.8
billion on acquisitions.
Fresenius 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. Fresenius also
) in certain niches such as the peritoneal dialysis products.
The company continues to register strong 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 economic
problems remains a matter of concern. Despite cost controlling
measures to combat the sluggish global economy, the company's
higher level of financial debt is another overhang.
The stock currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating.
BAXTER INTL (BAX): Free Stock Analysis Report
DAVITA INC (DVA): Free Stock Analysis Report
FRESENIUS MED (FMS): Free Stock Analysis Report
To read this article on Zacks.com click here.