BAD HOMBURG, Germany - Shares of Fresenius Medical Care (NYSE:FMS) fell sharply by 6.8% following the release of the company's first-quarter earnings, which missed analyst expectations.
The company reported an adjusted earnings per share (EPS) of EUR0.24, falling short of the consensus estimate of EUR0.28. Revenue for the quarter was also below expectations at EUR4.73 billion, compared to the anticipated EUR4.9 billion.
The healthcare provider, specializing in dialysis services, experienced a year-over-year (YoY) revenue growth of 4% on an outlook base, which adjusts for constant currency and excludes special items and the business impacts from closed divestitures during 2023.
However, reported revenue remained nearly unchanged from the previous year, with a slight increase of 0.4% to EUR4.725 million, or a 2% increase at constant currency.
CEO Helen Giza commented on the quarter's performance, stating, "The first quarter of this year demonstrates that we are executing on our strategy as planned. Both segments expanded their respective margins compared to the prior year."
Giza attributed the solid margin improvement in the Care Enablement segment to the company's transformation efforts, higher pricing, and savings from the FME25 initiative.
Despite the revenue growth driven by solid organic expansion, operating income declined by 6% to EUR246 million, resulting in a margin of 5.2%. The company's net income also saw a decrease of 18% to EUR71 million. These declines were attributed to various factors, including labor and inflationary cost increases, which impacted earnings.
Fresenius Medical Care confirmed its outlook for fiscal 2024, expecting revenue to grow by a low- to mid-single-digit percent rate and operating income to grow by a mid- to high-teens percent rate compared to the prior year. The company also reconfirmed its target to achieve an operating income margin of 10% to 14% by 2025.
As of March 31, 2024, the company treated 324,884 patients in 3,862 dialysis clinics worldwide and employed 117,128 people globally. Despite the challenges faced in the first quarter, Fresenius Medical Care remains committed to its strategic plan and continues to execute its portfolio optimization program, with several divestments signed or closed in Latin America and other markets.
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