Moody's Investors Service, the credit rating arm of
), has changed its outlook of Fresenius SE & Co. KGaA - the
parent company of
Fresenius Medical Care
) - from positive to negative due to the increase in leverage
following the recent acquisition of 43 hospitals from
Rhoen-Klinikum AG. The outlook has been downgraded despite the
fact that the acquisition will lead to improved coverage of
Fresenius SE hospitals across Europe.
Moody's Investors Service has also affirmed the Ba1 corporate
family rating, Ba1-PD probability of default rating and the Ba1
unsecured bond)Baa3/(P)Baa3 secured bank instrument ratings for
Fresenius SE's debt issuing finance subsidiaries.
Fresenius' acquisition of hospitals from private health-care
provider Rhoen-Klinikum by its Helios unit is expected to make
the company the largest private hospital operator in Europe.
Post-acquisition, Fresenius SA will operate 117 hospitals across
the continent. Fresenius expects the acquisition of new
hospitals, consisting of 11,800 beds and 15 outpatient
facilities, to produce synergies leading to a 1%-2% rise in
Helios EBITDA margin.
Fresenius will pay €3.07 billion ($4.07 billion) for the
Rhoen-Klinikum assets using debt. It anticipates the acquisition
to generate annual sales of €2 billion and EBITDA of nearly €250
million. However, the company expects one-time charges of about
€80 million before tax due to the acquisition
Later, Helios and Rhoen-Klinikum will also enter a cooperation
agreement covering latter's remaining hospitals. The cooperation
will be valued at €40 million, of which, Fresenius will
contribute 75% and Rhoen the remaining.
Fresenius Medical Care announced second quarter 2013 adjusted
earnings of 44 cents per American Depositary Share (ADS), which
was flat year-over-year and lower than the Zacks Consensus
Estimate of 46 cents per ADS.
Net revenues grew 5% (6% in terms of constant currency) year over
year to $3,613 million in the reported quarter. Revenues
marginally missed the Zacks Consensus Estimate of $3,615 million.
Organic sales growth was 5% on a global basis.
FMS reaffirmed its revenue forecast for 2013. The company expects
sales of over $14,600 million for 2013, up 6% year over year. It
raised the upper end of its net income guidance (for
shareholders) for 2013 to $1,100-$1,500 million from
Currently, FMS carries a Zacks Rank #3 (Hold). Other medical
instruments stocks that are performing well include
Delcath Systems, Inc.
Echo Therapeutics, Inc.
). Both of them carry a Zacks Rank #2 (Buy).
DELCATH SYS INC (DCTH): Free Stock Analysis
ECHO THERAPEUT (ECTE): Free Stock Analysis
FRESENIUS MED (FMS): Free Stock Analysis
MOODYS CORP (MCO): Free Stock Analysis Report
To read this article on Zacks.com click here.