Fresenius Medical Care AG & Co. FMS reported fourth-quarter 2024 adjusted earnings per share (EPS) of 48 cents, which surpassed the Zacks Consensus Estimate by 17.1%. The bottom line improved 2.1% year over year.

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FMS’ Revenue Details

Revenues of $5.43 billion (EUR 5,085 million) surpassed the Zacks Consensus Estimate by 0.7%. The company’s reported revenues were up 1.9% year over year and 1.6% at constant currency (cc). Also, revenues were up 7.4% organically.

Per management, during the fourth quarter, divestitures realized as part of the portfolio optimization plan affected revenue development by -250 basis points.

Segmental Details

Fresenius Medical implemented a new operating model during the first quarter and started reporting under two new segments, Care Delivery and Care Enablement.

Care Delivery

The segment’s revenues were down 0.8% on a year-over-year basis and 1.2% at cc but gained 6.3% on an organic basis.

Revenues in the U.S. markets improved 1.1% reportedly and gained 6.8% on an organic basis. The top line improved 0.5% year over year at cc. Growth was driven by the value-based care business and an overall increase in treatment volumes, higher reimbursement rates and a favorable payor mix shift, partially offset by the absence of the Tricare Settlement in 2024.

Per management, during the fourth quarter of fiscal 2024, U.S. same-market treatment growth further improved sequentially. During the fourth quarter, adjusted for the exit from less profitable acute care contracts (-0.1%), underlying U.S. same market treatment growth remained positive (+0.5%).

International sales declined 10.3% reportedly and 9.7% at cc but gained 3.6% on an organic basis. The decline was due to divestments realized as part of the portfolio optimization plan and was partially offset by organic growth and an increase in dialysis days. The organic growth was supported by accelerated same-market treatment growth of 1.5% and higher reimbursement rates.

Care Enablement

The segment’s revenues increased 11.3% year over year reportedly, as well as at cc and 9.7% organically. The growth was driven by solid volume development across all geographical regions. Also, the continued pricing momentum, excluding China, added to this growth. Per management, volume-based procurement in China developed in line with expectations and was supportive of volume growth.

Margin Analysis

In the quarter under review, Fresenius Medical’s gross profit declined 5.9% year over year. The gross margin contracted 207 basis points (bps) to 24.9%.

Selling, general & administrative expenses declined 0.7% on a reported basis. Research and development expenses decreased 24.1% year over year.

Adjusted operating income declined 13.2% from the prior-year quarter. The adjusted operating margin in the fourth quarter contracted 131 bps to 7.5%.

2025 Guidance

In 2025, Fresenius Medical expects revenue growth to be positive, with a low-single-digit percent rate compared to the prior year. The company also expects operating income to grow by a high-teens to high-twenties percent rate compared to the prior year.

Fresenius Medical Care AG & Co. KGaA Price, Consensus and EPS Surprise

Fresenius Medical Care AG & Co. KGaA price-consensus-eps-surprise-chart | Fresenius Medical Care AG & Co. KGaA Quote

Our Take

FMS exited the fourth quarter on a better-than-expected note, with its earnings and revenues surpassing its respective consensus estimate. Overall pricing momentum also supported growth in the Care Enablement segment. However, the effects of elevated mortality will likely continue to have a negative impact on sales.

Per management, the FME25 transformation program delivered EUR 221 million additional sustainable savings for 2024, ahead of the upgraded full-year target of around EUR 200 million. Accumulated savings of the entire program reached EUR 567 million. Due to the program’s strong momentum, FMS decided to raise the target for sustainable annual savings by EUR 100 million to now EUR 750 million by the end of 2025. The company assumes related one-time costs of EUR 700 million to EUR 750 million for the total FME25 transformation program.

The company’s continued divestment of its noncore and dilutive assets seems promising as it will help focus on its core and growing categories as well as boost its cash resources.

FMS’s Zacks Rank & Stocks to Consider

FMS carries a Zacks Rank #3 (Hold) at present.

Some better-ranked stocks from the industry have been discussed below.

Avenna Healthcare AVAH, sporting a Zacks Rank #1 (Strong Buy) at present, has an estimated earnings growth rate of 666.7% for 2025. You can see the complete list of today’s Zacks #1 Rank stocks here.

AVAH delivered a trailing four-quarter average earnings surprise of 135.00%. The company is expected to release fourth-quarter results in March. Its shares have lost 4% in the past six months against the industry’s 2.1% growth.

Alphatec ATEC, carrying a Zacks Rank #2 (Buy) at present, has an estimated growth rate of 40% for 2025. Its earnings missed estimates in each of the trailing four quarters, delivering a negative average surprise of 12.60%. The company is scheduled to release fourth-quarter results on Feb. 26.

ATEC’s shares have gained 87.7% against the industry’s 0.1% decline in the past six months.

Masimo MASI, carrying a Zacks Rank #2 at present, has an estimated growth rate of 9.5% for 2025.

MASI’s earnings surpassed estimates in each of the trailing four quarters, delivering an average surprise of 17.10%. Its shares have risen 47% against the industry’s 0.1% decline in the past six months. The company is scheduled to release fourth-quarter results today.

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