Fresenius Medical Care AG & Co. KGAA (FMS)
Q1 2013 Earnings Call
April 30, 2013 9:30 am ET
Oliver Maier - Head of Investor Relations & Corporate Communications
Previous Statements by FMS
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Michael Brosnan - Chief Financial Officer of Fresenius Medical Care Management AG and Member of Management Board - Fresenius Medical Care Management AG
Lisa Bedell Clive - Sanford C. Bernstein & Co., LLC., Research Division
Martin Wales - UBS Investment Bank, Research Division
Michael K. Jungling - Morgan Stanley, Research Division
Veronika Dubajova - Goldman Sachs Group Inc., Research Division
Jonathan A. Beake - Citigroup Inc, Research Division
Thomas M. Jones - Berenberg Bank, Research Division
David Adlington - JP Morgan Chase & Co, Research Division
Holger Blum - Deutsche Bank AG, Research Division
Ingeborg Øie - Jefferies & Company, Inc., Research Division
Ryan K. Halsted - Wells Fargo Securities, LLC, Research Division
Ladies and gentlemen, thank you for standing by. Welcome to the Fresenius Medical Care Q1 2013 Conference Call. [Operator Instructions] I would like to turn the conference over to Oliver Maier, Head of Investor Relations. Please go ahead, sir.
Great. Thank you very much, Jerry. Thank you, everybody for being back. I would like to welcome all of you to Fresenius Medical Care's earnings call for the first quarter of 2013. Also a warm welcome to everybody who joined us today actually on the web. We very much appreciate your interest.
With us today are Rice Powell, our Chief Executive Officer and Chairman of the Management Board of Fresenius Medical Care; and Mike Brosman, our Chief Financial Officer.
As always, I would like to start our presentation also by mentioning our cautionary language that is in our a Safe Harbor statement of our presentations and the material we distributed today. For further details concerning risks and uncertainties, please refer to our filings including our SEC filings.
One more housekeeping item from my end, I would like to ask those who have dialed-in today to limit their questions to just the 2 -- to just about 2, maximum 3 questions, per round in an effort to get everyone actually an opportunity to participate in the Q&A portion since I know that quite a lot of people actually have dialed in. Obviously, feel free to re-enter the queue if you wish.
So that it is from my end, Rice. The floors is yours.
Robert Maurice Powell
Thank you, Oliver. Good afternoon to the folks here in Europe. Good morning to the folks in the U.S.. Welcome to our Q1 Earnings Call. Let me start by saying to our FMC employees and management board members, please accept my thanks for all of your hard work in the first quarter. I appreciate the efforts that you make each and every day.
I will start, I've got about 9 slides I'd like to walk through with you today. I'm going to try to make sure I stay on the high points. I'll turn it over to Mike. He will then take you through the financials and some details, and then I'll come back and summarize before we move in to taking your questions.
Again, looking at Slide 4. First quarter 2013 in the blue shaded area. I won't go through each and every number. I know you've seen this since our press release has been out earlier this morning. You can see the 7% growth in net revenue, approximately $3.5 billion even at $493 million, down 2%, and you can see the net income as well as the net income adjusted. I think what's important on this slide is to say that we are pleased with the organic growth in North America at 4%. The dialysis services group in North America had a very good first quarter and we appreciate that. And as we talked quite a bit in the February full year presentation and guidance that we wanted to see improvement in our payer mix in North America. We've seen a slight improvement. We like the way that's going, not nearly where we need it to be, but there has been some improvement there in the course of the first quarter.
Looking at Europe, Middle East and Africa, I don't believe that the performance that you see in this first quarter, which is disappointing to all of us, is a trend necessarily. I'll give you some more color on this in a slide or 2, but we do have to recognize it wasn't where we had hoped it would be. But again, we saw strong growth in Asia as they continue to grow strongly throughout the region. This is not a set of results for my first quarter as a CEO that I'm thrilled about, but we will continue to work hard, things will improve. We are continuing to maintain our guidance. Mike will give you some more color on that. But it is work and we intend to be here everyday, trying to get better and improve.
Looking at Slide 5, again good revenue growth, but weak in Europe. North America at roughly 66% of the revenue. $2,287,000,000 for North America and 9% revenue growth with an organic growth of 4%. Internationally, looking at just shy at $1.2 billion, 4% revenue growth in constant currency and organic growth at 5%. When you look at the various regions in International, Latin America was very strong at 12% constant currency growth in revenue, Asia Pacific at 7%. And the surprise you see here is Europe at 1% constant currency growth. Now a couple of things here that we understand have gone on in Europe. Number 1, we saw slower de novo growth than we had anticipated, generally in the area of Russia. We were hoping that we would have had clinics up and running and patients being treated and reimbursed, but we're a little behind schedule there. There were a couple of tenders in the product business that we chose not to participate in. I'll give you a little more color on that later. But in addition to that, just generally speaking, the product sales in Europe in the first quarter were down. If you look at Gambro's earnings release, you can see that in EMEA, Europe, Middle East and Africa, they were 2% up on constant currency, Baxter in their international division, not exactly a one-for-one comparison, but they were at 1% growth in constant currency. I can't really tell you why. We do think there's some effect of Easter and the Holiday, and people not being around, if you will, to sell to. But it just seems to be generally speaking a down quarter, and I do believe it will come back. I have great faith in our team in Europe and their ability to drive their business.
Looking at global market leadership in terms of the franchise, 3 key numbers, and then let me come back and give you a little more detail. Clinics grew 2%, treatments were up 5% and patient count was up 3% for the global franchise. Now just a little detail for that, you can see at 3,180 clinics, North America was just shy of 2,100 and just shy of 1,100 clinics in International. That 5% shipment growth is approximately 9.7 million treatments in the quarter and then approximately 262,000 patients drove that 3% increase in patient count in the first quarter.
Moving to Slide 7. Looking at the revenue growth in dialysis services. When you look at it on the accumulated basis, you can see first quarter $2,678,000,000, that's 9% growth in constant currency, organic growth at 5% and same market at 3%. And again, I will highlight that North America had a good performance, 10% growth in constant currency, organic growth at 5% and same-market growth at 4%. And if you recall a year ago this time, we were pushing hard to get away from the 2.3%, 2.2% that we had, so we have, as we discussed, re-engineered that process, we've work hard at it and it would appear that we've made progress and we continue to do much better than we did a year ago.