July 31, 2014 / 6:40 AM / 3 years ago

UPDATE 2-Fresenius hospital, dialysis units post solid quarter, shares up

* Fresenius Q2 adj profit slightly above poll

* Shares jump on strong hospitals, U.S. dialysis units

* Raises sales outlook to include newly acquired business (Recasts, adds shares, analyst quotes)

By Ludwig Burger

FRANKFURT, July 31 (Reuters) - German healthcare group Fresenius SE posted earnings that exceeded expectations and showed solid performance for its hospitals and kidney dialysis units, driving up its shares on Thursday.

Second-quarter adjusted net income edged up 0.4 percent to 259 million euros ($347 million), slightly above the 255 million average estimate in a Reuters poll, as the company said it was making progress integrating newly acquired facilities at its hospitals unit.

Its shares jumped as much as 7 percent and were up 3.85 percent at 0955 GMT, poised for their biggest one-day gain in eight months. Before that, they had been down 3.3 percent for the year so far. It outperformed Germany’s blue-chip index , which was down about 1 percent.

“The share price jump was mainly due to strong results at hospitals unit Helios and at FMC,” said Commerzbank analyst Volker Braun.

Its subsidiary Fresenius Medical Care (FMC), the world’s largest kidney dialysis provider, said second-quarter net income, adjusted for a one-off tax burden, slipped 4 percent to $252 million, in line with average expectations in a Reuters poll.

Fresenius earlier this year wrapped up a 3 billion euro purchase of hospitals and outpatient facilities from peer Rhoen-Klinikum, resulting in a 48 percent jump in quarterly operating profit at its hospitals unit, Helios.

“I would have expected a lower contribution from the Rhoen hospitals,” Commerzbank’s Braun said.

Shares in separately listed unit FMC, which derives about two-thirds of its revenue from North America, jumped 4.5 percent.

DZ Bank analyst Sven Kuerten described its quarterly results as an encouraging sign “after several disappointments on the operating line in the recent quarters”.

The company, which operates more than a third of all dialysis treatment centres in the United States, has been grappling with healthcare budget cuts there.

The U.S. federal agency that sets the Medicare insurance programme’s reimbursements cut dialysis payment rates in January, cancelling out routine annual mark-ups to adjust for inflation, a move that will be repeated next year and possibly beyond.

Even so, “there’s a certain transparency on pricing over the next three years and investor confidence is returning,” Commerzbank’s Braun said.

Parent Fresenius raised its full-year outlook for sales to grow by a currency-adjusted 14 to 16 percent, accounted for by additional sales from acquired businesses. It had previously predicted growth of 12 to 15 percent.

It continued to expect adjusted net income to grow by 2 to 5 percent at constant currencies.

$1 = 0.7465 Euros Reporting by Ludwig Burger; Editing by Jonathan Gould and Jane Baird

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