Financial Data and Key Metrics Changes - The company reported solid revenue growth of 4% in the first quarter, with organic growth of 5% driven by the value-based care business and favorable rate and mix developments in Care Delivery [76][105] - Operating income margin improved from 7.3% to 8.6% year-over-year, indicating progress towards the 2025 group margin target [90][92] - The net leverage ratio remained stable at 3.2%, within the self-imposed target corridor of 3 to 3.5 times net debt to EBITDA [73] Business Line Data and Key Metrics Changes - Care Delivery revenue increased by 5% on an outlook basis, supported by 6% organic growth, primarily from the value-based care business [105] - Care Enablement revenue grew by 2% on an outlook basis, with operating income increasing by 23% year-over-year, driven by improved pricing and contributions from value-based care [80][87] - The Care Enablement margin expanded significantly from 1.3% in Q4 2023 to 6% in Q1 2024, reflecting strong pricing and operational improvements [62][92] Market Data and Key Metrics Changes - In the U.S., the company experienced a broadly flat quarter in terms of volume, with same-market treatment growth at -0.3% due to adverse weather and flu season impacts [52][79] - The company expects growth of 0.5% to 2% over the course of the year, with improvements anticipated as operational changes take effect [53][129] - The value-based care business saw patient lives increase to 125,000, contributing positively to revenue and earnings [59] Company Strategy and Development Direction - The company is focused on portfolio optimization, having divested non-core assets in Turkey and Latin America, which is expected to generate cash proceeds of around €650 million [17][57] - The FME25 transformation program is on track to achieve targeted savings of €100 million to €150 million by year-end, contributing to margin improvements [55][84] - The company aims to strengthen its operational capabilities and improve clinic utilization, with a focus on hiring and reducing turnover in constrained markets [3][22] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving the 2025 EBIT margin target of 10% to 14%, citing strong progress in financial performance and operational execution [96][112] - The company acknowledged challenges from labor inflation and staffing shortages but remains optimistic about improving operational efficiencies [20][31] - Management highlighted the importance of maintaining high clinical quality while executing turnaround and transformation plans [56] Other Important Information - The company experienced a cyber incident that negatively impacted operating cash flow by €58 million, but strong crisis management mitigated the overall effect [108][109] - The company is preparing for the rollout of high-volume hemodiafiltration in the U.S., aiming to set a new standard of care for patients [11] Q&A Session Summary Question: Can you comment on the VBP in dialysis products in China? - Management indicated that the VBP in China is holding its own and they are on track with their plans [7] Question: What are the trends in labor inflation? - Management confirmed that labor inflation trends are being managed, with a net expectation of around 3% after efficiencies [180] Question: How is the company addressing the weak bundled price increase this year? - Management is actively working through the impact of bundled price increases on commercial plans, expecting a gradual effect [45] Question: What is the outlook for same-market treatment growth? - Management expects a ramp-up in same-market treatment growth over the quarters, with a target range of 0.5% to 2% for the year [129][152] Question: Can you provide details on the divestiture from the Turkish clinics business? - The Turkish divestiture is a smaller-sized business, with effects expected to materialize in Q2 [135][136]

Fresenius Medical Care AG & Co. KGaA (FMS) is well-poised for growth on the back of a broad range of dialysis products and services and a solid global foothold. However, stiff competition remains a concern.Shares of this Zacks Rank #3 (Hold) company have lost 7.7% year to date against the industry’s growth of 7%. The S&P 500 Index has increased 9.2% in the same time frame.The company, with a market capitalization of $11.09 billion, is one of the largest integrated providers of products and services for indi ...

Fresenius Medical Care AG & Co. KGaA (FMS) reported fourth-quarter 2023 adjusted earnings per share (EPS) of 47 cents, which beat the Zacks Consensus Estimate of 36 cents by 30.6%. The bottom line improved 6.8% year over year.Revenue DetailsRevenues of $5.37 billion (EUR 4,988 million) beat the Zacks Consensus Estimate by 0.9%. The company’s reported revenues were flat year over year but recorded a growth of 7% at constant currency (cc) and 3% on an organic basis.Segmental DetailsFresenius Medical implement ...

▪ Solid organic revenue growth driven by both operating segments 4 2023 – Payors favor home treatments Investor Relations │ Analyst Presentation Q4 2023 Page 11 Low priority on M&A activities 2 Q4 Business Update Outlook Q4 2023 | Key developments at Group level ▪ Broadly stable U.S. same market treatment growth ▪ Operating income (outlook base) increased due to strong FME25 savings, the Tricare settlement and pricing in Care Enablement ▪ Realization of FME25 savings continued ahead of plan ▪ Value-based ca ...

Revenue and Income Performance - Revenue growth of 5% in FY 2023, reaching EUR 19,454 million, driven by favorable business development [3] - Operating income increased by 15% in FY 2023, totaling EUR 1,369 million, exceeding the top end of the outlook range [3] - Free cash flow increased by 32% in FY 2023, reaching EUR 1,960 million, resulting in a margin of 10.1% [29] - Net income for FY 2023 declined by 26% to EUR 499 million, but increased by 4% to EUR 756 million when excluding special items [26] - For Q4 2023, revenue was EUR 4,988 million, a decrease of 0.2% year-over-year, but a growth of 7.4% at constant currency [44] - Operating income for Q4 2023 was EUR 428 million, representing a 21.5% increase year-over-year, and EUR 555 million when excluding special items [44] - For the full year 2023, revenue was EUR 19,454 million, a slight increase of 0.3% year-over-year, with a growth of 5.5% at constant currency [48] - The operating income for the full year 2023 was EUR 1,369 million, a decrease of 9.4% year-over-year, while excluding special items, it was EUR 1,741 million, an increase of 13.1% [48] - Basic earnings per share for Q4 2023 increased by 35.4% to €0.64, and for the full year, it decreased by 25.9% to €1.70 [44][48] Cost Management and Savings - FME25 transformation program achieved annual sustainable savings of EUR 346 million, ahead of the initial target of EUR 250 to 300 million [8] - Special items impacting operating income in 2023 included costs related to the FME25 program (€153 million), Legal Form Conversion Costs (€30 million), and Legacy Portfolio Optimization (€204 million) [35] Financial Position and Debt - Net financial debt reduced by 11% to EUR 10.8 billion, with a net leverage ratio of 3.2x at the end of 2023 [10] - Proposed dividend of EUR 1.19 per share, a 6% increase compared to the prior year's dividend [10] Future Outlook - In 2024, revenue is expected to grow by a low- to mid-single digit percent rate compared to the prior year [31] - The Company expects operating income to grow by a mid- to high-teens percent rate compared to the prior year, with a 2023 revenue outlook of EUR 19,049 million and an operating income outlook of EUR 1,540 million [32] - The Company reconfirms its targets to achieve an operating income margin of 10% to 14% by 2025, excluding impacts from portfolio changes [33] Operational Highlights - As of December 31, 2023, Fresenius Medical Care treated 332,548 patients in 3,925 dialysis clinics worldwide [30] - The Company has a network of 3,925 dialysis clinics, providing treatments for approximately 333,000 patients globally [39] Upcoming Events - The Company will host a press conference on February 20, 2024, to discuss the strategic outlook and full year 2023 results [34] Divestments - Key divestments generated EUR 0.5 billion in total proceeds, with EUR 135 million received in 2023 [9]

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 20-F (Mark One) For the fiscal year ended December 31, 2023 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 or ☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of event requiring this shell company report Commission file number 001-32749 FRESENIUS MEDICAL CARE AG (Exact name of Registrant as specified in its charter) FR ...

Fresenius Medical Care (FMS) recently announced the receipt of FDA 510(k) clearance for the company’s 5008X Hemodialysis System.The new system is aimed at providing an improved standard of care in dialysis therapy to patients suffering from kidney diseases in the United States. The FDA clearance will allow the company to start clinical evaluations and user studies in the United States.Price PerformanceFor the past six months, FMS’s shares have declined 24.0% against the industry’s growth of 6.0%. The S&P 50 ...

Financial Data and Key Metrics - Revenue growth in Q3 was 7% at constant currency, driven by favorable pricing and volume in both Care Delivery and Care Enablement segments [62] - Operating income improved by 20% on a guided basis, with group margin increasing to 8.7% [38] - FME25 transformation program delivered EUR 97 million in savings in Q3, bringing year-to-date savings to EUR 232 million, with a target of EUR 250-300 million by year-end [30] - Leverage ratio remained at 3.4x, within the target range of 3-3.5x, with deleveraging as a top priority [42] Business Line Performance - **Care Delivery**: Organic revenue growth was supported by the U.S. value-based care business, InterWell Health, and reimbursement rate increases. Same-market treatment growth in the U.S. improved to 0.2% when adjusted for acute contract exits [19] - **Care Enablement**: Revenue increased by 5% on a constant currency basis, driven by higher sales of in-center disposables, machines, and home hemodialysis products. Operating income improved to EUR 22 million, supported by FME25 savings and pricing measures [20][41] Market Performance - The U.S. market saw positive growth in Care Delivery, with a favorable payer mix and reimbursement rate increases, though acute care contract exits had a negative impact [19] - Care Enablement faced negative exchange rate effects but benefited from higher sales volumes and pricing measures [40] Strategic Direction and Industry Competition - The company is focused on executing its FME25 transformation program, aiming for EUR 250-300 million in sustainable savings by 2025 [30] - Portfolio optimization continues, with the divestment of National Cardiovascular Partners (NCP) in the U.S. [31] - The company is addressing the potential impact of GLP-1 medications on patient volumes, expecting a balanced long-term effect [14][35] Management Commentary on Operating Environment and Future Outlook - Management highlighted inflationary pressures, particularly in Care Enablement, and negative impacts from nonrecurring pharmaceutical payments and exchange rate headwinds [18] - The company raised its full-year 2023 operating income guidance, expecting low single-digit growth, supported by FME25 savings and productivity improvements [43][44] - Management remains optimistic about achieving an operating profit margin of 10-14% by 2025 [69] Other Important Information - The company completed the refinancing of a EUR 650 million bond expiring in November, using a mix of long-term bank financing, cash, and short-term debt [13] - CMS Star ratings for clinics showed strong performance, with the company outpacing the industry in 3-, 4-, and 5-star clinics [17] Q&A Summary Questions and Answers - **Home Treatments**: Home treatment rates remained stable at around 16% [126] - **Labor Market**: Open positions improved to around 4,300, with labor conditions more stable than previous quarters [50] - **GLP-1 Impact**: No significant impact from GLP-1 medications observed yet, with only 8% of CKD patients prescribed SGLT2 inhibitors [54][90] - **CKCC Margin Dilution**: The CKCC true-up in Q3 was lower than expected, contributing to margin dilution, but this is not expected to repeat in Q4 [55][78] - **Care Enablement Margins**: Margins were impacted by transactional FX effects, with ongoing efforts to improve performance [78] - **Q4 Expectations**: Q4 is expected to be weaker due to tough year-over-year comparisons, including bonus plan favorability and NCP deconsolidation gains in the previous year [97] - **Value-Based Care**: The company is evaluating its participation in government programs like CKCC, with a focus on improving collaboration and transparency [75][86] - **Pricing Negotiations**: Private payer negotiations are ongoing, with a focus on profitability and potential contract exits where necessary [121]

[Introduction](index=9&type=section&id=1.%20INTRODUCTION) The report details the proposed conversion of Fresenius Medical Care KGaA to an AG, aiming for FME Group's deconsolidation from FSE KGaA to enhance flexibility [Introduction](index=9&type=section&id=1.%20INTRODUCTION) The report details the proposed conversion of Fresenius Medical Care KGaA to an AG, aiming for FME Group's deconsolidation from FSE KGaA to enhance flexibility - The company plans to change its legal form from a partnership limited by shares (**KGaA**) to a stock corporation (**AG**) under German law[26](index=26&type=chunk) - A key objective of the conversion is the **deconsolidation** of the **FME Group** from the consolidated financial statements of its parent company, **FSE KGaA**, due to a loss of control under **IFRS 10**[26](index=26&type=chunk) - The conversion will maintain the company's **legal identity**; it is not a liquidation or the formation of a new entity. Shareholders' stakes will not change, but the **General Partner will exit** the company[28](index=28&type=chunk) - The change is anticipated to increase FME Group's **financial and operational flexibility**, supporting its position as a leading provider of products and services for individuals with renal diseases[31](index=31&type=chunk) [FME KGaA Overview](index=11&type=section&id=2.%20FME%20KGAA) [Registered Office, Administration, Corporate Object, and Fiscal Year](index=11&type=section&id=2.1%20Registered%20office,%20administration,%20corporate%20object%20and%20fiscal%20year) This section details Fresenius Medical Care KGaA's registered office, administrative headquarters, corporate objectives in medical care, and fiscal year alignment - The company's registered office is in **Hof (Saale)**, Germany, with its administration located in **Bad Homburg v. d. Höhe**, Germany[37](index=37&type=chunk) - Corporate objectives are focused on **medical and health care**, including the development, production, and distribution of products and services for **dialysis** and associated treatments[40](index=40&type=chunk) [Structure of FME Group](index=12&type=section&id=2.2%20Structure%20of%20FME%20Group) FME KGaA's structure shows FSE KGaA as the sole General Partner shareholder and largest equity holder, leading to FME Group's full consolidation under IFRS 10 - **FSE KGaA** is the **sole shareholder** of the **General Partner**, Fresenius Medical Care Management AG, and also the company's largest shareholder with about a **32.2% stake**[43](index=43&type=chunk) - Due to **FSE KGaA's control** via the General Partner, FME Group is **fully consolidated** in FSE KGaA's financial statements in accordance with **IFRS 10**[46](index=46&type=chunk) [Business of FME Group](index=13&type=section&id=2.3%20Business%20of%20FME%20Group) FME Group is a leading provider of renal disease products and services, reorganized into Care Enablement and Care Delivery segments, with key financial figures presented - FME Group is the **world's leading provider** of products and services for individuals with **renal diseases**[49](index=49&type=chunk) - Effective **January 1, 2023**, the business was reorganized into two global operating segments: **Care Enablement** (healthcare products) and **Care Delivery** (healthcare services)[52](index=52&type=chunk) Selected Key Financial Figures (Audited) | Metric | FY 2022 (audited) | FY 2021 (audited) | | :--- | :--- | :--- | | Revenue | €19,398 million | €17,619 million | | Operating income | €1,512 million | €1,852 million | | Net income attributable to shareholders | €673 million | €969 million | | Basic earnings per share | €2.30 | €3.31 | Selected Key Financial Figures (Unaudited) | Metric | Q1 2023 (unaudited) | Q1 2022 (unaudited) | | :--- | :--- | :--- | | Revenue | €4,704 million | €4,548 million | | Operating income | €261 million | €348 million | | Net income attributable to shareholders | €86 million | €157 million | | Basic earnings per share | €0.29 | €0.54 | [Corporate Governance](index=16&type=section&id=2.4%20Corporate%20governance) FME KGaA's complex corporate governance involves the General Partner, KGaA Supervisory Board, general meeting, and Joint Committee, with the General Partner wholly owned by FSE KGaA and a Pooling Agreement ensuring independent board members - The company's corporate bodies include the **General Partner**, the **KGaA Supervisory Board**, the **general meeting**, and the **Joint Committee**[63](index=63&type=chunk) - The **General Partner**, Fresenius Medical Care Management AG, is a **wholly-owned subsidiary of FSE KGaA** and is responsible for managing FME KGaA[64](index=64&type=chunk)[66](index=66&type=chunk) - A "**Pooling Agreement**" ensures that at least **one-third** (and at least two) of the members of the General Partner's Supervisory Board are **independent**[71](index=71&type=chunk) [Share Capital, Shares, and Shareholder Structure](index=19&type=section&id=2.5%20Share%20capital,%20shares%20and%20shareholder%20structure) The company's share capital is €293,413,449.00 across ordinary bearer shares, listed on FWB and NYSE as ADSs, with FSE KGaA as the largest shareholder at 32.17% - The registered share capital is **€293,413,449.00**, divided into **293,413,449 ordinary bearer shares** with no par value[82](index=82&type=chunk) - The company's shares are listed on the **Frankfurt Stock Exchange (FWB)** and as **ADSs** on the **New York Stock Exchange (NYSE)**[86](index=86&type=chunk)[87](index=87&type=chunk) Shareholder Structure | Notifying person | Share of voting rights (in %) | | :--- | :--- | | FSE KGaA | 32.17 | | Richard Pzena | 5.20 | | Dodge & Cox | 5.03 | | BlackRock, Inc. | 3.19 | | Harris Associates Investment Trust | 3.01 | | Harris Associates L.P. | 3.00 | | Dodge & Cox International Stock Fund | 3.00 | | Free float | 45.40 | [Employees and Co-determination](index=26&type=section&id=2.6%20Employees%20and%20co-determination) As of March 31, 2023, FME Group employed 125,231 people and is not subject to German co-determination laws, with employees represented on FSE KGaA's supervisory board - As of **March 31, 2023**, FME Group employed **125,231 people** (headcount)[112](index=112&type=chunk) - The company is **not currently subject to corporate co-determination**. Its German employees are attributed to **FSE KGaA** for co-determination purposes and are represented on FSE KGaA's supervisory board[113](index=113&type=chunk) [Overview of the Conversion and its Economic and Legal Reasons](index=27&type=section&id=3.%20OVERVIEW%20OF%20THE%20CONVERSION%20AND%20OF%20ITS%20ECONOMIC%20AND%20LEGAL%20REASONS) [Overview and Background of the Conversion](index=27&type=section&id=3.1%20Overview%20and%20background%20of%20the%20Conversion) The conversion from KGaA to AG addresses complex governance and financial reporting, aiming for FME Group's deconsolidation from FSE KGaA and equity method accounting - The current corporate governance structure is **highly complex** due to the **dual KGaA structure** of FME and its parent FSE, involving multiple supervisory boards and legal dependencies[118](index=118&type=chunk) - The **full consolidation** of FME Group has a **disproportionate impact** on FSE KGaA's financial statements, as FSE KGaA only holds a **~32.2% equity stake**[122](index=122&type=chunk) - The conversion to an AG is considered the **best option** to achieve **deconsolidation** and allow FME Group to focus on its own strategic objectives[124](index=124&type=chunk) [Reasons for the Conversion](index=29&type=section&id=3.2%20Reasons%20for%20the%20Conversion) Key reasons for conversion include simplifying corporate governance, improving decision-making, increasing outside shareholder influence, and gaining independent financing strategy - **Simplification of Corporate Governance**: The **complex KGaA structure** will be replaced by a **simpler, more agile two-tier AG system** (Management Board, Supervisory Board, General Meeting)[127](index=127&type=chunk)[128](index=128&type=chunk) - **Improved Decision-Making**: The conversion will free up significant management resources currently spent on aligning with FSE Group, allowing for **faster and more efficient strategic decisions** focused on FME's business[131](index=131&type=chunk)[132](index=132&type=chunk) - **Increased Shareholder Influence**: Outside Shareholders will gain more influence by electing **at least four of the six shareholder representatives** to the **more powerful AG Supervisory Board**, which appoints the management[135](index=135&type=chunk)[141](index=141&type=chunk) - **Independent Financing Strategy**: The company will have **more flexibility** to establish and execute its own financing strategy with less consideration of FSE KGaA's interests[142](index=142&type=chunk)[143](index=143&type=chunk) [Impact of the Conversion on the Company's Share Price](index=32&type=section&id=3.3%20Impact%20of%20the%20Conversion%20on%20the%20Company's%20share%20price) The capital market reacted positively to the conversion announcement, with the share price increasing by approximately 7.3% to a six-month high, a trend expected to continue due to simplified governance - After the company announced concrete plans for the conversion on **February 21, 2023**, the share price increased by approximately **7.3%** to a **six-month high** of **€39.88** on **February 22, 2023**[147](index=147&type=chunk) - The General Partner believes the capital market has reacted **positively** to the announcement and expects the conversion to have a **positive future impact** on the share price[148](index=148&type=chunk) [Appropriateness of the Participation Ratio](index=33&type=section&id=3.4%20Appropriateness%20of%20the%20participation%20ratio) The conversion maintains the existing shareholder participation ratio, with each KGaA share converting to one AG share on a 1:1 basis, ensuring unchanged proportional ownership - Shareholders will receive **one AG Share** for each **KGaA Share** they hold, a **1:1 conversion ratio**[149](index=149&type=chunk) - The conversion ratio is considered **appropriate** as the **proportional participation** of each shareholder in the company's share capital remains unchanged[149](index=149&type=chunk) [Alternatives to the Conversion](index=34&type=section&id=3.8%20Alternatives%20to%20the%20Conversion) Alternatives like SE conversion or General Partner acquisition were rejected due to legal complexity and change-of-control risks, making the AG conversion the most favorable option with lowest execution risk - Alternatives considered included changing the legal form to an **SE**, the company purchasing the **General Partner**, causing the **General Partner to exit**, or an agreement to **suspend control**[156](index=156&type=chunk)[157](index=157&type=chunk)[158](index=158&type=chunk)[161](index=161&type=chunk) - These alternatives were **rejected** due to factors like **legal complexity**, **execution risks**, and the high risk of triggering **change-of-control clauses** in material financing agreements[157](index=157&type=chunk)[161](index=161&type=chunk)[164](index=164&type=chunk) - The conversion to an AG is considered the **most favorable option** as it has the **lowest execution risk** and does not have a **significant impact on current financing agreements**[164](index=164&type=chunk) [Assessment of the Conversion by the General Partner](index=37&type=section&id=3.9%20Assessment%20of%20the%20Conversion%20by%20the%20General%20Partner) The General Partner assesses the conversion as being in the best interests of the company and stakeholders, citing simplified governance, strategic freedom, and strengthened shareholder rights outweighing costs - The General Partner assesses the conversion as being in the **best interests** of the company and its stakeholders[167](index=167&type=chunk) - Key factors in this assessment include the **simplification of corporate governance**, **increased strategic opportunities**, and the **strengthening of outside shareholder rights**[168](index=168&type=chunk) - The future advantages of the conversion are considered to **significantly outweigh** its potential disadvantages and costs[172](index=172&type=chunk) [Assessment of the Conversion by the Independent Members of the Supervisory Boards](index=38&type=section&id=3.10%20Assessment%20of%20the%20Conversion%20by%20the%20independent%20members%20of%20the%20Supervisory%20Boards) Independent Supervisory Board members approved the conversion, concluding its advantages, including simplified governance and enhanced shareholder influence, significantly outweigh disadvantages, and deemed FSE KGaA's appointment right appropriate - **Independent members** of the Supervisory Boards **approved** the conversion plans, with members holding mandates at FSE KGaA abstaining from the vote[172](index=172&type=chunk) - The independent members concluded that the conversion is in the **best interests** of the company and its outside shareholders, as the advantages **significantly outweigh** any potential disadvantages[179](index=179&type=chunk) - The **Appointment Right** for **FSE KGaA** was deemed appropriate in light of its **~32.2% stake** and its continued commitment as the largest shareholder[178](index=178&type=chunk) [Explanation of the Conversion and the Conversion Resolution](index=40&type=section&id=4.%20EXPLANATION%20OF%20THE%20CONVERSION%20AND%20THE%20CONVERSION%20RESOLUTION) [Procedure of the Conversion](index=40&type=section&id=4.1%20Procedure%20of%20the%20Conversion) The conversion, a change of legal form under German Transformation Act (UmwG), becomes effective upon Commercial Register registration, requires no shareholder compensation, and preserves the company's legal identity as an AG - The conversion is implemented as a **change of legal form** according to the **German Transformation Act (UmwG)** and becomes effective upon **registration with the Commercial Register**[181](index=181&type=chunk) - Under German law (section 250 UmwG), a **compensation offer** to shareholders is **not required** for a change of legal form from a KGaA to an AG[181](index=181&type=chunk) [Key Legal Steps of the Conversion](index=40&type=section&id=4.2%20Key%20legal%20steps%20of%20the%20Conversion) Key legal steps include a notarized Conversion Resolution requiring 75% EGM approval, formal General Partner approval, and subsequent registration with the Commercial Register for effectiveness - The Conversion Resolution requires a majority of **at least 75%** of the share capital represented at the EGM[183](index=183&type=chunk) - The General Partner must also provide a **notarized approval** for the conversion, as it will **exit the company** upon completion[185](index=185&type=chunk) - **FSE KGaA**, holding approximately **32.2%** of the share capital, intends to **vote in favor** of the Conversion Resolution[184](index=184&type=chunk) [Explanation of the Conversion Resolution](index=42&type=section&id=4.3%20Explanation%20of%20the%20Conversion%20Resolution) The Conversion Resolution details the legal form change to "Fresenius Medical Care AG," new Articles of Association, unchanged share capital, General Partner exit, a new co-determined Supervisory Board, and the introduction of co-determination for employees - The new legal name will be "**Fresenius Medical Care AG**", with the registered office remaining in **Hof (Saale)**, Germany[196](index=196&type=chunk)[197](index=197&type=chunk) - The **General Partner will exit** the company **without compensation** upon the conversion's registration. Consequently, **FSE KGaA will no longer control** the company under **IFRS 10**[238](index=238&type=chunk)[240](index=240&type=chunk) - A **new, 12-member Supervisory Board** will be formed under **German co-determination law (MitbestG)**, composed of **six shareholder representatives** and **six employee representatives**[245](index=245&type=chunk) - **FSE KGaA** will be granted a **special right to appoint up to two** of the **six shareholder representatives** to the new Supervisory Board, contingent on its shareholding level (**at least 15% for one seat, at least 30% for two seats**)[278](index=278&type=chunk) [Operational, Financial, and Tax Effects and Costs of the Conversion](index=71&type=section&id=5.%20OPERATIONAL,%20FINANCIAL%20AND%20TAX%20EFFECTS%20AND%20COSTS%20OF%20THE%20CONVERSION) [Operational Effects](index=71&type=section&id=5.1%20Operational%20effects) Operational impacts include relabeling approximately 1,000 products, separating shared corporate functions from FSE Group, and the termination of the Pooling Agreement protecting outside shareholders - Product relabeling is required for **approximately 1,000 products** to change the company name from "**Fresenius Medical Care AG & Co. KGaA**" to "**Fresenius Medical Care AG**"[342](index=342&type=chunk)[343](index=343&type=chunk) - **Essential services** currently provided by FSE Group, including **IT, treasury, and insurance**, must be separated. FME Group will need to **establish these functions independently**, with **transitional service agreements** planned for the interim period[347](index=347&type=chunk)[348](index=348&type=chunk) - The **Pooling Agreement**, which grants certain rights to outside shareholders (e.g., independent members on the GP Supervisory Board), will **terminate** upon completion of the conversion[356](index=356&type=chunk) [Costs of the Conversion](index=75&type=section&id=5.2%20Costs%20of%20the%20Conversion) One-time conversion costs are estimated at €50 million to €100 million, mainly for product relabeling, while recurring administrative costs are expected to be significantly below €50 million annually - One-time costs associated with the conversion are estimated to range from **€50 million to €100 million**, with **product relabeling** being the main driver[358](index=358&type=chunk) - Recurring costs for new administrative functions are expected to be **significantly below €50 million per annum** and have an **immaterial impact on EBIT**[359](index=359&type=chunk) [Financial Effects](index=76&type=section&id=5.3%20Financial%20effects) Financial effects include maintaining investment-grade ratings from S&P and Moody's (Fitch potential downgrade), termination of a €600 million FSE KGaA credit facility, and no trigger of change-of-control provisions in major financing agreements - The company expects to maintain its **investment-grade ratings** from **S&P (BBB-)** and **Moody's (Baa3)**, but **Fitch** has placed the rating on "**negative rating watch**" with a **potential one-notch downgrade**[362](index=362&type=chunk) - The conversion is **not expected to trigger change-of-control provisions** under the company's bonds or most of its other material financing agreements[362](index=362&type=chunk) - An existing **€600 million** **uncommitted revolving credit facility** from FSE KGaA will be **terminated** upon the conversion[362](index=362&type=chunk) [Tax Effects](index=77&type=section&id=5.4%20Tax%20effects) The conversion is expected to be tax-neutral for both the company and shareholders, qualifying as a tax-free "F-Reorganization" for U.S. tax purposes, with no German RETT or VAT implications - The conversion is expected to be **tax-neutral** for the company in Germany, with **no gain or loss recognized** and **no impact on tax attributes** like loss carryforwards[369](index=369&type=chunk)[370](index=370&type=chunk) - For **U.S. federal income tax purposes**, the conversion is expected to qualify as a **tax-free "F-Reorganization,"** meaning **no gain or loss should be recognized** by the company or its shareholders[372](index=372&type=chunk)[378](index=378&type=chunk) - The transaction is **not expected to trigger** **German Real Estate Transfer Tax (RETT)** or **Value Added Tax (VAT)**[373](index=373&type=chunk)[374](index=374&type=chunk) [Future Shareholding in FME AG](index=80&type=section&id=6.%20FUTURE%20SHAREHOLDING%20IN%20FME%20AG) [General Comparison of KGaA and AG](index=80&type=section&id=6.2%20General%20comparison%20of%20KGaA%20and%20AG) This section compares KGaA and AG legal forms, highlighting the KGaA's General Partner management versus the AG's two-tier board structure, which grants shareholders more indirect influence over management - A **KGaA** is a **hybrid legal form** managed by a **General Partner**, whereas an **AG** is a **standard stock corporation** managed by a **Management Board**[383](index=383&type=chunk)[402](index=402&type=chunk) - In an **AG**, the **Supervisory Board appoints and dismisses the Management Board** members. In a **KGaA**, the Supervisory Board has **no such power** over the General Partner's management[412](index=412&type=chunk)[455](index=455&type=chunk) - The **AG Supervisory Board** has **greater authority** than its KGaA counterpart, including the ability to make certain management transactions **subject to its approval**[452](index=452&type=chunk) - In a **KGaA**, certain general meeting resolutions require the **consent of the General Partner**, a requirement that **does not exist in an AG**[476](index=476&type=chunk) [Legal Structure of FME AG](index=102&type=section&id=6.3%20Legal%20structure%20of%20FME%20AG) FME AG's future legal structure will include an AG Management Board, a 12-member co-determined AG Supervisory Board (six shareholder, six employee representatives), and a general meeting, with FSE KGaA retaining appointment rights based on its stake - FME AG will have three corporate bodies: the **AG Management Board** (managing the company), the **AG Supervisory Board** (supervising management), and the **general meeting**[493](index=493&type=chunk) - The AG Supervisory Board will consist of **12 members**: **six elected by shareholders** and **six elected by employees**, in accordance with **German co-determination law**[502](index=502&type=chunk)[555](index=555&type=chunk) - The new AG Articles of Association grant **FSE KGaA** the **right to appoint one or two members** to the Supervisory Board, depending on whether its shareholding is **above 15% or 30%**, respectively[558](index=558&type=chunk) [Effects of the Conversion on Shareholder Rights](index=127&type=section&id=6.4%20Effects%20of%20the%20Conversion%20on%20shareholder%20rights%20and%20comparison%20of%20such%20rights%20prior%20to%20and%20after%20the%20Conversion) The conversion significantly enhances shareholder rights, particularly for Outside Shareholders, by granting indirect influence over management through electing at least four of six shareholder representatives to the AG Supervisory Board - The **most significant change** for shareholders is the shift from a **General Partner-led structure** to a **Management Board appointed by a Supervisory Board** that is partially elected by shareholders[596](index=596&type=chunk) - Post-conversion, **Outside Shareholders** will be able to elect **at least four of the six shareholder representatives** to the **AG Supervisory Board**, thereby gaining **indirect influence** over the appointment of the company's management[601](index=601&type=chunk) Comparison of Shareholder Rights | Right | FME KGaA (Current) | FME AG (Future) | | :--- | :--- | :--- | | **Appoint Management** | No influence. GP Management Board is appointed by GP Supervisory Board, which is elected by FSE KGaA. | Indirect influence. Shareholders elect a majority of shareholder reps to the AG Supervisory Board, which appoints the AG Management Board. | | **Elect Supervisory Board** | Outside Shareholders elect all members of the (less powerful) KGaA Supervisory Board. | Outside Shareholders can elect at least 4 of 6 shareholder reps to the (more powerful) AG Supervisory Board. | | **Amend Articles** | Can be blocked by FSE KGaA (via General Partner consent). | Can be blocked by FSE KGaA (if it holds >25% of votes). No General Partner consent needed. | [Listing and Certification of the AG Shares](index=132&type=section&id=7.%20LISTING%20AND%20CERTIFICATION%20OF%20THE%20AG%20SHARES) [Listing and Certification of the AG Shares](index=132&type=section&id=7.%20LISTING%20AND%20CERTIFICATION%20OF%20THE%20AG%20SHARES) The conversion will not affect the FWB listing, ISIN, or ticker symbol, but new ADSs representing AG shares will be listed on the NYSE, and new global share certificates will be issued - The listing on the **Frankfurt Stock Exchange (Prime Standard)** will **not be affected** by the conversion. The **ISIN (DE0005785802)** and **ticker symbol (FME)** will remain the same[614](index=614&type=chunk) - The company will apply to list the **ADSs** representing the new AG Shares on the **New York Stock Exchange (NYSE)**[618](index=618&type=chunk) - **New global share certificates** representing the AG Shares will be issued to **replace the existing certificates** for the KGaA Shares[619](index=619&type=chunk)

Fresenius Medical Care AG & Co. KGaA (NYSE:FMS) Q4 2022 Earnings Conference Call February 22, 2023 9:30 AM ET Company Participants Dominik Heger - Head, Investor Relations Helen Giza - Chair & Chief Executive Officer Conference Call Participants Graham Doyle - UBS Hassan Al-Wakeel - Barclays Oliver Metzger - ODDO BHF Christoph Gretler - CS Ed Ridley-Day - Redburn Lisa Clive - Bernstein James Vane-Tempest - Jefferies Victoria Lambert - Berenberg Falko Friedrichs - Deutsche Bank Robert Davies - Morgan Stanley ...