Investor Presentation • Apr 3, 2014
Investor Presentation
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April 3 2014, New York City
New York City
| 09:00 | Welcome Oliver Maier |
12:00 | Global Manufacturing Operations (GMO) Kent Wanzek |
|---|---|---|---|
| 09:10 | Global Overview and Strategy Rice Powell |
12:20 | Medical/Care Coordination Frank Maddux |
| 09:50 | Region: North America Ron Kuerbitz |
12:40 | Q&A |
| 10:20 | Region: Asia Pacific Roberto Fuste |
13:00 | Lunch |
| 10:40 | Region: EMEA Rice Powell |
13:40 | Financials Mike Brosnan |
| 11:00 | Q&A | 14:10 | Summary Rice Powell |
| 11:20 | Break | 14:15 | Q&A |
| 11:40 | Global R&D (GRD) Olaf Schermeier |
14:30 | Finish |
GLOBAL OVERVIEW & STRATEGY Rice Powell
April 3 2014, New York City
| A | Fresenius Medical Care Today - A Global Perspective |
|---|---|
| B | Market Dynamics |
| C | Our Global Strategy |
A Global Perspective
| North America |
|||
|---|---|---|---|
| Provider | Patients | Countries | |
| 171,440 | 2 | ||
| 163,000 | 1 | ||
| 14,000 | 1 | ||
| 14,000 | 1 | ||
| 9,450 | 1 | ||
| 6,550 | 1 |
| Europe, Middle East, Africa | ||
|---|---|---|
| Provider | Patients | Countries |
| 51,540 | 23 | |
| 18,500 | 2 | |
| 18,500 | 14 | |
| 11,500 | 17 | |
| 6,900 | 1 | |
| 2,750 | 3 | |
| 1,650 | 4 |
| Latin America | ||
|---|---|---|
| Provider | Patients | Countries |
| 29,270 | 8 | |
| 8,750 | 2 | |
| 4,250 | 3 | |
| 1,650 | 1 | |
| 850 | 1 |
| Asia Pacific | |||
|---|---|---|---|
| Provider | Patients | Countries | |
| 17,870 | 12 | ||
| Zenjin-Kai | 6,000 | 1 | |
| 5,000 | 1 | ||
| 4,000 | 1 | ||
| 2,650 | 5 | ||
| 1,750 | 5 | ||
| 300 | 1 |
Drivers
\$28.0bn
April 3 2014, New York City
| A | Our Business Today |
|---|---|
| B | Market Dynamics |
| C | Our Strategy & Vision |
| DEMOGRAPHICS* | PAYOR RELATIONSHIPS | GROWTH OPPORTUNITIES |
|---|---|---|
| Stable patient growth >3% |
Stable government reimbursement |
37% of US dialysis market |
| 27.5% of Medicare • population has diabetes • 12.7% of Medicare population has CKD |
Stable commecial reimbursement Single-digit rate growth • |
Targeted dialysis growth opportunities remain |
| ESRD population has multiple co-morbidities |
Steady cash flows |
Additional opportunities in Care Coordination |
| CARE COORDINATION | |||
|---|---|---|---|
| Medicare FFS (Case Mix Adjusted) |
FMCNA Demo | % Improvement | |
| One-year Mortality | 14.6% | 9.3% | 36% |
| Two-year Mortality | 26.1% | 19.9% | 24% |
| Two-year All-Cause Hospitalizations |
76.1% | 60.5% | 20% |
| Two-year CVD Hospitalizations |
75.2% | 59.7% | 21% |
| Readmissions | 0.71 | 0.64 | 10% |
| Physician Visits | 10.57 | 8.43 | 20% |
| SNF Stays | 0.6 | 0.28 | 53% |
FMCNA Demo improved health outcomes and achieved cost savings of 5.1%
Source: Arbor Research: ESRD Demonstration Disease Management Demonstration Evaluation from 2006-2008, the First Three Years of a Five-Year
CARE COORDINATION
DATA ANALYTICS
| Per Patient/Year | |
|---|---|
| Inpatient | \$ 29,706 |
| Dialysis | 26,452 |
| Outpatient | 8,999 |
| Post-acute | |
| (SNF + Home Health + Hospice) | 5,767 |
| Vascular access | 1,755 |
| Nephrology | 3,110 |
| Other specialists | 6,214 |
| Pharmacy | 5,270 |
| Total | \$ 87,273 |
Source: United States Renal Data Service
April 3 2014, New York City
| A | Our Business Today |
|---|---|
| B | Market Dynamics |
| C | Our Strategy |
| C | A Focus on Japan & China |
| Stable HD/PD Ratio |
Increasing Efforts for Healthcare Coverage |
ASEAN Integration Accelerates |
Legal & Political Constraints for NephroCare |
|---|---|---|---|
| HD PD 90% 10% |
China Thailand Indonesia Malaysia Philippines |
Adding US\$1.9tn to Global Economy by 2025 |
Lessening Increasing Constraints Constraints Taiwan China Korea Japan Malaysia Hong Kong |
| 1.4 billion Population 2014 410,230 (+17.5%) Dialysis Patients 2014 5.2% Healthcare Spend as % of GDP |
\$59* Average Reimbursement Varies Across Regions/Cities Universal Coverage by 2020 |
127 million Population 2014 323,646 (+1.9%) Dialysis Patients 2014 9.3% Healthcare Spend as % of GDP |
\$243* Average Reimbursement Reimbursement Encouraging Higher Therapies Stable/Flat Fee Development |
|---|---|---|---|
| 1.2 billion Population 2014 98,727 (+16.1%) Dialysis Patients 2014 3.9% Healthcare Spend as % of GDP |
\$18* Average Reimbursement Not Available for General Public - Only Covers Gov't Employees & Family |
637 million Population 2014 155,994 (+9.6%) Dialysis Patients 2014 3.6% Healthcare Spend as % of GDP |
\$140* \$0 - Average Reimbursement Vastly Different Healthcare Systems & Reimbursement Across ASEAN Countries |
*Average Reimbursement per Treatment (USD)
Source: 2020 Patient Projection, BAO 2013, U.S. Census Bureau (population estimates)
Population (millions)
Providing a Comprehensive & Sustainable Renal Offering
2 Projects Proceeding in Shandong Province
Strong Private Investment in Healthcare Clinics
Rapid Growth in Chronic & Acute HD
Enter into PD Market
• Higher penetration and lower exposure
Japan Deregulation would provide opportunity
2nd Largest Dialysis Patient Population in AP
Reimbursement Encouraging Higher Therapies
Deregulation of Healthcare Services Business
2 Projects Proceeding in Shandong Province
1st Center in Taiwan; Expansion Underway Across Region
Diabetes Care Implementation in Progress
2 Dialysis Care JVs in Place; A 3rd JV to Set Up 3 Clinics Underway
Polyclinics / Labs
Currently in Philippines, Singapore, Malaysia; New Programs to Start in Taiwan, China, India in 2014
Basic machine & economical disposables
Localization via production set-up / acquisitions / OEMs
Global sourcing & enter new markets
Acute Expansion to new markets
Bloodlines In-sourcing
Local portfolios with registrations / new products Channel management agreement with Vifor Pharma
April 3 2014, New York City
| A | Our Business Today |
|---|---|
| B | Market Dynamics |
| C | Our Strategy |
| D | A Focus on some EMEA countries |
Spain, France and Turkey
Murcia 1st Comprehensive Contract Awarded
Catalonia Change to Comprehensive Contract for the Region
39% share of private market
186 HD-patients
Continuous negotiations with Health Insurance and Government
Q&A
GLOBAL R&D (GRD) Olaf Schermeier
April 3 2014, New York City
| A | Global R&D Vision |
|---|---|
| B | Our Strategy |
| C | A Focus on Innovation |
leveraging our vertical integration and adding value through our products and therapy improvements
A Focus in our Business
Arterial Venous
Arterial Venous
April 3 2014, New York City
| A | Our Global Manufacturing Operations Network |
|---|---|
| B | Our Capabilities |
| C | Our Strategy - Adding Value |
• CapEx 4-6% of Product Sales (External + Internal)
April 3 2014, New York City
| A | Our Approach |
|---|---|
| B | Our Strategy |
| C | A Focus on Innovation |
Chronic Disease Care Provider Network Assets
Care Coordination & Performance Risk Assets
Aligning Resources to Coordinate Care Throughout the Health Value Chain
Only 30% of hard outcomes in renal disease patients controlled by dialysis treatment parameters
Outcomes driven by associated illnesses and the management of multiple conditions
2004
Anemia Management
2013 2018
HIF Inhibitors - Novel Agents
$$
\frac{\partial}{\partial t}\int_{\gamma}^{\gamma+\Delta\gamma}\int_{\mu}^{\mu+\Delta\mu}P(t,\xi,\zeta)d\xi d\zeta=2(\text{rate entering iron class }\gamma\text{ from class }2\gamma)
$$
$$
= 2 \int_{\gamma}^{\gamma + \Delta \gamma} \int_{\mu}^{\mu + \Delta \mu} \beta P(t, \xi, 2\zeta) d\xi d\zeta
$$
\n
$$
- \int_{\gamma}^{\gamma + \Delta \gamma} \int_{\mu}^{\mu + \Delta \mu} \beta P(t, \xi, \zeta) d\xi d\zeta
$$
\n
$$
- \int_{\gamma}^{\gamma + \Delta \gamma} \int_{\mu}^{\mu + \Delta \mu} \delta P(t, \xi, \zeta) d\xi d\zeta
$$
\n
$$
+ \int_{\gamma}^{\gamma + \Delta \gamma} \rho P(t, \mu, \zeta) d\zeta - \int_{\gamma}^{\gamma + \Delta \gamma} \rho P(t, \mu + \Delta \mu, \zeta) d\zeta
$$
\n
$$
+ \int_{\mu}^{\mu + \Delta \mu} h P(t, \xi, \gamma) d\xi - \int_{\mu}^{\mu + \Delta \mu} h P(t, \xi, \gamma + \Delta \gamma) d\xi,
$$
Dustin Kapraun, Peter Kotanko, Franz Kappel and Doris Furtinger
Fluid Management Strategies
Maintaining Nutritional Competence
Random Forest
| 13:40 | Financials - Mike Brosnan |
|---|---|
| 14:10 | Summary - Rice Powell |
| 14:15 | Q&A |
April 3 2014, New York City
| A | Global Efficiency Program |
|---|---|
| B | Financial Outlook |
| C | Capital Allocation |
| D | Summary |
(Average Annual, Constant Currency)
| 2015 - 2020 |
||||
|---|---|---|---|---|
| Volume/ Patient |
Price/ Mix |
Market Share/ Acquisitions |
Total Growth |
|
| Products | 3-4% | ±2% | 1-2% | 4-7% |
| Services | 5-6% | ±1% | 1-2% | 6-8% |
| Care Coordination |
>10% |
Total Revenue Growth Rate (p.a.) ~10%
Net Income Growth Rate (p.a.) High Single Digit
EPS Growth Rate (p.a.) High Single Digit
(as of December 31, 2013)
(as of December 31, 2013)
Leverage as Funded Debt to EBITDA
Page 20
| Growth | In Services, in Products and in Care Coordination |
|---|---|
| Efficiency | Identified areas with efficiency potential to be incorporated under the Global Efficiency Program (GEP) |
| Shareholder Value |
Sustainable Increase in EPS Reliable Dividend |
April 3 2014, New York City
Q&A
New York City
Safe Harbor Statement: This presentation includes certain forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Act of 1934, as amended. The Company has based these forward-looking statements on its views with respect to future events an financial performance. Actual results could differ materially from those included in the forward-looking statements due to various risk factors and uncertainties, including changes in business, economic competitive conditions, regulatory reforms, foreign exchange rate fluctuations, uncertainties in litigation or investigative proceedings and the availability of financing. Given these uncertainties, readers should not put undue reliance on any forward-looking statements. These and other risks and uncertainties are discussed in detail in Fresenius Medical Care AG & Co. KGaA's (FMC AG & Co. KGaA) reports filed with the Securities and Exchange Commission (SEC) and the German Exchange Commission (Deutsche Börse).
Forward-looking statements represent estimates and assumptions only as of the date that they were made. The information contained in this presentation is subject to change without notice and the company does not undertake any duty to update the forward-looking statements, and the estimates and assumptions associated with them, except to the extent required by applicable law and regulations.
If not mentioned differently the term net income after minorities refers to the net income attributable to the shareholders of Fresenius Medical Care AG Co. KGaA independent of being the reported or the adjusted number. Numbers mentioned are in US-\$.
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