Fresenius SE&Co. KGaA

Overview Key strengths Key risks Large and diversified business within the broader health care industry, with solid underlying organic growth prospects across each business division. Near-term profitability pressure due to excess COVID-19 mortality rates among dialysis patients, investments in sustainably reducing the cost base, and the general cost inflationary environment. Leading position in the global dialysis market through the approximately 32%-owned subsidiary Fresenius Medical Care AG&Co. KGaA (FME). Ongoing competitive pressure at Kabi for IV drugs, and exposure to public funding and changes in reimbursement policies particularly at Helios. Strong player in intravenous (IV) drugs, with increasing focus on biosimilars and medical technology through subsidiary Fresenius Kabi (Kabi), and a leading player in German and Spanish private hospitals

...In 2021, Fresenius SE & Co. KGaA (FSE) performed broadly in line with our base-case expectations, seeing continued profitability erosion primarily from COVID-19 headwinds. Despite slightly higher revenue growth of 3.4% versus our expectations of 1%-2%, FSE's adjusted EBITDA margins dropped to 18.3%, translating into adjusted debt to EBITDA of 3.8x. Both profitability and leverage metrics were within our expectations. Expectedly, the drop in profit margins mainly reflected the continued excess mortality of dialysis patients and other operating cost increases from COVID-19 which affected FME, FSE's largest constituent. Both FSE and FME started the first investments linked to their respective cost and savings programs in 2021, which also weighed on profitability. The excess mortality continued to affect FME into 2021, with a spike in the third quarter (Q3). This led to overall treatment decline, which weighed on profitability. Elsewhere, Helios Germany was recovering from the effects of COVID-19...

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