FSMEP! EARNINGS REPORT!Fresenius Medical Care Reports 30% Gain in Net Income Before Special Charge for Full Year 1999
March 9, 2000 05:19 AM
BAD HOMBURG, Germany--(BW HealthWire)--March 9, 2000--
Fourth Quarter and Full Year Highlights
-- Total revenue rose 10% to $ 3,840 million for FY 1999
-- FY 1999 EPS before special charge increased 33% to US$ 2.15
-- FY 1999 Free Cash Flow was up 49% to US$ 202 million
-- Q4 total revenue increased by 12% currency adjusted
-- Q4 net income from continuing operations up 32% before special charge
Fresenius Medical Care AG CA:FME FMS , the world's largest provider of dialysis products and dialysis care, today announced for the fourth quarter ended December 31, 1999, a net income of US$ 45.6 million, or US$ 0.58 per share, before the special charge of US$ 11 million related to the final OIG Settlement. This represents a 32% increase in net income compared with net income from continuing operations of US$ 34.5 million, or US$ 0.43 per share, in the fourth quarter of 1998. Earnings per American Depository Receipt (ADR) were US$ 0.19 compared to $ 0.14 in the fourth quarter of 1998. Three ADRs are equivalent to one of the underlying shares.
Net revenue in the fourth quarter of 1999 rose 9% (12% currency adjusted) to US$ 1,008 million from US$ 922 million in the comparable period last year. Driving the strong revenue growth was a 10% rise in North America, and an 8% (19% currency adjusted) increase in International revenues. Dialysis Care revenue increased 8% (10% currency adjusted) to US$ 679 million in the fourth quarter. North American Dialysis Care revenue increased 10% in the fourth quarter of 1999. Revenue from Dialysis Products, which represents approximately one-third of total revenue, was US$ 329 million, up 11% (18% currency adjusted).
Earnings before interest and taxes (EBIT) before the special charge of US$ 11 million rose 11 % to $ 147 million in the fourth quarter. Earnings before interest, taxes, depreciation and amortization (EBITDA) before this special charge increased to US$ 222 million. This was 8% higher than in the fourth quarter of 1998. The EBITDA margin remained stable at 22% of revenue compared to the fourth quarter 1998.
Ben Lipps, Fresenius Medical Care's Chief Executive Officer, said, "The fourth quarter marks the successful conclusion to an exceptional year of significantly improved performance. Continued strong growth in Dialysis Care business was observed worldwide. The strong performance of our Dialysis Products business enabled us to expand our overall market share in both hemodialysis and peritoneal dialysis products."
1999 Marks a Successful Third Year of Operations
For the year ended December 31, 1999, Fresenius Medical Care reported net income of approximately US$ 170 million before a special charge after tax of US$ 419 million related to the final OIG settlement. This represented a 30% increase over net income from continuing operations of US$ 132 million in 1998. Earnings per share (EPS) for the year rose nearly 33% to US$ 2.15, or US$ 0.72 per ADR, compared to US$ 1.62, or US$ 0.54 per ADR, in the prior year.
Net revenue for the fiscal year 1999 increased 10% to US$ 3.8 billion (11% currency adjusted) from US$ 3.5 billion in 1998. Revenues grew by 10% in North America and 10% in International (14% currency adjusted) Dialysis Care revenues grew by 10% (11% currency adjusted) and Product revenues by 8% (11% currency adjusted). The increase in Dialysis Care was driven by a 9% internal revenue growth and a 1% contribution from acquisitions.
In 1999 EBIT grew by 15% to US$ 560 million in 1999 compared to US$ 489 million from the previous year. The EBIT margin improved 70 basis points from 13.9% to 14.6% in 1999. EBITDA before this special charge for the year 1999 was US$ 844 million, a 10% increase over EBITDA of US$ 768 million in 1998.
After the special pre-tax charge of US$ 601 million (US$ 419 million after tax) related to the final OIG settlement, EBITDA and EBIT were US$ 243 million and a loss of US$ 41 million respectively. The net income including this special charge was a loss of approximately US$ 249 million in 1999 and an EPS of US$ (3.15) or US$ (1.05) per ADR.
At the end of 1999, Fresenius Medical Care operated a total of 1,090 dialysis clinics worldwide. During the year, the Company opened 71 de novo clinics and selectively acquired 36 clinics worldwide. Internationally, 21 clinics were acquired primarily in Europe and in Latin America. This strong expansion reflects the Company's goal to expand its Dialysis Care business, leveraging on the successful product business in over 100 countries. In total, US$ 111 million was spent on acquisitions during 1999 versus US$ 265 million in 1998. Another US$ 160 million in capital expenditures was spent mainly on equipping and opening dialysis clinics and on expanding production capacities. On a worldwide basis, a total of 11.4 million dialysis treatments was provided, 9% above the number of treatments provided in 1998. The patient count at the end of fiscal 1999 was approximately 80,000.
Shareholders should participate in the increased profitability of the Company through an increase in the dividend. Based on the strong operational performance, before the special charge in 1999, the Managing Board proposed to the Supervisory Board a dividend distribution of Euro 0.69 (1.35 DM) per ordinary share and Euro 0.75 (DM 1.47) per preference share for shareholder approval at the annual meeting on May 30, 2000. The total dividend distribution is expected to be Euro 55 million or 33% of Fresenius Medical Care AG's consolidated net income of approximately US$ 170 million before the special charge.
Well positioned for the future
Fresenius Medical Care extended its position as an innovator in product and process technology. "We are committed to be the technology leader in both hemodialysis and peritoneal dialysis products," said Ben Lipps.
During 1999 Fresenius Medical Care successfully introduced in the International segment new products aimed to enhance new therapies with higher patient fluid exchange. In particular our new technologies ONLINEplusTM HDF (4008S/H) systems and online-priming, implemented in four new dialysis machines, allow the online preparation of such fluids. The combination of these technologies with our physiological dialysis monitoring (BTM, BVM, OCM) constitutes a unique therapeutically high quality approach. The successful development of other Polysulfone filters (HdF100S, Diasafe) contributed significantly to sales. The sleeposafe cycler TM has continued to show strong interest from doctors and patients. In 2000, we will introduce the 2008K for the U.S. market and continue to expand on product technology of our 4008S/H ONLINEplusTM systems. In addition we will also introduce a new class of dialyzers for the International and U.S. markets based on our Fresenius Polysulfone fiber. In the peritoneal dialysis products area we will launch the PremierTM Plus double bag system in the U.S. market and the Balance Biofine(R) bag in Europe.
"We are well positioned for the future and our capital structure facilitates growth opportunities. We signed definitive agreements to acquire the International and non-continental US operations of Total Renal Care Holdings, Inc.(TRC), and have recently announced the acquisition of Franconia Acquisition LLC which demonstrates our worldwide commitment to growing patient care presence", Ben Lipps stated.
Franconia Acquisition, LLC was acquired on March 2, 2000 by issuing around 8.97 million Preference shares. Franconia had a cash balance on the contribution date of US$ 350 million which is expected to support the acquisition program over an 18 month period. The acquisition of the Total Renal Care (TRC) International and non-continental U.S. business for US$ 161 million which will be included in the Franconia program adds approximately 5,100 patients in key countries such as Argentina, Italy, United Kingdom, Hawaii and Puerto Rico.
Fresenius Medical Care AG is the world's largest, integrated provider of products and services for individuals with chronic kidney failure, a condition that affects some 920,000 individuals worldwide. Through its network of 1,090 dialysis clinics in North America, Europe, Latin America and Asia-Pacific, Fresenius Medical Care provides dialysis treatment to approximately 80,000 patients around the globe. Fresenius Medical Care is also the world's leading provider of dialysis products, such as hemodialysis machines, dialyzers and related disposable products. For more information about Fresenius Medical Care, visit the company's website at fmc-ag.com.
This release contains forward-looking statements that are subject to various risks and uncertainties. Actual results could differ materially from those described in these forward-looking statements due to certain factors, including changes in business, economic and competitive conditions, regulatory reforms, foreign exchange rate fluctuations, uncertainties in litigation or investigative proceedings, the failure to realize anticipated tax deductions, and the availability of financing. These and other risks and uncertainties are detailed in Fresenius Medical Care AG's reports filed with the U.S. Securities and Exchange Commission. Fresenius Medical Care AG does not undertake any responsibility to update the forward-looking statements in this release.
Fresenius Medical Care AG
Statements of Earnings at current exchange rate
(in US-$ thousands except per share data)
Three Three Twelve Twelve
Months Months Months Months
Ended Ended Ended Ended
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
1999 1998 1999 1998
Continuing Operations
Net revenue
Dialysis Care $679,117 $626,301 $2,599,688 $2,358,577
Dialysis Products 329,304 295,473 1,240,741 1,147,099
----------- ---------- ---------- ----------
1,008,421 921,774 3,840,429 3,505,676
Cost of revenue 628,209 596,767 2,424,603 2,205,586
----------- ---------- ---------- ----------
Gross profit 380,212 325,007 1,415,826 1,300,090
Selling, general and
administrative 226,874 182,496 823,124 779,962
Research and development 6,505 10,069 32,488 31,150
Special charge related to
OIG investigations 11,000 601,000
--------- ---------- ---------- ----------
Operating income
(EBIT) 135,833 132,442 (40,786) 488,978
Interest (income)
expense, net 54,870 57,610 218,124 219,541
---------- ---------- ----------- ----------
Earnings before
income taxes 80,963 74,832 (258,910) 269,437
Income tax expense 41,851 39,844 (12,744) 135,366
Minority interest 555 492 2,378 2,454
----------- ------------ ----------- ---------
Income from continuing
operations $38,557 $34,496 ($248,544) $131,617
Net loss from discontinued
operations (105,897)
Net effect of accounting
changes prior year (6,589)
Net income (loss) $38,557 $34,496 ($248,544) $19,131
Continuing Operations
Earnings per share continuing
operations $0.49 $0.43 ($3.15) $1.62
Earnings per ordinary ADR
continuing operations $0.16 $0.14 ($1.05) $0.54
Operating income, Earnings before taxes,
Income from continuing operations and
Earnings per Share continuing operations
before special charge
Continuing Operations
Operating income (EBIT) $146,833 $132,442 $560,214 $488,978
Earnings before income
taxes $91,963 $74,832 $342,090 $269,437
Net income from continuing
operations $45,557 $34,496 $170,456 $131,617
Earnings per share $0.58 $0.43 $2.15 $1.62
Earnings per ordinary ADR $0.19 $0.14 $0.72 $0.54
-
Fresenius Medical Care AG Statements of Earnings at current exchange rate (in US-$ thousands except per share data)
Three Three Twelve Twelve Months Months Months Months Ended Ended Ended Ended Dec. 31, Dec. 31, Dec. 31, Dec. 31, 1999 1998 1999 1998 Segment and other information (in US-$ million)
Revenue North America $731 $664 $2,807 $2,563 International 278 258 1,033 943 ------- ------ ------- ------- Total revenue $1,008 $922 $3,840 $3,506 EBITDA North America $162 $150 $611 $549 International 64 60 243 228 Corporate (5) (4) (10) (9) EBITDA before special charge $222 $206 $844 $768 Special charge related to OIG investigations (11) (601) EBITDA after special charge $211 $206 $243 $768 Depreciation/Amortization $75 $74 $284 $279 Allowance for doubtful accounts $16 $2 $46 $56
Employees (Dec., 31) Full-time equivalents 29,318 27,423
Average weighted number of shares Ordinary shares 70,000,000 Preference shares 9,023,341
CONTACT: U.S. Contacts Fresenius Medical Care North America Heinz Schmidt Vice President Investor Relations Tel 1/800/662-1237, x4518 OR Office of Media Communications 1-800-370-3687
(Voluntary Disclosure: Position- Short; ST Rating- Strong Buy; LT Rating- Strong Buy)
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