Fresenius SE&Co. KGaA

The stable outlook reflects our expectation that, despite some near-term challenges from the pandemic, FSE's diversified and resilient business model supports strong recovery prospects. Despite our expectations for a material decline in EBITDA at FMC in 2021 due to excess mortality among dialysis patients from COVID-19, the group has sufficient financial flexibility to maintain adjusted debt to EBITDA below 4.0x, supported by solid annual DCF generation of over €1 billion. In our view, given the business' overall strength, a risk of rating downside mostly relates to a large unforeseen acquisition that would push FSE's adjusted leverage to about or above 4x, with little prospect of rapid deleveraging. In our view, this would highlight a deviation from the group's publicly stated

...FSE's 2020 results were at the stronger ends of our forecast ranges, supported by exceptional government-support measures in Germany and the U.S. For the fiscal year (FY) ended Dec. 31, 2020, FSE's credit metrics stood at the stronger ends of our forecast ranges, with S&P Global Ratings-adjusted debt to EBITDA of 3.6x, supported by exceptionally strong free operating cash flow (FOCF) of around 4.1 billion. These metrics compared with our base-case expectations of adjusted debt to EBITDA of 3.6x-3.8x and FOCF of over 2.5 billion. The strong performance was partly down to prompt and comprehensive government support measures in FSE's main large markets, the U.S. and Germany. In the U.S., advance Medicare payments for dialysis patients under the Coronavirus Aid, Relief, and Economic Security Act were a key pillar of FSE's large working capital inflows of about 1.28 billion. In Germany, Helios benefited from an initial flat daily fee of 560 per bed allocated for the treatment of COVID-19 patients,...

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