Specialist
Director at DaVita Inc
Agenda
- European dialysis market including key market growth drivers and impact of elevated mortality rates during coronavirus among dialysis patients
- Key cost breakdown – labour costs and recruitment headwinds
- Impact of Fresenius’ (ETR: FRE) new operation model, including the split into Care Enablement and Care Delivery and annual cost base reduction
- Future geographic expansion into APAC and Middle East
Questions
1.
What have been the key headwinds during the pandemic for dialysis players such as Fresenius? How are patient volume demands trending?
2.
To what extent has demand volume declined? Has there been any larger impact from newer coronavirus variants such as Delta and Omicron?
3.
What are your expectations for the impact of mortality rates on the dialysis market? You also mentioned consultation revenues are a main risk during pandemics. What is your longer-term outlook?
4.
Mortality amongst dialysis patients increased during Q3 2021 to about 2,700 from about 1,900 in Q2. How likely do you think it is that earnings are pushed to the lower end of management’s 2021 guidance range of a decline in the mid-20s? What should investors have in mind as they think about upcoming earnings?
5.
What other headwinds should we monitor in the dialysis market? We’ve already discussed the high mortality and the consultations being frozen or delayed. What are the tailwinds?
6.
You suggested that in the long term, there could be a higher dialysis population within those who perhaps had COVID-19. What increase could there be? What do you mean by long term?
7.
You outlined the headwind associated with labour costs, which is pertinent in light of the pressure on clinical efficiency and labour and supply costs. How should we think about labour costs in this market and what’s your outlook? How strained will this continue to be over the next two years?
8.
How might wage inflation trend in this market?
9.
What is the level of wage inflation in markets such as the US or Germany? What’s your estimated expectations if we take a medium-term outlook?
10.
You outlined a potential 3-4% increase in wage inflation. What might be the impact on margins? How can Fresenius bargain with an increase in labour costs?
11.
What are your thoughts on Fresenius’ new model, detailing plans to split into Care Enablement and Care Delivery? How might this contribute to growth?
12.
How do you expect the revenue split to trend across Care Enablement and Care Delivery? What might be the key drivers?
13.
Are there concerns or headwinds around Fresenius’ new operating model or are you overall quite positive on this split?
14.
Another part of Fresenius’ new operating model includes plans to reduce its annual cost base by around EUR 500m for the end of 2025. How realistic do you think this is?
15.
Is there a trend towards PD [peritoneal dialysis] and home HD [haemodialysis] from in-clinic HD, specific to the European market? What is the market split and how might that trend?
16.
Fresenius acquired NxStage Medical in February 2019 for home dialysis and this seems differentiated in the industry for ease of use and physician size. What are your thoughts on this particular acquisition and including any potential head- or tailwinds?
17.
How might reimbursement in Europe compare between the different dialysis settings? What are the dynamics today and what potential key shifts or changes should investors monitor?
18.
Are there any signs of regulators across Europe trying to tighten pricing to reduce margins?
19.
In which regions do you think reimbursement could grow?
20.
How can Fresenius drive organic growth? What do you think will be the key difficulties?
21.
How might growth differ between different markets? Where is the number of treatments growing fastest YoY across Europe vs APAC vs the Middle East?
22.
How should we be thinking about long-term growth for Fresenius? Its stock fell into severe correction in early 2021 due to pandemic-related concerns. What is your longer-term outlook? What are your thoughts on analyst consensus of 2.4-8.9% CAGR?
23.
What’s your short-to-mid-term M&A outlook for Fresenius, highlighting the key regions of growth or acquisition focus? The company has been highly acquisitive historically.
24.
How are multiples trending? What’s your longer-term outlook for multiples?
25.
How are multiples trending in China and the Middle East?
26.
How do you consider Fresenius’s competitive position within APAC or the Middle East?
27.
What 3-5 KPIs do you consider important for investors to monitor over the next 1-2 years around Fresenius or the wider dialysis market?
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