Subdued business prospects in the USA are weighing on the dialysis group Fresenius Medical Care.

FMC shares fell by a good four percent on Tuesday morning, making it the biggest loser in the second-line index MDax. In the USA, it had previously been announced that the increase in reimbursement rates for dialysis services by the state health insurance scheme Medicare for senior citizens would probably be lower than expected. The national health authority CMS proposed an increase in the prime rate of around 1.6 percent for 2024. In contrast, many analysts had expected an increase of between three and four percent.

According to Jefferies analysts, who had assumed an increase of three percent, this will make it even more difficult for FMC to achieve its 2025 targets. Further savings may be necessary. According to analysts at JP Morgan, the company is making good progress with its cost-cutting program. However, it is unlikely that the proposed increase in reimbursement will be able to cover wage inflation, which accounts for around 47 percent of costs.

An FMC spokesperson explained that the company had generally assumed only a moderate increase in Medicare reimbursement for its 2025 margin target. By 2025, the dialysis provider is aiming for an adjusted operating return on sales at constant exchange rates of 10 to 14 percent (2022: 7.9 percent). The Group has taken note of the draft Medicare reimbursement rates in the US and will now analyze them. "We will use the 60-day comment period available to us to provide appropriate feedback." The final rates are expected to be published in the fall.

According to FMC, CMS reimbursements accounted for about 26 percent of total revenue of 19.4 billion euros last year. "Significantly lower Medicare reimbursement rates could have a material adverse impact on our healthcare services business." This could also have an impact on the dialysis products business, according to the 2022 annual report. For 2023, the basic flat rate had been increased by three percent compared to the previous year.

(Report by Patricia Weiß and Ludwig Burger, edited by Myria Mildenberger. If you have any queries, please contact our editorial team at berlin.newsroom@thomsonreuters.com (for politics and the economy) or frankfurt.newsroom@thomsonreuters.com (for companies and markets)).