Fresenius SE's Future With Dialysis Company Unclear, Investors Seek Answers

Investors demanded more clarity from German healthcare group Fresenius SE regarding its intentions to relinquish strategic control over dialysis group Fresenius Medical Care AG FMS. 

The investors’ call for transparency comes in the wake of Fresenius’s recent deconsolidation of Fresenius Medical Care, where the company still retains a 32% stake.

Fresenius Medical Care faced significant challenges during the COVID-19 pandemic, including a higher mortality rate among dialysis patients and a shortage of nursing staff. 

“The volatility at Fresenius Medical Care seems to repeatedly overshadow the recent positive operating developments at Fresenius and is also deterring many potential shareholders from investing in Fresenius,” Reuters noted, citing Hendrik Schmidt, a corporate governance expert at fund manager DWS.

“Thus, despite the deconsolidation, the share price of Fresenius SE remains vulnerable to operational and strategic difficulties at Fresenius Medical Care,” Reuters noted.

These issues led to Fresenius Medical Care repeatedly missing the healthcare group’s annual targets. However, recent performance improvements suggest a potential turnaround for the dialysis specialist.

Michael Sen, who took over as CEO of Fresenius SE in 2022, has been actively pushing for the company’s realignment. His strategic initiatives have included divesting various peripheral businesses to streamline operations and focus on core areas. This realignment is part of Sen’s broader vision to strengthen the company’s position in the healthcare sector.

Fresenius Medical Care’s deconsolidation, executed by changing its legal structure at the end of November, is a key step in its restructuring efforts. 

Despite this, investors are eager to understand the long-term strategic plans for Fresenius SE and Fresenius Medical Care, emphasizing the need for greater clarity on the dialysis group’s future direction.

Last week, Fresenius Medical Care reported first-quarter revenue of 4.73 billion euros, up 2% Y/Y (+5% organic), driven by Care Delivery and Care Enablement segments.

“We have started the year with a slightly more favorable operating income phasing than planned and confirm our financial outlook for the full year 2024, said Helen Giza, CEO of Fresenius Medical Care.

Price Action: FMS shares are up 0.78% at $21.93 at last check Friday.

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