Fresenius SE & Co. KGaA — Investor Presentation 2016

Sep 7, 2016

A Leading Global Health Care Group

Bank of America Merrill Lynch European Credit Conference September 7, 2016 – London

Safe Harbor Statement

This presentation contains forward-looking statements that are subject to various risks and uncertainties. Future results could differ materially from those described in these forward-looking statements due to certain factors, e.g. changes in business, economic and competitive conditions, regulatory reforms, results of clinical trials, foreign exchange rate fluctuations, uncertainties in litigation or investigative proceedings, and the availability of financing. Fresenius does not undertake any responsibility to update the forward-looking statements contained in this presentation.

Agenda

• 1 Company Overview
• 2 Business Segments
• − Fresenius Medical Care
• − Fresenius Kabi
• − Fresenius Helios
• − Fresenius Vamed
• 3 Financial Overview
• 4 Financing Facilities and Debt Structure
• 5 Summary and Outlook

Company Overview

Fresenius Group: A Global Leader in Health Care Products and Services

• − Sales €28.2 bn, net income1 €2.5 bn in LTM June 30, 2016
• − Strong and well-diversified portfolio
• − Leading market positions
• − Global presence
• − Long-term opportunities in growing, non-cyclical markets

1 – Net income incl. attributable to non-controlling interest, 2015 before special items

Fresenius Group: Strong and Balanced Health Care Portfolio

• 1 LTM June 30, 2016
• 2 2015 before special items
• 3 Based on market capitalization of FSE as of August 31, 2016
• 4 Based on consolidated market capitalization of FSE and FME as of August 31, 2016 and consolidated net debt as of June 30, 2016
• 5 Held by Fresenius ProServe GmbH, a wholly owned subsidiary of FSE
• 6 Based on market capitalization of FME as of August 31, 2016

Fresenius Group: Financial Results

2 – Incl. attributable to non-controlling interest

3 – 2011 sales were adjusted by -€161 m according to a U.S. GAAP accounting change. This solely relates to Fresenius Medical Care North America

Fresenius Group: Sustainable Organic Sales Growth

Fresenius Group: Sustainable Organic Sales Growth in all Business Segments

1 – LTM June 30, 2016

2 – Due to project delays in Russia and Ukraine

Fresenius Group: Key Financials H1/16

1 – 2015 before special items

2 – Incl. attributable to non-controlling interest, 2015 before special items

Financial results by business segment

	H1/2016	Growth H1 YoY
Sales	\$8,626 m	6%
EBIT	\$1,181 m	12%
Sales	€2,946 m	0%
EBIT 1	€616 m	8%
Sales	€2,912 m	5%
EBIT 1	€332 m	8%
Sales	€472 m	2%
EBIT	€16 m	0%

1 – 2015 before special items

Business Segments

Fresenius Medical Care: Global Market Leader in Dialysis

• − World leader in dialysis products and services treating 301,548 patients in 3,504 clinics worldwide 1
• − Provide highest standard of patient care
• − Vertical integration
• − High quality products & services
• − Complete therapy offerings
• − Leader in growing market
• − Dialysis market growing 4% cc and estimated to reach around \$100 bn by 2020
• − Patient growth driven by age, life style and mortality reduction
• − Growth opportunities in emerging markets

~6% global patient growth p.a.

~3.8 million patients by 2020 expected

1 – As of June 30, 2016

Fresenius Medical Care: Market Leader in All Regions ¹

North America Provider Patients Countries 186,100 2 185,200 1 24,000 1 15,200 1 13,800 1

Europe, Middle East, Africa

Provider	Patients	Countries
	58,500	26
	24,200	15
	18,700	1
	18,300	22
	7,000	1
	4,290	4
Other	2,290	3

Latin America

Provider	Patients	Countries
	29,920	7
	8,270	3
	4,730	3
	3,250	1
	1,530	2

Asia Pacific

Provider	Patients Countries
	27,000	12
	5,300	6
Showai-Kai	5,150	5
	4,030	1
	3,300	5
	550	2

1 – Company data and internal estimates, as of June 30, 2015

Fresenius Medical Care: Key Figures H1/2016

\$ million	H1/2016	H1/2015	Growth
Total Sales	8,626	8,159	+6% 1
EBITDA	1,557	1,408	+11%
margin	18.1%	17.3%
EBIT	1,181	1,051	+12%
margin	13.7%	12.9%
Interest, net	-208	-204	-2%
EBT	973	847	+15%
Taxes	-306	-273	-12%
Non-controlling interest	-145	-124	-17%
Net Income 2	522	450	+16%

1 – 7% organic growth, 1% acquisitions, 0% divestitures, -2% currency effects

2 – Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA

Fresenius Medical Care: Leverage Ratio and Ratings

1 – Adjusted due to debt issuance cost restatement (U.S. GAAP standard ASU 2015-03)

Fresenius Medical Care: Proven Track Record of Deleveraging

3 – Excluding strategic charges

4 – Medspring Urgent Care Centers, Sound Inpatient Physicians, National Cardiovascular Partners and Cogent

Fresenius Kabi: A Worldwide Leading Hospital Supplier

• − Comprehensive product portfolio for critically and chronically ill patients:
• − Generic I.V. Drugs
• − Clinical Nutrition
• − Infusion Therapy
• − Medical Devices / Transfusion Technology
• − Global addressable market: >€33 bn
• − Leading market positions
• − Focus on organic growth driven by geographic product rollout and robust product pipeline
• − Aim to expand the business through selective acquisitions

Fresenius Kabi: Strong Growth Track Record & High Profitability

1 – Before special items

2 – LTM June 30, 2016

Fresenius Kabi: Key Figures H1/2016

€ million	H1/2016	H1/2015	Growth
Sales	2,946	2,932	0% 1
- I.V. Drugs	1,251	1,191	+5%
- Clinical Nutrition	770	772	0%
- Infusion Therapy	419	468	-10%
- Medical Devices/
- Transfusion Technology	506	501	1%
EBITDA 2	740	691	+7%
margin	25.1%	23.6%
EBIT 2	616	571	+8%
margin	20.9%	19.5%
Net Income 3	359	309	+16%

1 – 6% organic growth, 0% acquisitions, -2% divestitures, -4% currency effects

2 – 2015 before special items

3 – Net income attributable to shareholders of Fresenius Kabi AG, 2015 before special items

Fresenius Helios: Leading Hospital Operator in Germany

• − German Acute Care Hospital Market: ~€91 bn1, thereof 18% privatized
• − ~ 6% share in German Acute Care Hospital Market
• − High-quality medical care
• − Solid organic growth based on growing number of admissions and reimbursement rate increases
• − Strong track record in hospital operations and acquisitions: targeting 12 − 15% EBIT margin within 6 years per individual clinic location
• − Negligible bad debt ratio due to comprehensive insurance coverage of German population

1 – German Federal Statistical Office 2015; total costs, gross of the German hospitals less academic research and teaching

2 – As of June 30, 2016

Fresenius Helios: Strong Growth Track Record & High Profitability

2 – LTM June 30, 2016

Fresenius Helios: Performance Indicators

	H1/2016	H1/2015	Change
No. of hospitals1	112	111	1%
- Acute care clinics	88	87	1%
- Post-acute care clinics	24	24	0%
No. of beds1	34,766	34,076	2%
- Acute care clinics	29,654	28,914	3%
- Post-acute care clinics	5,112	5,162	-1%
Admissions
- Acute care (inpatient)	618,444	597,820	3%
Occupancy
- Post-acute care	80%	81%
Average length of stay (days)
Acute care2 -	6.4	6.5
- Post-acute care	26.3	26.7

1 – December 31, 2015

2 – German average (2014): 7.4

€ million	H1/2016	H1/2015	Growth
Total Sales	2,912	2,774	+5% 1 1
EBITDA 2 margin	427 14.7%	399 14.4%	+7%
EBIT 2 margin	332 11.4%	307 11.1%	+8%
Net Income 3	262	226	+16%

1 – 4% organic growth, 1% acquisitions, 0% divestitures, 0% currency effects

2 – 2015 before special items

3 – Net income attributable to shareholders of HELIOS Kliniken GmbH, 2015 before special items

Fresenius Vamed: A Leading Global Specialist in Hospital Projects and Services

• − Specialized in project development, building hospital infrastructure and providing hospital services (technical services and operational management)
• − Track record:
• − >760 health care projects in 78 countries successfully completed
• − Services provided to > 550 hospitals and 135,000 beds globally
• − Continuous demand for hospital infrastructure and operating efficiency; key markets: Europe, Asia-Pacific, Africa

Financial Overview

Fresenius Group: Key Figures H1/2016

€ million	H1/2016	H1/2015	Change	Change
			actual rates	constant rates
Sales	14,006	13,429	+4% 1	+6%
EBITDA 2	2,576	2,364	+9%	10%
EBIT 2	2,010	1,822	+10%	11%
Interest, net	-291	-330	+12%	+11%
EBT 2	1,719	1,492	+15%	+16%
Taxes 2	-491	-441	-11%	-12%
Net Income 3	1,228	1,051	+17%	+17%
Employees	227,856	220,339

1 – 6% organic growth, 1% acquisitions, -1% divestitures, -2% currency effects

2 – 2015 before special items

3 – Net income incl. attributable to non-controlling interest, 2015 before special items

€m	H1/2016	LTM Margin	H1/2015	LTM Margin	Growth YoY
Operating Cash Flow	1,330	12.1%	1,251	11.9%	6.3%
Capex (net)	-680	-5.5%	-605	-5.4%	-12.4%
Free Cash Flow (before acquisitions and dividends)	650	6.6%	646	6.5%	0.6%
Acquisitions (net)	-264		-16
Dividends	-592		-523
Free Cash Flow (after acquisitions and dividends)	-206	3.1%	107	0.1%

Fresenius Group: Cash Flow Development LTM June 30, 2016

		Operating CF	Capex	(net)		Free Cash Flow1
€ million	LTM	LTM Margin	LTM	LTM Margin	LTM	LTM Margin
	894	15.0%	-305	-5.1%	589	9.9%
	617	10.8%	-292	-5.1%	325	5.7%3
	98	8.7%	-8	-0.7%	90	8.0%
Corporate/Other	8	n.a.	-11	n.a.	-3	n.a.
Excl. FMC	1,617	13.3%2	-616	-4.8%	1,001	8.5%2
	1,789	11.5%	-921	-5.9%	868	5.6%
Group	3,406	12.1%	-1,537	-5.5%	1,869	6.6%

1 - Before acquisitions and dividends

2 - Margin incl. FMC dividend

3 - Understated: 6.6% excluding €55 million of capex commitments from acquisitions

Fresenius Group: Proven Track Record of Deleveraging

Net Debt/EBITDA

1 – Pro forma acquisitions, before special items

2 – Before special items

3 – Adjusted due to debt issuance cost restatement (U.S. GAAP standard ASU 2015 – 03)

4 – Pro forma excluding advances made for the acquisition of hospitals from Rhoen-Klinikum AG, before special items

5 – At annual average FX rates for both EBITDA and net debt, excluding potential acquisitions

Fresenius Group: Debt and Interest Ratios

• 1 At annual average FX rates for both EBITDA and net debt
• 2 Pro forma acquisitions; before special items
• 3 Pro special items
• 4 2011 2014 adjusted due to debt issuance cost restatement (U.S. GAAP standard ASU 2015-03)
• 5 At annual average FX rates for both EBITDA and net debt, without large unannounced acquisitions

Fresenius Group: Current Debt and Cash Flow Structure – June 30, 2016

• 1 External debt as of June 30, 2016
• 2 Incl. Fresenius Finance B.V. and other financing subsidiaries

• 3 Controlling stake

• 4 As held by Fresenius ProServe GmbH, a wholly owned subsidiary of Fresenius SE & Co. KGaA, which provides the guarantees

• 5 Incl. subsidiaries

Fresenius Group: Capitalization – June 30, 2016

	in € million	in \$ million3	% of total cap	EBITDA LTM x
FSE 2013 Credit Agreement: Revolver (€, US-\$)	0	0	0.0%
FSE 2013 Credit Agreement: Term Loan A (€, US-\$)	1,657	4 1,840	2.5%
Senior Notes (€, US-\$)	2,738	3,040	4.1%
Convertible Bonds	473	525	0.7%
Schuldschein Loans	1,169	1,298	1.8%
Commercial Paper	190	211	0.3%
Other debt less total debt issuance costs, gross	574	637	0.9%
Total Debt (FSE excl. FMC), gross	6,801	7,551	10.2%
Cash (excl. FMC)	459	510	0.7%
Total debt (FSE excl. FMC), net	6,342	7,041	9.5%
Total FMC debt, net	7,532	8,362	11.3%
Consolidation Adjustments	(12)	(13)
Total consolidated debt, net	13,862	15,390	20.8%	2.6x 2
Market capitalization1	52,639	58,598	79.2%	10.0x
Total capitalization	66,501	73,988	100.0%	12.6x
FSE Group EBITDA2				5,295

1 - Based on market capitalization for FSE and FMC as of August 31, 2016

2 - 2015 before special items; pro forma acquisitions

3 - Exchange rate as of as of June 30, 2016, except for market capitalization which uses exchange rate as of as of August 31, 2016

Fresenius Medical Care: Debt Maturity Profile¹ - June 30, 2016

1 - Based on utilization of major financing instruments

Fresenius Group ex. Fresenius Medical Care: Debt Maturity Profile¹ - June 30, 2016

Senior Notes Schuldschein Loans Credit Agreement Equity-neutral convertible bonds Commercial Papers

1 - Based on utilization of major financing instruments

Fresenius Group: Debt Maturity Profile¹ - June 30, 2016

Fresenius Medical Care Fresenius excl. Fresenius Medical Care

1 - Based on utilization of major financing instruments

Summary and Outlook

Fresenius Medical Care: 2016 Financial Outlook

		Revenue growth at constant currency	+7% - 10%
		Net Income growth at current exchange rate	+15% - 20%

• Including savings from the Global Efficiency Program
• Acquisitions 2015/2016 are not included
• Net income growth based on \$1,057 million in 2015 1
• 1 Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA (\$1,029 million), including GranuFlo®/NaturaLyte® agreement in principle (+\$37 million) and excluding acquisitions in 2015 of \$9 million

Fresenius Group: 2016 Financial Outlook by Business Segment

		Old	New
	Sales growth organic	low single-digit	3% – 5%
	EBIT constant currency	roughly flat	3% – 5%
	Sales growth organic	3% – 5%	unchanged
	EBIT	€670 – 700 m	unchanged
	Sales growth organic	5% – 10%	unchanged
	EBIT growth	5% – 10%	unchanged

Fresenius Group: 2016 Financial Guidance

	2015	2016
	Actual	Old	New
Sales growth	€27.6 bn	6% – 8%	unchanged
constant currency
Net income1 growth	€1,423 m	8% – 12%	11% – 14%
constant currency

1 - Net income attributable to shareholders of Fresenius SE & Co.KGaA; 2015 before special items

Fresenius Group: Confirming mid-term growth targets

2019:

€36 - 40 billion in sales €2.0 - 2.25 billion in net income

At comparable exchange rates

Includes small and mid-size acquisitions

EAT CAGR at mid-point of mid-term target: 10.5% (Previous implied EAT CAGR of mid-term target: 8.4%)

Net income attributable to shareholders of Fresenius SE & Co.KGaA; 2015 before special items

Aging Population and Higher Incidence of Chronic Diseases

60+	World population age 60+ by 20501 will reach >2 bn
80+	World population age 80+ will reach ~400 million by 20501
	In 2050, 80% of older people will live in Developing and Emerging Markets1
52m	Deaths due to Chronic Diseases are projected to increase from 38 million by 20302 in 2012 to 52 million

1 - WHO: 10 facts on aging and the life course

2 - WHO: Global status report on non communicable diseases

Increasing Health Care Spending

Increasing health expenditure per capita (2014 vs. 2004 - USA US\$9,403 (+147%), China: US\$420 (+592%), India: US\$75 (+277%)1

By 2022, one third of all global health expenditure will occur in Emerging Economies2

~4%

1/3

Health care spending in developed countries is growing steadily (2012-2022 with ~4% p.a.2)

1 - World Bank: Health expenditure per capita;

2 - World Economic Forum: Health Systems Leapfrogging in Emerging Economies – Project Paper (2014)

Investment Highlights