Fresenius Medical Care AG(FMS) - 2021 Q4 - Earnings Call Transcript

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]