Core Viewpoint - The stock market is experiencing volatility due to U.S. tariffs and global trade tensions, with the S&P 500 down over 8% for the year [1] Group 1: Market Conditions - U.S. tariffs on imports from major partners like China have reached as high as 145%, while China has imposed 84% duties on U.S. products [1] - Ongoing inflation pressures and concerns about a potential recession or stagflation are contributing to market uncertainty [1] Group 2: Investment Strategy - Investors are encouraged to focus on relative price strength, identifying stocks that outperform their peers even in volatile conditions [2] - Stocks that have shown better performance than the S&P 500 over the last 1 to 3 months, combined with solid fundamentals, indicate potential for growth [6] Group 3: Recommended Stocks - IHS Holding Limited (IHS) is highlighted for its strong growth potential, with a Zacks Consensus Estimate indicating 114.7% growth for 2025 earnings and a market cap of $1.6 billion [10][11] - Atlanticus Holdings Corporation (ATLC) is noted for a 29.4% growth estimate for 2025 earnings and a significant share price increase of 110.5% over the past year [12][13] - REX American Resources Corporation (REX) has a market cap of $676.4 million and a 15.7% upward revision in earnings estimates for fiscal 2026, despite a 31.3% decline in share price over the past year [14][15] - Fresenius Medical Care AG (FMS) is recognized for a 27.1% growth estimate for 2025 earnings and a share price increase of 31.8% in the last year [16][17] Group 4: Screening Parameters - Stocks are screened based on relative price changes over 12 weeks, 4 weeks, and 1 week, as well as positive current-quarter estimate revisions [8] - Only Zacks Rank 1 (Strong Buy) stocks are considered, which have historically outperformed the S&P 500 [9]

Market Overview - President Trump's announcement of reciprocal tariffs led to significant volatility in the U.S. stock market, with the S&P 500 dropping 9% in the first week of April, its worst week since 2020, followed by a rebound of 5.7% the next week, marking the best week since 2023 [1] - Exemptions from tariffs on items such as smartphones, semiconductors, and solar cells contributed to a strong tech rally, although the S&P 500 remained below its level from April 2 [2] - Ongoing uncertainty regarding a potential global trade war continues to concern investors and economists [2] Value Investing Strategy - Value investing focuses on purchasing stocks priced below their intrinsic value, capitalizing on market mispricing [4] - Earnings yield, calculated as (Annual Earnings per Share/Market Price) x 100, serves as a key metric for value investors, indicating potential undervaluation when high [5] - Earnings yield can be compared to bond returns, such as the 10-year Treasury yield, to assess the attractiveness of stocks relative to fixed-income securities [6] Stock Screening Criteria - A primary screening criterion is an Earnings Yield greater than 10%, supplemented by additional parameters such as estimated EPS growth for the next 12 months being greater than or equal to the S&P 500 [7] - Average Daily Volume (20 Day) should be greater than or equal to 100,000 to ensure adequate liquidity [8] - Current Price must be greater than or equal to $5, and stocks with a Zacks Rank 1 (Strong Buy) or 2 (Buy) are expected to outperform peers [9] Selected Stocks - **Alibaba Group (BABA)**: Dominates the e-commerce sector in China and is expanding internationally, with a Zacks Rank 1 and a Value Score of B. The consensus estimate for fiscal 2025 and 2026 earnings indicates year-over-year growth of 2.1% and 23% respectively [10][11] - **Fresenius Medical Care AG (FMS)**: A leading provider of dialysis products and services, recently launched a new home dialysis machine. The consensus estimate for 2025 and 2026 earnings suggests growth of 27.1% and 9.1% respectively [12][13] - **Helix Energy Solutions Group Inc. (HLX)**: Focuses on offshore energy services, with a consensus estimate for 2025 and 2026 earnings indicating growth of 42% and 28.2% respectively [14][15] - **Heritage Insurance Holdings, Inc. (HRTG)**: Provides residential insurance products with a focus on selective underwriting. The consensus estimate for 2025 and 2026 earnings suggests growth of 21% and 28.6% respectively [16][17]

The Medical group has plenty of great stocks, but investors should always be looking for companies that are outperforming their peers. Is Concentra Group (CON) one of those stocks right now? By taking a look at the stock's year-to-date performance in comparison to its Medical peers, we might be able to answer that question.Concentra Group is one of 1003 companies in the Medical group. The Medical group currently sits at #4 within the Zacks Sector Rank. The Zacks Sector Rank includes 16 different groups and ...

Investment Rating - The report indicates a positive investment outlook for the parenteral nutrition formulation industry, highlighting its potential for steady growth driven by technological innovation and policy support [4][32]. Core Insights - The global parenteral nutrition formulation industry is experiencing rapid development, focusing on enhancing energy efficiency and metabolic capacity. Key innovations include the rise of multi-chamber bags to meet personalized needs and reduce costs, while fat emulsions remain central to energy supply [4][21]. - The industry is characterized by a strong reliance on parenteral nutrition for patients with digestive and neurological disorders, emphasizing the necessity for precise nutritional supplementation to optimize patient outcomes [4][23]. - The industry chain consists of upstream raw material supply, midstream research and production, and downstream clinical applications, all of which are critical to the industry's core operations [20]. Summary by Sections Industry Overview - Parenteral nutrition (PN) is a medical method of providing essential nutrients intravenously, crucial for patients unable to consume adequate nutrition through the gastrointestinal tract. It includes Total Parenteral Nutrition (TPN) and Partial Parenteral Nutrition (PPN) [5][6]. Product Specifications - The parenteral nutrition formulations are categorized into single-chamber, double-chamber, and triple-chamber bags, each serving different clinical needs [6][7][8]. Industry Characteristics - Parenteral nutrition alleviates digestive burdens and optimizes patient outcomes, with multi-chamber formulations emerging to integrate multiple components for cost and efficacy optimization [9][10][11]. Development History - The industry has evolved from theoretical exploration to clinical validation, with significant advancements in technology and product innovation since the early 20th century [13][14][17]. Market Size and Growth - The market size for parenteral nutrition formulations grew from $3.476 billion in 2018 to $4.3 billion in 2023, with a compound annual growth rate (CAGR) of 4.35%. Projections indicate growth to $5.035 billion by 2028, with a CAGR of 3.95% [32][33]. Industry Chain Analysis - The upstream segment focuses on raw material supply, which is critical for product safety and compliance. The midstream involves the research and production of various parenteral nutrition formulations, while the downstream encompasses clinical usage and demand from critically ill patients [20][21][30]. Key Trends - The shift towards multi-chamber bags is driven by increasing demand for personalized nutrition solutions and cost considerations, reflecting a market preference for more flexible and economical formulations [22][29]. - Digestive and neurological disorders are primary areas of application for parenteral nutrition, with global guidelines emphasizing the importance of balanced nutrient intake to improve patient health [23][31]. Policy Impact - Recent policies have emphasized the importance of clinical nutrition, encouraging healthcare institutions to enhance their nutritional capabilities, which is expected to further expand the parenteral nutrition market [37].

Industry Overview - The MedTech sector has emerged as a resilient investment option amid macroeconomic challenges, characterized by innovation and a rising demand for personalized healthcare solutions [6][8] - The global MedTech industry market is projected to grow to $694.70 billion by 2025, with an estimated year-over-year increase of approximately 4% [8] Market Dynamics - The medical device industry has historically been a reliable refuge during turbulent market periods, with investors currently prioritizing long-term stability over short-term gains [4] - Innovations in artificial intelligence, robotics, and minimally invasive techniques are expected to revolutionize healthcare services, increasing the demand for advanced medical equipment and diagnostic instruments [8] Company Highlights - **Fresenius Medical Care AG (FMS)**: A leading provider of products and services for dialysis patients, recently launched the NxStage Versi HD home dialysis machine, with over 14,000 U.S. patients using its system [10][11] - FMS has a Zacks Rank of 1 and a Value Score of A, with a P/E ratio of 11.36X, below the industry average of 23.48X, and is expected to see a 27.1% growth in earnings by 2025 [12] - **Phibro Animal Health (PAHC)**: A global diversified animal health company that recently acquired Zoetis Inc.'s product portfolio, enhancing its profitability and EBITDA margin [14][15] - PAHC holds a Zacks Rank of 1 and a Value Score of B, with a P/E of 9.88X, below the industry average of 15.56X, and is projected to achieve 63% growth in earnings by 2025 [16] - **Cencora, Inc. (COR)**: A major pharmaceutical services company that launched Accelerate Pharmacy Solutions and is expanding its leadership in specialty products through strategic acquisitions [17][18] - COR has a Zacks Rank of 2 and a Value Score of B, with a P/S ratio of 0.18X, significantly lower than the industry average of 1.29X, and is expected to see an 11.6% growth in earnings by 2025 [19]

A dedicated session will highlight new advancements in hemodiafiltration therapy showcasing its potential to improve patient outcomes through enhanced toxin removal in dialysis treatments.Company-wide researchers and clinical experts share insights from large global databases, revealing crucial trends in kidney failure etiology, cardiovascular risks, and treatment modalities across different regions.Nearly 75 abstracts presented across a broad range of cutting-edge research, covering topics from the global ...

Analyst's Disclosure: I/we have a beneficial long position in the shares of FMS either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. While this article may sound like financial advice, please observe that the author is not a CFA or in any way licensed to give financial advice ...

Financial Data and Key Metrics Changes - In Q4 2021, the company achieved 3% revenue growth in constant currency, with net income excluding special items declining by 32% on a constant currency basis [29][30] - For the full year 2021, revenue was €17.6 billion, reflecting 2% growth in constant currency, while net income excluding special items declined by 23% on a constant currency basis [31][32] Business Line Data and Key Metrics Changes - Healthcare Services delivered organic revenue growth of 2% in Q4 2021, despite negative COVID-19 impacts, with Asia Pacific showing strong growth of around 3% [36][37] - The products business saw a 3% increase in revenue in Q4 2021, driven by higher sales of machines for chronic treatment and home hemodialysis products [38] Market Data and Key Metrics Changes - The company managed approximately 80,000 CKD and ESRD patients in value-based care arrangements, with expectations to generate around US$1.1 billion in revenues in 2022 [15][17] - The U.S. patient base is expected to see a Medicare Advantage mix in the mid-30% range during 2022, following the recent open enrollment period [49][64] Company Strategy and Development Direction - The company is focused on its midterm strategy prioritizing patient needs and quality of care, aiming for sustainable, profitable growth [12][18] - The FME25 transformation program is designed to create a leaner operating model and improve gross margins, with expected one-time costs of €175 million to €245 million in 2022 [22][57] Management Comments on Operating Environment and Future Outlook - Management anticipates ongoing challenges from COVID-19 and macroeconomic inflationary pressures, projecting excess mortality among dialysis patients to negatively impact results in 2022 [28][46] - The first quarter of 2022 is expected to be the low point for net income development, with a return to growth anticipated later in the year [51][52] Other Important Information - The company plans to propose a dividend of €1.35 at the Annual General Meeting in May 2022, emphasizing commitment to shareholder returns despite pandemic challenges [9][34] - The company aims to achieve climate neutrality in operations by 2040, with a roadmap to reduce absolute scope 1 and 2 emissions by 50% by 2030 [20][21] Q&A Session Summary Question: Update on Medicare Advantage (MA) penetration - The company ended the year with MA penetration around low 30% and expects to reach mid-30% through 2022, with no significant rate pressure currently felt [62][64] Question: Implications of potential stake sale by majority shareholder - Management remains focused on operational goals and is not overly concerned about ownership changes, emphasizing commitment to patient care and value creation [66] Question: Staffing and vacancies impact on P&L - The company has around 6,000 open positions, and filling these may create headwinds in H1 2022 due to labor market pressures [70][71] Question: Home dialysis growth expectations - Home hemodialysis is expected to grow faster than peritoneal dialysis, with a slow start anticipated before accelerating growth towards the 25% target by 2025 [75][76] Question: Revenue recognition for CKCC - Revenue recognition for CKCC will be delayed until reports are received, with feedback expected in mid-2022 [83]

Introduction [Certain Defined Terms](index=4&type=section&id=Certain%20defined%20terms) This section defines key terms used throughout the report for clarity - The report defines 'Company' as Fresenius Medical Care AG & Co KGaA and its subsidiaries on a consolidated basis after the legal form transformation[14](index=14&type=chunk) - **Fresenius SE & Co KGaA (Fresenius SE)** owns **100% of the General Partner** and **32.2% of the Company's shares** as of February 15, 2022[14](index=14&type=chunk) - Operating segments are defined as North America, EMEA (Europe, Middle East and Africa), Asia-Pacific, and Latin America[14](index=14&type=chunk) [Forward-Looking Statements](index=4&type=section&id=Forward-looking%20statements) The report contains forward-looking statements subject to inherent risks and uncertainties that could cause actual results to differ materially - Forward-looking statements are identified by words like 'outlook,' 'expects,' 'anticipates,' 'intends,' 'plans,' 'believes,' 'seeks,' 'estimates,' and similar expressions[15](index=15&type=chunk) - Key risks include changes in governmental and commercial insurer reimbursement, compliance with regulations, the impact of COVID-19, and the ability to implement the FME25 Program[16](index=16&type=chunk)[17](index=17&type=chunk)[23](index=23&type=chunk) - Other risks encompass product liability, patent infringement, global operational challenges, competition, global economic conditions, and attracting/retaining skilled personnel[17](index=17&type=chunk)[23](index=23&type=chunk) [Market and Industry Data](index=7&type=section&id=Market%20and%20industry%20data) Patient and market data in this report are primarily derived from the Company's internal 'Market & Competitor Survey' - All patient and market data in the report are derived from the Company's internal 'Market & Competitor Survey' (MCS)[24](index=24&type=chunk) - The MCS collects and analyzes information on the dialysis market, trends, market position, and competitors through annual country-by-country surveys[24](index=24&type=chunk) Part I [Item 1. Identity of Directors, Senior Management and Advisors](index=8&type=section&id=Item%201.%20Identity%20of%20directors%2C%20senior%20management%20and%20advisors) This item is not applicable to the report [Item 2. Offer Statistics and Expected Timetable](index=8&type=section&id=Item%202.%20Offer%20statistics%20and%20expected%20timetable) This item is not applicable to the report [Item 3. Key Information](index=8&type=section&id=Item%203.%20Key%20information) This section provides key information on global operations, reporting currency, exchange rates, and a comprehensive overview of risk factors - The Company conducts business globally in various currencies, with major operations in the U.S and Germany, and prepares consolidated financial statements in euro[26](index=26&type=chunk) Euro to U.S. Dollar Exchange Rates | | December 31, 2021 (spot) | December 31, 2020 (spot) | 2021 (average) | 2020 (average) | 2019 (average) | | :--- | :--- | :--- | :--- | :--- | :--- | | 1 U.S. dollar | 0.88292 | 0.81493 | 0.84549 | 0.87550 | 0.89328 | [Item 3.D. Risk Factors](index=8&type=section&id=Item%203.D.%20Risk%20factors) This sub-section details various risk factors that could adversely affect the Company's business, financial condition, and results of operations - The occurrence of any described risk event could materially impact the Company's business, financial condition, and results of operations, potentially leading to a decline in security prices[29](index=29&type=chunk) [Risks Relating to Legal and Regulatory Matters](index=8&type=section&id=Risks%20relating%20to%20legal%20and%20regulatory%20matters) The Company faces significant risks from legislative reforms, changes in reimbursement policies, and non-compliance with governmental regulations - Changes in U.S healthcare programs, such as the ACA, or shifts of commercially insured patients to lower-reimbursing Medicare/Medicaid, could **materially decrease revenues and operating profit**[30](index=30&type=chunk)[32](index=32&type=chunk)[33](index=33&type=chunk)[34](index=34&type=chunk) Consolidated Revenues from Medicare and Medicaid Reimbursement | Year | Percentage of Consolidated Revenues | | :--- | :--- | | 2021 | 27% | | 2020 | 32% | - **Non-compliance** with extensive governmental regulations could lead to severe legal consequences, including exclusion from government programs, monetary penalties, and business termination[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk) - **Cyber-attacks or data privacy incidents**, including breaches of sensitive personal information, could disrupt business, cause significant losses, liability, and reputational damage[43](index=43&type=chunk)[44](index=44&type=chunk)[47](index=47&type=chunk) [Risks Relating to Internal Control and Compliance](index=14&type=section&id=Risks%20relating%20to%20internal%20control%20and%20compliance) The Company faces risks from operating in many jurisdictions, particularly regarding violations of anti-corruption laws like the U.S FCPA - Violations of the U.S FCPA and similar anti-corruption laws worldwide, or allegations thereof, could disrupt business and result in **material adverse impacts**[52](index=52&type=chunk) - The Company resolved U.S government allegations related to FCPA violations in 2019, paying approximately **$231.7 million in penalties and disgorgement**, and continues to invest in compliance[54](index=54&type=chunk)[56](index=56&type=chunk) [Risks Relating to Our Business Activities and Industry](index=14&type=section&id=Risks%20relating%20to%20our%20business%20activities%20and%20industry) The Company is exposed to significant risks from public health crises, dependence on physician referrals, and challenges from global operations - COVID-19 resulted in an estimated **€338 million negative impact on net income** attributable to shareholders in 2021, primarily due to increased patient mortality and higher operating costs[59](index=59&type=chunk)[61](index=61&type=chunk)[63](index=63&type=chunk) - Dependence on physician referrals means a significant reduction in referrals could **decrease health care revenue**[65](index=65&type=chunk) - Global operations face risks such as economic/political instability, exchange rate fluctuations, difficulties in enforcing receivables, and trade barriers[66](index=66&type=chunk)[68](index=68&type=chunk) - The FME25 Program aims to reduce annual costs by **€500 million by the end of 2025**, with investments of €450-500 million, expecting positive net savings by the end of 2023[78](index=78&type=chunk) - Competition from generic drugs, new technologies, global economic downturns, and supply chain disruptions could **adversely affect sales and profitability**[80](index=80&type=chunk)[81](index=81&type=chunk)[82](index=82&type=chunk)[85](index=85&type=chunk) - Inability to attract and retain skilled personnel, exacerbated by COVID-19 and vaccine mandates, could **increase operating costs and impair growth**[89](index=89&type=chunk)[90](index=90&type=chunk) - Failure to meet sustainability (ESG) requirements could lead to fines, reputational damage, and **adverse impacts on share price or funding access**[92](index=92&type=chunk)[93](index=93&type=chunk)[94](index=94&type=chunk)[95](index=95&type=chunk)[96](index=96&type=chunk) [Risks Relating to Taxation and Accounting](index=22&type=section&id=Risks%20relating%20to%20taxation%20and%20accounting) The Company faces significant risks related to estimating healthcare service revenues, ongoing tax audits, and the collectability of accounts receivable - Estimating healthcare service revenues is complex and could **impact revenue recognition and financial condition**[97](index=97&type=chunk)[98](index=98&type=chunk)[101](index=101&type=chunk) - Ongoing tax audits in Germany, the U.S, and other jurisdictions could result in **unfavorable adjustments and additional tax payments**[99](index=99&type=chunk) - Collectability of accounts receivable, especially from government institutions, can be affected by payment behavior, **potentially impacting business and results of operations**[100](index=100&type=chunk) [Risks Relating to Our Financial Condition and Our Securities](index=23&type=section&id=Risks%20relating%20to%20our%20financial%20condition%20and%20our%20securities) The Company's substantial consolidated debt poses risks to fulfilling obligations, implementing strategy, and paying dividends Consolidated Financial Position (December 31, 2021) | Indicator | Amount (in €M) | | :--- | :--- | | Consolidated Debt (including lease liabilities) | 13,320 | | Consolidated Total Shareholders' Equity | 13,979 | - **High indebtedness** increases vulnerability to adverse economic conditions, limits financing for growth and dividends, and could necessitate asset disposals[102](index=102&type=chunk)[103](index=103&type=chunk) - Fresenius SE's **32.2% ownership** and control of the General Partner grants it **de facto management control**, limiting public shareholder influence[106](index=106&type=chunk)[107](index=107&type=chunk) - As a 'foreign private issuer,' the Company is exempt from certain detailed U.S federal securities laws, which may **adversely affect the market prices for its securities**[108](index=108&type=chunk)[109](index=109&type=chunk) [Item 4. Information on the Company](index=24&type=section&id=Item%204.%20Information%20on%20the%20Company) This section provides comprehensive information about the Company, covering its history, business, organizational structure, and properties [Item 4.A. History and Development of the Company](index=24&type=section&id=Item%204.A.%20History%20and%20development%20of%20the%20Company) The Company, incorporated in 1996, transformed into a partnership limited by shares in 2006 and has engaged in share buy-back programs - The Company was incorporated on August 5, 1996, and transformed into a partnership limited by shares (KGaA) on February 10, 2006[111](index=111&type=chunk)[113](index=113&type=chunk) - The transformation resulted from a reorganization where Fresenius SE contributed its dialysis business and merged with W.R Grace & Co.'s dialysis business[112](index=112&type=chunk) - The AGM renewed the authorization for a share buy-back program for five years, expiring on May 19, 2026[114](index=114&type=chunk) [Item 4.B. Business Overview](index=26&type=section&id=Item%204.B.%20Business%20overview) This section details the Company's core business as the world's leading provider of renal disease products and services - Fresenius Medical Care is the **world's leading provider of products and services** for individuals with renal diseases, based on publicly reported revenue and number of patients treated[119](index=119&type=chunk) - The Company provides dialysis care and related services for ESKD patients and develops, manufactures, and distributes a wide variety of healthcare products[119](index=119&type=chunk) Major Categories of Revenue (in €M) | Category | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Health Care Services | 13,876 | 14,114 | 13,872 | | Health Care Products | 3,743 | 3,745 | 3,605 | | **Total** | **17,619** | **17,859** | **17,477** | U.S. Patient Service Revenue by Payor (Percentage) | Payor Type | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Medicare program | 39.0 % | 45.0 % | 47.5 % | | Private / alternative payors | 50.5 % | 44.3 % | 42.2 % | | Medicaid and other government sources | 5.1 % | 5.3 % | 5.0 % | | Hospitals | 5.4 % | 5.4 % | 5.3 % | | **Total** | **100.0 %** | **100.0 %** | **100.0 %** | [Our Business](index=26&type=section&id=Our%20business) The Company is the global leader in renal disease products and services, with total revenue of €17,619 million in 2021 - The Company is the world's leading provider of products and services for individuals with renal diseases[119](index=119&type=chunk) Total Revenue by Category (in €M) | Category | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Health Care Services | 13,876 | 14,114 | 13,872 | | Health Care Products | 3,743 | 3,745 | 3,605 | | **Total** | **17,619** | **17,859** | **17,477** | U.S. Patient Service Revenue Distribution (2021) | Payor Type | Percentage | | :--- | :--- | | Private / alternative payors | 50.5 % | | Medicare program | 39.0 % | | Medicaid and other government sources | 5.1 % | | Hospitals | 5.4 % | | **Total** | **100.0 %** | [Our Services, Products and Business Processes](index=27&type=section&id=Our%20services%2C%20products%20and%20business%20processes) This section details the Company's comprehensive offerings for ESKD patients, including dialysis treatments, clinics, and healthcare products - The Company offers health care services and products in around 150 countries, focusing on in-center hemodialysis, peritoneal dialysis, home hemodialysis, and acute dialysis[125](index=125&type=chunk)[127](index=127&type=chunk) Patients with Chronic Kidney Failure (ESKD) Worldwide | Category | December 31, 2021 | % of Total (2021) | December 31, 2020 | % of Total (2020) | | :--- | :--- | :--- | :--- | :--- | | Patients with chronic kidney failure | 4,644,000 | 100 % | 4,547,000 | 100 % | | of which patients with transplants | 890,000 | 19 % | 865,000 | 19 % | | Of which dialysis patients | 3,754,000 | 81 % | 3,682,000 | 81 % | | In-center hemodialysis | 3,306,000 | 71 % | 3,245,000 | 71 % | | Peritoneal dialysis | 424,000 | 9 % | 413,000 | 9 % | | Home hemodialysis | 24,000 | 1 % | 24,000 | 1 % | - The worldwide number of dialysis patients rose by approximately **2% in 2021**, with lower growth rates primarily due to COVID-19 related excess mortality[129](index=129&type=chunk) - Hemodialysis is the most common therapy (**88% of dialysis patients in 2021**), with home dialysis accounting for 12% globally and 14% in the U.S[131](index=131&type=chunk) [Dialysis Treatment Options for ESKD](index=28&type=section&id=Dialysis%20treatment%20options%20for%20ESKD) This section outlines the primary treatments for ESKD: dialysis and kidney transplantation, with dialysis being the most common - ESKD is treated by dialysis (hemodialysis and peritoneal dialysis) or kidney transplantation, with **dialysis being the primary method** due to organ scarcity[125](index=125&type=chunk)[126](index=126&type=chunk) - Hemodialysis involves blood cleansing via a dialyzer, typically three times a week in clinics, while peritoneal dialysis is often self-administered at home daily[132](index=132&type=chunk)[133](index=133&type=chunk)[134](index=134&type=chunk)[135](index=135&type=chunk) - The worldwide number of dialysis patients increased by approximately **2% in 2021**, reaching **3.75 million**, with 88% undergoing hemodialysis and 12% home dialysis[126](index=126&type=chunk)[129](index=129&type=chunk)[131](index=131&type=chunk) [Health Care Services](index=30&type=section&id=Health%20care%20services) The Company provides dialysis treatment and related services through a global network of 4,171 outpatient clinics - The Company operates a global network of **4,171 outpatient dialysis clinics** (2021) providing hemodialysis and related services[136](index=136&type=chunk) - Services include administering ESAs to treat anemia in ESKD patients and providing materials, training, and support for home dialysis patients[137](index=137&type=chunk)[138](index=138&type=chunk) - Dialysis services are also provided under contract to hospitals for hospitalized ESKD and acute kidney failure patients[138](index=138&type=chunk) [Other Health Care Services](index=30&type=section&id=Other%20health%20care%20services) The Company offers pharmacy services, vascular access centers, and engages in value and risk-based care programs - Other services include pharmacy services, physician office-based vascular access centers, and specialty outpatient surgery centers, mainly in the U.S[139](index=139&type=chunk)[140](index=140&type=chunk) - The Company participates in value and risk-based care programs, such as CMS's Comprehensive Kidney Care Contracting (CKCC) model, assuming financial risk for managing care[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) - Internationally, the Asia-Pacific Segment offers ambulant treatment services, including day hospitals in Australia and renal hospitals in China[146](index=146&type=chunk) [Health Care Products](index=32&type=section&id=Health%20care%20products) The Company is the world's largest manufacturer of hemodialysis equipment and second largest for peritoneal dialysis products - The Company is the **world's largest manufacturer of hemodialysis equipment** and second largest for peritoneal dialysis products, with health care products representing **21% of consolidated total revenue** in 2021 and 2020[147](index=147&type=chunk) Health Care Product Revenue Breakdown (in €M) | Product Category | 2021 Total Product Revenues | % of Total (2021) | 2020 Total Product Revenues | % of Total (2020) | 2019 Total Product Revenues | % of Total (2019) | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Hemodialysis products | 3,036 | 81 % | 3,027 | 81 % | 2,941 | 82 % | | Peritoneal dialysis products | 374 | 10 % | 383 | 10 % | 375 | 10 % | | Other | 333 | 9 % | 335 | 9 % | 289 | 8 % | | **Total** | **3,743** | **100 %** | **3,745** | **100 %** | **3,605** | **100 %** | - Product offerings include advanced hemodialysis machines, dialyzers, home dialysis systems, acute dialysis products, and renal pharmaceuticals[149](index=149&type=chunk)[150](index=150&type=chunk)[151](index=151&type=chunk)[155](index=155&type=chunk)[156](index=156&type=chunk)[163](index=163&type=chunk)[164](index=164&type=chunk)[167](index=167&type=chunk)[168](index=168&type=chunk)[169](index=169&type=chunk)[170](index=170&type=chunk)[171](index=171&type=chunk)[172](index=172&type=chunk)[173](index=173&type=chunk)[174](index=174&type=chunk) [Major Markets and Competitive Position](index=37&type=section&id=Major%20markets%20and%20competitive%20position) The global dialysis market was estimated at €79 billion in 2021, with the Company holding a leading position in both services and products - The global dialysis market was estimated at **€79 billion in 2021**, comprising €15 billion in products and €64 billion in services[177](index=177&type=chunk) - The Company is the world's leading provider of dialysis services, with approximately **9% market share** of the global dialysis patient population in 2021[178](index=178&type=chunk) - The Company is also the global market leader for dialysis products, holding a **36% market share in 2021**, including **42% of the global hemodialysis product market**[178](index=178&type=chunk)[179](index=179&type=chunk) - In the U.S, the Company treats approximately **37% of all dialysis patients**, with home dialysis treatments increasing to about 15% in 2021[181](index=181&type=chunk) - Major competitors in dialysis services include DaVita, Diaverum, and B Braun, while product competitors include Baxter, Asahi Kasei Medical, and Medtronic[184](index=184&type=chunk)[190](index=190&type=chunk) [Our Strategy and Competitive Strengths](index=40&type=section&id=Our%20strategy%20and%20competitive%20strengths) The Company's 'Strategy 2025' aims to provide holistic healthcare for chronically and critically ill patients across the renal care continuum - The Company's vision is 'Creating a future worth living For patients Worldwide Every day' by offering high-quality products and outstanding healthcare[189](index=189&type=chunk) - **'Strategy 2025'** focuses on providing healthcare across the renal care continuum, including new renal care models, value-based care, and future innovations[193](index=193&type=chunk)[194](index=194&type=chunk)[195](index=195&type=chunk)[196](index=196&type=chunk) - The **FME25 Program** transforms the operating model into two global segments (Care Enablement and Care Delivery) to optimize growth and capital allocation[200](index=200&type=chunk)[201](index=201&type=chunk) - Sustainability is integrated into the strategy, with new climate targets to be **climate neutral by 2040** and reduce Scope 1 and 2 emissions by 50% by 2030[199](index=199&type=chunk)[231](index=231&type=chunk) [Customers, Marketing, Distribution and Service](index=42&type=section&id=Customers%2C%20marketing%2C%20distribution%20and%20service) The Company sells products to clinics and hospitals, utilizing a direct sales force and a global distribution system - Most products are sold to dialysis clinics, hospitals, and specialized treatment clinics, supported by a direct sales force and clinical nurses[202](index=202&type=chunk) - Distribution involves shipping from factories to central and regional warehouses, with direct delivery to customers and home patients[203](index=203&type=chunk)[204](index=204&type=chunk) [Sales of Dialysis Products to Iran](index=43&type=section&id=Sales%20of%20dialysis%20products%20to%20Iran) The Company conducts humanitarian-related business by selling dialysis products to independent Iranian distributors, complying with sanctions laws - The Company sells humanitarian dialysis products to Iran through German subsidiaries, complying with sanctions laws and benefiting from humanitarian exceptions[205](index=205&type=chunk) Sales to Iran (2021) | Metric | Amount | | :--- | :--- | | Sales of dialysis products | ~€6 M | | Operating income | €4.0 M | | % of total revenues | 0.03 % | - Most products were eventually sold to hospitals in Iran through state purchasing organizations affiliated with the Iranian Ministry of Health[206](index=206&type=chunk) [Patient, Physician and Other Relationships](index=43&type=section&id=Patient%2C%20physician%20and%20other%20relationships) The Company's success relies on referrals from physicians and other organizations, with medical directors overseeing patient care - Success depends on referrals from physicians, hospitals, and integrated care organizations, with medical directors overseeing patient care in dialysis clinics[207](index=207&type=chunk)[208](index=208&type=chunk) - Compensation for medical directors and contracted physicians is negotiated at fair market value, complying with federal and state anti-kickback statutes and Stark Law[208](index=208&type=chunk)[209](index=209&type=chunk)[211](index=211&type=chunk) - Many dialysis clinics are jointly owned with hospitals or physician groups, and while structured for compliance, these arrangements may not satisfy all safe harbor elements[212](index=212&type=chunk) [Capital Expenditures](index=45&type=section&id=Capital%20expenditures) Gross capital expenditures totaled €854 million in 2021, a decrease from prior years, while acquisitions and investments amounted to €628 million Capital Expenditures (Gross) by Segment (in €M) | Segment | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | **Capital expenditures for property, plant and equipment and capitalized development costs** | | | | | North America Segment | 400 | 536 | 567 | | EMEA Segment | 120 | 132 | 138 | | Asia-Pacific Segment | 50 | 77 | 59 | | Latin America Segment | 37 | 33 | 28 | | Corporate | 247 | 274 | 333 | | **Total** | **854** | **1,052** | **1,125** | | **Acquisitions, investments, purchases of intangible assets and investments in debt securities** | | | | | North America Segment | 526 | 252 | 2,111 | | EMEA Segment | 37 | 46 | 41 | | Asia-Pacific Segment | 13 | 24 | 43 | | Latin America Segment | 18 | 59 | 69 | | Corporate | 34 | 26 | 33 | | **Total** | **628** | **407** | **2,297** | [Acquisitions and Investments](index=45&type=section&id=Acquisitions%20and%20investments) Acquisitions, particularly of dialysis clinics, have been a significant growth driver for the Company - Acquisitions of healthcare businesses, especially dialysis clinics, have been a **significant factor in revenue and operating earnings growth**[215](index=215&type=chunk) - The Company is seen as a valuable strategic partner due to its experience in chronic disease management, quality improvement, and cost reduction[215](index=215&type=chunk) - Privatization of healthcare in Eastern Europe and Asia offers additional acquisition opportunities[215](index=215&type=chunk) [Procurement and Production](index=45&type=section&id=Procurement%20and%20production) The Company operates modern global facilities, leveraging proprietary processes and a centrally managed supply chain for competitive advantage - The Company operates modern development, production, and distribution facilities worldwide, utilizing proprietary processes and technologies for competitive advantage[216](index=216&type=chunk) - Key production facilities include Schweinfurt, Germany (HD machines), Ogden, Utah (dialyzers), and Reynosa, Mexico (bloodlines)[217](index=217&type=chunk)[218](index=218&type=chunk) - The GMQS division centrally manages procurement, manufacturing, and distribution, focusing on efficiency, cost optimization, and high quality/safety standards[219](index=219&type=chunk) [Quality Assurance and Quality Management in Dialysis Care](index=47&type=section&id=Quality%20assurance%20and%20quality%20management%20in%20dialysis%20care) The Company's clinics adhere to industry quality standards and use data management systems to monitor and improve patient outcomes - Clinics conform to industry quality standards such as KDOQI and KDIGO guidelines, using clinical data management systems for outcome evaluation[224](index=224&type=chunk) - North America, EMEA, and Latin America Segments implement various quality assurance committees and **ISO 9001:2015 certified Quality Management Systems**[225](index=225&type=chunk)[227](index=227&type=chunk)[229](index=229&type=chunk) - The ESRD quality incentive program in the U.S can **reduce Medicare payments by up to 2%** for facilities failing to meet annual quality standards[226](index=226&type=chunk) [Environmental Management](index=48&type=section&id=Environmental%20management) The Company launched a global environmental policy in 2021 and aims to achieve climate neutrality by 2040 - A global environmental policy was launched in 2021, and new climate targets were approved to achieve **climate neutrality by 2040** and a **50% reduction in Scope 1 and 2 emissions by 2030**[231](index=231&type=chunk) - Environmental Management Systems (EMS) based on **ISO 14001:2015** are in use in European production facilities and dialysis clinics[232](index=232&type=chunk)[233](index=233&type=chunk)[235](index=235&type=chunk) - Initiatives across regions include monitoring resource consumption, improving waste separation, and exploring renewable energy and recycling options[236](index=236&type=chunk)[237](index=237&type=chunk)[238](index=238&type=chunk)[239](index=239&type=chunk) [Patents and Licenses](index=49&type=section&id=Patents%20and%20licenses) The Company holds rights in over 10,000 patents and applications globally, covering various treatment systems and future technologies - The Company holds rights in **over 10,000 patents and patent applications** in major markets, covering various treatment systems and future technologies[240](index=240&type=chunk)[241](index=241&type=chunk) - Success depends significantly on technology, with proprietary know-how and continuous patent protection providing a competitive advantage[242](index=242&type=chunk) - Risks include patent infringement, invalidation claims by competitors, and technological advancements that could diminish the value of existing intellectual property[242](index=242&type=chunk) [Trademarks](index=49&type=section&id=Trademarks) The Company holds rights in over 3,500 trademarks worldwide, with 'Fresenius Medical Care' as its principal designation - The Company holds rights in **over 3,500 registered trademarks** or applications globally, with 'Fresenius Medical Care' as its primary brand[243](index=243&type=chunk) - The use of 'Fresenius' in its trademarks is under a perpetual, royalty-free license from Fresenius SE, the major shareholder[244](index=244&type=chunk) [Risk Management](index=49&type=section&id=Risk%20management) The Company's risk management system, based on the COSO framework, aims to identify, analyze, and evaluate potential business risks - The risk management system, based on the COSO framework, identifies, analyzes, and evaluates risks to business operations and implements countermeasures[244](index=244&type=chunk)[245](index=245&type=chunk)[247](index=247&type=chunk) - Activities include semi-annual risk identification and assessment by regional coordinators, review by corporate functions, and discussion in risk committees[248](index=248&type=chunk) - The effectiveness of the risk management system is monitored by the Audit and Corporate Governance Committee of the Supervisory Board[249](index=249&type=chunk) - Global Internal Audit conducts regular audits of departments, subsidiaries, and IT applications, focusing on compliance and cybersecurity[251](index=251&type=chunk)[254](index=254&type=chunk) [Internal Control and Risk Management System for the Company's Accounting Process](index=51&type=section&id=Internal%20control%20and%20risk%20management%20system%20for%20the%20Company's%20accounting%20process) The Company's internal control system over financial reporting is designed to ensure reliability in accordance with IFRS - The internal control system over financial reporting aims to provide reasonable assurance of reliable financial reporting and IFRS-compliant financial statement preparation[256](index=256&type=chunk) - It includes guidelines for accurate recording, automated/manual reconciliations, segregation of duties, and preventive/detective checks in finance processes[257](index=257&type=chunk)[258](index=258&type=chunk) - Compliance with U.S Sarbanes-Oxley Act Section 404 is maintained through yearly scoping, routine testing of control effectiveness, and quarterly certification processes[259](index=259&type=chunk)[260](index=260&type=chunk) - The system follows the COSO model (Internal Control – Integrated Framework 2013), with regular documentation, testing, and assessment[261](index=261&type=chunk) [Regulatory and Legal Matters](index=52&type=section&id=Regulatory%20and%20legal%20matters) The Company operates under extensive governmental regulation globally, covering healthcare services, product manufacturing, and data protection - Operations are subject to extensive governmental regulation globally, including U.S federal and state laws and international regulations like the EU Medical Device Regulation and GDPR[264](index=264&type=chunk)[266](index=266&type=chunk)[267](index=267&type=chunk) - **Non-compliance can result in loss of certifications/licenses**, monetary penalties, exclusion from government programs, and material adverse effects on business[265](index=265&type=chunk) - The COVID-19 pandemic has led to temporary regulatory waivers and modifications, with uncertain long-term impacts on the regulatory landscape[271](index=271&type=chunk)[272](index=272&type=chunk) - A comprehensive worldwide compliance program is in place to manage regulatory risks, but cannot guarantee protection from all violations[273](index=273&type=chunk)[274](index=274&type=chunk) [Regulatory and Compliance Overview](index=52&type=section&id=Regulatory%20and%20compliance%20overview) The Company's global operations are subject to extensive governmental regulations, with severe legal consequences for non-compliance - Operations are subject to extensive governmental regulation globally, covering areas like product approvals, facility licensure, billing accuracy, and data privacy[264](index=264&type=chunk)[266](index=266&type=chunk) - Failure to comply can result in loss of federal certifications/licenses, monetary penalties, product recalls, and exclusion from government reimbursement programs[38](index=38&type=chunk)[265](index=265&type=chunk) - Key U.S laws include the Anti-Kickback Statute, False Claims Act, Stark Law, and HIPAA, while international regulations include the EU Medical Device Regulation and GDPR[266](index=266&type=chunk)[267](index=267&type=chunk) - The ACA expanded the reach and enforcement authority of many healthcare laws, and future legislative changes could materially affect the business[270](index=270&type=chunk) [Product Regulation](index=54&type=section&id=Product%20regulation) The Company's products are subject to rigorous regulation by bodies like the U.S FDA and EU authorities - U.S pharmaceutical products are regulated by the FDA, requiring establishment registration, product listings, cGMP compliance, and adverse event reporting[275](index=275&type=chunk) - Outside the U.S, medicinal products are subject to national laws and EU directives, requiring marketing authorization based on proven quality, efficacy, and safety[276](index=276&type=chunk)[277](index=277&type=chunk)[278](index=278&type=chunk) - U.S medical devices are subject to FDA's Quality System Regulation (cGMP) and reporting requirements for adverse events and corrections/removals[280](index=280&type=chunk) - In Europe, the **EU Medical Device Regulation (MDR)**, applicable since May 2021, imposes higher safety standards and requires re-certification for medical devices[281](index=281&type=chunk)[282](index=282&type=chunk)[283](index=283&type=chunk) [Facilities and Operational Regulation](index=57&type=section&id=Facilities%20and%20operational%20regulation) The Company's global facilities are subject to extensive regulations concerning management, licensing, safety, and environmental standards - U.S operations are subject to federal, state, and local regulations (CMS, FDA, OSHA) covering facility management, licensing, safety, and quality assurance[295](index=295&type=chunk) - **Medicare/Medicaid certification** is required for healthcare centers, renal diagnostic support businesses, and laboratories to receive reimbursement[295](index=295&type=chunk) - COVID-19 led to temporary waivers and modifications of facility certification and licensing rules, which may result in long-term operational changes[297](index=297&type=chunk) - Non-U.S operations face diverse environmental and transportation regulations, as well as investment restrictions that affect corporate structure[298](index=298&type=chunk)[299](index=299&type=chunk) [Reimbursement](index=59&type=section&id=Reimbursement) Reimbursement for ESKD treatment varies globally, with Medicare's ESRD Prospective Payment System being a major source in the U.S - U.S Medicare's ESRD Prospective Payment System (PPS) reimburses dialysis facilities with a single payment per treatment, adjusted for patient characteristics and costs[307](index=307&type=chunk)[308](index=308&type=chunk) ESRD PPS Base Rate per Treatment | Year | Base Rate | | :--- | :--- | | CY 2022 | $257.90 (1.9% increase from 2021) | | CY 2021 | $253.13 | - Medicare payments are subject to a **2% sequestration**, temporarily suspended from May 2020 to March 2022, with full resumption from July 2022[312](index=312&type=chunk) - New Medicare payment models (ETC, KCF, CKCC) incentivize home treatment and kidney transplants, introducing financial risk for participants[333](index=333&type=chunk)[335](index=335&type=chunk) - Non-U.S healthcare systems vary, with reimbursement ranging from €70 to over €400 per treatment in Europe, and increasing focus on value-based payment programs[338](index=338&type=chunk)[339](index=339&type=chunk)[340](index=340&type=chunk)[341](index=341&type=chunk)[342](index=342&type=chunk)[343](index=343&type=chunk)[344](index=344&type=chunk) [Anti-Kickback Statutes, False Claims Act, Stark Law and Other Fraud and Abuse Laws in the United States](index=66&type=section&id=Anti-kickback%20statutes%2C%20False%20Claims%20Act%2C%20Stark%20Law%20and%20other%20fraud%20and%20abuse%20laws%20in%20the%20United%20States) The Company's U.S operations are subject to stringent federal and state fraud and abuse laws governing financial relationships - U.S operations are subject to federal and state fraud and abuse laws, including the Anti-Kickback Statute, False Claims Act, and Stark Law[349](index=349&type=chunk) - Government enforcement has increased, with expanded investigative authority and penalties, and the ACA made it easier to prove violations[350](index=350&type=chunk)[351](index=351&type=chunk) - CMS and OIG issued final rules in late 2020 to ease compliance burdens and promote coordinated care[352](index=352&type=chunk) [Health Care Reform](index=66&type=section&id=Health%20care%20reform) The ACA introduced broad healthcare reforms, and ongoing litigation and legislative proposals create uncertainty regarding future reimbursement systems - The ACA (2010) introduced reforms including private insurance access, Medicaid expansion, industry fees, and commercial insurance market reforms[353](index=353&type=chunk) - The **medical device excise tax was permanently repealed** in December 2019[354](index=354&type=chunk) - The individual mandate's tax penalty was reduced to zero in 2019, and the Supreme Court upheld the ACA's constitutionality in June 2021[323](index=323&type=chunk)[324](index=324&type=chunk)[356](index=356&type=chunk) - The Biden Administration aims to strengthen the ACA and Medicaid, potentially reversing previous policies on cost-sharing reduction payments and work requirements[357](index=357&type=chunk)[358](index=358&type=chunk)[361](index=361&type=chunk) [Item 4.C. Organizational Structure](index=69&type=section&id=Item%204.C.%20Organizational%20structure) This section presents a visual chart of the Company's organizational structure and its significant subsidiaries as of December 31, 2021 - The organizational structure and significant subsidiaries as of December 31, 2021, are presented[363](index=363&type=chunk) - Fresenius Medical Care Holdings, Inc conducts business as 'Fresenius Medical Care North America'[363](index=363&type=chunk) [Item 4.D. Property, Plant and Equipment](index=70&type=section&id=Item%204.D.%20Property%2C%20plant%20and%20equipment) This section lists the Company's principal facilities, including manufacturing plants, distribution centers, and administrative offices Principal Facilities Overview | Location | Floor area (approx. sq. meters) | Owned or leased | Lease expiration | Use | | :--- | :--- | :--- | :--- | :--- | | St. Wendel, Germany | 113,259 | leased | December 2026 | Manufacture of polysulfone membranes, dialyzers and peritoneal dialysis solutions; research and development | | Ogden, Utah, U.S. | 102,193 | owned | - | Manufacture of polysulfone membranes and dialyzers and peritoneal dialysis solutions; research and development | | Suzhou, China (Changshu Plant) | 83,808 | owned | - | Manufacture of hemodialysis bloodline sets & AV Fistula set, HD dialyzer and peritoneal dialysis solutions | | Biebesheim / Gernsheim, Germany | 65,000 | leased | December 2023 | Central distribution Europe, Asia-Pacific and Latin America | | L´Arbresle, France | 48,120 | owned | - | Manufacture of polysulfone dialyzers, special filters, dry & liquid hemodialysis concentrates, empty pouches, injection molding | | Schweinfurt, Germany | 38,100 | leased | December 2026 | Manufacture of hemodialysis machines and peritoneal dialysis cyclers; research and development | | Fukuoka, Japan (Buzen Plant) | 37,092 | owned | - | Manufacture of peritoneal dialysis bags and dialyzers | | Bogota, Colombia | 37,000 | owned | - | Manufacture of dry and liquid concentrates, CAPD and APD bags, intravenous solutions, empty Biofine bags | | Waltham, Massachusetts, U.S. | 36,473 | leased | April 2029 | Corporate headquarters and administration - North America | | Enstek, Malaysia | 28,778 | owned | - | Manufacture of peritoneal dialysis solutions and hemodialysis concentrate | | Fukuoka, Japan (Buzen Plant) - Site area for future expansion | 27,943 | owned | - | Manufacture of peritoneal dialysis bags and dialyzers | | Knoxville, Tennessee, U.S. | 27,637 | owned | - | Manufacture of peritoneal dialysis solutions | | Palazzo Pignano, Italy | 27,435 | owned | - | Manufacture of bloodlines and tubing, office | | São Paulo, Brazil | 24,755 | owned | - | Manufacture of hemodialysis concentrate solutions, dry hemodialysis concentrates, peritoneal dialysis bags, intravenous solutions bags, peritoneal dialysis and blood lines sets and warehouse | | Guadalajara, México | 24,234 | owned | - | Manufacture of saline, sodium citrate and liquid acids | | Oita, Japan (Inukai Plant) | 24,084 | owned | - | Manufacture of fiber bundles | | Tijuana, Mexico | 22,126 | leased | May 2024 / September 2026 | Manufacturing of NxStage System One equipment and related disposables | | Buenos Aires, Argentina | 20,020 | owned | - | Manufacture of hemodialysis concentrate solutions, dry hemodialysis concentrates and disinfectants | | Southaven, Mississippi, U.S. | 19,666 | leased | November 2035 | Clinical laboratory testing and administration | | Bad Homburg, Germany | 15,048 | leased | December 2026 / December 2029 | Corporate headquarters and administration | | Rockleigh, New Jersey, U.S. | 17,742 | leased | December 2028 | Clinical laboratory testing and administration | | Concord, California, U.S. | 17,015 | leased | June 2028 | Manufacture of hemodialysis machines and peritoneal dialysis cyclers; research and development; warehouse space | | Reynosa, Mexico | 15,746 | leased | November 2027 | Manufacture of bloodlines | | Vrsac, Serbia | 15,365 | owned | - | Administration, production and warehouse building | | Bad Homburg (OE), Germany | 10,300 | leased / owned | December 2026 | Manufacture of hemodialysis concentrate solutions / technical services / logistics services | - Most principal facilities in Germany are leased on a long-term basis from Fresenius SE or its affiliates[365](index=365&type=chunk) - The Company leases most of its dialysis clinics, manufacturing, laboratory, warehousing, distribution, and administrative/sales facilities globally[367](index=367&type=chunk) [Item 4A. Unresolved Staff Comments](index=71&type=section&id=Item%204A.%20Unresolved%20staff%20comments) This item is not applicable to the report [Item 5. Operating and Financial Review and Prospects](index=71&type=section&id=Item%205.%20Operating%20and%20financial%20review%20and%20prospects) This section provides a detailed analysis of the Company's operating results, financial position, and net assets - The Company's financial condition and results are sensitive to accounting methods, assumptions, and estimates[369](index=369&type=chunk) - The business is subject to risks and uncertainties that could cause actual results to differ materially from forward-looking statements[368](index=368&type=chunk) [I. Performance Management System](index=71&type=section&id=I.%20Performance%20management%20system) The Company's internal management system uses primary financial KPIs such as revenue, operating income, and ROIC - Primary KPIs for internal management from 2021 onwards include revenue, revenue growth, operating income, net income, net income growth, and Return on Invested Capital (ROIC)[376](index=376&type=chunk) - These metrics are presented in accordance with IFRS and at Constant Currency to show changes without currency fluctuations[376](index=376&type=chunk)[377](index=377&type=chunk) - **ROIC** is calculated as operating income after tax (NOPAT) to average invested capital, with adjustments for acquisitions, divestitures, and impairment losses[383](index=383&type=chunk) ROIC (excluding Impairment Loss and the Effect from IFRS 16) | Metric | 2021 | 2020 | | :--- | :--- | | Average invested capital | 23,512 €M | 23,183 €M | | NOPAT | 1,294 €M | 1,736 €M | | ROIC | 5.5 % | 7.5 % | - Secondary financial performance indicators include operating income margin, basic earnings per share growth, net cash from operating activities, and net leverage ratio[395](index=395&type=chunk)[396](index=396&type=chunk)[397](index=397&type=chunk)[399](index=399&type=chunk)[400](index=400&type=chunk)[401](index=401&type=chunk) [II. Financial Condition and Results of Operations](index=81&type=section&id=II.%20Financial%20condition%20and%20results%20of%20operations) This section provides an overview of the Company's financial performance, highlighting its leading market position and vertically integrated business model - The Company is the world's leading provider of renal disease products and services, with a vertically integrated business model[404](index=404&type=chunk) - The global dialysis market was approximately **€79 billion in 2021**, driven by factors like aging populations and rising incidence of kidney disease[404](index=404&type=chunk) - Approximately **79% of revenue is from healthcare services**, with **27% of consolidated revenue in 2021** from U.S federally-funded programs[411](index=411&type=chunk)[475](index=475&type=chunk) - Significant U.S reimbursement developments include the ESRD PPS, U.S Sequestration, and new Medicare payment arrangements[411](index=411&type=chunk)[413](index=413&type=chunk) - The **FME25 Program** is transforming the operating model into two global segments: Care Enablement (products) and Care Delivery (services)[407](index=407&type=chunk)[408](index=408&type=chunk)[410](index=410&type=chunk) [III. Results of Operations, Financial Position and Net Assets](index=82&type=section&id=III.%20Results%20of%20operations%2C%20financial%20position%20and%20net%20assets) This section summarizes the Company's consolidated and segment-specific results for 2021 compared to 2020 - The Company updated its strategy to 'Strategy 2025' to provide healthcare for chronically and critically ill patients across the renal care continuum[416](index=416&type=chunk) Consolidated Financial Performance (2021 vs. 2020) | Metric | 2021 (€M) | 2020 (€M) | Change (%) | Change at Constant Currency (%) | | :--- | :--- | :--- | :--- | :--- | | Total revenue | 17,619 | 17,859 | (1%) | 2 % | | Health care services | 13,876 | 14,114 | (2%) | 2 % | | Health care products | 3,743 | 3,745 | 0 % | 2 % | | Operating income | 1,852 | 2,304 | (20%) | (17%) | | Net income attributable to shareholders of FMC-AG & Co. KGaA | 969 | 1,164 | (17%) | (14%) | | Basic earnings per share (€) | 3.31 | 3.96 | (16%) | (14%) | - COVID-19-Related Impacts were estimated to reduce net income attributable to shareholders by approximately **€338 million in 2021**[432](index=432&type=chunk) - The **effective tax rate decreased to 22.4% in 2021** from 25.9% in 2020, driven by the prior year's non-deductible Impairment Loss[430](index=430&type=chunk) - Total employees (full-time equivalents) **decreased by 2% to 122,909** as of December 31, 2021, largely due to labor shortages in the North America Segment[434](index=434&type=chunk) [Results of Operations](index=83&type=section&id=Results%20of%20operations) This section presents the consolidated segment data for 2021 and 2020, highlighting the negative impact of currency fluctuations Segment Data (including Corporate) in €M | Metric | 2021 | 2020 | | :--- | :--- | | **Total revenue** | | | North America Segment | 12,088 | 12,478 | | EMEA Segment | 2,765 | 2,763 | | Asia-Pacific Segment | 2,010 | 1,894 | | Latin America Segment | 703 | 684 | | Corporate | 53 | 40 | | **Total** | **17,619** | **17,859** | | **Operating income** | | | North America Segment | 1,644 | 2,120 | | EMEA Segment | 309 | 412 | | Asia-Pacific Segment | 350 | 344 | | Latin America Segment | 12 | (157) | | Corporate | (463) | (415) | | **Total** | **1,852** | **2,304** | | Interest income | 73 | 42 | | Interest expense | (353) | (410) | | Income tax expense | (353) | (501) | | Net income | 1,219 | 1,435 | | Net income attributable to noncontrolling interests | (250) | (271) | | Net income attributable to shareholders of FMC-AG & Co. KGaA | 969 | 1,164 | Currency Development and Portion of Total Revenue and Operating Income (U.S. Dollars) | Metric | 2021 | 2020 | | :--- | :--- | | Currency development of euro against the U.S. dollar | negative impact | negative impact | | Percentage of revenue generated in U.S. dollars | 69 % | 70 % | | Percentage of operating income generated in U.S. dollars | 89 % | 92 % | [Year Ended December 31, 2021 Compared to Year Ended December 31, 2020](index=84&type=section&id=Year%20ended%20December%2031%2C%202021%20compared%20to%20year%20ended%20December%2031%2C%202020) Consolidated revenue decreased by 1% in 2021, while operating income decreased by 20%, driven by COVID-19 impacts and inflationary costs Consolidated Performance Indicators (2021 vs. 2020) | Metric | 2021 | 2020 | Change (As reported) | Change (Constant Currency) | | :--- | :--- | :--- | :--- | :--- | | Revenue in € M | 17,619 | 17,859 | (1%) | 2 % | | Health care services | 13,876 | 14,114 | (2%) | 2 % | | Health care products | 3,743 | 3,745 | 0 % | 2 % | | Number of dialysis treatments | 52,871,887 | 53,575,255 | (1%) | - | | Operating income in € M | 1,852 | 2,304 | (20%) | (17%) | | Net income attributable to shareholders of FMC-AG & Co. KGaA in € M | 969 | 1,164 | (17%) | (14%) | | Basic earnings per share in € | 3.31 | 3.96 | (16%) | (14%) | - Health care services revenue **decreased by 2%** (stable at Constant Exchange Rates) due to foreign currency translation and COVID-19-Related Impacts[421](index=421&type=chunk) - Gross profit **decreased by 8%** (-6% at Constant Exchange Rates) due to COVID-19-Related Impacts, inflationary costs, and higher personnel expenses[424](index=424&type=chunk) - SG&A expense **decreased by 1%** (+2% at Constant Exchange Rates) due to the absence of prior-year impairment loss and positive foreign currency translation[425](index=425&type=chunk) - Net interest expense **decreased by 24% to €280 million**, driven by lower interest rates, refinancing activities, and a release of interest accruals[429](index=429&type=chunk) - Net income attributable to shareholders **decreased by 17%** (-14% at Constant Currency), with COVID-19-Related Impacts estimated at **€338 million in 2021**[432](index=432&type=chunk) [North America Segment](index=86&type=section&id=North%20America%20Segment) The North America Segment's revenue decreased by 3% in 2021, while operating income decreased by 22% North America Segment Performance Indicators (2021 vs. 2020) | Metric | 2021 (€M) | 2020 (€M) | Change (As reported) | Change (Constant Currency) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 12,088 | 12,478 | (3%) | 0 % | | Health care services | 11,020 | 11,364 | (3%) | 0 % | | Health care products | 1,068 | 1,114 | (4%) | (1%) | | Number of dialysis treatments | 32,334,280 | 32,843,592 | (2%) | - | | Operating income | 1,644 | 2,120 | (22%) | (20%) | | Operating income margin | 13.6 % | 17.0 % | - | - | - Health care services revenue remained stable at Constant Exchange Rates, despite negative foreign currency translation and a revenue recognition adjustment reversal[437](index=437&type=chunk) - Operating income **decreased by 22%** (-20% at Constant Exchange Rates) due to COVID-19 impacts, inflationary costs, and higher personnel expenses[440](index=440&type=chunk) [EMEA Segment](index=87&type=section&id=EMEA%20Segment) The EMEA Segment's health care service revenue increased by 1% in 2021, while operating income decreased by 25% EMEA Segment Performance Indicators (2021 vs. 2020) | Metric | 2021 (€M) | 2020 (€M) | Change (As reported) | Change (Constant Currency) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 2,765 | 2,763 | 0 % | 1 % | | Health care services | 1,379 | 1,365 | 1 % | 2 % | | Health care products | 1,386 | 1,398 | (1%) | 0 % | | Number of dialysis treatments | 9,885,319 | 10,189,373 | (3%) | - | | Operating income | 309 | 412 | (25%) | (25%) | | Operating income margin | 11.2 % | 14.9 % | - | - | - Health care service revenue **increased by 1%** (+2% at Constant Exchange Rates) due to acquisitions and organic growth, despite COVID-19-Related Impacts[443](index=443&type=chunk) - Operating income **decreased by 25%** (-25% at Constant Exchange Rates) due to inflationary cost increases, COVID-19-Related Impacts, and FME25 Program costs[446](index=446&type=chunk) [Asia-Pacific Segment](index=87&type=section&id=Asia-Pacific%20Segment) The Asia-Pacific Segment's revenue increased by 7% in 2021, and operating income increased by 2% Asia-Pacific Segment Performance Indicators (2021 vs. 2020) | Metric | 2021 (€M) | 2020 (€M) | Change (As reported) | Change (Constant Currency) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 2,010 | 1,894 | 6 % | 7 % | | Health care services | 942 | 876 | 7 % | 10 % | | Health care products | 1,068 | 1,018 | 5 % | 4 % | | Number of dialysis treatments | 4,766,472 | 4,660,875 | 2 % | - | | Operating income | 350 | 344 | 2 % | 3 % | | Operating income margin | 17.4 % | 18.1 % | - | - | - Health care services revenue **increased by 7%** (+10% at Constant Exchange Rates) due to organic growth (+9%) and acquisitions (+2%)[448](index=448&type=chunk) - Operating income **increased by 2%** (+3% at Constant Exchange Rates) due to business growth and recovery in elective procedures[451](index=451&type=chunk) [Latin America Segment](index=88&type=section&id=Latin%20America%20Segment) The Latin America Segment's revenue increased by 3% in 2021, and operating income shifted from a loss to a profit Latin America Segment Performance Indicators (2021 vs. 2020) | Metric | 2021 (€M) | 2020 (€M) | Change (As reported) | Change (Constant Currency) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 703 | 684 | 3 % | 16 % | | Health care services | 499 | 485 | 3 % | 18 % | | Health care products | 204 | 199 | 2 % | 11 % | | Number of dialysis treatments | 5,885,816 | 5,881,415 | 0 % | - | | Operating income | 12 | (157) | n.a. | n.a. | | Operating income margin | 1.7 % | (22.9%) | - | - | - Health care service revenue **increased by 3%** (+18% at Constant Exchange Rates) due to organic growth (+17%) and acquisitions (+2%)[453](index=453&type=chunk) - Operating income improved from a **€157 million loss in 2020 to a €12 million profit in 2021**, primarily due to the absence of the prior-year Impairment Loss[457](index=457&type=chunk) [IV. Financial Position](index=89&type=section&id=IV.%20Financial%20position) This section details the Company's financial position, including its financing strategy, liquidity sources, and cash flow activities - The Company's financing strategy aims for financial flexibility, risk management, and optimized financing costs, supported by a balanced debt maturity profile[459](index=459&type=chunk) Net Leverage Ratio (Non-IFRS Measure) | Metric | December 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Debt and lease liabilities (€M) | 13,320 | 12,380 | | Net debt (€M) | 11,838 | 11,298 | | Adjusted EBITDA (€M) | 3,563 | 4,140 | | Net leverage ratio | 3.3 | 2.7 | - Primary liquidity sources are cash from operating activities, short-term debt, and proceeds from long-term debt and divestitures[469](index=469&type=chunk)[476](index=476&type=chunk) Cash Flow Performance Indicators (in €M) | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Net cash provided by (used in) operating activities | 2,489 | 4,233 | 2,567 | | Capital expenditures, net | (829) | (1,036) | (1,113) | | Free cash flow | 1,660 | 3,197 | 1,454 | | Net cash provided by (used in) operating activities in % of revenue | 14.1 % | 23.7 % | 14.7 % | | Free cash flow in % of revenue | 9.4 % | 17.9 % | 8.3 % | - Net cash from operating activities decreased in 2021 due to nonrecurring payments received in 2020 under the Medicare Accelerated and Advance Payment Program[474](index=474&type=chunk) - Net cash used in investing activities was **€1,196 million in 2021**, primarily for capital expenditures (€854 million) and acquisitions (€434 million)[482](index=482&type=chunk) - Net cash used in financing activities was **€1,024 million in 2021**, mainly for debt repayments and dividend payments[485](index=485&type=chunk)[486](index=486&type=chunk) [V. Balance Sheet Structure](index=95&type=section&id=V.%20Balance%20sheet%20structure) Total assets increased by 8% to €34.4 billion at December 31, 2021, and the equity ratio improved to 41% - Total assets **increased by 8% to €34.4 billion** at December 31, 2021, with a 6% positive impact from foreign currency translation[497](index=497&type=chunk) - The **equity ratio increased to 41%** at December 31, 2021 (from 39% in 2020), driven by increased equity from currency translation and net income[498](index=498&type=chunk) Key Balance Sheet Ratios | Metric | December 31, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Total assets (€B) | 34.4 | 31.7 | | Equity ratio | 41 % | 39 % | | ROIC | 4.9 % | 5.8 % | [VI. Risk Matrix](index=95&type=section&id=VI.%20Risk%20Matrix) This section outlines the Company's risk assessment methodology, which evaluates the probability and potential impact of known risks - The Company's FY 2022 outlook is subject to risks and uncertainties that may materially impact its achievement[501](index=501&type=chunk) Risk Classification Matrix | Potential impact | Description of impact | Classification | Likelihood | | :--- | :--- | :--- | :--- | | Severe | Material negative impact | Almost certain | > 90% to 100 % | | Major | Significant negative impact | Likely | > 50% to 90 % | | Medium | Moderate negative impact | Possible | > 10% to 50 % | | Low | Small negative impact | Unlikely | 0% to 10 % | - Key risks include regulatory non-compliance, medical cost management, reimbursement changes, supply shortages, personnel retention, and cyber-attacks[504](index=504&type=chunk) [VII. Research and Development](index=97&type=section&id=VII.%20Research%20and%20development) The Company's R&D strategy focuses on innovative, high-quality, and cost-efficient products and renal therapies - R&D activities, centrally managed by GRD, focus on innovative, high-quality, and cost-efficient products and renal therapies to support 'Strategy 2025'[505](index=505&type=chunk)[507](index=507&type=chunk)[508](index=508&type=chunk) - Key innovations in 2021 included the FX CorAL dialyzer, Optiflux® Enexa™ F500 for heparin-free hemodialysis, and the VersiPD APD cycler[511](index=511&type=chunk)[512](index=512&type=chunk)[513](index=513&type=chunk) - R&D also advanced critical care solutions, in-center dialysis for emerging markets, and digitalization (VR training, connected care)[515](index=515&type=chunk)[516](index=516&type=chunk)[517](index=517&type=chunk)[518](index=518&type=chunk) - Investments in regenerative medicine through Unicyte AG and eGenesis are ongoing, with an additional **$25M investment in Humacyte, Inc in 2021**[519](index=519&type=chunk)[520](index=520&type=chunk)[521](index=521&type=chunk) R&D Expenditures and Resources | Metric | 2021 | 2020 | 2019 | | :--- | :--- | :--- | :--- | | Total R&D expenditures (€M) | 221 | 194 | 168 | | R&D employees (FTE) | 1,187 | 1,218 | 1,157 | | Number of patents | 10,048 | 11,223 | 10,658 | [VIII. Trend Information](index=100&type=section&id=VIII.%20Trend%20information) For information regarding significant business trends, refer to the 'Operating financial review and prospects' section [IX. Tabular Disclosure of Contractual Obligations](index=100&type=section&id=IX.%20Tabular%20disclosure%20of%20contractual%20obligations) Information on contractual obligations can be found in the 'Financial position' section of Item 5.B [Item 6. Directors, Senior Management and Employees](index=101&type=section&id=Item%206.%20Directors%2C%20senior%20management%20and%20employees) This section details the Company's corporate governance structure, including the General Partner, Management Board, and Supervisory Board [A. Directors and Senior Management](index=101&type=section&id=A.%20Directors%20and%20senior%20management) The Company's corporate bodies include the General Partner, its Supervisory Board, and the general meeting of shareholders - The Company's corporate bodies are the General Partner (Management AG), its Supervisory Board, and the general meeting of shareholders[527](index=527&type=chunk) - Management AG, a wholly-owned subsidiary of Fresenius SE, is the sole General Partner and manages the Company's affairs[527](index=527&type=chunk) - The General Partner's Supervisory Board, elected by Fresenius SE, appoints and supervises the General Partner's Management Board[531](index=531&type=chunk) General Partner's Supervisory Board Members | Name | Current Age | Position | | :--- | :--- | :--- | | Mr. Stephan Sturm | 58 | Chairman | | Dr. Dieter Schenk | 69 | Vice Chairman | | Mr. Rolf A. Classon | 76 | Member | | Ms. Rachel Empey | 45 | Member | | Mr. Gregory Sorensen, MD | 59 | Member | | Ms. Pascale Witz | 55 | Member | General Partner's Management Board Members | Name | Current Age | Position | Year term expires | | :--- | :--- | :--- | :--- | | Mr. Rice Powell | 66 | Chief Executive Officer and Chairman of the Management Board | 2022 | | Ms. Helen Giza | 54 | Chief Financial Officer and Chief Transformation Officer | 2022 | | Mr. William Valle | 61 | Management Board Member responsible for Care Delivery | 2025 | | Dr. Katarzyna Mazur-Hofsäß | 58 | Management Board Member responsible for Care Enablement | 2026 | | Franklin W. Maddux, MD | 64 | Global Chief Medical Officer | 2022 | [B. Compensation](index=105&type=section&id=B.%20Compensation) This section details the compensation of the General Partner, its Management Board members, and the Supervisory Board - The Compensation Report for 2021 was prepared in accordance with section 162 of the German Stock Corporation Act[558](index=558&type=chunk) - The General Partner receives annual compensation of **€120 thousand** for managing the Company's affairs and liability[566](index=566&type=chunk) - The 'Compensation System 2020+' for Management Board members includes fixed and variable components linked to financial and sustainability targets[570](index=570&type=chunk)[573](index=573&type=chunk) - The compensation structure for target total direct compensation is **29% base salary, 31% short-term incentive, and 40% long-term incentive**[582](index=582&type=chunk)[583](index=583&type=chunk) - Short-term incentive is based on revenue, operating income, net income, and sustainability criteria, with payouts capped at **120% of the target amount**[598](index=598&type=chunk) - Long-term incentive involves cash-settled Performance Shares with a three-year performance period, linked to revenue growth, net income growth, and ROIC[624](index=624&type=chunk) - The maximum total compensation for the CEO is **€12,000 thousand** or **$13,434 thousand**, and for other Management Board members, it is **€7,000 thousand** or **$7,836 thousand**[587](index=587&type=chunk) [C. Board Practices](index=146&type=section&id=C.%20Board%20practices) This section outlines the Company's board practices, including terms of office and the compensation system - The General Partner's Supervisory Board, assisted by the Human Resources Committee, determines the compensation of the Management Board[749](index=749&type=chunk) - The Audit and Corporate Governance Committee oversees accounting, financial reporting, internal audit, internal control systems, and risk management[751](index=751&type=chunk) - A Joint Committee advises on and approves certain extraordinary management measures and significant transactions[751](index=751&type=chunk) - A Nomination Committee prepares candidate proposals for the Supervisory Board[752](index=752&type=chunk) [D. Employees](index=148&type=section&id=D.%20Employees) As of December 31, 2021, the Company employed 122,909 full-time equivalents, a 2% decrease from 2020 Number of Employees (Full-Time Equivalents) by Major Category | Category | December 31, 2021 | December 31, 2020 | December 31, 2019 | | :--- | :--- | :--- | :--- | | North America Segment | 60,782 | 62,925 | 60,478 | | EMEA Segment | 20,156 | 20,826 | 20,103 | | Asia-Pacific Segment | 11,766 | 11,984 | 11,836 | | Latin America Segment | 11,652 | 11,640 | 10,469 | | Corporate | 18,553 | 17,989 | 17,773 | | **Total Company** | **122,909** | **125,364** | **120,659** | - The **2% decrease in total employees in 2021** is largely due to labor shortages in