Fresenius Medical Care says profit may not grow until 2016

FRANKFURT: German kidney dialysis specialist Fresenius Medical Care (FMC) said investors may have to wait until 2016 for profit growth, as it cuts costs to counter pressure on reimbursement for dialysis treatments in the United States and amid a foray into new healthcare services.

FMC, which operates more than a third of the dialysis treatment centres in the United States, on Wednesday forecast net income to stagnate or grow by up to 5 percent in 2015 but to increase by 15-20 percent next year, based on current exchange rates prevailing at the beginning of 2015.

Analysts had on average hoped for net income growth of more than 12 percent this year and their expectations for an annual dividend of about 0.90 euros were also far ahead of FMC's proposed payout of 0.78 euros per share.

DZ Bank analyst Sven Kuerten described the outlook as rather disappointing; adding the forecast growth acceleration in 2016 "closes the gap to the estimates somewhat".

US state-run insurer Medicare changed the way it pays for medical services, giving clinic operators a financial incentive to reduce costs and use fewer drugs. Medicare no longer pays for individual services and drugs but instead makes lump-sum reimbursements per dialysis session.

In addition to cutting costs, FMC has embarked on buying a range of healthcare services companies in the so-called care coordination segment, seeking to offer a bundle of treatments for chronic kidney and cardiovascular disease to Medicare and private-sector insurers.

"The outlook reflects further operating cost investments within the Care Coordination segment for future growth," the company said.

Fourth-quarter net income of $335 million, down 4 percent, was broadly in line with analyst expectations.

German healthcare group Fresenius SE, which controls FMC, said separately it expected its adjusted net income to rise between 9 and 12 percent at constant currencies this year, helped by additional earnings from the purchase of new hospitals and demand for healthcare services.