Fresenius Medical Care FMS is one of the largest integrated providers of products and services for individuals undergoing dialysis due to chronic kidney failure. Operating through a network of over 3,700 clinics worldwide, the company delivers dialysis services and products across more than 140 countries.
Business Segments Driving Growth
Fresenius Medical Care reports its operations under two main segments:
Care Delivery: This encompasses the company’s Dialysis Services and Care-Coordination (non-dialysis laboratory services). During the first nine months of 2024, it contributed 78.2% to FMS’ net revenues.
Care Enablement: This includes Dialysis machines, dialyzers, dialysis solutions, hemodialysis concentrates, bloodline systems, water treatment systems, dialysis drugs and other medical products. It accounted for 21.8% of FMS’ net revenues during the same period.
The company’s organic quarterly performance has been bolstered by value-based care business growth, higher reimbursement rates and a favorable payer mix in the United States. Overall price improvements have further supported growth in the Care Enablement segment.
Additionally, FMS’ newly implemented operating model has driven operational efficiencies. Although quarterly performance reflects unfavorable impact of strategic divestments of non-core and underperforming assets, this is expected to sharpen the focus on key growth areas and enhance cash flow over the long term.
FMS’ shares have risen 14.3% year to date compared with the industry’s growth of 5.2%. The rise in stock price has largely been fueled by top-line growth in recent quarters. However, the broader S&P 500 Index experienced a 27.8% gain during the same period.
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Diversified Product Portfolio Boosts FMS’ Prospects
Fresenius Medical offers an extensive range of Hemodialysis, Peritoneal dialysis and Acute dialysis products. The company remains committed to broadening its home dialysis offerings to enhance patients’ quality of life and expand treatment options. In 2023, approximately 15% of its dialysis treatments in the United States were conducted in a home setting, consistent with the previous year. By 2025, it aims to perform 25% of all U.S. treatments in patients’ homes.
FMS’ Strong Global Foothold Buoys Optimism
Fresenius Medical Care holds a strong presence across North America, Europe (EMEA), Asia Pacific and Latin America. To reinforce its market position, the company is leveraging strategies such as organic growth and acquisitions. It also seeks to expand its business through public-private partnerships in the dialysis sector, opening new market opportunities.
Recent initiatives include entering the dialysis services market in Israel and expanding operations in India by acquiring an 85% stake in Sandor Nephro Services. This acquisition adds to its global reach, enabling treatment for 308,471 patients across 3,624 dialysis clinics. The third quarter of 2024 showed robust contributions from Asia Pacific, EMEA and Latin America.
Restructuring Initiatives Drive Savings
In October 2020, Fresenius Medical unveiled its 2025 strategy during its Capital Markets Day. This strategy prioritizes patient needs and care quality while aligning with industry trends, setting the stage for sustainable growth over the medium and long term. The FME25 transformation program is a key part of this strategy, targeting significant cost savings by 2025.
During the second quarter, FMS saved 64 million euros through FME25 initiatives. The company aims to realize savings of more than 100-150 million euros in 2024 and 650 million euros by the end of 2025.
Factors Hurting FMS Stock
Fresenius Medical faces intense competition from major players like HCA Holdings, DaVita HealthCare and Baxter International, which could potentially limit its market share and sales opportunities. However, management has indicated that competitive pressure poses a low risk in the short to medium term.
Moreover, operating in a highly regulated environment presents additional challenges. Compliance with stringent healthcare and antitrust regulations across various countries is mandatory. Violations of these regulations could result in severe legal and financial repercussions for the company.
Fresenius Medical Care AG & Co. KGaA Price
Fresenius Medical Care AG & Co. KGaA price | Fresenius Medical Care AG & Co. KGaA Quote
Zacks Rank & Other Stocks to Consider
Fresenius Medical currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader medical space are Masimo MASI, Accuray ARAY and Abbott Laboratories ABT.
Masimo, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated growth rate of 11.8% for 2025. You can see the complete list of today’s Zacks #1 Rank stocks here.
MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%. Its shares have risen 51.2% compared with the industry’s 5.2% growth year to date.
Accuray, carrying a Zacks Rank #2 at present, has an estimated growth rate of 1200% for 2025. Its earnings missed estimates in three of the trailing four quarters and met in one, delivering an average negative surprise of 141.97%.
ARAY’s shares have lost 31.1% against the industry’s 5.2% growth year to date.
Abbott, carrying a Zacks Rank of 2 at present, has an estimated earnings growth rate of 10% for 2025. It delivered a trailing four-quarter average earnings surprise of 1.64%.
ABT’s shares have risen 2.3% year to date compared with the industry’s 11.5% growth.
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