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Fresenius Medical (FMS) Ups '23 Outlook After Legal Settlement
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Fresenius Medical Care (FMS - Free Report) announced that it has resolved a legal dispute with the U.S. government related to the accounts receivable. Per the resolution, FMS entered into a final and legally binding settlement agreement, under which it will receive a payment from the U.S. government.
In 2019, Fresenius Medical filed a complaint against the United States to recover its payments for services provided to the U.S. Department of Defense under the Tricare program.
FMS complained that Tricare administrators reduced the rate of compensation paid for dialysis treatments per unpublished administrative actions. Tricare administrators acknowledged the unpublished administrative action but declined to change or abandon it. The recent agreement resolved the dispute underlying the complaint and concluded the litigation.
The Tricare program provides reimbursement for dialysis treatments and other medical care provided to members of the military services, their dependents and retirees.
Price Performance
Shares of FMS have risen 20.5% year to date against the industry’s 6.3% decline. The S&P 500 has increased 19.2% in the said time frame.
Image Source: Zacks Investment Research
Raised Outlook
Following the settlement agreement, Fresenius Medical expects a net positive impact on operating income of approximately 175 million euros ($191 million) in the fourth quarter of 2023. Although the impact is not specified, FMS expects its revenues to improve in the quarter.
On its third-quarter earnings call, FMS expected operating income to grow by a low-single-digit percentage rate. Following the settlement, the company now expects the same to increase 12-14% in fiscal 2023. All other elements of the previous 2023 outlook remain unchanged.
Recent Update
Fresenius Medical exited the third quarter on a dismal note. However, its results reflected strong organic growth on the back 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.
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, which also reflected in the company’s operating outlook.
In the first nine months of 2023, FMS generated EUR 232 million in savings by implementing initiatives under its FME25 transformation program. The company expects savings in the range of 250-300 million euros by 2023-end, and 650 million euros by 2025-end. These activities, along with the recent settlement, are likely to continue to improve the operating margin.
Currently, Fresenius Medical carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Biodesix (BDSX - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 18.3%. DVA’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 36.55%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have risen 30.6% year to date compared with the industry’s 1.6% growth.
Biodesix, carrying a Zacks Rank of 2 (Buy) at present, has an estimated growth rate of 32.3% for 2024. BDSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 9.76%.
Biodesix’s shares have lost 36.5% year to date compared with the industry’s 12.6% decline.
Integer Holdings, sporting a Zacks Rank of 1 at present, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 11.9%.
Integer Holdings’ shares have rallied 30.6% year to date against the industry’s 7.3% decline.
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Fresenius Medical (FMS) Ups '23 Outlook After Legal Settlement
Fresenius Medical Care (FMS - Free Report) announced that it has resolved a legal dispute with the U.S. government related to the accounts receivable. Per the resolution, FMS entered into a final and legally binding settlement agreement, under which it will receive a payment from the U.S. government.
In 2019, Fresenius Medical filed a complaint against the United States to recover its payments for services provided to the U.S. Department of Defense under the Tricare program.
FMS complained that Tricare administrators reduced the rate of compensation paid for dialysis treatments per unpublished administrative actions. Tricare administrators acknowledged the unpublished administrative action but declined to change or abandon it. The recent agreement resolved the dispute underlying the complaint and concluded the litigation.
The Tricare program provides reimbursement for dialysis treatments and other medical care provided to members of the military services, their dependents and retirees.
Price Performance
Shares of FMS have risen 20.5% year to date against the industry’s 6.3% decline. The S&P 500 has increased 19.2% in the said time frame.
Image Source: Zacks Investment Research
Raised Outlook
Following the settlement agreement, Fresenius Medical expects a net positive impact on operating income of approximately 175 million euros ($191 million) in the fourth quarter of 2023. Although the impact is not specified, FMS expects its revenues to improve in the quarter.
On its third-quarter earnings call, FMS expected operating income to grow by a low-single-digit percentage rate. Following the settlement, the company now expects the same to increase 12-14% in fiscal 2023. All other elements of the previous 2023 outlook remain unchanged.
Recent Update
Fresenius Medical exited the third quarter on a dismal note. However, its results reflected strong organic growth on the back 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.
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, which also reflected in the company’s operating outlook.
In the first nine months of 2023, FMS generated EUR 232 million in savings by implementing initiatives under its FME25 transformation program. The company expects savings in the range of 250-300 million euros by 2023-end, and 650 million euros by 2025-end. These activities, along with the recent settlement, are likely to continue to improve the operating margin.
Fresenius Medical Care AG & Co. KGaA Price
Fresenius Medical Care AG & Co. KGaA price | Fresenius Medical Care AG & Co. KGaA Quote
Zacks Rank & Stocks to Consider
Currently, Fresenius Medical carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are DaVita Inc. (DVA - Free Report) , Biodesix (BDSX - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .
DaVita, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated long-term growth rate of 18.3%. DVA’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 36.55%. You can see the complete list of today’s Zacks #1 Rank stocks here.
DaVita’s shares have risen 30.6% year to date compared with the industry’s 1.6% growth.
Biodesix, carrying a Zacks Rank of 2 (Buy) at present, has an estimated growth rate of 32.3% for 2024. BDSX’s earnings surpassed estimates in three of the trailing four quarters and missed the same in one, delivering an average surprise of 9.76%.
Biodesix’s shares have lost 36.5% year to date compared with the industry’s 12.6% decline.
Integer Holdings, sporting a Zacks Rank of 1 at present, has an estimated long-term growth rate of 15.8%. ITGR’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 11.9%.
Integer Holdings’ shares have rallied 30.6% year to date against the industry’s 7.3% decline.