Fresenius Medical Care AG (NYSE: FMS)

Sector: Healthcare Industry: Medical Care Facilities CIK: 0001333141
Market Cap 14.10 Bn
P/B 0.93
P/E 16.69
P/S 0.61
ROIC (Qtr) 3.39
Div Yield % 3.41
Rev 1y % (Qtr) 8.66
Total Debt (Qtr) 14.98 Bn
Debt/Equity (Qtr) 0.98

About

Fresenius Medical Care AG, also known as FMS, is a prominent global healthcare provider specializing in dialysis and related services. It is based in Germany and is renowned for developing, manufacturing, and distributing a wide range of healthcare products. The company's operations span over 150 countries, with a significant focus on the United States, Europe, and Asia. Fresenius Medical Care is the largest provider of dialysis services in the United States, treating over 300,000 patients. Fresenius Medical Care generates revenue through its...

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Price action

Investment thesis

Bull case

  • Robust free cash flow of 2.11B exceeds capital expenditure of 839.77M by 2.52x, indicating strong organic growth funding capability.
  • Retained earnings of 13.93B provide full 1.24x coverage of long-term debt 11.22B, indicating strong internal capital position.
  • Cash reserves of 1.48B provide ample 4.69x coverage of acquisition spending 315.33M, enabling strategic growth opportunities.
  • Robust tangible asset base of 18.88B provides 7.77x coverage of working capital 2.43B, indicating strong operational backing.
  • Free cash flow of 2.11B provides robust 10.61x coverage of R&D expenses 199.30M, enabling sustainable innovation investment.

Bear case

  • Operating cash flow of 2.95B barely covers its investment activities of (498.23M), with a coverage ratio of -5.93, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Investment activities of (498.23M) provide weak support for R&D spending of 199.30M, which is -2.50x, suggesting potentially insufficient investment in innovation relative to other capital deployment.
  • Operating earnings of 1.62B show weak coverage of depreciation charges of 1.89B, with a 0.86 ratio indicating high capital intensity and potential reinvestment needs.
  • Free cash flow of 2.11B represents just -1.85x of debt issuance (1.15B), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • High depreciation of 1.89B relative to operating cash flow of 2.95B, which is 0.64x suggests significant maintenance capital requirements affecting free cash flow.

Peer comparison

Companies in the Medical Care Facilities
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 HCA HCA Healthcare, Inc. 114.88 Bn 18.11 1.54 46.35 Bn
2 THC Tenet Healthcare Corp 18.07 Bn 13.34 0.87 13.19 Bn
3 UHS Universal Health Services Inc 14.64 Bn 10.65 0.86 5.11 Bn
4 FMS Fresenius Medical Care AG 14.10 Bn 16.69 0.61 14.98 Bn
5 EHC Encompass Health Corp 12.55 Bn 19.95 2.17 2.66 Bn
6 ENSG Ensign Group, Inc 10.08 Bn 30.72 2.09 2.16 Bn
7 DVA Davita Inc. 8.90 Bn 11.53 0.67 12.78 Bn
8 CHE Chemed Corp 6.38 Bn 22.87 2.52 0.14 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.89 1.26
EV to Cash from Ops. EV/CFO 10.99 12.78
EV to Debt EV to Debt 2.17 12.10
EV to EBIT EV/EBIT 20.00 10.74
EV to EBITDA EV/EBITDA 9.44 16.04
EV to Free Cash Flow [EV/FCF] EV/FCF 15.36 18.02
EV to Market Cap EV to Market Cap 2.31 432.64
EV to Revenue EV/Rev 1.41 2.77
Price to Book Value [P/B] P/B 0.92 -1.92
Price to Earnings [P/E] P/E 16.63 5.13
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 0.00 0.10
Dividend Payout Ratio % Div Payout % (Qtr) 56.60 -13.44
Dividend per Basic Share Div per Share (Qtr) 0.82 0.27
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 26.61 5.42
Interest Coverage Int. cover (Qtr) 3.57 -97.94
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -9.37 -114.65
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) -3.00 65.22
Dividend Growth (1y) % Div 1y % (Qtr) 28.55 0.97
EBIAT Growth (1y) % EBIAT 1y % (Qtr) 13.09 -46.98
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -0.96 75.97
EBIT Growth (1y) % EBIT 1y % (Qtr) 3.06 -61.19
EBT Growth (1y) % EBT 1y % (Qtr) 5.17 -115.48
EPS Growth (1y) % EPS 1y % (Qtr) 15.29 -24.32
FCF Growth (1y) % FCF 1y % (Qtr) 20.25 309.51
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 7.53 17.88
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.75 1.04
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.04
Cash Ratio Cash Ratio (Qtr) 0.22 0.39
Current Ratio Curr Ratio (Qtr) 1.36 1.39
Debt to Equity Ratio Debt/Equity (Qtr) 0.98 -13.19
Interest Cover Ratio Int Coverage (Qtr) 3.57 -97.94
Times Interest Earned Times Interest Earned (Qtr) 3.57 -97.94
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 15.20 -95.81
EBIT Margin % EBIT Margin % (Qtr) 5.97 -94.97
EBT Margin % EBT Margin % (Qtr) 5.06 -105.60
Gross Margin % Gross Margin % (Qtr) 25.00 23.31
Net Profit Margin % Net Margin % (Qtr) 3.70 -106.14