What Fresenius Medical Care AG & Co. KGaA (FMS) Said on Its Q3 Earnings Call

Key Points

• Third-quarter revenue was broadly stable, but operating income fell 6% at constant currency as reimbursement headwinds and inflation pressured results. Fresenius Medical Care narrowed its 2026 operating-income outlook to the lower half of its prior range, while still expecting broadly flat revenue.
• Care Delivery’s operating income rose 2% at constant currency, with its margin reaching 14.7%; excluding TDAPA effects, underlying operating income increased 21%. The company is expanding its high-volume hemodiafiltration rollout, reaching 348 U.S. clinics by September, and said treatment activity accelerated in October.
• Fresenius Medical Care remains on track for €250 million in full-year sustainable savings from its FME25+ program. By Sept. 30, it had repurchased 9.1 million shares for €357 million under its €1 billion buyback program.

Fresenius Medical Care AG & Co. KGaA NYSE: FMS reported broadly stable third-quarter revenue and a decline in operating income as reimbursement pressures and inflation weighed on results, while the company continued to advance its U.S. rollout of high-volume hemodiafiltration technology and execute its share repurchase program.

Chief Executive Officer Shervin Korangy, who joined the company three weeks before the call after serving on its Supervisory Board since December 2023, said Fresenius Medical Care has “market-leading assets” and opportunities to improve its portfolio, execution and performance assessment. He said the company will provide more detail on its 2027 plans in due course, with a fuller outlook expected alongside full-year results in February.

Third-Quarter Results and Revised Outlook

Chief Financial Officer Martin Fischer said group revenue was broadly stable in the third quarter. Organic growth in Care Delivery was partly offset by an anticipated decline in Value-Based Care revenue due to a change in the risk structure and accounting treatment of one larger contract. Divestitures reduced group revenue growth by 30 basis points.

Operating income excluding special items declined 6% at constant currency, reflecting expected reimbursement effects under the Transitional Drug Add-on Payment Adjustment, or TDAPA, as well as increased inflationary pressures, particularly in Care Enablement. The company reported an operating-income margin of 11%.

Special items totaled a net negative €161 million in the quarter. These included costs related to the company’s China strategy refinement, including the discontinuation of 4008A production and sales activities and an exit from the peritoneal dialysis business. The company also continued its FME25+ transformation program, recording €74 million in sustainable quarterly savings while incurring €54 million in one-time costs.

Fresenius Medical Care said it remains on track to deliver €250 million in full-year sustainable savings from FME25+, with initiatives including U.S. clinic consolidation, manufacturing-footprint measures and organizational efficiencies.

The company narrowed its 2026 operating-income outlook to the lower half of its previous guidance range. It continues to expect broadly flat revenue at constant currency for the year and now expects operating-income growth ranging from flat to a negative mid-single-digit percentage rate versus the prior year.

Fischer said the expected TDAPA headwind for 2026 remains about €50 million. He said the company recorded a year-over-year TDAPA-related headwind of slightly more than €60 million in the third quarter and expects roughly €140 million of headwind in the fourth quarter.

For 2027, Fischer said Fresenius Medical Care expects TDAPA-related operating-income pressure of €300 million to €350 million compared with 2026, though he noted that the estimate depends in part on drug volumes and pricing. The company expects the reimbursement environment to remain challenging after CMS announced a 1.9% base-rate increase and a 3.5% reimbursement increase for large dialysis organizations, with much of the latter tied to TDAPA reimbursement.

Care Delivery Volumes and Profitability

Care Delivery revenue increased 1% at constant currency and 2% organically in the third quarter. In the U.S., organic revenue rose 1%, aided by favorable rate effects and revenue-cycle-management initiatives.

U.S. same-market treatment growth declined 1.1%, which Fischer attributed to the carry-forward impact of weaker patient referrals in the first seven months of the year. The company maintained its full-year expectation for a decline of about 0.9%.

Management said patient inflows stabilized in the third quarter at a level similar to the prior-year period. Fischer said efforts to improve referral relationships, patient admissions and local-market execution are underway, but he cautioned that it will take months for the improvements to work through the company’s patient base.

Care Delivery operating income increased 2% at constant currency, and the segment’s margin expanded to 14.7%. Excluding TDAPA effects, underlying operating income rose 21% year over year. Fischer cited favorable reimbursement, revenue-cycle-management performance, FME25+ savings and operational execution. He noted that a favorable Medicare outlier-reimbursement effect was transitory.

Internationally, same-market treatment growth was 1.4%, with lower mortality rates and expanded home programs supporting performance.

Value-Based Care, Care Enablement and Innovation

Value-Based Care revenue declined 9% on both an organic and constant-currency basis, in line with the company’s forecast for an approximately €150 million full-year revenue decline. However, operating income excluding special items improved to a €1 million profit from a €21 million loss in the prior-year quarter.

Fischer said the improvement reflected higher savings rates, a favorable comparison with delayed CMS reporting data in 2025, and FME25+ integration synergies. He also said a decline in enrolled patients was deliberate, reflecting selective contract exits and a more disciplined contracting approach intended to improve savings rates and support break-even performance in 2026.

Care Enablement revenue grew 5% organically and at constant currency, supported by the U.S. rollout of the 5008X CAREsystem and favorable pricing. Segment earnings rose 4%, despite higher oil, gas and logistics costs connected to geopolitical tensions in the Middle East. The company now expects group inflationary pressures to exceed the €300 million upper end of its prior annual range.

Korangy said the 5008X rollout had reached 348 U.S. clinics, or 14% of the company’s clinics, by the end of September. Fresenius Medical Care had installed about 9,000 machines, representing 16% of its installed base, and remains on track to convert 20% by year-end.

The company performed roughly 300,000 high-volume hemodiafiltration treatments in the first nine months, representing about 1.3% of total treatments. Korangy said treatment activity accelerated materially in October and feedback from providers had been overwhelmingly positive. The company plans to prioritize its own Care Delivery clinics for the technology while also maintaining external sales to selected partners.

China, Quality Actions and Capital Allocation

Fresenius Medical Care said it continues to view China as an attractive market despite refining its product portfolio there. China represents 6% to 7% of Care Enablement sales. Fischer said the company still expects a roughly €50 million impact from China-related volume headwinds in 2026 and plans to compete through localized manufacturing, research capabilities and products including the 5008X CAREsystem and multiFiltratePRO system.

Korangy also addressed FDA audits conducted at company facilities in recent months. He said the company has designed corrective and preventive action plans to address the observations and strengthen its quality-management systems.

Operating cash flow increased 8% in the third quarter. Net debt and lease liabilities rose 6% year over year, while the net leverage ratio remained at 2.6 times, near the lower end of the company’s 2.5x to 3x target range.

As of Sept. 30, Fresenius Medical Care had repurchased 9.1 million shares, or 3.4% of its share capital, for €357 million under its second €1 billion buyback program. The company expects to complete the first tranche, totaling up to €600 million, by mid-December.

About Fresenius Medical Care AG & Co. KGaA (NYSE:FMS)

Fresenius Medical Care AG & Co KGaA is a Germany-based health care company focused on the treatment of chronic kidney failure. The company provides dialysis care for patients with end-stage renal disease through a network of outpatient dialysis clinics and other health care facilities.

In addition to operating dialysis centers, Fresenius Medical Care develops and supplies products used in dialysis treatment. Its portfolio includes hemodialysis machines, dialyzers, dialysis solutions, bloodlines, and related medical devices and services.

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