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Fresenius Medical (FMS) Divests Businesses to Optimize Portfolio
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Fresenius Medical Care (FMS - Free Report) successfully executed several divestments in 2023, as part of its ongoing Portfolio Optimization Program. These strategic transactions signify a significant step toward reshaping the company's focus, aligning with its commitment to deliver sustainable growth and improve leverage ratios.
These divestments mark a milestone in Fresenius Medical's pursuit of strategic aspirations. By divesting non-core and dilutive assets, the company is realigning its portfolio to concentrate on businesses and markets with optimal strategic fit, substantial scale and potential for sustainable profitable growth.
Price Performance
Shares of Fresenius Medical have risen 20.9% in the past year against the industry’s 0.1% decline. The S&P 500 grew 21.9% in the same time frame.
Image Source: Zacks Investment Research
Key Divestments in 2023
Fresenius Medical successfully executed several key divestments in 2023, including the sale of its Argentina operations to Grupo Olmos and the divestment of National Cardiovascular Partners (NCP) outpatient cardiovascular clinics business in the United States. Additionally, the sale of Cura Day Hospitals Group in Australia to a consortium led by global alternative asset manager ICG awaits regulatory approval.
In aggregate, these divested assets encompass 127 facilities, over 4,500 employees, and more than 10,000 dialysis patients, with a total proforma revenue of around EUR 600 million in 2022. The anticipated net proceeds of approximately EUR 500 million from these divestments are expected to further fortify Fresenius Medical's financial position in 2024.
The company will receive net proceeds of EUR 135 million from the divestments in the fourth quarter of 2023, with the rest to be received in 2024. These divestments are likely to impact operating income by EUR 50 million in the fourth quarter.
Leveraging Divestment Proceeds
Fresenius Medical is poised to capitalize on the expected proceeds of approximately EUR 500 million from the divestments, intending to allocate these funds toward deleveraging. This financial discipline reflects the company's commitment to sound capital allocation, strengthening its financial position and creating value for shareholders.
Helen Giza, CEO of Fresenius Medical, highlights the significant progress made through recent divestitures. These strategic moves not only simplify the company's portfolio but also set the stage for even greater management focus in 2024. The execution of its strategic plan underscores a disciplined and stringent approach to capital allocation, ensuring the best interests of patients, employees, shareholders and all involved parties.
As Fresenius Medical continues to optimize its portfolio, it anticipates that all assets under review, if executed by the end of 2025, would have a negative impact of EUR 1.5 billion on 2025 revenues but a positive impact on the 2025 margin. This forward-looking strategy positions the company for sustained growth and resilience in the dynamic healthcare landscape.
Recent Update
In November, Fresenius Medical 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.
FMS complained that Tricare administrators reduced the rate of compensation paid for dialysis treatments per unpublished administrative actions. The recent agreement resolved the dispute underlying the complaint and concluded the litigation.
Fresenius Medical exited the third quarter on a dismal note. However, its results reflected strong organic growth on the back of 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.
Fresenius Medical currently 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 17.3%. 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 36.4% in the past year compared with the industry’s 9.6% growth.
Biodesix, carrying a Zacks Rank #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 17.9% in the past year compared with the industry’s 5.7% decline.
Integer Holdings, sporting a Zacks Rank of 2 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 41% in the past year against the industry’s 2.7% decline.
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Fresenius Medical (FMS) Divests Businesses to Optimize Portfolio
Fresenius Medical Care (FMS - Free Report) successfully executed several divestments in 2023, as part of its ongoing Portfolio Optimization Program. These strategic transactions signify a significant step toward reshaping the company's focus, aligning with its commitment to deliver sustainable growth and improve leverage ratios.
These divestments mark a milestone in Fresenius Medical's pursuit of strategic aspirations. By divesting non-core and dilutive assets, the company is realigning its portfolio to concentrate on businesses and markets with optimal strategic fit, substantial scale and potential for sustainable profitable growth.
Price Performance
Shares of Fresenius Medical have risen 20.9% in the past year against the industry’s 0.1% decline. The S&P 500 grew 21.9% in the same time frame.
Image Source: Zacks Investment Research
Key Divestments in 2023
Fresenius Medical successfully executed several key divestments in 2023, including the sale of its Argentina operations to Grupo Olmos and the divestment of National Cardiovascular Partners (NCP) outpatient cardiovascular clinics business in the United States. Additionally, the sale of Cura Day Hospitals Group in Australia to a consortium led by global alternative asset manager ICG awaits regulatory approval.
In aggregate, these divested assets encompass 127 facilities, over 4,500 employees, and more than 10,000 dialysis patients, with a total proforma revenue of around EUR 600 million in 2022. The anticipated net proceeds of approximately EUR 500 million from these divestments are expected to further fortify Fresenius Medical's financial position in 2024.
The company will receive net proceeds of EUR 135 million from the divestments in the fourth quarter of 2023, with the rest to be received in 2024. These divestments are likely to impact operating income by EUR 50 million in the fourth quarter.
Leveraging Divestment Proceeds
Fresenius Medical is poised to capitalize on the expected proceeds of approximately EUR 500 million from the divestments, intending to allocate these funds toward deleveraging. This financial discipline reflects the company's commitment to sound capital allocation, strengthening its financial position and creating value for shareholders.
Helen Giza, CEO of Fresenius Medical, highlights the significant progress made through recent divestitures. These strategic moves not only simplify the company's portfolio but also set the stage for even greater management focus in 2024. The execution of its strategic plan underscores a disciplined and stringent approach to capital allocation, ensuring the best interests of patients, employees, shareholders and all involved parties.
As Fresenius Medical continues to optimize its portfolio, it anticipates that all assets under review, if executed by the end of 2025, would have a negative impact of EUR 1.5 billion on 2025 revenues but a positive impact on the 2025 margin. This forward-looking strategy positions the company for sustained growth and resilience in the dynamic healthcare landscape.
Recent Update
In November, Fresenius Medical 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.
FMS complained that Tricare administrators reduced the rate of compensation paid for dialysis treatments per unpublished administrative actions. The recent agreement resolved the dispute underlying the complaint and concluded the litigation.
Fresenius Medical exited the third quarter on a dismal note. However, its results reflected strong organic growth on the back of 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.
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
Fresenius Medical currently 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 17.3%. 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 36.4% in the past year compared with the industry’s 9.6% growth.
Biodesix, carrying a Zacks Rank #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 17.9% in the past year compared with the industry’s 5.7% decline.
Integer Holdings, sporting a Zacks Rank of 2 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 41% in the past year against the industry’s 2.7% decline.