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Healthcare

UPDATE 3-Fresenius reviews company structure after COVID-19 hit

* Plans to review operations, cut costs to keep mid-term goals

* No immediate spin-off plans but keeping long-term options open

* More details to follow on May 6 (Adds CFO comments, shares)

Feb 23 (Reuters) - German healthcare giant Fresenius will launch a cost-cutting plan and review the group’s structure to protect its mid-term goals, after its dialysis unit’s 2020 results were hit by a heavy toll of coronavirus-related deaths among patients.

Analysts have said the complex structure of the group - which has more than 300,000 employees and owns the Helios hospital chain, drugmaker Kabi and medical services unit Vamed as well as separately listed dialysis business Fresenius Medical Care (FMC) - could discourage investors.

“We have to make sure the capital market gives us the appreciation we deserve. This is why we should approach our corporate structure without any dogma,” Chief Executive Stephan Sturm said on a Tuesday conference call.

Shares in Fresenius and FMC dropped more than 20% over the last year, underperforming the broader European health sector three-fold.

While Fresenius has no plans for immediate changes and has said the separate FMC listing was not a model for other operations to follow, it “may have to be prepared to take alternative paths” if its growth strategy fails and investors continue to prefer spin-offs at large companies, Sturm said.

Asked for clarification on the proposed “simplification” mentioned in the companies’ statements, FMC boss Rice Powell said it is mainly a question of continuing to reduce travel and handling bookkeeping remotely after such moves worked well during the pandemic.

“Now that FMC operates in 150 countries, we are looking at where and how we do the work,” the company’s finance chief Helen Giza said.

Fresenius and FMC said they would invest 100 million euros each year until 2023 and 500 million euros until 2025 respectively to safeguard medium-term goals of the same duration, which they confirmed on Tuesday.

Many analysts had speculated that Fresenius would have to change their longstanding medium-term goals.

The companies said they would provide more details on the plan with first-quarter results in May.

$1 = 0.8230 euros Reporting by Zuzanna Szymanska in Gdansk; Editing by Tomasz Janowski, David Goodman and Jan Harvey

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