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Fresenius Medical (FMS) Q2 Earnings and Revenues Beat Estimates
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Fresenius Medical Care AG & Co. KGaA (FMS - Free Report) reported second-quarter 2023 adjusted earnings per share (EPS) of 32 cents, which beat the Zacks Consensus Estimate of 24 cents by 55.6%. The bottom line, however, declined 33.3% year over year.
Revenue Details
Revenues of $5.25 billion outpaced the Zacks Consensus Estimate by 1.2%. The company reported revenue growth of 1.4% year over year and 6% at constant currency (cc) as well as on an organic basis.
Segmental Details
In the second quarter, Fresenius Medical reported through two segments — Care Delivery and Care Enablement.
Care Delivery revenues rose 1% on a year-over-year basis and 6% at cc as well as on an organic basis.
Care Enablement revenues remained flat year over year, and up 6% at cc as well as on an organic basis.
New Operating Model
Fresenius Medical implemented a new operating model during the first quarter and started reporting under two new segments — Care Delivery and Care Enablement. This was a part of its transformation plan to return to a sustainable growth path.
Previously, the company used to report under Health Care Products and Health Care Services segments. The Care Delivery segment primarily consists of products earlier reported under the Health Care Services segment.
During the reported quarter, only 1.1% of Care Delivery revenues came from Health care products. Care Enablement generated more than 71.8% of its revenues from Health care products and the rest from Inter-segment sales — products that are transferred between the operating segments at fair market value.
2023 Outlook
Fresenius Medical maintained its outlook for revenues in 2023. The company expects revenues to grow at a low-to-mid single digit percentage rate. However, it lowered its operating income guidance following favorable earnings growth in the first half of 2023. The metric is now estimated to remain flat or decline by up to a low single-digit percentage rate (previously flat or down up to a high single-digit percentage rate).
Fresenius Medical Care AG & Co. KGaA Price, Consensus and EPS Surprise
FMS exited the second quarter on a decent note. Its results reflected improving treatment volumes as well as a stabilizing labor environment in the United States. A potential continuation of improvement in these two key factors will be beneficial for the company in the rest of 2023.
Overall price improvements also supported growth in the Care Enablement segment. While U.S. revenues continued to be hurt by FX impact, international sales improved.
Meanwhile, FMS’ newly implemented operating model led to operational improvements. The bottom line was hurt by inflationary cost increases in energy, material and personnel. These headwinds are likely to improve over the year that also gets reflected in the company’s operating outlook.
Zacks Rank and Stocks to Consider
Currently, Fresenius Medical carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories (ABT - Free Report) , Elevance Health, Inc. (ELV - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) .
Revenues of $9.98 billion outpaced the consensus mark by 2.9%.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.4%.
Elevance Health reported second-quarter 2023 adjusted EPS of $9.04, which beat the Zacks Consensus Estimate by 2.5%. Revenues of $43.38 billion surpassed the Zacks Consensus Estimate by 4.5%. The company currently carries a Zacks Rank #2.
ELV has a long-term estimated growth rate of 12.1%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 2.8%.
Intuitive Surgical reported second-quarter 2023 adjusted EPS of $1.42, which beat the Zacks Consensus Estimate by 7.6%. Revenues of $1.76 billion surpassed the consensus mark by 1.4%. The company currently carries a Zacks Rank #2.
ISRG has a long-term estimated growth rate of 14.5%. Its earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 4.2%.
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Fresenius Medical (FMS) Q2 Earnings and Revenues Beat Estimates
Fresenius Medical Care AG & Co. KGaA (FMS - Free Report) reported second-quarter 2023 adjusted earnings per share (EPS) of 32 cents, which beat the Zacks Consensus Estimate of 24 cents by 55.6%. The bottom line, however, declined 33.3% year over year.
Revenue Details
Revenues of $5.25 billion outpaced the Zacks Consensus Estimate by 1.2%. The company reported revenue growth of 1.4% year over year and 6% at constant currency (cc) as well as on an organic basis.
Segmental Details
In the second quarter, Fresenius Medical reported through two segments — Care Delivery and Care Enablement.
Care Delivery revenues rose 1% on a year-over-year basis and 6% at cc as well as on an organic basis.
Care Enablement revenues remained flat year over year, and up 6% at cc as well as on an organic basis.
New Operating Model
Fresenius Medical implemented a new operating model during the first quarter and started reporting under two new segments — Care Delivery and Care Enablement. This was a part of its transformation plan to return to a sustainable growth path.
Previously, the company used to report under Health Care Products and Health Care Services segments. The Care Delivery segment primarily consists of products earlier reported under the Health Care Services segment.
During the reported quarter, only 1.1% of Care Delivery revenues came from Health care products. Care Enablement generated more than 71.8% of its revenues from Health care products and the rest from Inter-segment sales — products that are transferred between the operating segments at fair market value.
2023 Outlook
Fresenius Medical maintained its outlook for revenues in 2023. The company expects revenues to grow at a low-to-mid single digit percentage rate. However, it lowered its operating income guidance following favorable earnings growth in the first half of 2023. The metric is now estimated to remain flat or decline by up to a low single-digit percentage rate (previously flat or down up to a high single-digit percentage rate).
Fresenius Medical Care AG & Co. KGaA Price, Consensus and EPS Surprise
Fresenius Medical Care AG & Co. KGaA price-consensus-eps-surprise-chart | Fresenius Medical Care AG & Co. KGaA Quote
Summing Up
FMS exited the second quarter on a decent note. Its results reflected improving treatment volumes as well as a stabilizing labor environment in the United States. A potential continuation of improvement in these two key factors will be beneficial for the company in the rest of 2023.
Overall price improvements also supported growth in the Care Enablement segment. While U.S. revenues continued to be hurt by FX impact, international sales improved.
Meanwhile, FMS’ newly implemented operating model led to operational improvements. The bottom line was hurt by inflationary cost increases in energy, material and personnel. These headwinds are likely to improve over the year that also gets reflected in the company’s operating outlook.
Zacks Rank and Stocks to Consider
Currently, Fresenius Medical carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Abbott Laboratories (ABT - Free Report) , Elevance Health, Inc. (ELV - Free Report) and Intuitive Surgical, Inc. (ISRG - Free Report) .
Abbott, carrying a Zacks Rank #2 (Buy) at present, reported second-quarter 2023 adjusted EPS of $1.08, which beat the Zacks Consensus Estimate by 3.8%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Revenues of $9.98 billion outpaced the consensus mark by 2.9%.
Abbott has a long-term estimated growth rate of 5.1%. ABT’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 12.4%.
Elevance Health reported second-quarter 2023 adjusted EPS of $9.04, which beat the Zacks Consensus Estimate by 2.5%. Revenues of $43.38 billion surpassed the Zacks Consensus Estimate by 4.5%. The company currently carries a Zacks Rank #2.
ELV has a long-term estimated growth rate of 12.1%. Its earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 2.8%.
Intuitive Surgical reported second-quarter 2023 adjusted EPS of $1.42, which beat the Zacks Consensus Estimate by 7.6%. Revenues of $1.76 billion surpassed the consensus mark by 1.4%. The company currently carries a Zacks Rank #2.
ISRG has a long-term estimated growth rate of 14.5%. Its earnings surpassed estimates in three of the trailing four quarters and missed once, delivering an average surprise of 4.2%.