May 6, 2020 / 5:22 AM / a month ago

Fresenius reports Q1 net income beat on pandemic demand

(Reuters) - Healthcare group Fresenius (FREG.DE) beat first-quarter net income expectations on Wednesday, citing a U.S. and European spike in demand for drugs and devices for COVID-19 patients and government help with costs incurred by health providers.

FILE PHOTO: A Fresenius SE logo is pictured in Bad Homburg near Frankfurt, Germany February 22, 2017. REUTERS/Ralph Orlowski

Healthcare companies worldwide have benefited from subsidies and increased demand as a result of the coronavirus crisis, but they have also faced new costs, including protective gear.

Fresenius’ first-quarter net income was 465 million euros ($503.97 million), above analysts’ average forecast of 421.8 million euros, a Refinitiv poll found.

“It is, however, too early to say with any certainty what impact COVID-19 will have on the company’s full business year,” Chief Executive Stephan Sturm said in a statement.

On April 7, Fresenius’ infusion drug unit Kabi said it was trying to meet demand by focusing on products used in COVID-19 patients, such as sedatives and painkillers.

Increased demand should last into the second quarter, so Kabi’s performance should not decrease from the first three months of 2020, Sturm told a conference call.

Fresenius said its hospital-operating unit Helios overcame pandemic-related costs as the German government is compensating hospitals for procedures they cancel to focus on COVID-19 patients. It pays 560 euros for every missed treatment day compared to 2019.

Helios is waiting to see how much compensation it can get for its Spanish division, which treated 13% of all COVID-19 inpatients in the country, Sturm said.

The group said it would revisit its 2020 guidance when publishing results for the second quarter, when it expects a greater COVID-19 effect than in the first three months of 2020, although it does not see an impact on dividend payments.

The company is also not considering issuing equity as it expects reduced investment as some projects are delayed from this year to the next, Sturm said.

Fresenius’ separately-listed dialysis unit, Fresenius Medical Care (FMC) (FMEG.DE), also reported better-than-expected first-quarter net income, saying patients’ continued need for dialysis offset pandemic-related costs of about 30 million euros.

FMC’s earnings were also spurred by a switch to generic dialysis drugs, high demand for its Novalung respirator alternative and the fact that dialysis patients with COVID-19 are more likely to need acute blood purification, the company’s spokesman said.

The dialysis specialist is also set to receive U.S. state aid, but the amount will depend on the development of the pandemic, FMC said.

Both companies were among the biggest risers on Germany's blue chip index .GDAXI with Fresenius up 2.7% and its dialysis unit up 2.4% at 1450 GMT.

Reporting by Zuzanna Szymanska and Sarah Morland in Gdansk; editing by Tomasz Janowski and Barbara Lewis

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