Fresenius Medical Care AG(FMS) - 2020 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported strong revenue growth of 9% in Q1 2020, with earnings increasing despite the impacts from the COVID-19 pandemic [8][17][38] - Operating income improved by more than EUR 30 million to EUR 648 million, although the operating income margin declined by 60 basis points due to COVID-19 related costs [26][27] - Operating cash flow reached EUR 584 million, representing 13% of revenue, with free cash flow increasing significantly year-over-year to EUR 304 million [34][36] Business Line Data and Key Metrics Changes - Dialysis services and products both experienced growth, with organic growth of 3.8% overall [17][20] - The products business delivered strong reported growth of 10%, with organic growth of 2% despite the pandemic [20][21] - The home business is growing considerably, requiring fewer clinics to be built, contributing to a slower growth rate of clinical infrastructure at 1% [14][15] Market Data and Key Metrics Changes - North America contributed the highest growth in absolute terms with a 10% revenue increase, while EMEA, Asia Pacific, and Latin America followed with 4% growth [18][19] - In North America, same market growth continued with a 3% increase, despite closures as part of a cost optimization program [19] - Asia Pacific's growth of 6% was supported by an increase in the core dialysis business and Care Coordination [19] Company Strategy and Development Direction - The company remains focused on patient care, emphasizing the importance of providing life-saving treatments in a safe environment [10] - The management highlighted the resilience of the business model during the pandemic and confirmed targets for 2020, excluding COVID-19 impacts [9][37] - The company is optimizing its Care Coordination portfolio and has divested some clinics in North America, which positively contributed to margin development [28][30] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the underlying business fundamentals, despite the challenges posed by the pandemic [28][38] - The company anticipates that most COVID-19 related costs will be covered by government support, particularly from the CARES Act [38] - Future patient volumes and treatment demand remain uncertain, with management monitoring the situation closely [56] Other Important Information - The company has taken extensive measures to ensure the safety of patients and staff during the pandemic, including the use of personal protective equipment [11] - There were no disruptions in manufacturing facilities, and the supply chain remained functional despite global challenges [11] Q&A Session Summary Question: Clarification on guidance and CARES Act funding - Management confirmed that the guidance is inclusive of CARES funding and expects to receive it to cover additional costs incurred due to COVID-19 [44][45] Question: Impact of COVID-19 on patient volumes - Management noted that while there is uncertainty regarding future patient volumes, they are monitoring trends and expect potential increases in acute care demand due to COVID-19 related complications [56] Question: Drivers of Care Coordination growth - The growth in Care Coordination was driven by improved reimbursement rates for vascular care and effective pharmacy operations [60] Question: Status of commercial contracting discussions - Management indicated that discussions are ongoing, with varying perspectives among insurers regarding the management of dialysis patients [89]