Shares of Fresenius Medical Care AG & Co. KGaA (DE:FME) fell 4.5% yesterday after giving a weak patient outlook, overshadowing its better-than-expected earnings report. For the fourth quarter of Fiscal 2023, Fresenius posted adjusted earnings of €0.88 per share, up 4% year-over-year. Meanwhile, revenue of €4.99 billion remained nearly the same as in the prior year.
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Germany-based Fresenius Medical is the world’s largest kidney dialysis services provider. It mostly serves patients with end-stage renal disease, requiring them to undergo dialysis at least thrice a week. FME shares have gained over 1% in the past year.
More About FME’s Results and Outlook
For the full year ending December 31, 2023, FME posted adjusted earnings of €2.58 per share on revenue of €19.45 billion. FME’s earnings beat was backed by expense reduction measures under the FME25 transformation program and a one-time payment related to a legal settlement. The company’s board also proposed an annual dividend of €1.19 per share for Fiscal 2023, up 6% compared to 2022.
Fresenius CEO Helen Giza said that the company witnessed fewer patient visits during Q4 owing to the Christmas festival, leading to missed treatments. The CEO added that Q1 is usually marred by missed treatments, but the momentum catches up later.
Looking ahead, FME forecasts patient volume growth between 0.5% and 2% for Fiscal 2024, much lower than analysts’ expectations. Moreover, FME expects a low-to-mid-single-digit revenue growth for Fiscal 2024, while operating income is set to grow by mid-to-high-teens percentage points.
Update on GLP-1
Talking about GLP-1, which is a diabetes and weight loss drug, Giza said that there are both pros and cons. For one, the drug slows the progression of chronic kidney conditions, thus ensuring that patients continue to access Fresenius medical treatment for longer periods.
At the same time, GLP-1 delays the progress toward end-stage renal disease, thus prolonging the time that patients will start coming to Fresenius for the treatment. Having said that, Giza said that only about 5% of its patients are taking GLP-1 and that this number is increasing very slowly.
Is Fresenius Medical a Good Stock to Buy?
Following the Q4 print, eight analysts revisited their ratings on FME shares, with only one analyst reiterating a Buy rating, three maintaining their Hold views, and four reiterating their Sell ratings.
With one Buy, five Holds, and five Sell ratings, FME stock has a Moderate Sell consensus rating on TipRanks. The Fresenius Medical Care AG & Co. KGaA share price forecast of €34.17 implies 9.4% downside potential from current levels.
