(Bloomberg) -- Fresenius Medical Care AG’s shares fell in early trading after the company reported second-quarter revenue that missed estimates as US patient-care volume disappointed.
Revenue for the quarter fell 1% to €4.77 billion ($5.2 billion), according to a statement Tuesday. Volume growth in the US “remains underwhelming,” Citi analysts said in a note.
The shares fell as much as 9% in Frankfurt, the most intraday since October. They had lost 1.4% this year through Monday’s close.
The company has struggled since the pandemic after experiencing setbacks including rising costs, staffing shortages and a higher-than-normal rate of deaths among the company’s dialysis patients, many of whom are vulnerable to severe infections. Chief Executive Officer Helen Giza has sought to stabilize performance by accelerating cost cuts and tightening the portfolio of assets. The company has divested dialysis clinics in Latin America and Turkey along with a hospital group in Australia.
Obesity Drugs, Covid
A recent rise in Covid along with the flu, which can also hurt dialysis patients, had a meaningful impact on volumes in the first half of the year, Giza said in a call with journalists. The company now expects growth in the US market to be flat to 0.5% this year; it had earlier forecast growth of as much as 2%. Covid levels are expected to remain stable for the rest of the year.
Obesity drugs that can help some patients preserve kidney health are expected to have a neutral effect on Fresenius’ dialysis business, Giza said. Only some 5% of the company’s patients are on the drugs, which have high drop-out rates because of side effects and cost. While it will take a decade to see their full impact, the drugs could even increase Fresenius’ customer base, she said.
“These drugs offer cardiovascular benefit to our patients,” Giza said. “We should end up with a larger patient pool as well as a healthier patient pool.”
Business growth and reduced costs both contributed to performance in the care enablement segment that performs supply chain and commercial operations, regulatory and quality management and other functions. Operating income increased to €68 million in the unit.
Overall operating income in the quarter reached €425 million, ahead of the €414-million average of analysts’ estimates for the measure of adjusted profit. The company confirmed its midterm target of achieving an operating income margin of 10% to 14% by 2025, excluding the impact of portfolio changes.
--With assistance from Lisa Pham and Naomi Kresge.
(Updates with CEO comments from fourth paragraph.)
©2024 Bloomberg L.P.
