Fresenius Medical (FMS) Stock Gains 5.6% on Q3 Earnings Beat

Shares of Fresenius Medical Care AG & Co. KGaA FMS rose 5.6% on Oct 29 following the company's third-quarter 2020 results.

The company reported third-quarter adjusted earnings per share (EPS) of 71 cents, which beat the Zacks Consensus Estimate of 66 cents by 7.6%. Moreover, the bottom line improved 5.9% year over year.

Revenues increased 5% year over year to $5.16 billion. However, the top line missed the Zacks Consensus Estimate by 7.1%.

Segmental Details

In the third quarter, Fresenius Medical reported through two segments — Health Care Services and Health Care Products.

Health Care Services revenues remained flat on a year-over-year basis and grew 6% at constant currency (cc). On a cc basis, the improvement was driven by contributions from acquisitions.

Health Care Products revenues declined 1% year over year but grew 4% at cc. On a cc basis, the upside can primarily be attributed to higher sales of products for acute care treatments and machines for chronic treatment and peritoneal dialysis products.

Geographical Growth

North America

Revenues in the region remained flat on a year-over-year basis, while growing 4% at cc. On organic basis, sales in the region improved 2%.

EMEA

Revenues in this region remained flat on a year-over-year basis and grew 3% cc in the quarter. On organic basis, sales in the region increased 1%.

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

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

Asia-Pacific

Revenues in this region rose 2% year over year and 6% at cc in the reported quarter. On an organic basis, sales in the region climbed 6%.

Latin America

Revenues in Latin America fell 7% year over year but rose 22% at cc. Organic growth in region was 17%.

Guidance

The following outlook has been provided after taking into account the anticipated impact of COVID-19.

For 2020, the company continues to anticipate adjusted revenues and adjusted net income to improve at a mid-to-high-single digit rate.

Summing Up

Fresenius Medical exited the third quarter on a mixed note. The company continues to gain from Health Care Products and Services units, which witnessed revenue growth in the quarter under review on constant currency basis. While revenues in the North American and EMEA regions remained stable, the same in Asia-Pacific witnessed noticeable improvement. In fact, management remains optimistic regarding the buyouts of Sound Physicians and NxStage Medical.

Furthermore, strong view for 2020 paints a bright picture. Revenue growth in the reported quarter highlights the company’s underlying business development remaining intact and resiliency of its business model.

However, Fresenius Medical witnessed decline in revenues in the Latin America region. Further, the company faces intense competition in the field of health care services, and sale of dialysis products, which remains a concern.

Zacks Rank

The company carries a Zacks Rank #3 (Hold).

Earnings of Other MedTech Majors at a Glance

Some better-ranked stocks in the broader medical space that have already announced their quarterly results are Thermo Fisher Scientific Inc. TMO, Align Technology, Inc. ALGN and AngioDynamics, Inc. ANGO. While Align Technology sports a Zacks Rank of 1 (Strong Buy), both Thermo Fisher and AngoDynamics carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Align Technology reported third-quarter 2020 adjusted EPS of $2.25, which surpassed the Zacks Consensus Estimate by 281.4%. Revenues of $734.1 million outpaced the consensus mark by 38%.

Thermo Fisher reported third-quarter 2020 adjusted EPS of $5.63, beating the Zacks Consensus Estimate by 28.8%. Revenues of $8.52 billion surpassed the consensus mark by 10%.

AngioDynamics reported first-quarter fiscal 2021 adjusted EPS of 2 cents against the Zacks Consensus Estimate of a loss per share of 6 cents. Revenues of $70.2 million beat the consensus mark by 6.9%.

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