credit relations presentation...credit relations presentation page 34 “fme, with a global network...

© Copyright

CREDIT RELATIONS PRESENTATION

MAY 2020

© Copyright

Safe harbor statement: This presentation includes certain forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Act of 1934, as amended. Forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy or might not even be anticipated. The Company has based these forward-looking statements on current estimates and assumptions which we believe are reasonable and which are made to the best of our knowledge. Actual results could differ materially from those included in the forward-looking statements due to various risk factors and uncertainties, including changes in business, economic or competitive conditions, changes in reimbursement, regulatory compliance issues, regulatory reforms, foreign exchange rate fluctuations, uncertainties in litigation or investigative proceedings, cyber security issues and the availability of financing. Given these uncertainties, readers should not put undue reliance on any forward-looking statements. These and other risks and uncertainties are discussed in detail in Fresenius Medical Care AG & Co. KGaA’s (FMC AG & Co. KGaA) Annual Report on Form 20-F under the heading “Forward-Looking Statements” and under the headings in that report referred to therein, and in FMC AG & Co. KGaA’s other reports filed with the Securities and Exchange Commission (SEC) and the Frankfurt Stock Exchange (Frankfurter Wertpapierbörse).

Forward-looking statements represent estimates and assumptions only as of the date that they were made. The information contained in this presentation is subject to change without notice and the company does not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable law and regulations.

If not mentioned differently the term net income refers to the net income attributable to the shareholders of Fresenius Medical Care AG Co. KGaA. The term EMEA refers to the region Europe, Middle East and Africa. Amounts are in Euro if not mentioned otherwise.

AGENDAMARKET OVERVIEW & STRATEGY

FINANCIALS

1

2

CREDIT HIGHLIGHTS3

DEMONSTRATING COMMITMENT TO PATIENT CARE

ENHANCING PATIENTS‘ CHOICE

With the acquisition of NxStage, we have expanded our offering in home dialysis, giving our patients more independence and quality of life.

MAINTAINING SUPERIOR CARE

In 2019, we continued to improve clinical quality and achieved the best result in the U.S. government‘s Five-Star dialysis clinics rating.

RAISING AWARENESS, PROVIDING SUPPORT

The Fresenius Medical Care Foundation is investing in innovative programs to help patients, families, and communities impacted by kidney disease.

LINKING RESEARCH AND PRACTICE

We aim to link research and therapy more closely and thus develop further enhanced therapies. To this end, we have established the Global Medical Office.

Credit Relations Presentation

FY 2019 | LEVERAGING OUR GLOBAL FOOTPRINT

NORTH AMERICA

2,579 clinics211,064 patients

LATIN AMERICA

234 clinics34,810 patients

EMEA


ASIA-PACIFIC


45 Production

sites worldwide

Products in

~150 countries

Services in

~50 countries

~121,000employees worldwide


FY 2019 | €17.5BN REVENUE

ASIA-PACIFIC

NORTH AMERICA

Product revenue

Service revenue

LATIN AMERICA

EMEA

Revenue Patients Clinics

€12.2bn ~211,000 ~2,600

~ % cc +3% +2%


€0.7bn ~34,800 ~230

+21% cc +6% +2%


€2.7bn ~66,000 ~800

+4% cc +2% +1%


€1.9bn ~33,000 ~400

+7% cc +5% +2%

70%of total revenue

4%of total revenue

15%of total revenue

11%of total revenue


Segment revenue and operating income FY 2019, number of patients and clinics as of YE 2019, yoy change

cc = at constant currency

0

1

2

3

4

5

2005

Patients

in m

illions

20151995 2000 2010 2020e 2025e

ORGANIC GROWTH DRIVERS INTACT

CAGR (2019 – 2025e)

Globally ~6%

Asia-Pacific ~7-9%

North America

Latin America ~3-4%

EMEA

Dialysis patients in 2025e:

~4.9 million Global patient number grew by 6% in 2019

Patient growth driven by:

▪ age, lifestyle and higher life expectancy

▪ increasing wealth and access to medical treatments

Internal estimates as of Dec. 31, 2019


MARKET POSITION| DIALYSIS SERVICES


211,064FME

DaVita

US Renal Care

North America

25,400

206,900

24,600

EMEA

Diaverum

FME

B. Braun

66,217

30,700

6,700

33,005FME

Nephroplus

B. Braun

14,000

Asia-Pacific

34,800

DaVita

FME

14,500

Latin-America

Baxter 10,900

Based on the latest Annual Reports of the respective companies as well as FME estimates

10%Global Market Share

Dialysis Services

According to our estimates, global dialysis services is a 66€b market. FME is the clear market leader treating around 10% of patients worldwide.

MARKET POSITION| DIALYSIS PRODUCTS

36%Global Market Share

Dialysis Products

The global dialysis products market has a market volume of around 14 €b.

Product Group FME Market Share

Hemodialysis Products 41%

Hemodialysis Dialyzers 44%

Hemodialysis Machines 51%

Peritoneal Dialysis Products 16%

Market shares according to the Annual Report 2019


STRATEGY – CORE COMPETENCIES

OPERATING OUTPATIENT FACILITIES

COORDINATING PATIENTS EFFICIENTLY

INNOVATING PRODUCTS

STANDARDIZING MEDICAL PROCEDURES


PRODUCTS DIALYSIS SERVICES

CARE COORDINATION

GLOBAL MARKET LEADER IN DIALYSIS

Pharmacy Rx

(Cardio-) Vascular Access

Physician Practice services

Health Plan

Outpatient facilities

▪ Innovate for enhancing patient care

▪ Market leading high quality products

▪ Solution selling

▪ Standardized medical procedures

▪ Enable best treatment outcomes

▪ Capture growth in developing markets

▪ Coordinating patients efficiently

▪ Data analytics & predictive modelling

▪ Develop & enhance value based care


Target 2022:15%+ of treatments in the U.S. performed in a home setting

▪ Invested into expansion of home treatments: Home training facilities, educational staff and materials along with scaling the distribution infrastructure

▪ Reducing Capex for De novo clinics

▪ Increasing awareness for early recognition of CKD to ensure smooth transition to dialysis

HOME STRATEGY ON TRACK

DIALYSIS TREATMENTS U.S.

12% 13%

2019

88%

2018

87%

15%+

85%

2022Target

Home In-Center

+17%

Numbers as per Q4 of the respective year


GLOBAL SUSTAINABILITY PROGRAM

Sustainability Decision Board

Management Board

Corporate Sustainability

Office

Corporate Sustainability Committee

GLOBAL ENVIRONMENTAL & SOCIAL GOVERNANCE

▪ 8 materiality areas identified and will be addressed

▪ Responsibility with the Sustainability Decision Board, headed by the CEO

▪ Involvement of senior representatives in all regions and global functions

Regional/ Functional

Teams

Business Segments

Global Sustainability Initiative

SupervisoryBoard



FINANCIALS

1

2

CREDIT HIGHLIGHTS3

Q1 2020 | UNDERLYING RESILIENCE

> Revenue growth of 9% supported by growth in all regions

> Positive Q1 earnings growth despite impact from COVID-19 pandemic

> Q1 earnings growth excl. COVID-19 pandemic impact would be at the top end of the 2020 guidance range

> Solid cash flow development

> 2020 financial targets confirmed



COVID-19 IMPACT

> Broad and early implementation of wide-ranging measures to ensure continuity

of care and reduce the risk of infection for patients and employees at increased

cost as important contribution to the healthcare system and society as a whole

> Pandemic did not cause any major disruptions to manufacturing facilities and

supply chain continuity

> While a sizable negative impact had to be adsorbed in Q1, there is no benefit

from the CARES Act included in Q1 reported results

> Cooperation with other providers in the U.S. to create isolation clinics and

dedicated shifts for infected patients

Q1 2020 | CONTINUED GROWTH

+1% Clinics

4,002

+5% Treatments

13,179,096

Quality remains on a consistently

high level

+4% Patients

348,703


Q1 2020€ million

Q1 2019€ million

Growthin %

Growthin %cc

Revenue 4,488 4,133 9 7

Operating income

555 537 3 1

Net income 283 271 4 2

Q1 2020 | STRONG REVENUE GROWTH CONTINUED

▪ 3.8% organic revenue growth

▪ Continued tailwind from FX effects

▪ Services and products contributing to growth

▪ Positive operating performance despite COVID-19 impact



ASIA-PACIFIC10%

Q1 2020 | ALL REGIONS CONTRIBUTE TO ORGANIC GROWTH

NORTH AMERICA € million

Revenue 3,186 10%

Organic growth 3%

EMEA € million

Revenue 679 4%

Organic growth 3%

ASIA-PACIFIC € million

Revenue 443 4%

Organic growth 2%

LATIN AMERICA € million

Revenue 168 4%

Organic growth 17%

▪ Organic revenue growth continues in all regions

▪ North America with highest growth contribution

4,488€m+4%

(Organic)


NORTH AMERICA71%

LATIN AMERICA 4%

EMEA

15%


North America: same market treatment growth relates to growth in the U.S.

Q1 2020 SERVICES | STRONG GROWTH DESPITE COVID-19

Drivers

+ Same market treatment growth

+ Contributions from acquisitions

+ Increase in dialysis days

− Closed or sold clinics


Revenue

Q1 2020€ million

Q1 2019€ million

Growthin %

Growthin %cc

Organic growth

in %

Same market treatment

growthin %

Health Care Services 3,595 3,317 8 7 4 3

North America 2,908 2,680 9 5 3 3

of which Care Coordination 337 308 9 6 9

EMEA 341 324 5 6 4 2

Asia-Pacific 218 199 10 8 6 6

of which Care Coordination 60 52 15 16 9

Latin America 121 114 5 29 20 5

3,595€m+4%(Organic)

LATIN AMERICA

3%

NORTH AMERICA81%

EMEA10%

ASIA-PACIFIC6%


Q1 2020 PRODUCTS | GROWTH IMPACTED BY COVID-19

Drivers

+ Acute care products

+ Renal pharmaceuticals

+ Disposables, esp. bloodlines

− Dialysis machines

893 €m+2%(Organic)

EMEA

38%

NORTH AMERICA32%

ASIA-PACIFIC25%

LATIN AMERICA5%

Revenue

Q1 2020€ million

Q1 2019€ million

Growthin %

Growthin %cc

Organic growth

in %

Health Care Products 893 816 10 9 2

Dialysis Products 864 797 9 8 1

North America 278 207 34 31 6

EMEA 314 310 1 1 0

Asia-Pacific 220 229 (4) (4) (4)

Latin America 47 47 2 14 11

Non-Dialysis Products 29 19 53 53 53



Q1 2020 | OPERATING INCOME GROWTH DESPITE COVID-19

COVID-19 impact

− Higher cost for

− Personal protective equipment

− Personnel expense

− Patient transportation

− Logistics

− Unfavorable effect on market valuations

Reported margin drivers

+ Lower costs for pharmaceuticals

+ Cardio vascular clinics divestiture

− Prior year reduction of a contingent consideration liability related to Xenios AG

372463

138

10195

77

616 711

Q1 2019 Q1 2020

648

%

Operating income in €m; % Operating income margin

Operating income excluding Corporate

NALatam Asia-Pac EMEA

12.9%

21.1%

22.1%

7.1%

14.5%

14.9%

17.3%

4.1%

Margin Margin13.0% 12.4%


Q1 2020 | STRONG CASH FLOW


Q1 2020€ million

Q1 2019€ million

Operating cash flow 584 76

in % of revenue 13.0 1.8

Capital expenditures, net (280) (199)

Free cash flow 304 (123)

Free cash flow after investing activities 272 (1,941)

CONFIRM 2020 TARGETS

REVENUE

(constant currency)

Mid to high single digit

growth rate

NET INCOME

(constant currency)

Mid to high single digit

growth rate

Excluding impact from COVID-19 and special items. Special items are effects that are unusual in nature and have not been foreseeable or not foreseeable in size or impact at the time of giving guidance.

2019: EUR 17,477m 2019: EUR 1,236m



FINANCIALS

1

2

CREDIT HIGHLIGHTS3

CREDIT HIGHLIGHTS

Sustainable revenue and EBITDA growth

Consistent cash generation

Proven track record of deleveraging

Broad mix of financing Instruments

Well-balanced maturity profile

Solid IG rating and strong access to capital markets


6.0 6.17.6

6.48.3

6.8

2015 2016 2017 2018

5.91

2019 Q1 2020

CONSISTENT CASH GENERATION

FREE CASH FLOW in % of revenue


OPERATING CASH FLOW in % of revenue

11.4 11.7 12.3 12.514.7

13.0

201820162015 2017

12.01

2019 Q1 2020

5.5 5.54.7

6.1 6.4 6.3

2016 20192015 20182017 Q1 2020

CAPEX (net) in % of revenue

1 Adjusted for FCPA related charges, the implementation of IFRS 16, the gain (loss) to divestitures of Care Coordination activities and the cost optimization costs. All effects from the acquisition of NxStage are excluded as well.

5.05.4

6.87.1 7.2

8.1

9.1 9.2

11.0 11.2

12.1

15.5

16.6

17.8

16.5

17.5

0.91.0

1.31.4 1.4

1.6

1.8 1.9

2.2 2.2 2.2

2.8

3.13.2

3.1

3.9

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Revenue in €b EBITDA in €b

SUSTAINABLE REVENUE AND EBITDA GROWTH

EBITDA 2012, 2015, 2017, 2018 excl. strategic/special charges/settlements and non-recurring items


CAGR 2004-19

Revenue 8.7%

EBITDA 10.4%

PROVEN TRACK RECORD OF DELEVERAGING

The respective ratio in 2012 is calculated excluding strategic charges / special items


Incl. IFRS 16

4.6

3.6

3.3

2.9

2.82.9

3.0

2.7

2.2

1.8

3.2

2.5

2.7

2.3

2.2

2.7

2.5

2.5

3.1

2.6

2.3

2.1

1.8

2.5

3.2

3.3

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 Q1 2020

LEASE LIABILITIES

33%

BROAD MIX OF FINANCING INSTRUMENTS

~€14.6 billion

USD57%

~€14.6 billion

EUR40%

BONDS35%

SYNDICATED LOANS12%

COMMERCIAL PAPER6%

OTHER9%

A/R FACILITY5%

Financing & Currency Mix as of March 31, 2020


OTHER3%

CAPITALIZATION AS OF MARCH 31, 2020

Balance outstanding in €m

% of total capitalization

Cash and cash equivalents 1,405

EUR Revolving credit facility 2017/2022 0 0.0%

USD Revolving credit facility 2017/2022 21 0.1%

USD term loan 2017/2022 1,095 3.5%

EUR term loan 2017/2022 280 0.9%

EUR term loan 2017/2020 400 1.3%

Total credit agreement debt 1,796 5.7%

EUR Bonds 2,550 8.1%

USD Bonds 2,510 8.0%

A/R Facility 662 2.1%

Commercial Paper 930 3.0%

Lease Liabilities 4,782 15.2%

Other debt less total debt issuance costs 1,347 4.3%

Total net debt and lease liabilities 13,172 41.8%

Market capitalization as of March 31, 2020 18,328 58.2%

Total capitalization 31,500 100.0%

LTM EBITDA as of March 31, 2020: €3,971 M


Total net debt to LTM EBITDA: 3.3

WELL BALANCED MATURITY PROFILE

Maturity profile presented as of March 31, 2020 based on utilization of major financing instruments, excluding the utilization of the commercial paper program (€930m)


€ million

456

893

639 650

365500

600

957

503

138

1,156

662

0

500

1,000

1,500

2,000

2020 2021 2022 2023 2024 2025 2026 2027 2028 2029

Bonds Syndicated Credit Agreement A/R Facility

Average Maturity: 2.8 years

STRONG ACCESS TO CAPITAL MARKETS

Major Financing Instruments

2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

Bonds €250m €800m$1.05b

€250m$1.5b

$900m €500m $500m€1.75b

SyndicatedLoans

$2.3b $3.85b $4.1b€700m

€1.35b$2.4b

$2.0bn

ConvertibleBonds

€400m

A/R Facility $700m $800m $800m $900m

Debt Investor PresentationCredit Relations Presentation

CURRENT RATINGS OVERVIEW

Standard & Poor‘s Moody’s Fitch

Corporate Credit Rating BBB Baa3 BBB

Outlook stable stable stable


“FME, with a global network of about 4,000 clinics, is the world's largest provider of dialysis services for patients suffering from end-stage renal disease. FME is also the world's leading provider of dialysis products such as hemodialysis machines, dialyzers, and related disposable products. With the recent acquisition of NxStage, FME is also a player in the expanding home-dialysis business.” S&P, May 23, 2019

“… [FME’s] rating is mainly supported by (1) the group's strong defensive business profile, (…) (2) strong market position as a leading vertically integrated provider of dialysis products and services globally; (3) favorable industry dynamics, driven by a growing share of older people in the population and an increase in lifestyle diseases, (...) and (4) recurring noncyclical nature of FMC's revenue (…).”Moody‘s, May 20, 2020

“The affirmation [of the rating] reflects FME's global leadership in the non-cyclical and structurally growing dialysis market across products and services, translating into robust profitability and resilient cash generation […]. FME stands out with its much larger size and stronger business diversification against other Fitch-rated companies in the healthcare and consumer sector […].”Fitch, May 5, 2020


EBITDA

Q1 2020 LTM€ million

FY 2019€ million

FY 2018€ million

Net income 1,461 1,439 2,226

+ Income tax expense 401 402 511

− Interest income (42) (62) (147)

+ Interest expense 468 491 448

+ Depreciation and amortization 1,590 1,553 725

+ Adjustments 93 110 (722)

Adjusted EBITDA (annualized) 3,971 3,933 3,041

Net leverage ratio (Net debt/EBITDA) 3.3 3.2 1.8

RECONCILIATION OF ANNUALIZED ADJUSTED EBITDA AND NET LEVERAGE RATIO TO THE MOST DIRECTLY COMPARABLE IFRS FINANCIAL MEASURES

Adjustments: Acquisitions and divestitures made for the last twelve months with a purchase price above a €50 M threshold as defined in the Amended 2012 Credit Agreement (2020: €5 M; 2019: -€71 M; 2018: -€23 M), non-cash charges, primarily related to pension expense (2020: €46 M; 2019: €46 M; 2018: €45 M), impairment loss (2020: €42 M; 2019: €40 M; 2018: €65 M), (gain) loss related todivestiture of Care Coordination activities with a sales price above €50 M (2018: €-809 M) and NxStage related transaction costs (2019: €95 M).

DEBT

Q1 2020€ million

FY 2019€ million

FY 2018€ million

Debt

Short term debt 1,507 1,150 1,205

+ Short term debt from related parties 521 22 189

+ Current portion of long-term debt 1,965 1,447 1,107

+ Current portion of long-term lease liabilities 630 622

+ Current portion of long-term lease liabilities from related parties

17 17

+ Long-term debt, less current portion 5,803 6,458 5,045

+ Long-term lease liabilities, less current portion 4,030 3,960

+ Long-term lease liabilities from related parties, less current portion

104 106

Total debt and lease liabilities 14,577 13,782 7,546

− Cash and cash equivalents (1,405) (1,008) 2,146

Total net debt and lease liabilities 13,172 12,774 5,400

RECONCILIATION OF NON-IFRS FINANCIAL MEASURES TO THE MOST DIRECTLY COMPARABLE IFRS FINANCIAL MEASURES


OVERVIEW BONDS

Volumemillion

Coupon€ million

Coupon(in %)

Maturity ISIN(RegS)

WKN

FMC Finance VII S.A. €300 Fix 5.25 2011/21 XS0576395478 A1GLY6

Fresenius Medical Care US Finance, Inc $650 Fix 5.75 2011/21 USU31433AA03 A1GL0J

Fresenius Medical Care US Finance II, Inc. $500 Fix 4.125 2014/20 US35802XAH61 A1ZRTL

Fresenius Medical Care US Finance II, Inc. $700 Fix 5.875 2012/22 USU31434AC42 A1GZRF

Fresenius Medical Care US Finance II, Inc. $400 Fix 4.75 2014/24 US35802XAJ28 A1ZRTN

Fresenius Medical Care US Finance III, Inc.

$500 Fix 3.75 2019/29 USU3149FAA76 A2R3YR

Fresenius Medical Care AG & Co. KGaA €650 Fix 0.250 2019/23 XS2084510069 A255DU

Fresenius Medical Care AG & Co. KGaA €500 Fix 1.50 2018/25 XS1854532949 A2NBE6

Fresenius Medical Care AG & Co. KGaA €600 Fix 0.625 2019/26 XS2084497705 A255DV

Fresenius Medical Care AG & Co. KGaA €500 Fix 1.250 2019/29 XS2084488209 A255DW


CONTACTS

FME INVESTOR RELATIONS

Else-Kröner-Str. 1

61352 Bad Homburg v.d.H.Germany

TICKER: FME or FMS (NYSE)

WKN:578 580

ISIN:DE00057858002

ROBERT ADOLPH

Vice President Investor Relations

+49(0) [email protected]

PHILIPP GEBHARDT

DirectorInvestor Relations

[email protected]

DR. DOMINIK HEGER

Head of Investor Relations, Strategic Development & Communications | EVP

+49(0) [email protected]


credit relations presentation...credit relations presentation page 34 “fme, with a global network...

Documents