6-K 1 a2242489z6-k.htm 6-K

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 6-K

REPORT OF FOREIGN PRIVATE ISSUER

PURSUANT TO RULE 13A-16 OR 15D-16 OF THE
SECURITIES EXCHANGE ACT OF 1934

For the month of October 2020

Commission file number: 001-32749

FRESENIUS MEDICAL CARE AG & Co. KGaA
(Translation of registrant's name into English)

Else-Kröner Strasse 1
61346 Bad Homburg
Germany
(Address of principal executive offices)

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F.

Form 20-F    ý   Form 40-F    o

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1):            

Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7):            

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

Yes    o   No    ý

If "Yes" is marked, indicate below the file number assigned to the registrant in connection with Rule 12g3-2(b): 82—            .

   


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FRESENIUS MEDICAL CARE AG & Co. KGaA

Interim Report of Financial Condition and Results of Operations for the three and nine months ended September 30, 2020 and 2019

 
  Page

FINANCIAL INFORMATION

   

Management's discussion and analysis

 
 

Forward-looking statements

  1

Supplemental risk factors

  3

Financial condition and results of operations

  6

Overview

  6

Discussion of measures

  12

Business metrics for Care Coordination

  21

Results of operations, financial position and net assets

  21

Recently issued accounting standards

  44

Financial Statements (unaudited)

 
 

Consolidated statements of income

  45

Consolidated statements of comprehensive income

  46

Consolidated balance sheets

  47

Consolidated statements of cash flows

  48

Consolidated statement of shareholders' equity

  49

Notes to consolidated financial statements

  50

Quantitative and qualitative disclosures about market risk

  75

Controls and procedures

  76

OTHER INFORMATION

 
 

Legal proceedings

  78

Submission of matters to a vote of security holders

  78

Exhibits

  79

Signatures

  80

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FINANCIAL INFORMATION

Management's discussion and analysis

In this report, "FMC-AG & Co. KGaA," or the "Company," "we," "us" or "our" refers to the Company or the Company and its subsidiaries on a consolidated basis, as the context requires. You should read the following discussion and analysis of the results of operations of the Company and its subsidiaries in conjunction with our unaudited consolidated financial statements and related notes contained elsewhere in this report and our disclosures and discussions in our consolidated financial statements for the year ended December 31, 2019 prepared in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board ("IASB"), using the euro as our reporting currency.

The term "North America Segment" refers to our North America operating segment, the term "EMEA Segment" refers to the Europe, Middle East and Africa operating segment, the term "Asia-Pacific Segment" refers to our Asia-Pacific operating segment, and the term "Latin America Segment" refers to our Latin America operating segment. The term "Corporate" includes certain headquarters' overhead charges, including accounting and finance, centrally managed production, asset management, quality and supply chain management, procurement as well as research and development and our Global Medical Office function (as of January 1, 2020), which seeks to standardize medical treatments and clinical processes within the Company. The abbreviation "M" is used to denote the presentation of amounts in millions. The term "Constant Currency" or at "Constant Exchange Rates" means that we have translated local currency revenue, operating income, net income attributable to shareholders of FMC-AG & Co. KGaA and other items for the current reporting period into euro using the prior year exchange rates to provide a comparable analysis without effect from exchange rate fluctuations on translation, as described below under "Financial condition and results of operations—II. Discussion of measures—Non-IFRS measures."

Forward-looking statements

This report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). When used in this report, the words "outlook," "expects," "anticipates," "intends," "plans," "believes," "seeks," "estimates" and similar expressions are generally intended to identify forward looking statements. Although we believe that the expectations reflected in such forward-looking statements are reasonable, forward-looking statements are inherently subject to risks and uncertainties, many of which cannot be predicted with accuracy and some of which might not even be anticipated, and future events and actual results, financial and otherwise, could differ materially from those set forth in or contemplated by the forward-looking statements contained elsewhere in this report. We have based these forward-looking statements on current estimates and assumptions made to the best of our knowledge. By their nature, such forward-looking statements involve risks, uncertainties, assumptions and other factors which could cause actual results, including our financial condition and profitability, to differ materially, positively or negatively, relative to the results expressly or implicitly described in or suggested by these statements. Moreover, forward-looking estimates or predictions derived from third parties' studies or information may prove to be inaccurate. Consequently, we cannot give any assurance regarding the future accuracy of the opinions set forth in this report or the actual occurrence of the projected developments described herein. In addition, even if our future results meet the expectations expressed here, those results may not be indicative of our performance in future periods.

These risks, uncertainties, assumptions, and other factors, including associated costs, could cause actual results to differ from our projected results and include, among others, the following:

changes in governmental and commercial insurer reimbursement for our complete products and services portfolio, including the United States ("U.S.") Medicare reimbursement system for dialysis and other health care services, including potentially significant changes to the Patient Protection and Affordable Care Act of 2010 (Pub.L. 111-148), as amended by the Health Care and Education Reconciliation Act (Pub.L. 111-152) (collectively, "ACA") that could be enacted due to the announced intention of the current U.S. administration to continue its efforts to repeal and replace the ACA or result from pending legal challenges to the ACA;

the outcome of government and internal investigations as well as litigation;

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compliance with current and future government regulations applicable to our business including sanctions and export control laws and regulations, the impact of health care, tax and trade law reforms and regulation as well as, in the U.S., the Anti-Kickback Statute, the False Claims Act, the Stark Law, the Health Insurance Portability and Accountability Act, the Health Information Technology for Economic and Clinical Health Act, the Foreign Corrupt Practices Act ("FCPA") including the monitor agreement with the U.S. Department of Justice, the Food, Drug and Cosmetic Act, and outside the U.S., inter alia, the European Union ("EU") Medical Device Directive, which will be repealed and replaced by the new EU Medical Device Regulation as of May 26, 2021, the EU General Data Protection Regulation, the two invoice policy and the Tendering and Bidding Law in China and other related local legislation as well as other comparable regulatory regimes in many of the countries where we supply health care services and/or products;

possible future disruptions in federal government agencies' operations and funding that could negatively impact regulatory approvals for our pharmaceutical products, medical devices and regulatory guidance;

the influence of commercial insurers and integrated care organizations, including efforts by these organizations to manage costs by limiting health care benefits, narrowing their networks, reducing provider reimbursement and/or restricting options for patient funding of health insurance premiums;

the impact of the on-going worldwide severe acute respiratory syndrome coronavirus 2 ("COVID-19") pandemic, including, without limitation, a significant increase in persons experiencing renal failure which may be attributable to COVID-19, as well as the impacts of the virus on our patients, caregivers, employees, suppliers, business and operations, consequences of an economic downturn resulting from the impacts of COVID-19 and evolving guidelines and requirements regarding the use of COVID-19 related relief.

product liability risks;

our ability to continue to make acquisitions, including our ability to develop our core dialysis business to increase future growth and product sales;

our ability to attract and retain skilled employees, including shortages of skilled clinical personnel, and risks that legislative, union, or other labor-related activities or changes will result in significant increases in our operating costs or decreases in productivity;

the impact of currency and interest rate fluctuations;

potential impairment of our goodwill, investments or other assets due to decreases in the recoverable amount of those assets relative to their book value, particularly as a result of sovereign rating agency downgrades;

our ability to protect our information technology systems against cyber security attacks or prevent other data privacy or security breaches;

changes in our costs of purchasing and utilization patterns for pharmaceuticals as well as changes in raw material and energy costs or the inability to procure raw materials;

introduction of generic or new pharmaceuticals and medical devices that compete with our products or services or the development of pharmaceuticals that greatly reduce the progression of chronic kidney disease;

launch of new technology, advances in medical therapies, or new market entrants that compete with our medical businesses;

potential increases in tariffs and trade barriers that could result from withdrawal by single or multiple countries from multilateral trade agreements or the imposition of retaliatory tariffs and other countermeasures in the wake of trade disputes;

collectability of our receivables, which depends primarily on the efficacy of our billing practices and the financial stability and liquidity of our governmental and commercial payors;

our ability to achieve cost savings in various health care risk management programs in which we participate or intend to participate;

the greater size, market power, experience and product offerings of certain competitors in certain geographic regions and business lines; and

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the use of accounting estimates, judgments and accounting pronouncement interpretations in our consolidated financial statements.

Important factors that could contribute to such differences are noted in the "Supplemental Risk Factors" set forth below, "Financial condition and results of operations—I. Overview" below, in note 8 of the notes to consolidated financial statements (unaudited) included in this report, in note 22 of the notes to consolidated financial statements included in our Annual Report on Form 20-F for the year ended December 31, 2019 (our "2019 Form 20-F"), as well as under "Risk Factors," "Business overview," "Operating and financial review and prospects," and elsewhere in that report.

Our business is also subject to other risks and uncertainties that we describe from time to time in our public filings which can be accessed at the United States Securities and Exchange Commission's internet website at www.sec.gov. Developments in any of these areas could cause our results to differ materially from the results that we or others have projected or may project.

Our reported financial condition and results of operations are sensitive to accounting methods, assumptions and estimates that are the basis of our financial statements. The actual accounting policies, the judgments made in the selection and application of these policies, as well as the sensitivities of reported results to changes in accounting policies, assumptions and estimates, are factors to be considered along with our financial statements and the discussion under "Results of operations, financial position and net assets" below.

Rounding adjustments applied to individual numbers and percentages shown in this and other reports may result in these figures differing immaterially from their absolute values.

Supplemental risk factors

As a result of the current global economic climate, specifically as it relates to COVID-19, as well as attacks on our IT environment, we are subject to additional risks, and we have updated previously disclosed risks, related to the on-going worldwide crisis and cybersecurity described below. We are, and will continue to be, subject to the risks described in our 2019 Form 20-F, specifically under "Risk Factors," and the supplemental risk factors described below should be read in conjunction with those risk factors.

We are subject to risks associated with public health crises and epidemics/pandemics, such as the global spread of the COVID-19 pandemic.

Our global operations expose us to risks associated with public health crises and epidemics/pandemics, such as the rapid global spread of the COVID-19 pandemic. COVID-19 has resulted in a material deterioration of the conditions for the global economy and financial markets have been materially affected which may, as a result, adversely affect our business, results of operations and financial condition. While the financial impact of COVID-19 on us has not been material to date (see note 2d) of the notes to the consolidated financial statements (unaudited) included in this report), it is currently impossible to estimate or quantify the extent of its prospective negative effects on our business, results of operations and financial condition. Going forward, the COVID-19 pandemic may have an adverse impact on our operations, manufacturing, supply chains and distribution channels and increase our expenses, including as a result of impacts associated with preventive and precautionary measures that we, our suppliers, customers and other businesses or governments impose on a local, regional, national or international level. Due to these impacts and measures, we are incurring incremental expenses to provide care to our patients and we are experiencing both reductions and increases in demand for certain of our products as health care customers re-prioritize the treatment of patients. We expect to continue to experience significant and unpredictable expenses, reductions and increases in demand for our services and products in the immediately foreseeable future. In addition to existing travel restrictions, countries may continue to close borders, restrict certain product flows, impose prolonged quarantines and further restrict travel, which may significantly impact the ability of our employees to produce products or provide services, or may significantly hamper our products from moving through the supply chain.

In addition to the effects on our health care products business, given the already compromised health condition of our typical dialysis patients, our patients represent a heightened at-risk population, particularly during a public health crisis, such as the COVID-19 outbreak. Our in-center and home patients must receive their life-saving dialysis treatment several days a week for three to four hours at a time, which presents a unique challenge for patients and their care teams. We must ensure that there are enough clinical staff, including nurses, social workers, dietitians, care technicians and available space to treat all of our patients, including those who are or may be infected with COVID-19, in a manner that does

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not unnecessarily expose our care teams or other patients for whom we provide dialysis services. We have incurred, and expect to continue to incur, extra costs in establishing isolated treatment areas for COVID-positive and suspected patients and implementing other precautions as well as incur costs to identify, contain and remedy the impact in the event that a staff member or patient is determined to have developed COVID-19. It appears that COVID-19 has resulted in a significant increase in persons experiencing temporary renal failure, and we could incur additional staffing costs required to meet the resulting increased demand for dialysis treatment and/or to provide equipment and medical staff needed for emergency treatments, for example in hospitals. To the extent that the COVID-19 pandemic increases the historical normal mortality rate in either the pre-end-stage renal disease patient population or in our end-stage renal disease ("ESRD") patient population, our near-term operating results may be materially and adversely affected. The COVID-19 pandemic has resulted, and may continue to result, in more of our dialysis patients requiring hospitalization, which could also materially and adversely affect our financial results, including those of our value-based and shared risk products and services.

In the U.S., the Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") has been enacted to mitigate certain adverse financial impacts of the pandemic, including impacts in the health care sector. Additional funding provided under the CARES Act and other COVID-19 relief provides some financial support to our business in the U.S. through suspension of the 2% Medicare payment sequestration reduction from May to December 2020, accelerated and advance payments of Medicare reimbursement and grants to defray expenses and mitigate the loss of revenues related to the COVID-19 pandemic (see note 2d) of the notes to the consolidated financial statements (unaudited) included in this report). However, these measures may not fully offset potential lost revenues and increased costs. We currently estimate that all funds received from grants comply with the terms and conditions associated with the funding received. Additional guidance is expected to be released from the U.S. Department of Health and Human Services with regards to the application of CARES Act relief funds which may affect the Company's estimate as of September 30, 2020. Additionally, these costs may become more pronounced should the COVID-19 pandemic and its associated effects on our business, financial condition and results of operations persist without relief extensions or additional government programs being provided. Further legislation and amendments to existing legislation intended to fight the COVID-19 pandemic and its adverse economic consequences may be enacted in the markets in which we operate. As the COVID-19 pandemic is prolonged, the risk of further government intervention or measures to counteract the pandemic could impact our business globally. It is currently not possible to estimate or to quantify any effects of such legislative measures on our business.

Furthermore, the outbreak of COVID-19 could disrupt our operations due to absenteeism among our workforce. As a result of these and potentially other factors, and given the rapid and evolving nature of the virus, COVID-19 could negatively affect our results, and it is uncertain how COVID-19 will affect our global operations generally if these impacts persist or are exacerbated over an extended period of time. Any of these impacts could have a material adverse effect on our business, financial condition and results of operations.

In addition, to the extent that the COVID-19 pandemic adversely affects our business, net assets, financial condition and results of operations, it may also have the effect of heightening many of the other risks described in this report and under "Risk Factors" in our 2019 Form 20-F.

Global economic conditions as well as disruptions in financial markets may have an adverse effect on our businesses.

We are dependent on the conditions of the financial markets and the global economy. In order to pursue our business, we are reliant on capital markets, as are our renal product customers and commercial health care insurers. Limited or more expensive access to capital in the financial markets could adversely affect our business and profitability. Among other things, the potential decline in federal and state revenues in a prolonged economic slowdown or recession may create additional pressures to contain or reduce reimbursements for our services from public payors around the world, including Medicare, Medicaid in the United States and other government sponsored programs in the United States and other countries around the world.

Devaluation of currencies and worsening economic conditions, including inflationary cost increases in various markets in connection with deteriorating country credit ratings also increase the risk of a goodwill impairment, which could lead to a partial or total goodwill write-off in the affected cash generating units, or have a negative impact on our investments and external partnerships. In addition, uncertainty in the financial markets could adversely affect the valuations of certain of our investments or variable interest

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rates payable under our credit facilities or could make it more difficult to obtain or renew such facilities or to obtain other forms of financing in the future should access to these capital markets become restricted. Most recently, the rapid global spread of the COVID-19 pandemic has resulted in a material deterioration of the conditions for the global economy and financial markets have been materially and adversely affected which could have adverse effects on our financial condition and our liquidity.

Job losses or increases in the unemployment rate in the United States may result in a smaller percentage of our patients being covered by employer group health plans and a larger percentage being covered by lower paying Medicare and Medicaid programs. Unemployment rates globally have been negatively impacted by the COVID-19 outbreak, which adversely affected the global economy and could adversely impact our operating results. The extent to which the COVID-19 outbreak impacts our business, results of operations and financial condition will depend on future developments, which are highly uncertain and cannot be predicted. To the extent that our commercial payors are negatively impacted by a decline in the economy, including the projected decline resulting from the COVID-19 pandemic, we may experience further pressure on commercial rates, a further slowdown in collections and a reduction in the amounts we are able to collect.

Any or all of these factors, or other consequences of the continuation, or worsening, of domestic and global economic conditions which cannot currently be predicted, could continue to have a material adverse effect on our businesses and results of operations.

We could be adversely affected if we experience shortages of goods or material price increases from our suppliers, or an inability to access new and improved products and technology.

Our business is dependent on the reliable supply of several raw materials for production and service purposes. If we are unable to obtain sufficient quantities of these raw materials at times of limited availability of such materials, this could result in delays in production or loss of sales and hence have an adverse effect on our results of operations. Similarly, price increases by suppliers and the inability to access new products or technology could also adversely affect our results of operations.

Our procurement risk mitigation efforts include (i) the development of partnerships with strategic suppliers through framework contracts, (ii) where reasonably practicable, at least two sources for all supply and price-critical primary products (dual sourcing, multiple sourcing), and (iii) measures to prevent loss of suppliers, such as risk analyses as well as continuous supply chain monitoring. Any failure of these measures to mitigate disruptive goods shortages and potential price increases or to allow access to favorable new product and technology developments could have an adverse impact on our business and financial condition.

Measures taken by governmental authorities and private actors to limit the spread of the COVID-19 virus have interfered, and may continue to interfere, with the ability of our employees, suppliers, and other business providers to carry out their assigned tasks or supply materials at ordinary levels of performance. While the financial impact of these actions on us has not been material to date, given the rapid spread and evolving nature of the virus, it is uncertain how COVID-19 will affect our global operations generally if these actions persist or are expanded over an extended period of time. Additionally, decreases in the availability and related increases in the cost of personal protective equipment as well as the insufficiency of grants under governmental COVID-19 relief programs to offset some of those expenses could adversely affect our results of operations.

Cyber-attacks or other privacy and data security incidents could disrupt our business and expose us to significant losses, liability and reputational damage.

We and our third-party service providers routinely process, store and transmit large amounts of data in our operations, including sensitive personal information as well as proprietary or confidential information relating to our business or third parties. We may be subject to breaches of the information technology security systems we use both internally and externally with third-party service providers.

Cyber-attacks may penetrate our and our third-party service providers' security controls and result in the misappropriation or compromise of sensitive personal information or proprietary or confidential information, including such information which is stored or transmitted on the systems used by certain of our or their products, to create system disruptions, cause shutdowns, or deploy viruses, worms, and other malicious software programs that attack our systems. We and our third-party service providers handle the personal information of our patients and beneficiaries, Patient Personal Data ("PPD"), throughout the United States and other parts of the world. We or our business associates may experience a breach under

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the U.S. Health Insurance Portability and Accountability Act Privacy and Security Rules, the EU's General Data Protection Regulation and or other similar laws ("Data Protection Laws"), including the following events:

impermissible use, access, or disclosure of unsecured PPD,

a breach under Data Protection Laws when we or our business associates neglect to implement the required administrative, technical and physical safeguards of its electronic systems and devices, or

a data breach that results in impermissible use, access or disclosure of personal identifying information of our employees, patients and beneficiaries.

In May 2020, our IT environment was attacked which resulted in certain patient data being illegally published in Serbia. We immediately filed a complaint against the unknown attackers with the public prosecutor in Germany and we have contacted the patients who were affected by the illegal data publication. While there was no material impact to our financial condition and results of operations as a result of this attack, future cyber-attacks against our IT systems may result in a loss of financial data or other sensitive information as well as interruptions of our operations that could have a material adverse impact on our business, financial condition and results of operations in the future.

As we increase the amount of sensitive personal information or financial data that we store and share digitally, our exposure to these privacy and data breaches and cyber-attack risks increases, including the risk of undetected attacks, damage, loss or unauthorized disclosure or access, and the cost of attempting to protect against these risks also increases. There are no assurances that our security technologies, processes and procedures that we or our outside service providers have implemented to protect sensitive personal information and proprietary or confidential information and to build security into the design of our products will be effective. Any failure to keep our information technology systems, financial data and our patients' and customers' sensitive information secure from attack, damage, loss or unauthorized disclosure or access, whether as a result of our action or inaction or that of our third-party business associates or vendors that utilize and store such personal information on our behalf, could materially adversely affect our reputation and ability to continue normal operations, expose us to mandatory public disclosure requirements, litigation and governmental enforcement proceedings, material fines, penalties and/or remediation costs, and compensatory, special, punitive and statutory damages, consent orders and other adverse actions, any of which could have a material adverse impact on our business, financial condition and results of operations.

Financial condition and results of operations

I. Overview

We are the world's largest kidney dialysis company, based on publicly reported revenue and number of patients treated. We provide dialysis care and related services to persons who suffer from ESRD as well as other health care services. We also develop, manufacture and distribute a wide variety of health care products, which includes dialysis and non-dialysis products. Our dialysis products include hemodialysis machines, peritoneal cyclers, dialyzers, peritoneal solutions, hemodialysis concentrates, solutions and granulates, bloodlines, renal pharmaceuticals and systems for water treatment. Our non-dialysis products include acute cardiopulmonary and apheresis products. We supply dialysis clinics we own, operate or manage with a broad range of products and also sell dialysis products to other dialysis service providers. We sell our health care products to customers in around 150 countries and we also use them in our own health care service operations. Our dialysis business is therefore vertically integrated. We describe certain of our other health care services as "Care Coordination." Care Coordination currently includes, but is not limited to, value and risk-based arrangements, pharmacy services, vascular, cardiovascular and endovascular specialty services as well as ambulatory surgery center services, physician nephrology and cardiology services, urgent care services (until the first quarter of 2020) and ambulant treatment services. All of these Care Coordination services together with dialysis care and related services represent our health care services. We estimated the volume of the global dialysis market was approximately €80 billion in 2019. Due to the complexity and evolving nature of Care Coordination services, we are currently unable to estimate the global volume of this market. Dialysis patient growth results from factors such as the aging population and increased life expectancies; shortage of donor organs for kidney transplants; increasing incidence of kidney disease and better treatment of and survival of patients with diabetes, hypertension and other illnesses, which frequently lead to the onset of chronic kidney disease; improvements in treatment quality, new pharmaceuticals and product technologies, which prolong patient life; and

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improving standards of living in developing countries, which make life-saving dialysis treatment available. We are also engaged in different areas of health care product therapy research.

As a global company delivering health care services and products, we face the challenge of addressing the needs of a wide variety of stakeholders, such as patients, customers, payors, regulators and legislators in many different economic environments and health care systems. In general, government-funded programs (in some countries in coordination with private insurers) pay for certain health care items and services provided to their citizens. Not all health care systems provide payment for dialysis treatment. Therefore, the reimbursement systems and ancillary services utilization environment in various countries significantly influence our business.

Significant U.S. reimbursement developments

The majority of health care services we provide are paid for by governmental institutions. For the nine months ended September 30, 2020, approximately 32% of our consolidated revenue is attributable to U.S. federally-funded health care benefit programs, such as Medicare and Medicaid reimbursement, under which reimbursement rates are set by the Centers for Medicare and Medicaid ("CMS"). Legislative changes could affect Medicare reimbursement rates for a significant portion of the services we provide. In recent years, the stability of reimbursement in the U.S. has been affected by (i) the implementation of the ESRD prospective payment system ("ESRD PPS") in January 2011, (ii) the U.S. federal government across the board spending cuts in payments to Medicare providers commonly referred to as "U.S. Sequestration" as well as the current moratorium on such cuts, (iii) the reduction to the ESRD PPS rate to account for the decline in utilization of certain drugs and biologicals associated with dialysis pursuant to the American Taxpayer Relief Act of 2012 ("ATRA") as subsequently modified under the Protecting Access to Medicare Act of 2014 ("PAMA") and (iv) CMS's 2017 final rule on the Physician Fee Schedule, which partially corrected reimbursement for certain procedures that were materially undervalued in 2016. Please see the detailed discussions on these and further legislative developments below:

Under the Medicare Improvements for Patients and Providers Act of 2008 ("MIPPA"), for patients with Medicare coverage, all ESRD payments for dialysis treatments are made under a single bundled payment rate which provides a fixed payment rate, the ESRD Prospective Payment System ("PPS"), or ESRD PPS, to encompass substantially all goods and services provided during the dialysis treatment. MIPPA further created the ESRD quality incentive program ("QIP") which provides that dialysis facilities in the United States that fail to achieve annual quality standards established by CMS could have base payments reduced in a subsequent year by up to 2%.

MIPPA also includes a provision for an annual adjustment to the ESRD PPS base rate based on changes in the costs of a "market basket" of certain healthcare items and services, less a productivity adjustment.

Additionally, as a result of the Budget Control Act of 2011 ("BCA") and subsequent activity in Congress, U.S. Sequestration ($1.2 trillion in across-the-board spending cuts in discretionary programs) took effect on March 1, 2013 and is expected to continue through 2030. In particular, a 2% reduction to Medicare payments took effect on April 1, 2013 and continues in force. The 2% sequestration has been temporarily suspended from May 1, 2020 through December 31, 2020 as part of the COVID-19 relief measures. Spending cuts pursuant to U.S. Sequestration have adversely affected and will continue to adversely affect our operating results after the suspension is lifted.

On July 7, 2020, CMS issued a proposed rule to update and make revisions to the ESRD PPS for calendar year ("CY") 2021. CMS estimates that large dialysis organizations will experience a 2.4% increase in payments as a result of payment changes under this proposed rule. The proposed per-treatment CY 2021 base rate is $255.59, which represents a 7% increase from the 2020 base rate of $239.33. The proposed update adds $12.06 to the base rate to pay for calcimimetics and no longer provides the transitional drug add-on payment adjustment ("TDAPA") for calcimimetics. The updated base rate also includes an adjustment reflecting application of the wage index budget-neutrality factor of 0.998652 and a statutory productivity-adjusted market basket increase of 1.8%. CMS updated the acute kidney injury dialysis payment rate for calendar year CY 2021 to $255.59, which is the same as the base rate proposed for the ESRD PPS for CY 2021. As a result of the projected 1.6% overall payment increase for all ESRD facilities, CMS estimates there will be an increase in beneficiary co-insurance payments of 1.6% in CY 2021. CMS received two applications for its transitional add-on payment adjustment for new and innovative equipment and supplies ("TPNIES") but did not propose

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    an add-on payment for either applicant. Finally, CMS proposed to expand its TPNIES policy for CY 2021 to allow eligible home dialysis machines to apply for an add-on payment.

The CY 2021 ESRD PPS proposed rule also updated the ESRD QIP for payment years ("PY") 2023 and 2024. Under the QIP, payments made to dialysis facilities are subject to a payment reduction of up to 2% based on their performance on certain clinical measures. For PY 2023, based on performance period CY 2021, the ESRD QIP measure set will contain 14 measures including two measures that were newly adopted for PY 2022 (the Percentage of Prevalent Patients Waitlisted (for kidney transplantation) clinical measure and the Medication Reconciliation for Patients Receiving Care at Dialysis Facilities reporting measure), which were finalized in the CY 2019 ESRD PPS rule. CMS did not propose to adopt any new measures for PY 2023. CMS proposed to update the scoring methodology for the Ultrafiltration Rate Reporting Measure to score facilities based on the number of eligible patient-months as opposed to facility-months. CMS does not believe that the current methodology is flexible enough to account for situations in which a facility is unable to obtain data on 100% of all patients. CMS also proposed to update the National Healthcare Safety Network validation study to reduce the number of required records from 20 records across each of the first two quarters (total of 40 records) to 20 records across any two quarters. CMS estimates the impact of its proposed QIP changes will result in a 0.12% payment reduction for large dialysis organizations.

On August 4, 2020, CMS issued the CY 2021 proposed rule for hospital outpatient and ambulatory surgery center payment systems. For CY 2021, CMS will continue to pay for services covered by certain dialysis vascular access codes at the Ambulatory Surgical Center ("ASC") rate. The proposed rule updating the ASC Fee Schedule for CY 2021 generally increased the reimbursement rates for certain vascular access services. For the range of procedures provided in an ASC, the average increase is 2.6% compared to the prior year. CMS also updated the Physician Fee Schedule for CY 2021. For the range of procedures provided in a physician office, the CY 2021 Physician Fee Schedule represents, on average, no change in reimbursement compared to the prior year.

Non-oral ESRD-related drugs are generally reimbursed as part of the ESRD PPS bundled payment. Oral only ESRD-related drugs are generally reimbursed outside the ESRD PPS bundled payment. In a final rule published on November 6, 2015, CMS provided for implementation of the PAMA oral-only provision. CMS clarified that once any non-oral ESRD-related drug in a category previously considered oral only is approved by the U.S. Food and Drug Administration ("FDA"), such category of drugs will cease to be considered oral only. However, for at least two years, CMS will pay for both oral and non-oral versions of the drug using a TDAPA. During this transition period, CMS will not pay outlier payments for these drugs, but the agency will collect data reflecting utilization of both the oral and injectable or intravenous forms of the drugs, as well as payment patterns, to help determine how to appropriately adjust the ESRD PPS payment rate as these drugs are included in the payment bundle. At the end of this transition period, CMS will incorporate payment for the oral and non-oral versions of the drug in the ESRD PPS payment rates, utilizing a public rulemaking process.

The introduction of Parsabiv™, an intravenous calcimimetic, has resulted in changes in how some payors, other than Medicare, arrange for the provision of calcimimetics for their patients. While some patients continue to receive calcimimetics from their pharmacies as a pharmacy benefit, other patients receive calcimimetics from their dialysis providers, as a medical benefit. While we receive additional reimbursement from some payors when these drugs are provided by our clinics, this type of transition from an oral-only drug has not occurred previously and the reimbursement landscape for non-Medicare payors continues to evolve.

Presently, there is uncertainty regarding possible future changes in health care regulation, including the regulation of reimbursement for dialysis services, and the status of the ACA. On March 2, 2020 the U.S. Supreme Court agreed to review the Fifth Circuit Court of Appeals decision affirming a decision by a Texas federal district court that declared the individual mandate under the ACA to be an improper exercise of Congress' taxing power. On August 19, 2020, the U.S. Supreme Court scheduled oral arguments in the consolidated cases, California, et al., v. Texas, et al., No. 19-840 and Texas, et al., v. California, et al., No. 19-1019 for November 10, 2020, with a decision expected to be issued in 2021. For additional information regarding these proceedings, see Item 4B, "Information on the Company—Regulatory and Legal Matters—Health Care Reform" in our 2019 Form 20-F. Changes to the ACA (including a determination that the measure is unconstitutional) could adversely affect us.

For additional information, see "Risk Factors" included in our 2019 Form 20-F.

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On May 22, 2020, CMS issued a final rule that, effective January 1, 2021, removes outpatient dialysis facilities from the time-and-distance standards applicable under the network adequacy rules for Medicare Advantage plans (see note 8 of the notes to the consolidated financial statements (unaudited) included in this report for further information).

Premium assistance programs

On August 18, 2016, the CMS issued a request for information ("RFI") seeking public comment about providers' alleged steering of patients inappropriately to individual plans offered on the Patient Protection and Affordable Care Act individual health insurance market. The holding company for our U.S. operations, Fresenius Medical Care Holdings, Inc. ("FMCH"), and other dialysis providers, commercial insurers and other industry participants responded to the RFI, and in that response, we reported that we do not engage in such steering. On December 14, 2016, CMS published an Interim Final Rule ("IFR") titled "Medicare Program; Conditions for Coverage for End-Stage Renal Disease Facilities-Third Party Payment" that would amend the Conditions for Coverage for dialysis providers, like FMCH. The IFR would have effectively enabled insurers to reject premium payments made by patients who received grants for individual market coverage from the American Kidney Fund ("AKF") and, therefore, could have resulted in those patients losing their individual market health insurance coverage. The loss of individual market coverage for these patients would have had a material and adverse impact on our operating results. See "Risk Factors" in our 2019 Form 20-F. On January 25, 2017, a federal district court in Texas, responsible for litigation initiated by a patient advocacy group and dialysis providers including FMCH, preliminarily enjoined CMS from implementing the IFR (Dialysis Patient Citizens v. Burwell (E.D. Texas, Sherman Div.)). The preliminary injunction was based on CMS's failure to follow appropriate notice-and-comment procedures in adopting the IFR. The injunction remains in place and the court retains jurisdiction over the dispute. On June 22, 2017, CMS requested a stay of proceedings in the litigation pending further rulemaking concerning the IFR. CMS stated, in support of its request that it expected to publish a Notice of Proposed Rulemaking in the Federal Register and otherwise pursue a notice-and-comment process in the fall of 2017 which it ultimately did not publish. Plaintiffs in the litigation, including FMCH, consented to the stay, which was granted by the court.

Separately, the United States Department of Health and Human Services ("HHS") has drafted a new proposed rule entitled "Conditions for Coverage for End-Stage Renal Disease Facilities—Third Party Payments" (CMS-3337-P). While the proposed rule has been under review by the Office of Management and Budget since June 2019, and the HHS identified a target date of November 2019 for publication, the proposed rule has not yet been published for comment.

The operation of charitable assistance programs like that of the AKF is also receiving increased attention by state insurance regulators and legislators. The result may be a regulatory framework that differs from state to state. Even in the absence of the IFR or similar state actions, insurers are likely to continue efforts to thwart charitable premium assistance to our patients for individual market plans and other insurance coverages. If successful in a material area or scope of our U.S. operations, these efforts would have a material adverse impact on our business and operating results.

On January 3, 2017, FMCH received a subpoena from the United States Attorney for the District of Massachusetts inquiring into its interactions and relationships with AKF, including its charitable contributions to the Fund and the Fund's financial assistance to patients for insurance premiums. FMCH cooperated with the investigation, which was part of a broader investigation into charitable contributions in the medical industry. On August 1, 2019, the United States District Court for the District of Massachusetts entered an order announcing that the United States had declined to intervene on a qui tam complaint underlying the Boston United States Attorney's Office ("USAO") investigation and unsealing the relator's complaint so as to permit the relator to serve the complaint and proceed on his own. The relator did not serve the complaint within the time allowed. On July 17, 2020, the relator filed a notice of dismissal and the court thereafter closed the case.

For further information on these and other legal proceedings, please see note 8 of the notes to the consolidated financial statements (unaudited) included in this report.

U.S. ballot initiatives and other legislation

Further federal or state legislation or regulations may be enacted in the future through legislative and public referendum processes that could substantially modify or reduce the amounts paid for services and products offered by us and our subsidiaries and/or mandate new or alternative operating models and

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payment models that could present more risk to our health care service operations. Ballot initiatives that are successfully introduced at the state level in the United States require the vote of state citizens to directly adopt or reject proposed new legislation. These ballot initiatives require a material expenditure of resources by us to participate in public discourse regarding the proposed new legislation underlying the initiatives which, if passed, could further regulate multiple aspects of our operations including, for instance, clinic staffing requirements, state inspection requirements and profit margins on commercial business. Efforts to enact new state laws regarding our operations are continuing. State regulation at this level would introduce an unprecedented level of additional regulatory oversight and expense at the clinic level which could have a material adverse effect on our business in the impacted states. It is also possible that statutes may be adopted or regulations may be promulgated in the future that impose additional eligibility requirements for participation in the federal and state health care programs. Such new legislation or regulations could, depending upon the detail of the provisions, have positive or adverse effects, possibly material, on our businesses and results of operations.

Participation in new Medicare payment arrangements

Under CMS's Comprehensive ESRD Care Model (the "Model"), dialysis providers and physicians have formed entities known as ESRD Seamless Care Organizations ("ESCOs") as part of a payment and care delivery pilot program that seeks to deliver better health outcomes for Medicare ESRD patients while lowering CMS's costs. Following our initial participation in six ESCOs, we are presently participating in the Model through 23 ESCOs formed at our dialysis facilities. ESCOs that achieve the program's minimum quality thresholds and generate reductions in CMS's cost of care above certain thresholds for the ESRD patients covered by the ESCO will receive a share of the cost savings, which is adjusted based on the ESCO's performance on certain quality metrics. ESCOs that include dialysis chains with more than 200 facilities are required to share in the risk of cost increases and to reimburse CMS a share of any such increases if actual costs rise above set thresholds. As of September 2020, approximately 41,000 patients were participating in our ESCOs.

In November 2017, we announced the results from the first performance year ("PY") from our ESCOs. The results, which cover the period from October 2015 through December 2016, show improved health outcomes for patients receiving coordinated care through the ESCOs. This success was validated by an independent report, which showed a nearly 9% decrease in hospitalization rates for these patients during the same time. In the second performance year (calendar year ("CY") 2017) the Company's ESCOs together generated more than $66.7 M in gross savings, an average 3.4% reduction in expenditures per patient. For the third performance year (CY 2018), CMS published the final settlement reports on August 14, 2020. In total the Company's ESCO produced more than $66.1 M in gross savings, an average 1.9% reduction in expenditures per patient. CMS has not finalized results for the fourth performance year (CY 2019). For the fifth performance year (CY 2020), CMS has stated it will give each ESCO the options to (a) extend participation in the program through March 31, 2021, and/or to (b) accept the following financial changes: (i) reduce 2020 downside risk by reducing shared losses by proportion of months during the COVID-19 Public Health Emergency as promulgated under the Public Health Services Act, (ii) cap gross savings upside potential at 5% gross savings, (iii) remove COVID-19 inpatient episodes, and (iv) remove the 2020 financial guarantee requirement. Our ESCOs have not yet selected among these options.

We have also entered into sub-capitation and other risk-based and value-based arrangements with certain payors to provide care to commercial and Medicare Advantage, ESRD and CKD patients. Under these arrangements, a baseline per patient per month amount is established. If we provide complete care for less than the baseline, we retain the difference. If the cost of complete care exceeds the baseline, we may owe the payor the difference.

Executive order-based models

On July 10, 2019, an Executive Order on advancing kidney health was signed in the United States. Among other things, the order instructed the Secretary of HHS to develop new Medicare payment models to encourage identification and earlier treatment of kidney disease as well as increased home dialysis and transplants. One of those models, for which the rule was finalized on September 29, 2020, the ESRD Treatment Choices ("ETC") model, is a mandatory model that creates financial incentives for home treatment and kidney transplant with a start date in January 2021 and ending in June 2026. This model applies both upside and downside payment adjustments to claims submitted by physicians and dialysis facilities for certain Medicare home dialysis patients over the span of six and one-half years. Participants in

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this model are based on a random selection of thirty percent of the Hospital Referral Regions. As of September 2020, 967 U.S. dialysis clinics, representing approximately 35% of our U.S. dialysis clinics, are within the random selection of Hospital Referral Regions and therefore are in areas selected for participation in the model. An initial upside-only payment, Home Dialysis Payment Adjustment ("HDPA"), will be applied for the first three years of the model, beginning in January 2021, in decreasing payment adjustments ranging from 3% in the first payment year, to 2% in the second payment year, and to 1% in the final payment year. This model also includes a Performance Payment Adjustment ("PPA") beginning in July 2022. PPA payments will be a combined calculation of home dialysis and transplant rates based upon historic and/or benchmark data from comparison geographic areas. Possible PPA payment adjustments increase in time and will range from (5%) to 4% in the first payment year (beginning July 2022) for both physicians and facilities and rise to (9%) and 8% for physicians and (10%) and 8% percent for facilities in the final payment year (ending in June 2026).

Pursuant to the Executive Order, the Secretary also announced voluntary payment models, Kidney Care First ("KCF") and Comprehensive Kidney Care Contracting ("CKCC") model (graduated, professional and global), which aim to build on the existing Comprehensive End Stage Renal Disease Care model. The voluntary models create financial incentives for health care providers to manage care for Medicare beneficiaries with chronic kidney disease stages 4 and 5 and with ESRD, to delay the start of dialysis, and to incentivize kidney transplant. The voluntary models allow health care providers to take on various amounts of financial risk by forming an entity known as a Kidney Care Entity ("KCE"). Two options, the CKCC global and professional models, allow renal health care providers to assume upside and downside financial risk. A third option, the CKCC graduated model, is limited to upside risk, but is unavailable to KCEs that include large dialysis organizations. Under the global model, the KCE is responsible for 100 percent of the total cost of care for all Medicare Part A and B services for aligned beneficiaries, and under the professional model, the KCE is responsible for 50 percent of such costs. Applications for the voluntary models were submitted in January 2020. We submitted 25 CKCC applications to participate in the professional model and were also included in four other CKCC applications submitted by nephrologists. All 29 of these KCE applications were accepted in June 2020. Of the 29 accepted applications, 28 KCEs have elected to participate in the implementation period, which started on October 15, 2020, and provides a start-up period during which the KCE is not at financial risk. Each KCE will elect, by December 21, 2020, whether to remain in the professional model or switch to the global model. Further, prior to April 1, 2021, each KCE will elect whether to continue its participation at-risk beginning in the first Performance Year which starts on April 1, 2021 and ends December 31, 2021. Once implemented, the CKCC model is expected to run through 2025. We are presently unable to predict the effects on our business of the ETC payment model and the voluntary payment models.

Company structure

Our operating segments are the North America Segment, the EMEA Segment, the Asia-Pacific Segment and the Latin America Segment. The operating segments are determined based upon how we manage our businesses with geographical responsibilities. All segments are primarily engaged in providing health care services and the distribution of products and equipment for the treatment of ESRD and other extracorporeal therapies. Management evaluates each segment using measures that reflect all of the segment's controllable revenues and expenses. With respect to the performance of business operations, management believes that the most appropriate IFRS measures are revenue, operating income and operating income margin. We do not include income taxes as we believe taxes are outside the segments' control. Financing is a corporate function which our segments do not control. Therefore, we do not include interest expense relating to financing as a segment measurement. Similarly, we do not allocate certain costs which relate primarily to certain headquarters' overhead charges, including accounting and finance, because we believe that these costs are also not within the control of the individual segments. Production of products, production asset management, quality and supply chain management as well as procurement related to production are centrally managed. Products transferred to the segments are transferred at cost; therefore, no internal profit is generated. The associated internal revenue for the product transfers and their elimination are recorded as corporate activities. Capital expenditures for production are based on the expected demand of the segments and consolidated profitability considerations. The Company's global research and development as well as its Global Medical Office are also centrally managed. These corporate activities do not fulfill the definition of a segment according to IFRS 8. In addition, certain revenues, investments and intangible assets, as well as any related expenses, are not allocated to a segment but accounted for as Corporate. Accordingly, these items are excluded from our analysis of segment results and are discussed below in the discussion of our consolidated results of operations. See note 10 of the notes to consolidated financial statements (unaudited) found elsewhere in this report for a further discussion on our operating segments.

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II.    Discussion of measures

Non-IFRS measures

Certain of the following key performance indicators and other financial information as well as discussions and analyses set out in this report include measures that are not defined by IFRS ("Non-IFRS Measure"). We believe this information, along with comparable IFRS financial measurements, is useful to our investors as it provides a basis for assessing our performance, payment obligations related to performance-based compensation and our compliance with financial covenants. Non-IFRS financial measures should not be viewed or interpreted as a substitute for financial information presented in accordance with IFRS.

Some key performance indicators and other financial measures used in this report such as changes in revenue, operating income and net income attributable to shareholders of FMC-AG & Co. KGaA include the impact of translating local currencies to our reporting currency for financial reporting purposes. We calculate these Non-IFRS financial measures at constant exchange rates in our publications to show changes in our revenue, operating income, net income attributable to shareholders of FMC-AG & Co. KGaA and other items without giving effect to period-to-period currency fluctuations. Under IFRS, amounts received in local (non-euro) currency are translated into euro at the average exchange rate for the period presented. Once we translate the local currency for the constant currency, we then calculate the change, as a percentage, of the current period calculated using the prior period exchange rates versus the prior period. This resulting percentage is a Non-IFRS Measure referring to a change as a percentage at constant currency. These currency-adjusted financial measures are identifiable by the designated terms "Constant Exchange Rates" or "Constant Currency."

We believe that the measures at Constant Currency are useful to investors, lenders and other creditors because such information enables them to gauge the impact of currency fluctuations on our revenue, operating income, net income attributable to shareholders of FMC-AG & Co. KGaA and other items from period to period. In addition, under our long-term incentive plans, we measure the attainment of certain pre-determined financial targets for revenue growth and net income growth in Constant Currency. However, we limit our use of Constant Currency period-over-period changes to a measure for the impact of currency fluctuations on the translation of local currency into euro. We do not evaluate our results and performance without considering both:

(1)
period-over-period changes in revenue, operating income, net income attributable to shareholders of FMC-AG & Co. KGaA and other items prepared in accordance with IFRS, and

(2)
Constant Currency changes in revenue, operating income, net income attributable to shareholders of FMC-AG & Co. KGaA and other items.

We caution the readers of this report to follow a similar approach by considering data on Constant Currency period-over-period changes only in addition to, and not as a substitute for or superior to, changes in revenue, operating income, net income attributable to shareholders of FMC-AG & Co. KGaA and other items prepared in accordance with IFRS. We present the growth rate derived from non-IFRS measures next to the growth rate derived from IFRS measures such as revenue, operating income, net income attributable to shareholders of FMC-AG & Co. KGaA and other items. As the reconciliation is inherent in the disclosure, we believe that a separate reconciliation would not provide any additional benefit.

Delivered operating income (Non-IFRS Measure)

As a result of the significance of noncontrolling interest holders in our operations, we believe a measure that is meaningful to investors is operating income less noncontrolling interests ("Delivered Operating Income"). Delivered Operating Income approximates the operating income attributable to the shareholders of FMC-AG & Co. KGaA. As such, we believe that operating income is the closest comparable IFRS measure. Delivered Operating Income is also benchmarked based on movement at Constant Exchange Rates.

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Below is a table showing the reconciliation of operating income to Delivered Operating Income on a consolidated basis and for our reporting segments:

Delivered Operating Income reconciliation
in € M

 
  Three months
ended
September 30,
  Nine months
ended
September 30,
 
 
  2020   2019   2020   2019  

Total

                         

Operating income

    632     595     1,843     1,653  

less noncontrolling interests

    (66 )   (59 )   (210 )   (177 )

Delivered Operating Income

    566     536     1,633     1,476  

North America Segment

   
 
   
 
   
 
   
 
 

Operating income

    514     477     1,587     1,279  

less noncontrolling interests

    (62 )   (55 )   (202 )   (167 )

Delivered Operating Income

    452     422     1,385     1,112  

Dialysis

   
 
   
 
   
 
   
 
 

Operating income

    490     500     1,474     1,261  

less noncontrolling interests

    (54 )   (50 )   (176 )   (154 )

Delivered Operating Income

    436     450     1,298     1,107  

Care Coordination

   
 
   
 
   
 
   
 
 

Operating income

    24     (23 )   113     18  

less noncontrolling interests

    (8 )   (5 )   (26 )   (13 )

Delivered Operating Income

    16     (28 )   87     5  

EMEA Segment

   
 
   
 
   
 
   
 
 

Operating income

    99     100     278     334  

less noncontrolling interests

    (1 )   (2 )   (2 )   (4 )

Delivered Operating Income

    98     98     276     330  

Asia-Pacific Segment

   
 
   
 
   
 
   
 
 

Operating income

    97     90     237     254  

less noncontrolling interests

    (2 )   (2 )   (5 )   (6 )

Delivered Operating Income

    95     88     232     248  

Dialysis

   
 
   
 
   
 
   
 
 

Operating income

    82     81     227     235  

less noncontrolling interests

    (3 )   (2 )   (7 )   (5 )

Delivered Operating Income

    79     79     220     230  

Care Coordination

   
 
   
 
   
 
   
 
 

Operating income

    15     9     10     19  

less noncontrolling interests

    1     0     2     (1 )

Delivered Operating Income

    16     9     12     18  

Latin America Segment

   
 
   
 
   
 
   
 
 

Operating income

    11     11     29     28  

less noncontrolling interests

    0     0     0     0  

Delivered Operating Income

    11     11     29     28  

Net cash provided by (used in) operating activities in % of revenue

Our consolidated statement of cash flows indicates how we generated and used cash and cash equivalents. In conjunction with our other primary financial statements, it provides information that helps us evaluate changes to our net assets and our financial structure (including liquidity and solvency). Net cash provided by (used in) operating activities is applied to assess whether a business can generate the cash required to

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make the necessary replacement and expansion of investments. This indicator is impacted by the profitability of our business and the development of working capital, mainly receivables. Net cash provided by (used in) operating activities in percent of revenue shows the percentage of our revenue that is available in terms of financial resources. It is an indicator of our operating financial strength.

Free cash flow in % of revenue (Non-IFRS Measure)

Free cash flow (which we define as net cash provided by (used in) operating activities after capital expenditures, before acquisitions and investments) refers to the cash flow we have at our disposal, including cash flows that may be restricted for other uses. This indicator shows the percentage of revenue available for acquisitions and investments, dividends to shareholders, reducing debt financing or for repurchasing shares.

The following table shows the cash flow key performance indicators for the nine months ended September 30, 2020 and 2019 and reconciles free cash flow and free cash flow in percent of revenue to Net cash provided by (used in) operating activities and Net cash provided by (used in) operating activities in percent of revenue, respectively:

Cash flow measures
in € M, except where otherwise specified

 
  For the nine months
ended
September 30,
 
 
  2020   2019  

Revenue

    13,459     12,897  

Net cash provided by (used in) operating activities

    3,649     1,796  

Capital expenditures

    (746 )   (788 )

Proceeds from sale of property, plant and equipment

    10     11  

Capital expenditures, net

    (736 )   (777 )

Free cash flow

    2,913     1,019  

Net cash provided by (used in) operating activities in % of revenue

    27.1 %   13.9 %

Free cash flow in % of revenue

    21.6 %   7.9 %

Net leverage ratio (Non-IFRS Measure)

The net leverage ratio is a key performance indicator used for internal management. To determine the net leverage ratio, debt and lease liabilities less cash and cash equivalents (net debt) is compared to adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) (adjusted for acquisitions and divestitures made during the last twelve months with a purchase price above a €50 M threshold as defined in the Amended 2012 Credit Agreement, non-cash charges and impairment loss). The ratio is an indicator of the length of time the Company needs to service the net debt out of its own resources. We believe that the net leverage ratio provides alternative information that management believes to be useful in assessing our ability to meet our payment obligations in addition to considering the absolute amount of our debt. We have a strong market position in a growing, global and mainly non-cyclical market. Furthermore, most of our customers have a high credit rating as the dialysis industry is characterized by stable and sustained cash flows. We believe this enables us to work with a reasonable proportion of debt, through the employment of an extensive mix of debt.

Adjusted EBITDA, a non-IFRS Measure, is also the basis for determining compliance with certain other covenants contained in our Amended 2012 Credit Agreement and is also relevant in certain of our other major financing arrangements. You should not consider adjusted EBITDA to be an alternative to net earnings determined in accordance with IFRS or to cash flow from operations, investing activities or financing activities. In addition, not all funds depicted by adjusted EBITDA are available for management's discretionary use. For example, a substantial portion of such funds are subject to contractual restrictions and functional requirements to fund debt service, capital expenditures and other commitments from time to time as described in more detail elsewhere in this report.

The following table shows the reconciliation of adjusted EBITDA and net leverage ratio as of September 30, 2020 and December 31, 2019.

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Reconciliation of adjusted EBITDA and net leverage ratio to the most directly comparable IFRS financial measure
in € M, except for net leverage ratio

 
  September 30,
2020
  December 31,
2019
 

Debt and lease liabilities(1)

    13,053     13,782  

Minus: Cash and cash equivalents(2)

    (1,599 )   (1,008 )

Net debt

    11,454     12,774  

Net income(3)

   
1,602
   
1,439
 

Income tax expense(3)

    471     402  

Interest income(3)

    (42 )   (62 )

Interest expense(3)

    428     491  

Depreciation and amortization(3)

    1,614     1,553  

Adjustments(3),(4)

    76     110  

Adjusted EBITDA

    4,149     3,933  

Net leverage ratio

   
2.8
   
3.2
 

(1)
Debt includes the following balance sheet line items: short-term debt, short-term debt from related parties, current portion of long-term debt and long-term debt, less current portion.

(2)
The increase in cash and cash equivalents as of September 30, 2020 was primarily related to federal relief funding and advanced payments under the CARES Act and other COVID-19 relief (see note 2d) of the notes to the consolidated financial statements included in this report).

(3)
Last twelve months.

(4)
Acquisitions and divestitures made for the last twelve months with a purchase price above a €50 M threshold as defined in the Amended 2012 Credit Agreement (2020: €2 M; 2019: -€71 M), non-cash charges, primarily related to pension expense (2020: €49 M; 2019: €46 M), impairment loss (2020: €25 M; 2019: €40 M) and NxStage Medical, Inc. related transaction costs (2019: €95 M).

Return on invested capital ("ROIC") (Non-IFRS Measure)

ROIC is the ratio of operating income, for the last twelve months, after tax ("net operating profit after tax" or "NOPAT") to the average invested capital of the last five quarter closing dates, including adjustments for acquisitions and divestitures made during the last twelve months with a purchase price above a €50 M threshold as defined in the Amended 2012 Credit Agreement, and expresses how efficiently we allocate the capital under our control or how well we employ our capital with regard to a specific investment project. An adjustment to exclude amounts related to the implementation of IFRS 16, Leases, which replaced the straight-line operating lease expense for former leases under International Accounting Standard 17, Leases, with a depreciation charge for the lease asset and an interest expense on the lease liability as well as the classification of certain IAS 17 leases (such effects being, collectively "IFRS 16 Implementation") is included for the purpose of increasing the comparability of previously reported information in accordance with our long-term incentive plans in 2019. The following table shows the reconciliation of average invested capital to total assets, which we believe to be the most directly comparable IFRS financial measure, and how ROIC is calculated:

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Reconciliation of average invested capital and ROIC (unadjusted)
in € M, except where otherwise specified

2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
  December 31,
2019
  September 30,
2019
 

Total assets

    33,049     34,200     34,072     32,935     33,169  

Plus: Cumulative goodwill amortization

    405     421     430     420     432  

Minus: Cash and cash equivalents

    (1,599 )   (1,890 )   (1,405 )   (1,008 )   (965 )

Minus: Loans to related parties

    (51 )   (49 )   (40 )   (72 )   (65 )

Minus: Deferred tax assets

    (429 )   (401 )   (382 )   (361 )   (348 )

Minus: Accounts payable

    (729 )   (678 )   (762 )   (717 )   (655 )

Minus: Accounts payable to related parties

    (132 )   (135 )   (134 )   (119 )   (255 )

Minus: Provisions and other current liabilities(1)

    (3,641 )   (3,799 )   (2,577 )   (2,452 )   (2,546 )

Minus: Income tax payable

    (269 )   (212 )   (200 )   (180 )   (181 )

Invested capital

    26,604     27,457     29,002     28,446     28,586  

Average invested capital as of September 30, 2020

    28,019                          

Operating income

   
2,459
                         

Income tax expense(2)

    (656 )                        

NOPAT

    1,803                          

Adjustments to average invested capital and ROIC
in € M, except where otherwise specified

2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
  December 31,
2019-
  September 30,
2019(3)
 

Total assets

                    155  

Plus: Cumulative goodwill amortization

                     

Minus: Cash and cash equivalents

                    (4 )

Minus: Loans to related parties

                     

Minus: Deferred tax assets

                     

Minus: Accounts payable

                     

Minus: Accounts payable to related parties

                     

Minus: Provisions and other current liabilities(1)

                    (4 )

Minus: Income tax payable

                     

Invested capital

                    147  

Adjustment to average invested capital as of September 30, 2020

    29                          

Adjustment to operating income(3)

   
2
                         

Adjustment to income tax expense(3)

    0                          

Adjustment to NOPAT

    1                          

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Reconciliation of average invested capital and ROIC (Non-IFRS Measure)
in € M, except where otherwise specified

2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
  December 31,
2019-
  September 30,
2019(3)
 

Total assets

    33,049     34,200     34,072     32,935     33,324  

Plus: Cumulative goodwill amortization

    405     421     430     420     432  

Minus: Cash and cash equivalents

    (1,599 )   (1,890 )   (1,405 )   (1,008 )   (969 )

Minus: Loans to related parties

    (51 )   (49 )   (40 )   (72 )   (65 )

Minus: Deferred tax assets

    (429 )   (401 )   (382 )   (361 )   (348 )

Minus: Accounts payable

    (729 )   (678 )   (762 )   (717 )   (655 )

Minus: Accounts payable to related parties

    (132 )   (135 )   (134 )   (119 )   (255 )

Minus: Provisions and other current liabilities(1)

    (3,641 )   (3,799 )   (2,577 )   (2,452 )   (2,550 )

Minus: Income tax payable

    (269 )   (212 )   (200 )   (180 )   (181 )

Invested capital

    26,604     27,457     29,002     28,446     28,733  

Average invested capital as of September 30, 2020

    28,048                          

Operating income(3)

   
2,461
                         

Income tax expense(2),(3)

    (656 )                        

NOPAT

    1,805                          

ROIC in %

    6.4 %                        

Adjustments to average invested capital and ROIC for the effect from IFRS 16
in € M, except where otherwise specified

2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
  December 31,
2019
  September 30,
2019
 

Total assets

    (4,261 )   (4,421 )   (4,388 )   (4,356 )   (4,319 )

Plus: Cumulative goodwill amortization

                     

Minus: Cash and cash equivalents

                     

Minus: Loans to related parties

                     

Minus: Deferred tax assets

    4     3     3     2     4  

Minus: Accounts payable

                     

Minus: Accounts payable to related parties

                     

Minus: Provisions and other current liabilities(1)

    (134 )   (140 )   (143 )   (140 )   (144 )

Minus: Income tax payable

                    (4 )

Invested capital

    (4,392 )   (4,558 )   (4,529 )   (4,494 )   (4,463 )

Adjustment to average invested capital as of September 30, 2020

    (4,487 )                        

Adjustment to operating income

   
(113

)
                       

Adjustment to income tax expense

    29                          

Adjustment to NOPAT

    (84 )                        

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Reconciliation of average invested capital and ROIC (Non-IFRS Measure, adjusted for the effect from IFRS 16)
in € M, except where otherwise specified

2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
  December 31,
2019-
  September 30,
2019(3)
 

Total assets

    28,788     29,779     29,684     28,579     29,005  

Plus: Cumulative goodwill amortization

    405     421     430     420     432  

Minus: Cash and cash equivalents

    (1,599 )   (1,890 )   (1,405 )   (1,008 )   (969 )

Minus: Loans to related parties

    (51 )   (49 )   (40 )   (72 )   (65 )

Minus: Deferred tax assets

    (426 )   (398 )   (380 )   (359 )   (344 )

Minus: Accounts payable

    (729 )   (678 )   (762 )   (717 )   (655 )

Minus: Accounts payable to related parties

    (132 )   (135 )   (134 )   (119 )   (255 )

Minus: Provisions and other current liabilities(1)

    (3,775 )   (3,940 )   (2,720 )   (2,592 )   (2,694 )

Minus: Income tax payable

    (269 )   (212 )   (200 )   (180 )   (185 )

Invested capital

    22,212     22,899     24,473     23,952     24,270  

Average invested capital as of September 30, 2020

    23,561                          

Operating income(3)

   
2,348
                         

Income tax expense(2),(3)

    (628 )                        

NOPAT

    1,720                          

ROIC in % (adjusted for IFRS 16)

   
7.3

%
                       

Reconciliation of average invested capital and ROIC (unadjusted)
in € M, except where otherwise specified

2019
  December 31,
2019
  September 30,
2019
  June 30,
2019
  March 31,
2019
  December 31,
2018
 

Total assets

    32,935     33,169     31,956     32,353     26,242  

Plus: Cumulative goodwill amortization

    420     432     416     419     413  

Minus: Cash and cash equivalents

    (1,008 )   (965 )   (922 )   (959 )   (2,146 )

Minus: Loans to related parties

    (72 )   (65 )   (62 )   (81 )   (80 )

Minus: Deferred tax assets

    (361 )   (348 )   (329 )   (309 )   (346 )

Minus: Accounts payable

    (717 )   (655 )   (680 )   (708 )   (641 )

Minus: Accounts payable to related parties

    (119 )   (255 )   (156 )   (210 )   (154 )

Minus: Provisions and other current liabilities(1)

    (2,452 )   (2,546 )   (2,524 )   (2,604 )   (2,727 )

Minus: Income tax payable

    (180 )   (181 )   (171 )   (161 )   (166 )

Invested capital

    28,446     28,586     27,528     27,740     20,395  

Average invested capital as of December 31, 2019

    26,539                          

Operating income

   
2,270
                         

Income tax expense(2)

    (565 )                        

NOPAT

    1,705                          

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Adjustments to average invested capital and ROIC
in € M, except where otherwise specified

2019
  December 31,
2019
  September 30,
2019(3)
  June 30,
2019(3)
  March 31,
2019(3)
  December 31,
2018(3)
 

Total assets

        156     149     151     2,092  

Plus: Cumulative goodwill amortization

                     

Minus: Cash and cash equivalents

        (4 )   (4 )   (4 )   (45 )

Minus: Loans to related parties

                     

Minus: Deferred tax assets

                    (1 )

Minus: Accounts payable

                    (17 )

Minus: Accounts payable to related parties

                     

Minus: Provisions and other current liabilities(1)

        (4 )   (3 )   (3 )   (48 )

Minus: Income tax payable

                     

Invested capital

        148     142     144     1,981  

Adjustment to average invested capital as of December 31, 2019

    483                          

Adjustment to operating income(3)

   
(79

)
                       

Adjustment to income tax expense(3)

    20                          

Adjustment to NOPAT

    (59 )                        

Reconciliation of average invested capital and ROIC (Non-IFRS Measure)
in € M, except where otherwise specified

2019
  December 31,
2019
  September 30,
2019(3)
  June 30,
2019(3)
  March 31,
2019(3)
  December 31,
2018(3)
 

Total assets

    32,935     33,325     32,105     32,504     28,334  

Plus: Cumulative goodwill amortization

    420     432     416     419     413  

Minus: Cash and cash equivalents

    (1,008 )   (969 )   (926 )   (963 )   (2,191 )

Minus: Loans to related parties

    (72 )   (65 )   (62 )   (81 )   (80 )

Minus: Deferred tax assets

    (361 )   (348 )   (329 )   (309 )   (347 )

Minus: Accounts payable

    (717 )   (655 )   (680 )   (708 )   (658 )

Minus: Accounts payable to related parties

    (119 )   (255 )   (156 )   (210 )   (154 )

Minus: Provisions and other current liabilities(1)

    (2,452 )   (2,550 )   (2,527 )   (2,607 )   (2,775 )

Minus: Income tax payable

    (180 )   (181 )   (171 )   (161 )   (166 )

Invested capital

    28,446     28,734     27,670     27,884     22,376  

Average invested capital as of December 31, 2019

    27,022                          

Operating income(3)

   
2,191
                         

Income tax expense(2),(3)

    (545 )                        

NOPAT

    1,646                          

ROIC in %

   
6.1

%
                       

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Adjustments to average invested capital and ROIC for the effect from the IFRS 16 Implementation
in € M, except where otherwise specified

2019
  December 31,
2019
  September 30,
2019
  June 30,
2019
  March 31,
2019
  December 31,
2018
 

Total assets

    (4,356 )   (4,319 )   (4,172 )   (4,229 )    

Plus: Cumulative goodwill amortization

                     

Minus: Cash and cash equivalents

                     

Minus: Loans to related parties

                     

Minus: Deferred tax assets

    2     4     4     5      

Minus: Accounts payable

                     

Minus: Accounts payable to related parties

                     

Minus: Provisions and other current liabilities(1)

    (140 )   (144 )   (138 )   (143 )    

Minus: Income tax payable

        (4 )   (4 )   (1 )    

Invested capital

    (4,494 )   (4,463 )   (4,310 )   (4,368 )    

Adjustment to average invested capital as of December 31, 2019

    (3,527 )                        

Adjustment to operating income

   
(75

)
                       

Adjustment to income tax expense

    18                          

Adjustment to NOPAT

    (57 )                        

Reconciliation of average invested capital and ROIC (Non-IFRS Measure, adjusted for the effect from the IFRS 16 Implementation)
in € M, except where otherwise specified

2019
  December 31,
2019
  September 30,
2019(3)
  June 30,
2019(3)
  March 31,
2019(3)
  December 31,
2018(3)
 

Total assets

    28,579     29,006     27,933     28,275     28,334  

Plus: Cumulative goodwill amortization

    420     432     416     419     413  

Minus: Cash and cash equivalents

    (1,008 )   (969 )   (926 )   (963 )   (2,191 )

Minus: Loans to related parties

    (72 )   (65 )   (62 )   (81 )   (80 )

Minus: Deferred tax assets

    (359 )   (344 )   (325 )   (304 )   (347 )

Minus: Accounts payable

    (717 )   (655 )   (680 )   (708 )   (658 )

Minus: Accounts payable to related parties

    (119 )   (255 )   (156 )   (210 )   (154 )

Minus: Provisions and other current liabilities(1)

    (2,592 )   (2,694 )   (2,665 )   (2,750 )   (2,775 )

Minus: Income tax payable

    (180 )   (185 )   (175 )   (162 )   (166 )

Invested capital

    23,952     24,271     23,360     23,516     22,376  

Average invested capital as of December 31, 2019

    23,495                          

Operating income(3)

   
2,116
                         

Income tax expense(2),(3)

    (527 )                        

NOPAT

    1,589                          

ROIC in % (adjusted for IFRS 16)

   
6.8

%
                       

(1)
Including non-current provisions, non-current labor expenses and variable payments outstanding for acquisitions and excluding pension liabilities and noncontrolling interests subject to put provisions.

(2)
Adjusted for noncontrolling partnership interests.

(3)
Including adjustments for acquisitions and divestitures made within the reporting period with a purchase price above a €50 M threshold as defined in the Amended 2012 Credit Agreement.

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Business metrics for Care Coordination

The measures for the North America Segment and the Asia-Pacific Segment discussed below include prior programs in which we participated and current and future programs that we will be participating in and will be reflected in the discussion of our business. Currently, in our North America Segment, sub-capitation, ESCO programs and other shared savings programs are included within the Member Months and Medical Cost Under Management calculations below. In the future, other programs may be included in the metrics below. Note that due to the timing required by CMS to review ESCO program data that we provide, estimates have been used to report these metrics in a timely manner. The Asia-Pacific Segment Care Coordination metric currently used for discussion purposes is patient encounters. In light of our renal care continuum strategy, these metrics may be adjusted or developed further in future periods. These metrics are neither IFRS measures nor non-IFRS measures and are therefore not accompanied by, or reconciled to, IFRS measures.

Member months under medical cost management

In our North America Segment, member months under medical cost management is calculated by multiplying the number of members included in value-based reimbursement programs by the corresponding number of months these members participate in those programs ("Member Months"). In the aforementioned programs, we assume the risk associated with generating savings. The value-based programs within Care Coordination include sub-capitation arrangements, the ESCO program and various other shared savings programs. Additionally, we provide coordinated and holistic care for eligible CKD and ESRD members through a value-based payment model in which reimbursement is based on meeting agreed quality improvement, patient outcome goals and cost efficiencies ("Coordinated Care Program"). An increase in patient membership may indicate future earnings or losses as our performance is determined through these managed care programs.

Medical cost under management

In our North America Segment, medical cost under management represents the management of medical costs associated with our patient membership in value-based programs. For ESCOs and other shared savings programs, this is calculated by multiplying the Member Months in each program by the benchmark of expected medical costs per member per month. The sub-capitation calculation multiplies the premium per member of the program per month by the number of Member Months associated with the plan, as noted above.

Care Coordination patient encounters

In the North America Segment and the Asia-Pacific Segment, Care Coordination patient encounters represents the total patient encounters and procedures conducted by certain of our Care Coordination activities and, we believe, is an indicator of the revenue generated. Care Coordination patient encounters in the North America Segment is the sum of all encounters and procedures completed during the period by MedSpring Urgent Care Centers (in 2019), Azura Vascular Care, and National Cardiovascular Partners, as well as patients in our Fresenius Medical Care Rx Bone Mineral Metabolism program. Care Coordination patient encounters in the Asia-Pacific Segment is the sum of all encounters for the following services: ambulant treatment services in day care hospitals, comprehensive and specialized health check-ups, inpatient and outpatient services, vascular access and other chronic treatment services.

III.  Results of operations, financial position and net assets

The following sections summarize our results of operations, financial position and net assets as well as key performance indicators by reporting segment, as well as Corporate, for the periods indicated. We prepared the information consistent with the manner in which management internally disaggregates financial information to assist in making operating decisions and evaluating management performance.

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Results of operations

Segment data (including Corporate)
in € M

 
  For the three
months ended
September 30,
  For the nine
months ended
September 30,
 
 
  2020   2019   2020   2019  

Total revenue

                         

North America Segment

    3,069     3,073     9,495     9,021  

EMEA Segment

    682     683     2,048     1,984  

Asia-Pacific Segment

    484     475     1,377     1,360  

Latin America Segment

    170     182     508     516  

Corporate

    9     6     31     16  

Total

    4,414     4,419     13,459     12,897  

Operating income

                         

North America Segment

    514     477     1,587     1,279  

EMEA Segment

    99     100     278     334  

Asia-Pacific Segment

    97     90     237     254  

Latin America Segment

    11     11     29     28  

Corporate

    (89 )   (83 )   (288 )   (242 )

Total

    632     595     1,843     1,653  

Interest income

    8     21     27     47  

Interest expense

    (96 )   (126 )   (311 )   (374 )

Income tax expense

    (124 )   (98 )   (362 )   (292 )

Net income

    420     392     1,197     1,034  

Net income attributable to noncontrolling interests

   
(66

)
 
(59

)
 
(210

)
 
(177

)

Net income attributable to shareholders of FMC-AG & Co. KGaA

    354     333     987     857  

Revenue and operating income generated in countries outside the eurozone are subject to currency fluctuations. The three months ended September 30, 2020 were negatively impacted by the development of the euro against the U.S. dollar, whereas the nine months ended September 30, 2020 were relatively unaffected. The three and nine months ended September 30, 2019 were positively impacted by the development of the euro against the U.S. dollar. For the three and nine months ended September 30, 2020, approximately 70% and 71% of revenue and approximately 81% and 86% of operating income were generated in U.S. dollars, respectively.

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Three months ended September 30, 2020 compared to three months ended September 30, 2019

Consolidated financials

Key indicators for the consolidated financial statements
in € M, except where otherwise specified

 
  For the three months ended
September 30
  Change in %  
 
  As
reported
  Currency
translation
effects
  Constant
Currency(1)
 
 
  2020   2019  

Revenue

    4,414     4,419     (0 )%   (6 )%   6 %

Health care services

    3,499     3,492     0 %   (6 )%   6 %

Health care products

    915     927     (1 )%   (5 )%   4 %

Number of dialysis treatments

    13,572,506     13,237,546     3 %            

Same market treatment growth in %

    1.8 %   3.7 %                  

Gross profit as a % of revenue

    31.0 %   30.5 %                  

Selling, general and administrative costs as a % of revenue

    16.3 %   16.6 %                  

Operating income

    632     595     6 %   (5 )%   11 %

Operating income margin in %

    14.3 %   13.5 %                  

Delivered Operating Income(2)

    566     536     5 %   (5 )%   10 %

Net income attributable to shareholders of FMC-AG & Co. KGaA

    354     333     6 %   (5 )%   11 %

Basic earnings per share in €

    1.21     1.10     9 %   (5 )%   14 %

(1)
For further information on Constant Exchange Rates, see "II. Discussion of measures—Non—IFRS measures" above.

(2)
For further information on Delivered Operating Income, including a reconciliation of Delivered Operating Income to operating income on a consolidated basis and for each of our operating segments, see "II. Discussion of measures—Non—IFRS measures—Delivered Operating Income (Non-IFRS Measure)" above.

Health care services revenue remained stable as compared to the three months ended September 30, 2019. In addition to a 6% negative impact from foreign currency translation, health care services revenue increased by 6% driven by organic growth despite lower reimbursement for calcimimetics (3%), a revenue recognition adjustment for accounts receivable in legal dispute in the prior year (3%) and contributions from acquisitions (1%), partially offset by the effect of closed or sold clinics (1%).

Dialysis treatments increased by 3% as a result of growth in same market treatments (2%) and contributions from acquisitions (2%), partially offset by the effect of closed or sold clinics (1%).

At September 30, 2020, we owned, operated or managed 4,073 dialysis clinics compared to 4,003 dialysis clinics at September 30, 2019. During the three months ended September 30, 2020, we acquired 25 dialysis clinics, opened 18 dialysis clinics and combined or closed 6 clinics. The number of patients treated in dialysis clinics that we own, operate or manage increased by 2% to 349,167 at September 30, 2020 (September 30, 2019: 342,488).

Health care product revenue decreased by 1%, including a 5% negative impact from foreign currency translation. At Constant Exchange Rates, health care product revenue increased by 4%. Dialysis product revenue decreased by 2%. In addition to a 6% negative impact from foreign currency translation, dialysis product revenue increased by 4% driven by higher sales of products for acute care treatments, machines for chronic treatment, peritoneal dialysis products and renal pharmaceuticals, partially offset by lower sales of in-center disposables. Non-dialysis product revenue increased by 20% to €24 M from €20 M with virtually no foreign currency translation effects. The non-dialysis product revenue increase was due to higher sales of acute cardiopulmonary products.

The increase period over period in the gross profit margin of 31.0% (2019: 30.5%) was 0.5 percentage points. Foreign currency translation effects represented a 0.4 percentage point increase in the current period. The increase was primarily driven by a favorable impact related to a revenue recognition adjustment for accounts receivable in legal dispute in the prior year and the prior year effect of a reduction in patient attribution and a decreasing savings rate for ESCOs ("Prior Year ESCO effect") in the North America Segment, partially offset by higher personnel expense and higher costs for supplies in the North America Segment as well as unfavorable business growth in certain business lines in the Asia-Pacific Segment.

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The decrease period over period in selling, general and administrative ("SG&A") expense as a percentage of revenue of 16.3% (2019: 16.6%) was 0.3 percentage points. Foreign currency translation effects represented a 0.1 percentage point increase in the current period. The decrease was primarily driven by the prior year effects of (a) costs associated with the sustained improvement of our cost base ("Costs Optimization costs") (North America Segment and EMEA Segment), (b) a revenue recognition adjustment for accounts receivable in legal dispute and (c) the Prior Year ESCO Effect as well as the current year effects of COVID-19-related meeting and travel savings and higher income attributable to a consent agreement on certain renal pharmaceuticals within the North America Segment. Additionally, the decrease was driven by lower bad debt expense (Asia-Pacific Segment), favorable foreign currency transaction effects in the Latin America Segment and at Corporate and business growth, including acquisitions combined with a favorable impact from cost management initiatives (mainly in the Asia-Pacific Segment and the EMEA Segment). The decrease was mostly offset by the remeasurement effect on the fair value of investments in the prior year and contributions to the opposition of U.S state ballot initiatives in the North America Segment, unfavorable foreign currency transaction effects in the EMEA Segment and higher costs related to the compliance monitor engaged in accordance with the DOJ and SEC non-prosecution agreement (see note 8 of the notes to the consolidated financial statements included in this report) at Corporate.

The increase period over period in the operating income margin was 0.8 percentage points. Foreign currency translation effects represented a 0.2 percentage point increase in the current period. The increase in the current period was largely driven by the increase in the gross profit margin coupled with the decrease in SG&A expenses, as discussed above.

Delivered Operating Income increased by 5%. In addition to a 5% negative impact from foreign currency translation, Delivered Operating Income increased by 10% largely driven by increased operating income.

Net interest expense decreased by 16% to €88 M from €105 M. Including a 5% positive impact from foreign currency translation, net interest expense decreased by 11% primarily due to the replacement of high interest-bearing bonds by debt instruments at lower interest rates, lower variable Libor-based interest rates and a lower debt level.

Income tax expense increased to €124 M from €98 M. The effective tax rate increased to 22.9% from 20.2% for the same period of 2019 largely driven by the prior year tax benefit related to the divestiture of Sound Inpatient Physicians, Inc., and the increase of non-tax deductible expenses in the U.S. in the current year, partially offset by the prior year impact related to the release of a tax liability and the increase of tax-free income related to equity method investees.

Net income attributable to noncontrolling interests increased by 12% to €66 M from €59 M. In addition to a 7% positive impact from foreign currency translation, net income attributable to noncontrolling interests increased by 19% due to higher earnings in entities in which we have less than 100% ownership.

Net income attributable to shareholders of FMC-AG & Co. KGaA increased by 6% to €354 M from €333 M. In addition to a 5% negative impact from foreign currency translation, net income attributable to shareholders of FMC-AG & Co. KGaA increased by 11% as a result of the combined effects of the items discussed above. COVID-19 resulted in a negative impact to net income attributable to shareholders of FMC-AG & Co. KGaA in the amount of €8 M for the three months ended September 30, 2020.

Basic earnings per share increased by 9%. In addition to a 5% negative impact from foreign currency translation, basic earnings per share increased by 14% primarily due to the increase in net income attributable to shareholders of FMC-AG & Co. KGaA described above coupled with a decrease in the average weighted number of shares outstanding for the period. The average weighted number of shares outstanding for the period decreased to approximately 292.8 M on September 30, 2020 (September 30, 2019: 301.4 M), primarily as a result of our share buy-back program (see note 2 of the notes to the consolidated financial statements (unaudited) included in this report).

We employed 126,463 people (full-time equivalents) as of September 30, 2020 (September 30, 2019: 120,734). This 5% increase was primarily due to acquisitions and organic growth in our business.

Consolidated operating performance on an adjusted basis

Management believes that there are certain distinct transactions or events for which the operating results should be adjusted to enhance transparency and comparability. We believe the following results (adjusted to exclude these items) should be analyzed in connection with the results presented above. For the three

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months ended September 30, 2020 and 2019, we identified the following transactions which, when excluded from the results disclosed above, may provide a reader with further useful information in assessing our performance:

an adjustment to the 2019 presentation to remove the integration costs related to the acquisition of NxStage Medical Inc. ("NxStage") on February 21, 2019 ("NxStage Costs")

an adjustment to the 2019 presentation to remove Cost Optimization Costs

an adjustment to the 2019 presentation to remove the gain related to divestitures of Care Coordination activities ("(Gain) loss related to divestitures of Care Coordination activities")

The following table reconciles the key indicators for the consolidated financial statements in accordance with IFRS to the key indicators adjusted for the items described above. While we believe these adjustments provide additional clarity to the discussion of our operating results, the following table should only be viewed as a supplement to our results disclosed in accordance with IFRS above.

Consolidated operating performance on an adjusted basis
in € M, except where otherwise specified

 
   
   
   
   
  (Gain) loss
related to
divestitures of
Care
Coordination
activities
   
  Change in %
as adjusted
 
 
  Results
2020
  Results
2019
  NxStage
costs
  Cost
optimization
costs
  Results
2019
adjusted
  Current
rate
  Constant
Currency(1)
 

Three months ended September 30

                                                 

EBITDA

    1,025     1,005     2     7     (2 )   1,012     1 %   6 %

Operating income

    632     595     2     25     (2 )   620     2 %   7 %

Operating income margin in %

    14.3 %   13.5 %                     14.0 %            

Income tax expense

    124     98     1     7     18     124     0 %   5 %

Net income(2)

    354     333     1     18     (20 )   332     7 %   11 %

Basic earnings per share in €

    1.21     1.10     0.01     0.06     (0.07 )   1.10     10 %   14 %

(1)
For further information on Constant Exchange Rates, see "II. Discussion of measures—Non-IFRS measures" above.

(2)
Attributable to shareholders of FMC-AG & Co. KGaA.

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The following discussions pertain to the North America Segment, the EMEA Segment, the Asia-Pacific Segment and the Latin America Segment and the measures we use to manage these segments.

North America Segment

Key indicators and business metrics for the North America Segment
in € M, except where otherwise specified

 
  For the three
months ended
September 30
  Change in %  
 
  As
reported
  Currency
translation
effects
  Constant
Currency(1)
 
 
  2020   2019  

Total North America Segment

                               

Revenue

    3,069     3,073     (0 )%   (5 )%   5 %

Health care services

    2,801     2,795     0 %   (6 )%   6 %

Health care products

    268     278     (4 )%   (6 )%   2 %

Operating income

    514     477     8 %   (5 )%   13 %

Operating income margin in %

    16.8 %   15.5 %                  

Delivered Operating Income(2)

    452     422     7 %   (5 )%   12 %

Dialysis

   
 
   
 
   
 
   
 
   
 
 

Revenue

    2,740     2,800     (2 )%   (5 )%   3 %

Number of dialysis treatments

    8,296,384     8,174,088     1 %            

Same market treatment growth in %

    1.0 %   3.4 %                  

Operating income

    490     500     (2 )%   (5 )%   3 %

Operating income margin in %

    17.9 %   17.9 %                  

Delivered Operating Income(2)

    436     450     (3 )%   (5 )%   2 %

Care Coordination

   
 
   
 
   
 
   
 
   
 
 

Revenue

    329     273     20 %   (7 )%   27 %

Operating income

    24     (23 )   n.a.           n.a.  

Operating income margin in %

    7.2 %   (8.3 )%                  

Delivered Operating Income(2)

    16     (28 )   n.a.           n.a.  

Member months under medical cost management(3),(4)

    162,442     146,714     11 %            

Medical cost under management(3),(4)

    936     975     (4 )%   (6 )%   2 %

Care Coordination patient encounters(3)

    179,792     224,531     (20 )%            

(1)
For further information on Constant Exchange Rates, see "II. Discussion of measures—Non—IFRS measures" above.

(2)
For further information on Delivered Operating Income, including a reconciliation of Delivered Operating Income to operating income on a consolidated basis and for each of our operating segments, see "II. Discussion of measures—Non—IFRS measures—Delivered Operating Income (Non-IFRS Measure)" above.

(3)
For further information on these metrics, please refer to the discussion above of our Care Coordination measures under "II. Discussion of measures—Business metrics for Care Coordination."

(4)
Data presented for the ESCO metrics are subject to finalization by CMS, which may result in changes from previously reported metrics.


Dialysis

Revenue

Dialysis revenue decreased by 2%. In addition to a 5% negative impact resulting from foreign currency translation, dialysis revenue increased by 3%. Dialysis revenue is comprised of dialysis care revenue and health care product revenue.

Dialysis care revenue decreased by 2% to €2,472 M from €2,522 M. In addition to a 5% negative impact from foreign currency translation, dialysis care revenue increased by 3% mainly due to a revenue recognition adjustment for accounts receivable in legal dispute in the prior year (3%) and contributions from acquisitions (1%), partially offset by a decrease in organic growth as a result of lower reimbursement for calcimimetics and COVID-19-related reduced growth in treatments (1%).

Dialysis treatments increased by 1% largely due to growth in same market treatments (1%). At September 30, 2020, 211,766 patients, an increase of 1% (September 30, 2019: 209,633), were treated in

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the 2,620 dialysis clinics (September 30, 2019: 2,585) that we own or operate in the North America Segment.

Health care product revenue decreased by 4%. In addition to a 6% negative impact from foreign currency translation, health care product revenue increased by 2% driven by higher sales of products for acute care treatments, renal pharmaceuticals and peritoneal dialysis products, partially offset by lower external sales of home hemodialysis products and in-center disposables.

Operating income margin

Operating income margin remained stable period over period. Foreign currency translation effects represented a 0.1 percentage point increase in the dialysis operating income margin. The increase was primarily due to a favorable impact related to a revenue recognition adjustment for accounts receivable in legal dispute in the prior year, Cost Optimization costs in the prior year, favorable cost management of pharmaceuticals, as well as COVID-19-related meeting and travel savings and the effect of the suspended Medicare sequestration, an increase in commercial revenue mainly offset by the remeasurement effect on the fair value of investments in the prior year, higher personnel expense, contributions to the opposition of U.S. state ballot initiatives and lower reimbursement for calcimimetics.

Delivered Operating Income

Dialysis Delivered Operating Income decreased by 3%. In addition to a 5% negative impact from foreign currency translation, Delivered Operating Income increased by 2% mainly as a result of increased operating income at Constant Exchange Rates.


Care Coordination

Revenue

Care Coordination revenue increased by 20%. In addition to a 7% negative impact from foreign currency translation, Care Coordination revenue increased by 27% largely driven by an increase in organic growth impacted by the Prior Year ESCO Effect (32%), partially offset by the effect of closed or sold centers (3%) and lower contributions from acquisitions (2%).

Operating income margin

The increase period over period in the Care Coordination operating income margin was 15.5 percentage points. Foreign currency translation effects represented a 0.3 percentage point decrease in the operating income margin. The increase was mainly due to the Prior Year ESCO Effect.

Delivered Operating Income

Care Coordination Delivered Operating Income increased to €16 M for the three months ended September 30, 2020 as compared to a loss of € 28 M in the comparative period of 2019 mainly as the result of increased operating income.

Care Coordination business metrics

Member months under medical cost management increased by 11% due to increases in member months related to the Coordinated Care Program as well as our payor programs, partially offset by a decrease in member months related to our existing ESCOs. See note 4 to the table "Key indicators and business metrics for the North America Segment," above.

Care Coordination's medical cost under management decreased by 4%. Including a 6% negative impact from foreign currency translation, Care Coordination's medical cost under management increased by 2% due to the increase in member months related to payor programs, partially offset by a decrease in member months related to our existing ESCOs as described above. See note 4 to the table "Key indicators and business metrics for the North America Segment" above.

The decrease in patient encounters was primarily driven by decreased encounters for urgent care services as a result of the divestiture of the Medspring Urgent Care Center business in the second quarter of 2019.

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North America Segment operating performance on an adjusted basis

Management believes that there are certain distinct transactions or events for which the operating results should be adjusted to enhance transparency and comparability. We believe the following results (adjusted to exclude these items) should be analyzed in connection with the results presented above. For the three months ended September 30, 2020 and 2019, we identified the following transactions that, when excluded from the results disclosed above, may provide a reader with further useful information in assessing our performance:

an adjustment to the 2019 presentation to remove the NxStage Costs

an adjustment to the 2019 presentation to remove the Cost Optimization Costs

an adjustment to the 2019 presentation to remove the (Gain) loss related to divestitures of Care Coordination activities

The following table reconciles the key indicators for the North America Segment in accordance with IFRS to the key indicators adjusted for the items described above. While we believe these adjustments provide additional clarity to the discussion of our operating results, the following table should only be viewed as a supplement to our results disclosed in accordance with IFRS above.

North America Segment operating performance on an adjusted basis
in € M, except where otherwise specified

 
   
   
   
   
   
   
  Change in % as
adjusted
 
 
   
   
   
   
  (Gain) loss related
to divestitures of
Care Coordination
activities
   
 
 
  Results
2020
  Results
2019
  NxStage
costs
  Cost
optimization
costs
  Results
2019
adjusted
  Current
rate
  Constant
Currency(1)
 

Three months ended September 30

                                                 

Operating income

    514     477     2     22     (2 )   499     3 %   8 %

Operating income margin in %

    16.8 %   15.5 %                     16.2 %            

Dialysis

    490     500     2     22         524     (6 )%   (2 )%

Dialysis operating income margin in %

    17.9 %   17.9 %                     18.7 %            

Care Coordination

    24     (23 )           (2 )   (25 )   n.a.     n.a.  

Care Coordination operating income margin in %

    7.2 %   (8.3 )%                     (9.2 )%            

(1)
For further information on Constant Exchange Rates, see "II. Discussion of measures—Non-IFRS measures" above.

EMEA Segment

Key indicators for the EMEA Segment
in € M, except where otherwise specified

 
  For the three months
ended September 30
  Change in %  
 
  As
reported
  Currency
translation
effects
  Constant
Currency(1)
 
 
  2020   2019  

Revenue

    682     683     (0 )%   (3 )%   3 %

Health care services

    346     343     1 %   (4 )%   5 %

Health care products

    336     340     (1 )%   (2 )%   1 %

Number of dialysis treatments

    2,602,850     2,527,666     3 %            

Same market treatment growth in %

    1.7 %   3.6 %                  

Operating income

    99     100     (0 )%   0 %   0 %

Operating income margin in %

    14.6 %   14.6 %                  

Delivered Operating Income(2)

    98     98     0 %   (1 )%   1 %

(1)
For further information on Constant Exchange Rates, see "II. Discussion of measures—Non—IFRS measures" above.

(2)
For further information on Delivered Operating Income, including a reconciliation of Delivered Operating Income to operating income on a consolidated basis and for each of our operating segments, see "II. Discussion of measures—Non—IFRS measures—Delivered Operating Income (Non-IFRS Measure)" above.

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Revenue

Health care service revenue increased by 1%. Including a 4% negative impact resulting from foreign currency translation, health care service revenue increased by 5% largely as a result of contributions from acquisitions (3%) and organic growth (3%), partially offset by the effect of closed or sold clinics (1%).

Dialysis treatments increased by 3% mainly due to growth in same market treatments (2%) and contributions from acquisitions (2%), partially offset by the effect of closed or sold clinics (1%). As of September 30, 2020, 67,623 patients, an increase of 2% (September 30, 2019: 66,259), were treated at the 805 dialysis clinics (September 30, 2019: 784) that we own, operate or manage in the EMEA Segment.

Health care product revenue decreased by 1% including a 2% negative impact from foreign currency translation. Dialysis product revenue decreased by 2% primarily due to a 2% negative impact resulting from foreign currency translation. Non-Dialysis product revenue increased by 16% to €23 M from €20 M with virtually no impact from foreign currency translation, largely due to higher sales of acute cardiopulmonary products.

Operating income margin

The operating income margin remained relatively stable period over period. Foreign currency translation effects represented a 0.4 percentage point increase in the operating income margin. The resulting slight decrease in operating income margin was mainly due to an unfavorable impact from foreign currency transaction effects, partially offset by the release of bad debt expense.

Delivered Operating Income

Delivered Operating Income remained relatively stable period over period. Including a 1% negative impact from foreign currency translation, Delivered Operating Income increased by 1%.

EMEA Segment operating performance on an adjusted basis

Management believes that there are certain distinct transactions or events for which the operating results should be adjusted to enhance transparency and comparability. We believe the following results (adjusted to exclude these items) should be analyzed in connection with the results presented above. For the three months ended September 30, 2020, we adjusted the 2020 presentation to remove the 2019 Cost Optimization Costs in the amount of €3 M resulting in an adjusted operating income amount of €103 M and an adjusted operating income margin of 15.0%. When excluded from the results disclosed above, we believe the adjusted amount may provide a reader with further useful information in assessing our performance. While we believe the adjustment provided additional clarity to the discussion of our operating results, adjusted operating income and adjusted operating income margin for the EMEA Segment should only be viewed as a supplement to our results disclosed in accordance with IFRS above.

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Asia-Pacific Segment

Key indicators and business metrics for the Asia-Pacific Segment
in € M, except where otherwise specified

 
  For the three months
ended September 30
  Change in %  
 
  As
reported
  Currency
translation
effects
  Constant
Currency(1)
 
 
  2020   2019  

Total Asia-Pacific Segment

                               

Revenue

    484     475     2 %   (4 )%   6 %

Health care services

    227     223     2 %   (3 )%   5 %

Health care products

    257     252     2 %   (4 )%   6 %

Operating income

    97     90     7 %   (2 )%   9 %

Operating income margin in %

    20.0 %   19.0 %                  

Delivered Operating Income(2)

    95     88     7 %   (1 )%   8 %

Dialysis

   
 
   
 
   
 
   
 
   
 
 

Revenue

    413     411     1 %   (4 )%   5 %

Number of dialysis treatments

    1,181,179     1,160,964     2 %            

Same market treatment growth in %

    8.4 %   6.6 %                  

Operating income

    82     81     0 %   (2 )%   2 %

Operating income margin in %

    19.9 %   19.9 %                  

Delivered Operating Income(2)

    79     79     (1 )%   (2 )%   1 %

Care Coordination

   
 
   
 
   
 
   
 
   
 
 

Revenue

    71     64     10 %   (2 )%   12 %

Operating income

    15     9     71 %   2 %   69 %

Operating income margin in %

    21.0 %   13.6 %                  

Delivered Operating Income(2)

    16     9     79 %   1 %   78 %

Care Coordination Patient Encounters(3)

    318,935     295,146     8 %            

(1)
For further information on Constant Exchange Rates, see "II. Discussion of measures—Non—IFRS measures" above.

(2)
For further information on Delivered Operating Income, including a reconciliation of Delivered Operating Income to operating income on a consolidated basis and for each of our operating segments, see "II. Discussion of measures—Non—IFRS measures—Delivered Operating Income (Non-IFRS Measure)" above.

(3)
For further information on patient encounters, please refer to the discussion above of our Care Coordination measures under "II. Discussion of measures—Business metrics for Care Coordination."


Dialysis

Revenue

Dialysis revenue increased by 1%. Including a 4% negative impact from foreign currency translation, dialysis revenue increased by 5%. Dialysis revenue is comprised of dialysis care revenue and health care product revenue.

Dialysis care service revenue decreased by 1% to €156 M from €159 M. Including a 3% negative impact resulting from foreign currency translation, dialysis care service revenue increased by 2% as a result of an increase in organic growth (6%) and contributions from acquisitions (3%), partially offset by the effect of closed or sold clinics (7%).

Dialysis treatments increased by 2% mainly due to growth in same market treatments (8%) and contributions from acquisitions (3%), partially offset by the effect of closed or sold clinics (9%). As of September 30, 2020, 32,689 patients (September 30, 2019: 32,239) were treated at the 397 dialysis clinics (September 30, 2019: 401) that we own, operate or manage in the Asia-Pacific Segment.

Health care product revenue increased by 2%, including a 4% negative impact resulting from foreign currency translation. Dialysis product revenue increased by 2% to €257 M from €252 M. Including a 4% negative impact resulting from foreign currency translation, dialysis product revenue increased by 6% mainly a result of higher sales of in-center disposables and products for acute care treatments, partially offset by lower sales of machines for chronic treatment.

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Operating income margin

Operating income margin remained stable period over period. Foreign currency translation effects represented a 0.5 percentage point increase in the operating income margin. The decrease at Constant Exchange Rates was primarily due to an unfavorable impact from foreign currency transaction effects.

Delivered Operating Income

Delivered Operating Income decreased by 1%. Including a 2% negative impact resulting from foreign currency translation, Delivered Operating Income increased by 1% mainly due to increased operating income.


Care Coordination

Revenue

Care Coordination revenue increased by 10%. Including a 2% negative impact resulting from foreign currency translation, Care Coordination revenue increased by 12% mainly driven by contributions from acquisitions (7%) and organic growth (5%).

Operating income margin

The increase period over period in the Care Coordination operating income margin was 7.4 percentage points. Foreign currency translation effects represented a 0.6 percentage point increase in the operating income margin. The increase was driven by a favorable impact from COVID-19 due to government relief related to costs incurred during the first nine months of 2020.

Delivered Operating Income

Care Coordination Delivered Operating Income increased by 79%. Including a 1% positive impact resulting from foreign currency translation, Care Coordination Delivered Operating Income increased by 78% mainly as a result of increased operating income.

Care Coordination business metrics

The number of patient encounters increased primarily due to increased encounters for inpatient and outpatient services as a result of acquisitions in the region.

Latin America Segment

Key indicators for the Latin America Segment
in € M, except where otherwise specified

 
  For the three months
ended September 30
  Change in %  
 
  As
reported
  Currency
translation
effects
  Constant
Currency(1)
 
 
  2020   2019  

Revenue

    170     182     (7 )%   (29 )%   22 %

Health care services

    120     131     (9 )%   (28 )%   19 %

Health care products

    50     51     (1 )%   (28 )%   27 %

Number of dialysis treatments

    1,492,093     1,374,828     9 %            

Same market treatment growth in %

    1.8 %   2.7 %                  

Operating income

    11     11     6 %   (22 )%   28 %

Operating income margin in %

    6.6 %   5.8 %                  

Delivered Operating Income(2)

    11     11     4 %   (21 )%   25 %

(1)
For further information on Constant Exchange Rates, see "II. Discussion of measures—Non—IFRS measures" above.

(2)
For further information on Delivered Operating Income, including a reconciliation of Delivered Operating Income to operating income on a consolidated basis and for each of our operating segments, see "II. Discussion of measures—Non—IFRS measures—Delivered Operating Income (Non-IFRS Measure)" above.

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Revenue

Health care service revenue decreased by 9%. Including a 28% negative impact resulting from foreign currency translation, health care service revenue increased by 19% as a result of an increase in organic growth (13%) and contributions from acquisitions (6%).

Dialysis treatments increased by 9% mainly due to contributions from acquisitions (7%) and growth in same market treatments (2%). As of September 30, 2020, 37,089 patients, an increase of 8% (September 30, 2019: 34,357), were treated at the 251 dialysis clinics (September 30, 2019: 233) that we own, operate or manage in the Latin America Segment.

Health care product revenue decreased by 1%. Including a 28% negative impact resulting from foreign currency translation, health care product revenue increased by 27% due to higher sales of machines for chronic treatment.

Operating income margin

The increase period over period in the operating income margin was 0.8 percentage points primarily driven by foreign currency translation effects of 0.5 percentage points.

Delivered Operating Income

Delivered Operating Income increased by 4%. Including a 21% negative impact resulting from foreign currency translation, Delivered Operating Income increased by 25% due to increased operating income.

Nine months ended September 30, 2020 compared to nine months ended September 30, 2019

Consolidated financials

Key indicators for the consolidated financial statements
in € M, except where otherwise specified

 
  For the nine months
ended September 30
  Change in %  
 
  As
reported
  Currency
translation
effects
  Constant
Currency(1)
 
 
  2020   2019  

Revenue

    13,459     12,897     4 %   (2 )%   6 %

Health care services

    10,708     10,265     4 %   (2 )%   6 %

Health care products

    2,751     2,632     5 %   (2 )%   7 %

Number of dialysis treatments

    40,098,653     38,757,809     3 %            

Same market treatment growth in %

    2.7 %   3.6 %                  

Gross profit as a % of revenue

    31.1 %   30.6 %                  

Selling, general and administrative costs as a % of revenue

    17.0 %   17.4 %                  

Operating income

    1,843     1,653     11 %   (1 )%   12 %

Operating income margin in %

    13.7 %   12.8 %                  

Delivered Operating Income(2)

    1,633     1,476     11 %   0 %   11 %

Net income attributable to shareholders of FMC-AG & Co. KGaA

    987     857     15 %   0 %   15 %

Basic earnings per share in €

    3.35     2.82     19 %   0 %   19 %

(1)
For further information on Constant Exchange Rates, see "II. Discussion of measures—Non—IFRS measures" above.

(2)
For further information on Delivered Operating Income, including a reconciliation of Delivered Operating Income to operating income on a consolidated basis and for each of our operating segments, see "II. Discussion of measures—Non—IFRS measures—Delivered Operating Income (Non-IFRS Measure)" above.

Health care services revenue increased by 4% compared to the nine months ended September 30, 2019. In addition to a 2% negative impact from foreign currency translation, health care services revenue increased by 6% driven by organic growth despite lower reimbursement for calcimimetics (4%), contributions from acquisitions (2%) and a revenue recognition adjustment for accounts receivable in legal dispute in the prior year (1%), partially offset by the effect of closed or sold clinics (1%).

Dialysis treatments increased by 3% as a result of growth in same market treatments (3%) and contributions from acquisitions (1%), partially offset by the effect of closed or sold clinics (1%).

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Health care product revenue increased by 5%. Including a 2% negative impact from foreign currency translation, health care product revenue increased by 7% Dialysis product revenue increased by 4%. In addition to a 2% negative impact from foreign currency translation, dialysis product revenue increased by 6% driven by higher sales of products for acute care treatments, in-center disposables, renal pharmaceuticals and home hemodialysis products, partially offset by lower sales of machines for chronic treatment. Non-dialysis product revenue increased by 36% to €76 M from €56 M, with virtually no impact from foreign currency translation. The increase in non-dialysis product revenue was due to higher sales of acute cardiopulmonary products.

The increase period over period in the gross profit margin of 31.1% (2019: 30.6%) was 0.5 percentage points. Foreign currency translation effects represented a 0.2 percentage point increase in the current period. The increase was primarily driven by lower costs for renal pharmaceuticals and a revenue recognition adjustment for accounts receivable in legal dispute in the prior year within the North America Segment, partially offset by higher personnel expense in the North America Segment and the EMEA Segment as well as unfavorable business growth in certain business lines and unfavorable foreign currency transaction effects in the Asia-Pacific Segment.

The decrease period over period in SG&A expense as a percentage of revenue of 17.0% (2019: 17.4%) was 0.4 percentage points. Foreign currency translation effects represented a 0.1 percentage point increase in the current period. The decrease was primarily driven by the prior year impacts from (a) legal settlements, (b) integration costs associated with NxStage, (c) the Prior Year ESCO Effect and (d) Cost Optimization costs, as well as the current year impacts from COVID-19-related meeting and travel savings and lower health insurance expense in the North America Segment. The decrease was partially offset by the prior year remeasurement effect on the fair value of investments (North America Segment), the reduction of a contingent consideration liability related to Xenios AG ("Xenios") in 2019 (EMEA Segment) and higher costs related to the compliance monitor engaged in accordance with the DOJ and SEC non-prosecution agreement (see note 8 of the notes the consolidated financial statements included in this report) (Corporate).

The gain related to divestitures of Care Coordination activities was €32 M in the nine months ended September 30, 2020, as compared to €14 M in the comparable period of 2019 primarily due to the divestiture of cardiovascular clinics in the North America Segment in the current year.

Research and development expenses increased by 19% to €141 M from €119 M. The period over period increase, as a percentage of revenue, was 0.2 percentage points, largely driven by research and development activities at NxStage as well as in-center and home program development and research activities in the fields of digital connectivity and regenerative medicine.

Income from equity method investees decreased by 23% to €48 M from €63 M. The decrease was primarily driven by an impairment of a license held by Vifor Fresenius Medical Care Renal Pharma Ltd. ("VFMCRP") based on an unfavorable clinical trial.

The increase period over period in the operating income margin was 0.9 percentage points. Foreign currency translation effects represented a 0.1 percentage point increase in the current period. The increase in the current period was largely driven by the increase in the gross profit margin coupled with the decrease in SG&A expenses, as discussed above.

Delivered Operating Income increased by 11%, with virtually no impact from foreign currency translation. The increase was largely driven by increased operating income.

Net interest expense decreased by 13% to €284 M from €327 M. In addition to a 1% positive impact from foreign currency translation, net interest expense decreased by 12% primarily due to lower interest rates driven by the replacement of high interest-bearing bonds by debt instruments at lower interest rates and lower variable Libor-based interest rates, partially offset by a higher debt level.

Income tax expense increased by 24% to €362 M from €292 M. The effective tax rate increased to 23.2% from 22.0% for the same period of 2019 largely driven by the prior year tax benefit related to the divestiture of Sound Inpatient Physicians, Inc., the tax-free contingent consideration liability gain from Xenios in 2019 and the increase of non-tax deductible expenses in the U.S. in the current year, partially offset by the prior year impact related to the release of a tax liability and the increase of tax-free income related to equity method investees.

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Net income attributable to noncontrolling interests increased by 19% to €210 M from €177 M, with virtually no impact from foreign currency translation. The increase was due to higher earnings in entities in which we have less than 100% ownership.

Net income attributable to shareholders of FMC-AG & Co. KGaA increased by 15% to €987 M from €857 M, with virtually no impact from foreign currency translation. The increase was as a result of the combined effects of the items discussed above. COVID-19 resulted in a negative impact to net income attributable to shareholders of FMC-AG & Co. KGaA in the amount of €7 M for the nine months ended September 30, 2020.

Basic earnings per share increased by 19%, with virtually no impact from foreign currency translation. The increase was primarily due to the increase in net income attributable to shareholders of FMC-AG & Co. KGaA described above, coupled with a decrease in the average weighted number of shares outstanding for the period. The average weighted number of shares outstanding for the period decreased to approximately 294.5 M on September 30, 2020 (September 30, 2019: 303.8 M), primarily as a result of our share buy-back program (see note 2 of the notes to the consolidated financial statements (unaudited) included in this report).

Consolidated operating performance on an adjusted basis

Management believes that there are certain distinct transactions or events for which the operating results should be adjusted to enhance transparency and comparability. We believe the following results (adjusted to exclude these items) should be analyzed in connection with the results presented above. For the nine months ended September 30, 2020 and 2019, we identified the following transactions which, when excluded from the results disclosed above, may provide a reader with further useful information in assessing our performance:

an adjustment to the 2019 presentation to remove the NxStage Costs

an adjustment to the 2019 presentation to remove the Cost Optimization Costs

an adjustment to the 2019 presentation to remove the (Gain) loss related to divestitures of Care Coordination activities

The following table reconciles the key indicators for the consolidated financial statements in accordance with IFRS to the key indicators adjusted for the items described above. While we believe these adjustments provide additional clarity to the discussion of our operating results, the following table should only be viewed as a supplement to our results disclosed in accordance with IFRS above.

Consolidated operating performance on an adjusted basis
in € M, except where otherwise specified

 
   
   
   
   
  (Gain) loss
related to
divestitures of
Care
Coordination
activities
   
   
   
 
 
   
   
   
   
   
  Change in % as adjusted  
 
  Results
2020
  Results
2019
  NxStage
costs
  Cost
optimization
costs
  Results 2019
adjusted
  Current
rate
  Constant
Currency(1)
 

Nine months ended September 30

                                                 

EBITDA

    3,047     2,812     22     14     (14 )   2,834     8 %   8 %

Operating income

    1,843     1,653     22     32     (14 )   1,693     9 %   9 %

Operating income margin in %

    13.7 %   12.8 %                     13.1 %            

Income tax expense

    362     292     6     8     15     321     13 %   13 %

Net income(2)

    987     857     16     24     (29 )   868     14 %   14 %

Basic earnings per share in €

    3.35     2.82     0.05     0.08     (0.09 )   2.86     17 %   18 %

(1)
For further information on Constant Exchange Rates, see "II. Discussion of measures—Non-IFRS measures" above.

(2)
Attributable to shareholders of FMC-AG & Co. KGaA.

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The following discussions pertain to the North America Segment, the EMEA Segment, the Asia-Pacific Segment and the Latin America Segment and the measures we use to manage these segments.

North America Segment

Key indicators and business metrics for the North America Segment
in € M, except where otherwise specified

 
  For the nine months ended
September 30
  Change in %  
 
  2020   2019   As reported   Currency translation effects   Constant Currency(1)  

Total North America Segment

                               

Revenue

    9,495     9,021     5 %   0 %   5 %

Health care services

    8,660     8,264     5 %   0 %   5 %

Health care products

    835     757     10 %   0 %   10 %

Operating income

    1,587     1,279     24 %   0 %   24 %

Operating income margin in %

    16.7 %   14.2 %                  

Delivered Operating Income(2)

    1,385     1,112     25 %   0 %   25 %

Dialysis

                               

Revenue

    8,480     8,162     4 %   0 %   4 %

Number of dialysis treatments

    24,600,114     23,872,968     3 %            

Same market treatment growth in %

    2.1 %   3.4 %                  

Operating income

    1,474     1,261     17 %   0 %   17 %

Operating income margin in %

    17.4 %   15.4 %                  

Delivered Operating Income(2)

    1,298     1,107     17 %   0 %   17 %

Care Coordination

                               

Revenue

    1,015     859     18 %   0 %   18 %

Operating income

    113     18     529 %   0 %   529 %

Operating income margin in %

    11.1 %   2.1 %                  

Delivered Operating Income(2)

    87     5     1,610 %   (3 )%   1,613 %

Member months under medical cost management(3),(4)

    508,117     482,970     5 %            

Medical cost under management(3),(4)

    3,196     3,149     1 %   (1 )%   2 %

Care Coordination patient encounters(3)

    563,809     774,764     (27 )%            

(1)
For further information on Constant Exchange Rates, see "II. Discussion of measures—Non—IFRS measures" above.

(2)
For further information on Delivered Operating Income, including a reconciliation of Delivered Operating Income to operating income on a consolidated basis and for each of our operating segments, see "II. Discussion of measures—Non—IFRS measures—Delivered Operating Income (Non-IFRS Measure)" above.

(3)
For further information on these metrics, please refer to the discussion above of our Care Coordination measures under "II. Discussion of measures—Business metrics for Care Coordination."

(4)
Data presented for the ESCO metrics are subject to finalization by CMS, which may result in changes from previously reported metrics.


Dialysis

Revenue

Dialysis revenue increased by 4%, with virtually no impact from foreign currency translation. Dialysis revenue is comprised of dialysis care revenue and health care product revenue.

Dialysis care revenue increased by 3% to €7,645 M from €7,405 M, with virtually no impact from foreign currency translation. The increase was mainly due to a revenue recognition adjustment for accounts receivable in legal dispute in the prior year (1%) contributions from acquisitions (1%) and organic growth despite lower reimbursement for calcimimetics (1%).

Dialysis treatments increased by 3% largely due to growth in same market treatments (2%) and contributions from acquisitions (1%).

Health care product revenue increased by 10%, with virtually no impact from foreign currency translation. The increase driven by higher sales of products for acute care treatments, renal pharmaceuticals and in-center disposables, partially offset by lower sales of machines for chronic treatment and home hemodialysis products.

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Operating income margin

The increase period over period in the dialysis operating income margin was 2.0 percentage points, with virtually no impact from foreign currency translation. The increase was primarily due to a favorable impact related to a revenue recognition adjustment for accounts receivable in legal dispute in the prior year, favorable cost management of pharmaceuticals, an increase in commercial revenue, Cost Optimization costs in the prior year as well as COVID-19-related meeting and travel savings and the effect of the suspended Medicare sequestration, partly offset by the remeasurement effect on the fair value of investments in the prior year, higher personnel expense and contributions to the opposition of U.S. state ballot initiatives.

Delivered Operating Income

Dialysis Delivered Operating Income increased by 17%, with virtually no impact from foreign currency translation. The increase was mainly as a result of increased operating income, partially offset by an increase in income attributable to noncontrolling interests.


Care Coordination

Revenue

Care Coordination revenue increased by 18%, with virtually no impact from foreign currency translation. The increase was largely driven by an increase in organic growth impacted by the Prior Year ESCO Effect (23%), partially offset by the effect of closed or sold centers (5%).

Operating income margin

The increase period over period in the Care Coordination operating income margin was 9.0 percentage points with virtually no impact from foreign currency translation in the current period. The increase was mainly due to the Prior Year ESCO Effect, increased gains related to the divestiture of Care Coordination activities, a favorable impact from vascular access services driven by lower operating costs and higher volumes of procedures as well as a favorable impact from urgent care services, partially offset by an unfavorable impact from pharmacy services.

Delivered Operating Income

Care Coordination Delivered Operating Income increased by 1,610%. In addition to a 3% negative impact from foreign currency translation, Delivered Operating Income increased by 1,613% mainly as a result of increased operating income.

Care Coordination business metrics

Member months under medical cost management increased by 5% due to increases in member months related to payor programs and the Coordinated Care Program, partially offset by a decrease in member months related to our existing ESCOs. See note 4 to the table "Key indicators and business metrics for the North America Segment," above.

Care Coordination's medical cost under management increased by 1%. Including a 1% negative impact from foreign currency translation, Care Coordination's medical cost under management increased by 2% due to the increase in member months related to payor programs, partially offset by a decrease in member months related to our existing ESCOs as described above. See note 4 to the table "Key indicators and business metrics for the North America Segment" above.

The decrease in patient encounters was primarily driven by decreased encounters for urgent care services as a result of the divestiture of the Medspring Urgent Care Center business in the second quarter of 2019.

North America Segment operating performance on an adjusted basis

Management believes that there are certain distinct transactions or events for which the operating results should be adjusted to enhance transparency and comparability. We believe the following results (adjusted to exclude these items) should be analyzed in connection with the results presented above. For the nine months ended September 30, 2020 and 2019, we identified the following transactions that, when excluded

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from the results disclosed above, may provide a reader with further useful information in assessing our performance:

an adjustment to the 2019 presentation to remove the NxStage Costs

an adjustment to the 2019 presentation to remove the Cost Optimization Costs

an adjustment to the 2019 presentation to remove the (Gain) loss related to divestitures of Care Coordination activities

The following table reconciles the key indicators for the North America Segment in accordance with IFRS to the key indicators adjusted for the items described above. While we believe these adjustments provide additional clarity to the discussion of our operating results, the following table should only be viewed as a supplement to our results disclosed in accordance with IFRS above.

North America Segment operating performance on an adjusted basis
in € M, except where otherwise specified

 
   
   
   
   
  (Gain) loss
related to
divestitures of
Care
Coordination
activities
   
   
   
 
 
   
   
   
   
   
  Change in % as adjusted  
 
  Results
2020
  Results
2019
  NxStage
costs
  Cost
optimization
costs
  Results 2019
adjusted
  Current
rate
  Constant
Currency(1)
 

Nine months ended September 30

                                                 

Operating income

    1,587     1,279     22     29     (14 )   1,316     21 %   21 %

Operating income margin in %

    16.7 %   14.2 %                     14.6 %            

Dialysis

    1,474     1,261     22     29         1,312     12 %   13 %

Dialysis operating income margin in %

    17.4 %   15.4 %                     16.1 %            

Care Coordination

    113     18             (14 )   4     2,662 %   2,665 %

Care Coordination operating income margin in %

    11.1 %   2.1 %                     0.5 %            

(1)
For further information on Constant Exchange Rates, see "II. Discussion of measures—Non-IFRS measures" above.

EMEA Segment

Key indicators for the EMEA Segment
in € M, except where otherwise specified

 
  For the nine months
ended September 30
  Change in %  
 
  2020   2019   As
reported
  Currency
translation
effects
  Constant
Currency(1)
 

Revenue

    2,048     1,984     3 %   (2 )%   5 %

Health care services

    1,028     1,002     3 %   (2 )%   5 %

Health care products

    1,020     982     4 %   (1 )%   5 %

Number of dialysis treatments

    7,659,111     7,503,691     2 %            

Same market treatment growth in %

    2.3 %   3.6 %                  

Operating income

    278     334     (17 )%   (1 )%   (16 )%

Operating income margin in %

    13.6 %   16.8 %                  

Delivered Operating Income(2)

    276     330     (16 )%   0 %   (16 )%

(1)
For further information on Constant Exchange Rates, see "II. Discussion of measures—Non—IFRS measures" above.

(2)
For further information on Delivered Operating Income, including a reconciliation of Delivered Operating Income to operating income on a consolidated basis and for each of our operating segments, see "II. Discussion of measures—Non—IFRS measures—Delivered Operating Income (Non-IFRS Measure)" above.

Revenue

Health care service revenue increased by 3%. Including a 2% negative impact resulting from foreign currency translation, health care service revenue increased by 5% largely as a result of an increase in organic growth (4%) and contributions from acquisitions (2%), partially offset by the effect of closed or sold clinics (1%).

Dialysis treatments increased by 2% mainly due to growth in same market treatments (2%) and contributions from acquisitions (1%), partially offset by the effect of closed or sold clinics (1%).

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Health care product revenue increased by 4%. Including a 1% negative impact from foreign currency translation, health care product revenue increased by 5%. Dialysis product revenue increased by 3%. Including a 1% negative impact from foreign currency translation, dialysis product revenue increased by 4% due to higher sales of products for acute care treatments and home hemodialysis products, partially offset by lower sales of in-center disposables and machines for chronic treatment. Non-Dialysis product revenue increased by 24% to €70 M from €56 M. Including a 1% negative impact from foreign currency translation, non-dialysis product revenue increased by 25% largely due to higher sales of acute cardiopulmonary products.

Operating income margin

The decrease period over period in the operating income margin was 3.2 percentage points. Foreign currency translation effects represented a 0.2 percentage point increase in the operating income margin. The decrease was mainly due to the reduction of a contingent consideration liability related to Xenios in the prior year period, an impairment of a license held by VFMCRP based on an unfavorable clinical trial for CCX140, higher personnel expense in certain countries, unfavorable foreign currency transaction effects and increased expenses driven by COVID-19, partially offset by lower bad debt expense.

Delivered Operating Income

Delivered Operating Income decreased by 16%, with virtually no impact from foreign currency translation, primarily due to decreased operating income.

EMEA Segment operating performance on an adjusted basis

Management believes that there are certain distinct transactions or events for which the operating results should be adjusted to enhance transparency and comparability. We believe the following results (adjusted to exclude these items) should be analyzed in connection with the results presented above. For the nine months ended September 30, 2020, we adjusted the 2020 presentation to remove the 2019 Cost Optimization Costs in the amount of €3 M resulting in an adjusted operating income amount of €337 M and an adjusted operating income margin of 17.0%. When excluded from the results disclosed above, we believe the adjusted amount may provide a reader with further useful information in assessing our performance. While we believe the adjustment provided additional clarity to the discussion of our operating results, adjusted operating income and adjusted operating income margin for the EMEA Segment should only be viewed as a supplement to our results disclosed in accordance with IFRS above.

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Asia-Pacific Segment

Key indicators and business metrics for the Asia-Pacific Segment
in € M, except where otherwise specified

 
  For the nine months
ended September 30
  Change in %  
 
  2020   2019   As
reported
  Currency
translation
effects
  Constant
Currency(1)
 

Total Asia-Pacific Segment

                               

Revenue

    1,377     1,360     1 %   (1 )%   2 %

Health care services

    641     632     1 %   0 %   1 %

Health care products

    736     728     1 %   (2 )%   3 %

Operating income

    237     254     (7 )%   0 %   (7 )%

Operating income margin in %

    17.2 %   18.7 %                  

Delivered Operating Income(2)

    232     248     (7 )%   0 %   (7 )%

Dialysis

                               

Revenue

    1,206     1,187     2 %   0 %   2 %

Number of dialysis treatments

    3,465,604     3,398,594     2 %            

Same market treatment growth in %

    8.1 %   7.0 %                  

Operating income

    227     235     (4 )%   0 %   (4 )%

Operating income margin in %

    18.8 %   19.8 %                  

Delivered Operating Income(2)

    220     230     (4 )%   0 %   (4 )%

Care Coordination

                               

Revenue

    171     173     (1 )%   (1 )%   0 %

Operating income

    10     19     (46 )%   (3 )%   (43 )%

Operating income margin in %

    6.1 %   11.1 %                  

Delivered Operating Income(2)

    12     18     (36 )%   (3 )%   (33 )%

Care Coordination Patient Encounters(3)

    706,946     759,726     (7 )%            

(1)
For further information on Constant Exchange Rates, see "II. Discussion of measures—Non—IFRS measures" above.

(2)
For further information on Delivered Operating Income, including a reconciliation of Delivered Operating Income to operating income on a consolidated basis and for each of our operating segments, see "II. Discussion of measures—Non—IFRS measures—Delivered Operating Income (Non-IFRS Measure)" above.

(3)
For further information on patient encounters, please refer to the discussion above of our Care Coordination measures under II. Discussion of measures—Business metrics for Care Coordination."


Dialysis

Revenue

Dialysis revenue increased by 2%, with virtually no impact resulting from foreign currency translation. Dialysis revenue is comprised of dialysis care revenue and health care product revenue.

Dialysis care service revenue increased by 2% to €470 M from €459 M, with virtually no impact resulting from foreign currency translation. The increase was as a result of an increase in organic growth (5%), contributions from acquisitions (1%) and an increase in dialysis days (1%), partially offset by the effect of closed or sold clinics (5%).

Dialysis treatments increased by 2% mainly due to growth in same market treatments (8%), an increase in dialysis days (1%) and contributions from acquisitions (1%), partially offset by the effect of closed or sold clinics (8%).

Health care product revenue increased by 1%. Including a 2% negative impact from foreign currency translation, health care product revenue increased by 3%. Dialysis product revenue remained relatively stable. Including a 2% negative impact from foreign currency translation, dialysis product revenue increased by 2% due to a result of higher sales of products for acute care treatments and in-center disposables, partially offset by lower sales of machines for chronic treatment. Non-Dialysis product revenue increased to €5 M (2019: €0 M) due to higher sales of acute cardiopulmonary products.

Operating income margin

The decrease period over period in the operating income margin was 1.0 percentage points. Foreign currency translation effects represented a 0.2 percentage point increase in the operating income margin.

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The decrease was primarily due to impacts from unfavorable foreign currency transaction effects and lower income from equity method investees, partially offset by COVID-19-related travel savings and a gain from the deconsolidation of clinics.

Delivered Operating Income

Delivered Operating Income decreased by 4%, with virtually no impact from foreign currency translation. The decrease was mainly due to decreased operating income.


Care Coordination

Revenue

Care Coordination revenue decreased by 1%. Including a 1% negative impact resulting from foreign currency translation, Care Coordination revenue remained stable.

Operating income margin

The decrease period over period in the Care Coordination operating income margin was 5.0 percentage points. Foreign currency translation effects represented a 0.2 percentage point decrease in the operating income margin. The decrease was driven by unfavorable effects related to COVID-19 and an unfavorable mix effect from acquisitions with lower margins.

Delivered Operating Income

Care Coordination Delivered Operating Income decreased by 36%. In addition to a 3% negative impact resulting from foreign currency translation, Care Coordination Delivered Operating Income decreased by 33% mainly as a result of decreased operating income.

Care Coordination business metrics

The number of patient encounters decreased primarily due to the impacts of COVID-19.

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Latin America Segment

Key indicators for the Latin America Segment
in € M, except where otherwise specified

 
  For the nine months ended
September 30
  Change in %  
 
  As
reported
  Currency
translation
effects
  Constant
Currency(1)
 
 
  2020   2019  

Revenue

    508     516     (2 )%   (25 )%   23 %

Health care services

    360     367     (2 )%   (26 )%   24 %

Health care products

    148     149     (1 )%   (21 )%   20 %

Number of dialysis treatments

    4,373,824     3,982,556     10 %            

Same market treatment growth in %

    3.4 %   1.9 %                  

Operating income

    29     28     4 %   (14 )%   18 %

Operating income margin in %

    5.7 %   5.4 %                  

Delivered Operating Income(2)

    29     28     4 %   (13 )%   17 %

(1)
For further information on Constant Exchange Rates, see "II. Discussion of measures—Non—IFRS measures" above.

(2)
For further information on Delivered Operating Income, including a reconciliation of Delivered Operating Income to operating income on a consolidated basis and for each of our operating segments, see "II. Discussion of measures—Non—IFRS measures—Delivered Operating Income (Non-IFRS Measure)" above.

Revenue

Health care service revenue decreased by 2%. Including a 26% negative impact resulting from foreign currency translation, health care service revenue increased by 24% as a result of an increase in organic growth (17%) and contributions from acquisitions (7%).

Dialysis treatments increased by 10% mainly due to contributions from acquisitions (6%), growth in same market treatments (3%) and an increase in dialysis days (1%).

Health care product revenue decreased by 1%. Including a 21% negative impact resulting from foreign currency translation, health care product revenue increased by 20% due to higher sales of in-center disposables, machines for chronic treatment and products for acute care treatments.

Operating income margin

The increase period over period in the operating income margin was 0.3 percentage points. Foreign currency translation effects represented a 0.5 percentage point increase in the operating income margin in the current period. The decrease in margin, at constant exchange rates, was mainly driven by a cost increases driven by inflation not fully offset by reimbursement increases, partially offset by favorable foreign currency transaction effects.

Delivered Operating Income

Delivered Operating Income increased by 4%. Including a 13% negative impact resulting from foreign currency translation, Delivered Operating Income increased by 17% due to increased operating income.

Financial position

Sources of liquidity

Our primary sources of liquidity are typically cash provided by operating activities, cash provided by short-term debt from third parties and related parties, proceeds from the issuance of long-term debt and divestitures. We require this capital primarily to finance working capital needs, fund acquisitions, operate clinics, develop free-standing renal dialysis clinics and other health care facilities, purchase equipment for existing or new renal dialysis clinics and production sites, repay debt, pay dividends and repurchase shares, (see "Net cash provided by (used in) investing activities" and "Net cash provided by (used in) financing activities" below).

As of September 30, 2020, our available borrowing capacity resulting from unutilized credit facilities amounted to approximately €2.5 billion. The Amended 2012 Credit Agreement accounted for approximately €1.4 billion in unutilized available borrowing capacity.

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In our long-term financial planning, we focus primarily on the net leverage ratio, a Non-IFRS measure, see "II. Discussion of measures—Non—IFRS measures—Net leverage ratio (Non-IFRS Measure)" above. At September 30, 2020 and December 31, 2019, the net leverage ratio was 2.8 and 3.2, respectively.

At September 30, 2020, we had cash and cash equivalents of €1,599 M (December 31, 2019: €1,008 M).

Free cash flow (Net cash provided by (used in) operating activities, after capital expenditures, before acquisitions and investments) amounted to €2,913 M and €1,019 M for the nine months ended September 30, 2020 and September 30, 2019, respectively. Free cash flow is a Non-IFRS Measure and is reconciled to net cash provided by (used in) operating activities, the most directly comparable IFRS measure, see "II. Discussion of measures—Non—IFRS measures—Cash flow measures" above. Free cash flow in percent of revenue was 21.6% and 7.9% for the nine months ended September 30, 2020 and 2019, respectively.