Fresenius Medical Care (NYSE:FMS) shares are up slightly on second-quarter results that topped the consensus forecast.
The Bad Homburg v. d. Höhe, Germany-based dialysis company posted profits of $150.3 million (€147 million), or 51¢ (€0.50) per share, on sales of $4.9 (€4.75 billion) billion for the three months ended June 30, 2022, for a 32.9% bottom-line slide on sales growth of 10.1%.
Adjusted to exclude one-time items, earnings per share were 78¢ (€0.77), 34¢ ahead of Wall Street, where analysts were looking for sales of $4.7 billion.
Headwinds from labor issues and inflation harmed the company’s results, according to a news release, with “meaningfully higher than assumed wage inflation, surcharges, retention payments and additional costs for contract labor to contain the increasing staff shortages.”
The company said that, despite additional investments in labor, staff shortages and turnover rates remain on the rise, affecting second-quarter growth due to the number of clinics with constrained ability to accept new patients for treatment.
“The already existing challenging macroeconomic environment has further significantly deteriorated in the second quarter as well, driving accelerated non-wage cost inflation,” the company said. “This has been exacerbated by the ongoing war in Ukraine and its global economic impact and results in higher logistics costs, raw material and energy prices as well as further supply chain disruptions.”
As a result of the ongoing challenges, Fresenius now expects revenue to grow at a low-single-digit percentage rate, while net income will decline around a high-teens percentage range.
“Even though most of the current burdens are assumed to be temporary, the uncertainty of these effects is widening the gap to our targets and making a potential catch-up unlikely,” Fresenius Deputy CEO and CFO Helen Giza said in a recent news release. “As a consequence, we have cut our financial targets for the fiscal year 2022 and feel it prudent to withdraw our 2025 targets. We continue to assess opportunities to accelerate and broaden our FME25 transformation program. We strongly believe our business model and the underlying growth drivers to be intact. Our strategy to drive growth in home dialysis and value-based care is more relevant than ever.”
FMS shares were up slightly to $18.36 apiece by midday trading today. MassDevice‘s MedTech 100 Index — which includes stocks of the world’s largest medical device companies — was also up slightly.
$1 = €0.979758