Fresenius Medical Care AG & Co. KGaA Q2 2025 Earnings Report

Fresenius Medical Care AG & Co. KGaA EPS Results

• Actual EPS: $0.52
• Consensus EPS: $0.50
• Beat/Miss: Beat by +$0.02
• One Year Ago EPS: N/A

Fresenius Medical Care AG & Co. KGaA Revenue Results

• Actual Revenue: $5.54 billion
• Expected Revenue: $5.00 billion
• Beat/Miss: Beat by +$537.31 million
• YoY Revenue Growth: N/A

Fresenius Medical Care AG & Co. KGaA Announcement Details

• Quarter: Q2 2025
• Date: 8/5/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, August 5, 2025
• Conference Call Time: 8:00AM ET

Fresenius Medical Care AG & Co. KGaA (NYSE:FMS) is the world’s largest integrated provider of products and services for individuals with renal diseases. The company’s primary business activities encompass the operation of dialysis clinics and the manufacture and distribution of dialysis equipment, dialysis machines, dialyzers, consumables and related therapies. Through its global network of clinics, Fresenius Medical Care delivers comprehensive kidney care, including hemodialysis and peritoneal dialysis treatments, patient education and support services.

In its products segment, the company designs and produces dialysis machines, water treatment systems and disposables such as high‐flux dialyzers and bloodlines. These offerings are complemented by a range of pharmaceuticals, including anticoagulants and iron therapies, along with digital health solutions for remote patient monitoring and data management. By integrating clinical expertise with proprietary technology, Fresenius Medical Care aims to improve treatment outcomes and enhance patient quality of life.

Founded in 1996 as a spin‐off from the Fresenius SE healthcare group, Fresenius Medical Care is headquartered in Bad Homburg, Germany. The company maintains a presence in over 50 countries across North America, Europe, Latin America and the Asia Pacific region. Its global reach is supported by manufacturing facilities, research centers and a network of more than 4,000 dialysis clinics, serving hundreds of thousands of patients worldwide.

Fresenius Medical Care AG & Co. KGaA Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Organic revenue growth was 7% with contributions across all three segments and operating income rose 13%, driving margin expansion to 9.9% and a 75% increase in operating cash flow.
• Positive Sentiment: The SME25+ transformation program delivered €58 million in sustainable savings through Q2 toward its €180 million annual target, and net leverage improved to 2.7x, within the new 2.5–3x range.
• Positive Sentiment: A €1 billion share buyback program was initiated beginning in August under the new capital allocation framework to enhance shareholder returns.
• Negative Sentiment: US dialysis volumes were offset by higher patient outflows due to a severe flu season, leading to a revised assumption of flat to slightly positive same-market treatment growth for 2025.
• Neutral Sentiment: The newly reported Value Based Care segment saw 28% revenue growth but incurred a €9 million operating loss, with full-year earnings projected to be slightly negative to breakeven.

Presentation

[Operator]

Ladies and gentlemen, welcome to the Reporteron Second Quarter twenty twenty five Conference Call. I am Sandra, the Chorus Call operator. I would like to remind you that all participants are in listen only mode and the conference is being recorded. The presentation will be followed by a Q and A session. The conference must not be recorded for publication or broadcast.

[Operator]

At this time, it's my pleasure to hand over to Doctor. Dominik Hager. Please go ahead, sir.

[Dominik Heger, Executive VP and Head of Investor Relations, Strategic Development & Communications at Fresenius Medical Care]

Thank you, Sandra. I would like to welcome everyone to our earnings call for the 2025. As always, I would like to start out the call by mentioning our cautionary language that is in our safe harbor statement as well as in our presentation and in all the materials that we have distributed earlier today. For further details concerning risks and uncertainties, please refer to these documents and to our SEC filings. We will have sixty minutes for the call to give everyone the chance to ask questions.

[Dominik Heger, Executive VP and Head of Investor Relations, Strategic Development & Communications at Fresenius Medical Care]

We would like to limit the number of questions to two. It would be great if you could make this work as always. Let me now welcome Helen Gieser, CEO and Chair of the Management Board and Martin Fischer, our Chief Financial Officer. Helen, the floor is yours.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Thank you, Dominic. I'd also like to welcome everyone to the call. We appreciate you taking the time to join us today and for your continued interest in Fresenius Medical Care. Our second quarter results reflect continued improvement in our operational performance disciplined execution as we transform and strengthen our company. Building on this momentum, we are well positioned to embark on our next chapter, FME Reignite, which we outlined at our recent Capital Markets Day in June.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Through our clear ambition to lead kidney care through exceptional patient care and innovation, we are ready to unlock our full potential to reignite Fresenius Medical Care and reignite future growth. I will begin my prepared remarks on slide four. In the second quarter, we delivered strong organic revenue growth of 7% with positive contribution from all three operating segments. Our SME25 plus transformation program continued its momentum delivering €58,000,000 in additional sustainable savings of our targeted €180,000,000 for the year. We achieved 13% operating income growth, further driving margin expansion.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Our operating cash flow development increased by 75% and our net leverage ratio improved to 2.7 times, which is well within our new target leverage range of 2.5 to three times. The overall phasing of our earnings through the 2025 has developed well in line with our planning and we continue to expect accelerating earnings development in the second half of the year. Therefore, we are of course confirming our full year 2025 outlook. Given the strength of our cash flow profile and our belief that shareholders should meaningfully benefit in the success of our company, we announced at our Capital Markets Day that we will initiate a share buyback program of €1,000,000,000 initially, which will be executed in multiple tranches. We have planned to start with the first tranche already in August.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Going forward, our new capital allocation framework provides further opportunity for regular share buybacks. This is a key component of our strategy to reignite value creation and with that shareholder returns. Turning to slide five. Here, I would like to highlight recent developments in each of our now three operating segments. Beginning with Care Delivery.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

In The U. S, the stable volume development reflects strong and accelerating patient inflow dynamics, which have been unfortunately offset by higher than expected patient outflows due to the very severe flu season earlier in the year. I will further unpack The U. S. Volume development later in my remarks.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Outside The U. S, international same market treatment growth increased to 1.7%. Second quarter Care Delivery performance benefited from favorable rate and mix development in The U. S. As well as a positive impact from phosphate binders.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Our U. S. Clinic Network is gearing up for the launch of the 5,000 MADE X and high volume HDR. And we will begin to roll out the 50008X to our clinics beginning later in the third quarter and ramping up further from there. On this slide, you will notice that value based care is highlighted as a separate segment for the first time and is no longer included as part of care delivery.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

As announced in June, we have initiated a new reporting segment as part of our ongoing efforts to refine our operating model, providing greater visibility into the drivers of this growing business and further enhance our financial reporting transparency. This is important as value based care has a very different financial profile and market dynamics than care delivery. In the second quarter, value based care benefited from expanded contracting leading to an increase in member months. With this positive development, the revenue growth in the first half of the year was at the upper end of our expectations. Turning to Care Enablement.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Care Enablement delivered another strong quarter supported by volume and price increases. As every year the volume growth is less strong in the second quarter, which is normal phasing. We expect to we continue to capture sustainable savings as part of SME25 plus driven by disciplined execution of the next level of footprint optimization across both manufacturing and supply chain. As a result, our Care Enablement margin further progressed within the 2025 target band to 8.7%. Care Enablement is also well on track for the 5008 X launch in The U.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

S, following the additional FDA approval of Release two point zero in May. Turning to slide six. If you were able to follow our Capital Markets Day, you will remember that Doctor. Frank Maddox outlined the dynamics of volume growth and how both patient inflows and outflows play an equal role in shaping overall patient flow. This framework is helpful to understand the components of recent volume development in The U.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

S. And underscores why we are encouraged by about future growth. In the second quarter, patient inflow accelerated a bit more than expected compared to the prior year, supported by a higher number of patient referrals and new patient starts. This is an important trend as it signals strength in the underlying volume recovery and also reflects ongoing operational improvements in our own inflow management process. This positive development in patient inflow, however, was offset by higher than expected patient outflow.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

The severe flu season in the first months of the year in The U. S. Resulted in significantly increased mortality compared to the already elevated level of the prior year, as well as a greater number of mistreatments. The impact of higher mortality early in the year carried forward, dampening volume growth in subsequent quarters as well. This clearly impacts our assumption of plus 0.5% plus same market treatment growth in The U.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

S. In 2025. We now just carefully assume flat to slightly positive same market treatment growth for 2025. I will now hand over to Martin to take you through the second quarter financial performance in more detail.

[Martin Fischer, CFO & Member of the Management Board at Fresenius Medical Care]

Thank you, Helen, and welcome to everyone on the call also from my side. I will pick up on Slide eight. In In the second quarter, we achieved organic revenue growth of 7%, with all three segments contributing to this strong performance. Revenue increased by 5% at constant currency. The impact from divestitures executed as part of our portfolio optimization negatively impacted revenue development by 110 basis points.

[Martin Fischer, CFO & Member of the Management Board at Fresenius Medical Care]

As a reminder, we decided to absorb the revenue and operating income effects from divestitures executed in 2024 and 2025 in our guidance range. Operating income, excluding special items, increased by 13% on a constant currency basis, primarily driven by growth in Care Enablement. As a result, we realized further margin expansion to 9.9%. Divestitures had a neutral effect on operating income margin development. Special items negatively affected group operating income by €51,000,000 This mainly includes costs relating to FME25 plus and our continued portfolio optimization, offset by positive effects from the remeasurements of our investment in Humacyte.

[Martin Fischer, CFO & Member of the Management Board at Fresenius Medical Care]

Next on Slide nine. This slide outlines the year over year margin development for the second quarter. At the group level, we realized a margin increase of 80 basis points. This increase was driven by positive contributions from both Care Enablement and Care Delivery, with particularly strong results from Care Enablement and was partially offset by a slightly negative impact from Value Based Care. Net corporate costs increased by €14,000,000 from the prior year, including a positive €9,000,000 contribution from virtual power purchase agreements.

[Martin Fischer, CFO & Member of the Management Board at Fresenius Medical Care]

In addition, foreign exchange rates development unfavorably with a negative €16,000,000 impact. The average U. S. Dollar exchange rate in quarter two was €1.13 compared to €1.05 in the first quarter. Let us now have a closer look of the drivers of each segment, starting with Care Delivery on Slide 10.

[Martin Fischer, CFO & Member of the Management Board at Fresenius Medical Care]

Care Delivery showed strong organic organic revenue growth of 3.6%, supported by both Care Delivery U. S. And International. In The U. S, organic growth of 3.4% was driven by favorable rate and payer mix development, which offset the volume impact from a severe flu season in the first month of the year.

[Martin Fischer, CFO & Member of the Management Board at Fresenius Medical Care]

Internationally, we realized robust organic growth of 4.5%, driven by 1.7% same market treatment growth and continued rate increases. The execution of our portfolio optimization negatively impacted revenue development by 190 basis points. Operating income further improved, and the margin expanded to 11.2%. On the earnings side, business growth in the quarter was supported by positive rate and mix effects as well as contributions from phosphate binders. Further sustainable savings from FME25 plus helped compensate higher inflation costs and higher labor costs.

[Martin Fischer, CFO & Member of the Management Board at Fresenius Medical Care]

The labor costs were impacted by increasing medical benefit expenses for our U. S. Employees. The increase in medical benefit expenses is partially attributable to higher insurance utilization observed across the industry and partially due to the timing of offsetting initiatives. Consistent with broader industry trends, we expect these costs to moderate in the second half of the year.

[Martin Fischer, CFO & Member of the Management Board at Fresenius Medical Care]

The unfavorable translation exchange rate development also had a sizable negative impact. Slide 11 will provide an overview of the developments in our newly reported segment Value Based Care. Value Based Care realized continued strong organic revenue growth with 28% in the quarter. This was mainly driven by significant higher volumes in the form of a higher number of member months, mainly due to contract expansion early in the year. On the earnings side, operating income declined to a loss of €9,000,000 due to an unfavorable savings rate and inflation, offsetting positive effects from increased member months.

[Martin Fischer, CFO & Member of the Management Board at Fresenius Medical Care]

While revenue growth of this operating segment is ahead of expectations, we continue to assume a slightly negative to breakeven earnings development for the year. I will conclude the detailed segment review with Care Enablement on Slide 12. In the second quarter, Care Enablement continued to show strong revenue growth of 3%, supported by 3% organic growth. Revenue development was driven by volume increases for our products overall and continued positive pricing momentum despite volume based procurement in China. Care enablement showed a significant 79% increase in operating income, leading to a margin increase of three eighty basis points.

[Martin Fischer, CFO & Member of the Management Board at Fresenius Medical Care]

With 8.7%, the operating segment is further advancing into its twenty twenty five target margin band. Earnings growth reflected strong business growth, supported by volume growth and pricing as well as savings from FME25 plus These positive effects more than offset the anticipated inflationary pressures and the unfavorable impact of foreign exchange translation. Moving on to Slide 13. In the second quarter, we realized a 75% increase in operating cash flow, mainly driven by favorable working capital development. This reflects the recovery against prior year headwinds from the cyber incident at Change Healthcare and the phasing of federal income tax payments in The United States.

[Martin Fischer, CFO & Member of the Management Board at Fresenius Medical Care]

The strong cash flow additionally absorbed an expected seasonality in invoicing compared to last year. Consistent with our strict financial discipline, we further reduced both our total debt and lease liabilities and our total net debt and lease liabilities compared to the first half of last year. As a reminder, at our Capital Markets Day, we announced our decision to lower our self imposed target range for our net financial leverage as part of our new capital allocation framework. We are now targeting a net financial leverage ratio of 2.5x to 3x net debt to EBITDA. In the second quarter, our net leverage ratio further improved to 2.7x, well within this new lower range.

[Martin Fischer, CFO & Member of the Management Board at Fresenius Medical Care]

More recently, in July, we redeemed the €500,000,000 bond that had matured. As Helen mentioned, our commitment is to return excess cash to shareholders as part of our new capital allocation framework. We are planning to initiate the first tranche of our announced share buyback already this month. I will now hand back to Helen to review our outlook.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Thank you, Martin. I will finish my prepared remarks on Slide 15. Given our performance through the first half of the year and our expectations for growth acceleration in the 2025, we are confirming our full year outlook. With the strong growth in value based care in the first half of the year, which is driven by the contracted risk types, we expect to be at the upper end of our positive to low single digit percent revenue growth range. This revenue growth in value based care is not impacting the operating income growth.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Therefore, we continue to expect to grow operating income by a high teens to high 20s percent rate compared to prior year. We are also confirming our operating income guidance range. This also includes the upper end of our guidance range, which also tells you that we continue to consider this to be a viable outcome for earnings growth. With the planned margin improvements by all three operating segments, including benefits from revenue cycle management, we are fully on track to accelerate our earnings growth in the second half of the year. With that, I will now hand back to Dominic to start the Q and A.

[Dominik Heger, Executive VP and Head of Investor Relations, Strategic Development & Communications at Fresenius Medical Care]

Thank you, Helen. Thank you, Martin. Before I hand over for the Q and A, I would like to remind everyone to limit your questions to two. If we have remaining time, we can go another round to have a new flavor of the same question maybe. And with that, I hand it back to Sandra to open the Q and A. Sandra, please.

[Operator]

Thank you. We will now begin the question and answer session.

[Dominik Heger, Executive VP and Head of Investor Relations, Strategic Development & Communications at Fresenius Medical Care]

And the first question comes from Hugo from BNP. Hugo, the line is yours.

[Hugo Solvet, Executive Director - Equity Research - Medical Technologies & Services at BNP Paribas]

Hi, guys. Thanks for taking my questions. I have two, please. Maybe in terms of U. S.

[Hugo Solvet, Executive Director - Equity Research - Medical Technologies & Services at BNP Paribas]

Volume growth and if we think about 2026, you obviously have a low base in H1. Or are you confident to grow volumes in 2026 in The U. S? That would be my first question. And second on Care Enablement, you have very strong margin expansion, two fifty basis points in Q1, close to 400 basis points in Q2. How should we think about the back half of the year and the level of comfort to eat probably the high end of the 2025 margin band here? Thank you.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Hi, Hugo. I'll take both of those. With regards to U. S. Volume growth, obviously, what we are seeing right now is this continued elevated mortality.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

And that's why as we've kind of completed the first half flat, we are calling the back half flat to slightly positive. So I know it's low of small numbers at this point, but that does assume that the growth continues. We are really encouraged by the referral trends and the inflows and we have seen improving trends there for five months in a row now. So that is really encouraging on the front end of the funnel. And that comes back to what we've always said that once mortality normalizes and we see the inflows returning, the underlying fundamentals of this business, there's no reason to suggest that that 2% plus is unchanged. So yes, we will expect to see growth going into 2026. And obviously, as we look at the development over the next few quarters, the rate of that slope will be determined in time. So I think that follows the consistent messaging we've been giving there. With care enablement, we're really, really pleased and encouraged with what we are seeing there.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

And as you rightly point out, nice progression in the margin band. Clearly, we still have the margin band out there for Care Enablement of H12 and we changed that. But we do see H2 stronger than H1. And then we usually see the back end of the year stronger for Care Enablement particularly in Q4 because of the sales volume. So it is a little bit seasonal, but the band overall was still confirming and really, really pleased with the progress that the Canadian and team is making.

[Hugo Solvet, Executive Director - Equity Research - Medical Technologies & Services at BNP Paribas]

Thank you very much.

[Dominik Heger, Executive VP and Head of Investor Relations, Strategic Development & Communications at Fresenius Medical Care]

Thank you. The next question comes from Veronika from Citibank.

[Veronika Dubajova, Managing Director at Citi]

Hi, guys. Good afternoon. Hopefully, you can hear me okay. Thank you for taking my questions. I will also keep it to two, if I can.

[Veronika Dubajova, Managing Director at Citi]

The first one is just on the patient inflow dynamics, Helen, that you alluded to. Can you maybe talk to sort of how you're thinking about that in terms of the market getting better versus some of the processes that you have in the business? And I don't know if you can quantify it and also quantify maybe the mortality that you saw in the quarter just to help us with the math as we think about how things accelerate. And then I'm sorry to be on the same to stay on the same topic, but obviously you do have that guidance for 2% plus starting next year. So just curious how you're thinking about the ability to get into that 2% plus already in 2026 or given the dynamics that we're seeing at the moment is that more a 2027 question?

[Veronika Dubajova, Managing Director at Citi]

Sorry to stick to same market, but those are the two most important points. Thank you.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Thanks Veronica. We'll see how many times we get asked a different flavor of that question, but we recognize how important it is and for us to share what we are seeing in real time. Look, I think on the patient inflows, as I've mentioned, they are encouraging and positive and it's the best two we've seen in years. But not just the fact that this quarter is strong, but as I mentioned, five months in a row of improving patient inflows and new patient starts. I think it's a bit of both and I think we're still obviously without data trying to tease that out on.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

We're doing a lot of things all at the same time, but we are definitely seeing new referrals coming in. But of course, it is helped by our improved processes to get those patients in and scheduled into treatment. So I think it's a bit of both and I can't tease out how much is one or the other at the moment other than the inflows are positive. I think we on your second part of that question on the two percent, we've definitely said that that two percent plus is based on normalized mortality. It is still somewhat elevated coming out of this flu season and with the positive inflow that helps.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

So I think if we had normalized mortality and the same trend of inflow that we've been seeing, that two percent obviously is unchanged. And I think as we said, it's that kind of the weight of the slope as we go through 2026 will be key. But we're kind of encouraged by what we're seeing in this last quarter.

[Veronika Dubajova, Managing Director at Citi]

That's great. Thanks so much.

[Dominik Heger, Executive VP and Head of Investor Relations, Strategic Development & Communications at Fresenius Medical Care]

Thank you. The next question comes from Hassan from Barclays. Hassan, the line is yours.

[Hassan Al-Wakeel, Director, European MedTech & Services Research at Barclays Investment Bank]

Good afternoon. Thank you for taking my questions.

[Hassan Al-Wakeel, Director, European MedTech & Services Research at Barclays Investment Bank]

A couple from me. Firstly, on the margins, you continue to expect an accelerating earnings development in the second half. And I wonder if the persistent weaker volume dynamics and lowered expectations here has an impact on your H2 expectations and where you expect to land in the range? And then secondly on VBC, your guidance assumes 100,000,000 of incremental revenue year over year, yet you've banked 200,000,000 already in the first half. So if you could talk about the strength here and how we should think about the evolution in the second half as well as any dilution at the margin level? Thank you.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Thanks, Sasan. Why don't I tackle the half two trend and then Martin maybe you can take the VBC trend. So yes Hassan, the softer volume perhaps two does have an impact. However, we've always said that it's the volume number alone with small numbers is quite small. So it was never going to make or break the year.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

We just recognize the underlying metric is obviously important for future growth. So it doesn't have that significant or big impact at all in the back half. What we know is half two is always stronger than half one and you always you kind of you've seen this historically as you followed us and Q4 is always stronger than Q3, but half two always stronger. So clearly, we have that built in. And then in the back half for H2 development, we will see continued benefits from rate and mix.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

The work that we're doing on rev cycle improvement as we already touched on the talk outline will also head in. And then we're really pleased with the momentum we're seeing on FME25. And of course, all the work that we're doing on continuing operational improvements will continue to have that momentum. So it is a little bit of seasonal and also the ramping up of the work that's underway and the programs and initiatives that we are already executing on. Martin?

[Martin Fischer, CFO & Member of the Management Board at Fresenius Medical Care]

Yes. Heather, I'm more than happy to take the VPC one. We are very pleased with what we saw in the first half. Also, we have expanded contracting activities. In the meantime, have about 148,000 patients under programs. And we will expect more than €1,900,000,000 to your point, in the full year when we look at it.

[Martin Fischer, CFO & Member of the Management Board at Fresenius Medical Care]

When it comes to the operating margin, we always said that it is slightly negative to neutral. And as we also said, there's a certain dynamic when it comes to gross revenue recognition, and we expect that we still are within that operating margin corridor. So there is a limited conversion that comes from that from the additional volume to our operating income.

[Dominik Heger, Executive VP and Head of Investor Relations, Strategic Development & Communications at Fresenius Medical Care]

The next question comes from Oliver Neckster from ODDO. Oliver, the line is yours.

[Oliver Metzger, Head - Frankfurt Research at ODDO BHF AG]

Yes. Good afternoon. Thanks a lot for taking my questions. The first one is also that beneath mortality, you talked also about the missed treatments due to the flu season. So is this an area where you already see a return to the normal baseline?

[Oliver Metzger, Head - Frankfurt Research at ODDO BHF AG]

Or it's still also at an elevated level? The second one is in addition to Hassan's question on value based care. As now the separate business unit, we have got, thanks to Dominic's team, some historic data, but eventually not enough to identify some patterns. So can you give us an indication of when you see some more of this typical paydays? And also whether we should think rather in years and in quarters about the progress on the bottom line? Thank you.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Yes. Thanks, Oliver. I think I'll snag those questions. So mortality, the flu effect obviously impacted mortality and mistreatment. So it's kind of the double effect on outflows if you will.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

That is still elevated over last year. And as we were kind of quantifying that the flu effect through half one, it is around that 40 to 60 basis points still of elevation over what is already a higher mortality from last year. So I think that it's fair to say that there's still that elevation. And I think as we come into quarter three seeing how that develops kind of bringing down the mortality level. Obviously, the work that we are doing ourselves on these treatments that are in our control, we're tackling as well with the operational improvements.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

So they are elevated and we continue to work on those to improve that post pandemic and post flu season. Martin gave you a nice outline on how we're thinking about value based care numbers. Of course, it is a new segment. We are getting under what the right KPIs are. And I think you can expect us to continue to give more transparency on the KPIs as we move forward.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Martin talked about the number of lives that we're covering, but we're also talking about membership and membership months because I think that's an important metric for us to continue to track as well in terms of how many months of members we are covering. So I think more to come, Oliver, as we kind of get more mature in our reporting here, as you can appreciate pulling it all out and having the historical data was a good step in the right direction. So for this year, you can see member months and memberships and obviously that varies too. But I think as we continue to progress with this segment, we'll figure out if there's more metrics to provide next year.

[Oliver Metzger, Head - Frankfurt Research at ODDO BHF AG]

Okay. Thank you.

[Dominik Heger, Executive VP and Head of Investor Relations, Strategic Development & Communications at Fresenius Medical Care]

Okay. So next question comes from Richard from Goldman Sachs.

[Richard Felton, Equity Research Analyst at Goldman Sachs]

Thank you very much. Thanks for taking my questions. Two please. The first one is how much benefit was there from phosphate binders in H1? And how should we think about the remaining benefit into the second half?

[Richard Felton, Equity Research Analyst at Goldman Sachs]

And then the second one is another one on treatment volume dynamics. But could you help us put the five months of better inflow into historical context? I mean, is it fair to say that that's the first time since COVID that you've seen that consistency in patient inflows? That'd be really helpful just to sort of frame that shift. You.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Martin, do want to take about this half one?

[Martin Fischer, CFO & Member of the Management Board at Fresenius Medical Care]

So take regarding for Spendbiters, we did see quarter two develop in line on how we expected the quarter to develop. We did see a double digit million positive contribution for Caterpillar, as we pointed out. We also had highlighted in the first half that in quarter one, we had a bit of a stronger development. And then in quarter two, it came in, in line with what we assumed. So we are, for the first half, in line with our expectations.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Thanks, Martin. And Richard, on treatments, yes, I think it's fair to say that this has been our strongest quarter two since 2020 from an inflow perspective and that not just that it's the strongest quarter we've seen, but also the monthly improvement we have seen over the last five months consistently is a new trend for us as well. So for us, we can kind of see that, that work has clearly started at the back even though we had fuel, we could see the inflow in the fall is improving Q1 into Q2. And the work that we are doing is clearly paying off there.

[Richard Felton, Equity Research Analyst at Goldman Sachs]

Great. Thanks very much.

[Dominik Heger, Executive VP and Head of Investor Relations, Strategic Development & Communications at Fresenius Medical Care]

Thank you, Richard. The next question comes from James from Jefferies. The line is yours.

[James Vane-Tempest, Equity Research Analyst at Jefferies & Company Inc]

Thanks very much for taking my questions. Two, if I may, please. Confirming the guidance range, including the upper end, I'm just kind of curious the levers to get you there, the upper end of the margin range if volumes are expected to remain flat this year? And then second question is just again regarding lower volumes. If volumes don't get to the 2% plus as an exit rate next year, how does that impact your thoughts on timing for capital allocation decisions just given cash flows are reliant on higher volumes? Thank you.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Hey, James. I'll take the first one and I'll give the capital allocation question to Martin. Obviously, what we've tried to do is lay out the building blocks of the headwinds and tailwinds on guidance and there's a range for them all. I think it's fair to say, if we hit the bottom end of all those building blocks, we'd be at the bottom end of the range. And if we hit the top end, the converse would be true.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

And obviously, are our job as management is to balance all of those to make them all as strong as possible. The building blocks that we gave in with 2024 are the same building blocks that hasn't changed, right? So we are continuing to track quite well within those blocks. And we're managing our ways with those. I think what maybe we want to reiterate is what we kind of what I said in an earlier answer is we know that there is acceleration in the back half.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Some of that is the natural phasing and stronger business performance with the volume seasonality particularly on CE. But H1 was completely in line with our plan. And we always knew that our H1 phasing would look like this. But the continued momentum on rate and mix, the revenue cycle as we've mentioned, the strong momentum in F and E '25, the operating improvements, labor. So you obviously touched on the softness on volume.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Labor, weather inflation is tracking kind of favorable sorry, in line with our expectations, but we did have an unfavorable hit in Q2 for the medical benefit costs. I think like the whole many corporations are seeing and you saw it across the insurance companies, higher claims and higher cost of claims. But I think that is more of a half one phenomenon. So I think we're just managing each one of these building blocks with a high degree of rigor, high degree of focus, pulling through on the programs, and that's what's giving us the confidence for the back half two development.

[Martin Fischer, CFO & Member of the Management Board at Fresenius Medical Care]

Yes, James. And on capital allocation, we did outline in the Capital Markets Day the clear prioritization of investment into the core with our CapEx of €800,000,000 to €1,000,000,000 with a lowered leverage ratio and returns to our shareholders. And we have announced the 1,000,000,000 over two years. And you saw that we had a strong cash flow generation in quarter two and development. And you also see that the first half, as Helen outlined, expected in line with our expectations, and we expect an acceleration for the second half.

[Martin Fischer, CFO & Member of the Management Board at Fresenius Medical Care]

So we will start with the first tranche of the share buyback in August, and we feel very confident about our ability to execute the program overall as planned.

[James Vane-Tempest, Equity Research Analyst at Jefferies & Company Inc]

Thank you.

[Dominik Heger, Executive VP and Head of Investor Relations, Strategic Development & Communications at Fresenius Medical Care]

Thank you. The next question comes from Graham from UBS.

[Graham Doyle, Executive Director - Equity Research at UBS Group]

Hi, guys. Thanks for taking my questions. They kind of repeat what we had earlier, but maybe for some slightly different information. In terms of phosphate binders and their contribution to the business growth in Care Delivery, how much more do you think we have to go in the second half? And what do you think makes us just takes up the differential if that sort of eases in terms of contribution in the second half?

[Graham Doyle, Executive Director - Equity Research at UBS Group]

And then you've talked a lot about the inflows, which are super helpful. Could you give us a sense as to what the percentage growth is? So is it like 1%, 2% in terms of year over year? And has that been trending like this for quite some time? And then just a quick one, is there any way of discerning what is like share gains versus what is just the kind of funnel picking up? Thank you.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Martin, do you want to take binders and I'll take it Yes,

[Martin Fischer, CFO & Member of the Management Board at Fresenius Medical Care]

than happy to. Graham, as I outlined, the first half developed in our expectation with a double digit million contribution for the second quarter and starting stronger in the first quarter. But then after the first half, we feel good about what we saw with phosphate binders. There are still certain topics that we are very close to, like utilization and certain pricing developments. But so far, we are feeling good about what we saw, and that also gives us confidence for our full year overall assumptions.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Yes, Graham. And then on inflows, look, I think a couple of things to your question. The trend that we're seeing that referral improvement that we have seen these last five months equates to just under about 1% improvement in referrals year to date, but about little more than that in Q2. So it was closer to 2% improvement in that referral improvement in Q2. So that also speaks to the kind of the improving trend since 2020, but also the last five months.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

In terms of your question on share gains, know that the work that we are doing operationally, internally is paying off. And I think those improvements are clearly visible in our operation. We'll obviously have to see how the rest of the market kind of reports out this quarter. But I think for us, it's definitely kind of the patient trend and the work that we're doing is supporting that effort. Kind of the improving that cancellation rate is also kind of adding to our accepted referral growth.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

So it kind of there's a lot even when you've kind of got the new patients up, we had been struggling to get them in and scheduled in time. The front end work on improving the scheduling is also a key driver of this. So I think this trend, we have been seeing it a few quarters now, it's not just the last month or so. It's been a consistent trend that we're encouraged by. And obviously, we have a lot of work to do with the turnaround in care delivery.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

So I think that that is speaking for itself. But I also recognize that we're still talking small numbers.

[Graham Doyle, Executive Director - Equity Research at UBS Group]

No, I really appreciate the color. Thank you very much.

[Dominik Heger, Executive VP and Head of Investor Relations, Strategic Development & Communications at Fresenius Medical Care]

Thank you. Our next question comes from David from JPMorgan.

[David Adlington, Managing Director at J.P. Morgan]

Hey guys, thanks for the questions. Slightly different tax. So maybe just first, early thoughts on 2026 and the headwinds you might have from the annualization of phosphate binders and also the expiration of ACA subsidies? And then second question, would be good to hear your recent thoughts or your thoughts on the recent clinical data out of ProKidney for the impact on progression of that product on CKD? Thank you.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

David. Look, I think we're definitely not giving 2026 guidance and kind of sizing out the headwinds and tailwinds today, more to come on that. But what I would say on binders is, we've got this half one development and Martin has touched on this already. There's a lot of things at play here. We've got the patient numbers, the utilization rates, we've got generics, we've got branded, we've got the impact that's hitting on the clinic business, we've got the impact that is hitting pharma business, we've got the impact that's hitting pharmacy.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

So I think we're trying to get our arms around or not we've got our arms around what we see in 2025 and it is progressing quite nicely as planned. Obviously, this utilization and what happens here every quarter will shape what 2026 looks like. I think the thing that is key to watch for us is obviously post the DAPA period, which is January 2027. But we're going to learn a lot about the uptake and utilization of these products by then. So I think, David, this is one where it's a quarter by quarter through 2025.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

We'll obviously try and size 26 and then see what happens post posted up. The other thing on this piece as well is obviously the noise on pharma pricing and potential tariffs. So I think it's just such a fluid situation. We've got good line of sight into 2025 and obviously will shape 2026. The ACA, I think we had already sized that on previous call.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Of course, we expect for 2026 and I can size this one for 2026, we already have that it would be about 2% of U. S. CD EBIT. Obviously, past 2026, we also have to see how this plays out and what happens with these extended tax credits and do these patients end up somewhere else of exchanges in different coverage and what insurance they would take. So I think too early to call that yet, but obviously we've got our arms around it. And then you had another question pro Yes, Dominic.

[Dominik Heger, Executive VP and Head of Investor Relations, Strategic Development & Communications at Fresenius Medical Care]

Dominic, okay. So we'll wait for the ASN. I think they start their clinical study the next phase of the clinical study. I think pricing, I think there's rumors what pricing would be.

[Dominik Heger, Executive VP and Head of Investor Relations, Strategic Development & Communications at Fresenius Medical Care]

But I think our understanding is you have to see what's the long term effect of those shots. I think they now do one shot versus two shot. And we are not the experts on that, but you have to see how long it actually holds and how long it would improve the outcomes, right? That's the big question. How it works?

[Dominik Heger, Executive VP and Head of Investor Relations, Strategic Development & Communications at Fresenius Medical Care]

I think even the medical people don't fully understand, but it seems to have an effect. And I think we'll have to wait for the long term impact to see if there's more shots they need and what's then the pricing of it. But yes, I think it's maybe not a very qualified answer, but I think there is not more that we could know by now.

[David Adlington, Managing Director at J.P. Morgan]

Fair enough. And maybe just one follow-up. Just in terms of the phosphate binder double digit impacts, could you sort of narrow it down a bit whether it's low, medium, high? Because that's a 10% to 99% range.

[Martin Fischer, CFO & Member of the Management Board at Fresenius Medical Care]

Yes. So it's more well, to give you an indication for the quarter when we saw double digit, it's more on the lower below mid, so to say.

[Dominik Heger, Executive VP and Head of Investor Relations, Strategic Development & Communications at Fresenius Medical Care]

Thank you, David. And our last caller is Falko from Deutsche Bank. Falko, the call is yours. Sorry, the line is yours, not the call. You can't have the full call.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Okay, Farco.

[Falko Friedrichs, Director - Equity Research at Deutsche Bank]

I'm fine with just my two questions. Thank you all. Firstly, could you briefly remind us on the next steps for your new high volume HDF machine rollout in The U. S? The things we should be looking out for here and how meaningful this could potentially be for your financials this year and next?

[Falko Friedrichs, Director - Equity Research at Deutsche Bank]

And then secondly, at current spot rates, what is your expected FX headwind on adjusted EBIT for the full year and also on sales? Thank you.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Thanks, Sarko. This is my favorite topic. So I will take the HDF question and Martin, not surprisingly, will take the exchange rate question. We're continuing to go all systems fast on HDF. As you heard me say, we have all the approvals we need.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

We already have one clinic fully converted and the plan is to have 30 clinics and 600 machines converted during Q3 and Q4. So really excited about the traction and the work that is happening around that. Impact in 2025 somewhat limited, obviously the big ramp up hits in 2026. But everything going to plan and excited to get our own U. Real data and hear firsthand from how our patients are feeling and doing after the treatment.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

So we'll continue to update that on that as the year goes through as the year goes by, I'll go.

[Martin Fischer, CFO & Member of the Management Board at Fresenius Medical Care]

Yes. And Falko, the FX, we do see quite some volatility currently in the markets over the last couple of weeks. So I'll give you a reference rate because it also changed from the last quarter to this quarter where we did see a significant development also of U. S. Dollar and euro.

[Martin Fischer, CFO & Member of the Management Board at Fresenius Medical Care]

Over the last couple of weeks, we saw a 1.17 ish. It now came down a bit. But when you take that as a reference, we would expect a 3% to 4% impact on both revenue as well as earnings if it were to stay for the remainder of the full year on that level. And that effect would also then be a full year effect that we have.

[Falko Friedrichs, Director - Equity Research at Deutsche Bank]

Thank you.

[Dominik Heger, Executive VP and Head of Investor Relations, Strategic Development & Communications at Fresenius Medical Care]

Great. Okay, perfect. So thank you very much. We will close the call now.

[Dominik Heger, Executive VP and Head of Investor Relations, Strategic Development & Communications at Fresenius Medical Care]

Thank you for listening in, in the summer. We do wish you all a great summer break and are looking forward to be in touch after the break and see you on many conferences, roadshows and looking forward to reconnect.

[Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care]

Thank you, everybody. Enjoy the rest of the summer. Take care.

[Martin Fischer, CFO & Member of the Management Board at Fresenius Medical Care]

Thank you. Take care.

[Operator]

Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines. Goodbye.

Participants

Analysts

• Dominik Heger, Executive VP and Head of Investor Relations, Strategic Development & Communications at Fresenius Medical Care
• Helen Giza, CEO & Chair of the Management Board at Fresenius Medical Care
• Martin Fischer, CFO & Member of the Management Board at Fresenius Medical Care
• Hugo Solvet, Executive Director - Equity Research - Medical Technologies & Services at BNP Paribas
• Veronika Dubajova, Managing Director at Citi
• Hassan Al-Wakeel, Director, European MedTech & Services Research at Barclays Investment Bank
• Oliver Metzger, Head - Frankfurt Research at ODDO BHF AG
• Richard Felton, Equity Research Analyst at Goldman Sachs
• James Vane-Tempest, Equity Research Analyst at Jefferies & Company Inc
• Graham Doyle, Executive Director - Equity Research at UBS Group
• David Adlington, Managing Director at J.P. Morgan
• Falko Friedrichs, Director - Equity Research at Deutsche Bank