6-K 1 a2243214z6-k.htm 6-K

Table of Contents

 

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 May 2021

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):            

   


Table of Contents


FRESENIUS MEDICAL CARE AG & Co. KGaA

Interim Report of Financial Condition and Results of Operations for the three months ended March 31, 2021 and 2020

 
  Page  

FINANCIAL INFORMATION

       

Management's discussion and analysis

   
 
 

Forward-looking statements

   
1
 

Financial condition and results of operations

   
3
 

Overview

   
3
 

Discussion of measures

   
9
 

Results of operations, financial position and net assets

   
16
 

Recently issued accounting standards

   
26
 

Financial Statements (unaudited)

   
 
 

Consolidated statements of income

   
27
 

Consolidated statements of comprehensive income

   
28
 

Consolidated balance sheets

   
29
 

Consolidated statements of cash flows

   
30
 

Consolidated statement of shareholders' equity

   
31
 

Notes to consolidated financial statements

   
32
 

Quantitative and qualitative disclosures about market risk

   
53
 

Controls and procedures

   
54
 

OTHER INFORMATION

   
 
 

Legal proceedings

   
55
 

Exhibits

   
56
 

Signatures

   
57
 

i


Table of Contents


FRESENIUS MEDICAL CARE AG & Co. KGaA

FINANCIAL INFORMATION

Management's discussion and analysis

In this report, "FMC-AG & Co. KGaA," or the "Company," "we," "us" or "our" refers to Fresenius Medical Care AG & Co. KGaA or Fresenius Medical Care AG & Co. KGaA 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 as of and for the year ended December 31, 2020 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, production asset management, quality and supply chain management, procurement related to production as well as research and development and our Global Medical Office function, which seeks to standardize medical treatments and clinical processes within the Company. The abbreviations "THOUS" and "M" are used to denote the presentation of amounts in thousands and millions, respectively. 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 result from pending legal challenges to the ACA;

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

1


Table of Contents

our ability to accurately interpret and comply with complex 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, in particular the potential U.S. tax reform, and regulation as well as, in the U.S., the Anti-Kickback Statute, the False Claims Act, the Stark Law, the Civil Monetary Penalty 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 our monitor agreement with the U.S. Department of Justice ("DOJ"), the Food, Drug and Cosmetic Act, antitrust and competition laws in the countries and localities in which we operate, 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;

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 and the related Coronavirus disease ("COVID-19") pandemic, including, without limitation, a significant increase of mortality of patients with chronic kidney diseases as well as an increase in persons experiencing renal failure, both of 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 government provided COVID-19 related relief and any additional economic relief legislation that may be passed in the countries in which we operate;

product liability risks;

our ability to continue to grow our health care services and products businesses, including through acquisitions;

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 coupled with the impact of inflation and an economic downturn in various regions;

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 and our other health care products, changes in raw material and energy costs, the inability to procure raw materials or disruptions to our supply chain;

introduction of generic or new pharmaceuticals and medical devices that compete with our products or services or the development of pharmaceuticals that 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 and desired clinical outcomes in various health care risk management programs in which we participate or intend to participate;

2


Table of Contents

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

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 "Financial condition and results of operations—I. Overview" below, in note 9 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, 2020 (our "2020 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. Some figures (including percentages) in this report have been rounded in accordance with commercial rounding conventions. In some instances, such rounded figures and percentages may not add up to 100% or to the totals or subtotals contained in this report. Furthermore, totals and subtotals in tables may differ slightly from unrounded figures contained in this report due to rounding in accordance with commercial rounding conventions. A dash ("—") indicates that no data were reported for a specific line item in the relevant financial year or period, while a zero ("0") is used when the pertinent figure, after rounding, amounts to zero.

Financial condition and results of operations

I. Overview

We are the world's leading provider of products and services for individuals with renal diseases, based on publicly reported revenue and number of patients treated. We provide dialysis care and related services to persons who suffer from End-Stage Kidney Disease ("ESKD") as well as other health care services. We also develop, manufacture and distribute a wide variety of health care products. Our health care products include hemodialysis machines, peritoneal dialysis cyclers, dialyzers, peritoneal dialysis solutions, hemodialysis concentrates, solutions and granulates, bloodlines, renal pharmaceuticals, systems for water treatment, 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. Our other health care services which, prior to 2021, were described as "Care Coordination," include 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 and ambulant treatment services. We estimated the size of the global dialysis market was approximately €82 billion in 2020. 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 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

3


Table of Contents

(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 three months ended March 31, 2021, approximately 28% 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. The stability of reimbursement in the U.S. has been affected by (i) the End-Stage Renal Disease ("ESRD") prospective payment system ("ESRD PPS"), (ii) the U.S. federal government across the board spending cuts in payments to Medicare providers commonly referred to as "U.S. Sequestration", (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 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%.

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 was temporarily suspended from May 1, 2020 through December 31, 2021 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 November 2, 2020, CMS issued a final rule for the ESRD PPS rate for calendar year ("CY") 2021. CMS estimates that, on average, large dialysis organizations will receive a 2.9% increase in payments under this final rule. The base rate per treatment is $253.13 which represents a 5.8% increase from the 2020 base rate of $239.33. The updated rate for CY 2021 adds $9.93 to the base rate to pay for calcimimetics, which were previously, but will no longer be, reimbursed under the transitional drug add-on payment adjustment ("TDAPA"). Under the CY 2021 final rule, calcimimetics will be eligible for outlier payments, when applicable. The updated rate also includes the adjustment for the wage index budget-neutrality factor of 0.999485, and a market basket increase of 1.9% that is partially offset by a 0.3% multifactor productivity adjustment (as mandated by the ACA), yielding a productivity-adjusted market basket increase of 1.6%. The 2021 ESRD PPS rate retains the 2020 wage index floor of 0.5000. The labor-related portion of the ESRD PPS base rate to which the wage index is applied will be 52.3% in 2021. CMS updated the Acute Kidney Injury payment rate for CY 2021 to $253.13, which is the same as the base rate finalized under the ESRD PPS for CY 2021. As a result of the projected 2% overall payment increase, CMS estimates that there will be an increase in beneficiary co-insurance payments of 2% in CY 2021. CMS considered two products, a dialyzer and a cartridge for a home dialysis machine, for the transitional add-on payment adjustment for new and innovative equipment and supplies ("TPNIES") in CY 2021. CMS determined that neither product met the eligibility criteria for TPNIES for CY 2021 but acknowledged that, with respect to the dialyzer, the applicant is eligible to apply for CY 2022 and CY 2023.

In the CY 2021 ESRD PPS final rule, CMS finalized several programmatic updates to the ESRD QIP and codified data submission requirements for calculating measure scores. Under the ESRD QIP program, CMS assesses the total performance of each facility on measures specified per payment year

4


Table of Contents

    and applies an appropriate payment reduction to each facility that does not meet a minimum total performance score ("TPS"). For performance year 2023, CMS estimated that a facility must meet or exceed a minimum TPS of 57 in order to avoid a payment reduction. In the CY 2021 final rule, CMS updated 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 also updated the scoring methodology for the National Healthcare Safety Network (NHSN) validation study to reduce the number of required records from 20 records across each of the first two quarters to 20 records across any two quarters. In the 2021 ESRD PPS final rule, CMS also acknowledged that the nationwide Extraordinary Circumstances Exception (ECE) that CMS granted to facilities in response to the COVID-19 public health emergency, which excluded data from the first and second quarter of CY 2020, may impact the CY 2020 data. CMS is currently considering ways to address the impact of this exclusion and will provide further guidance in the CY 2022 ESRD proposed rule. The final rule also finalizes payment reductions of up to two percent for the PY 2023 ESRD QIP. The total payment reductions for the approximate 1,790 out of 7,610 Medicare-enrolled dialysis facilities expected to receive a payment reduction is approximately $15.8 million for the 2021 performance year.

On December 2, 2020, CMS issued the CY 2021 final rule for hospital outpatient and ambulatory surgery center payment systems. For CY 2021, CMS will continue to pay certain dialysis vascular access codes at the Ambulatory Surgical Center ("ASC") rate. The rule to update the ASC Fee Schedule for CY 2021 generally increases 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. On December 2, 2020 CMS released the annual Physician Fee Schedule final rule which cut reimbursement in CY 2021 for certain specialty services, including those related to cardiovascular and vascular access care. On December 27, 2020 the Consolidated Appropriations Act, 2021 (H.R. 133) was enacted which modified the physician fee schedule for CY 2021 to increase payment rates for all physicians by 3.75 percent, partially offsetting the cuts finalized by CMS.

Presently, there is considerable uncertainty regarding possible future changes in health care regulation, including the regulation of reimbursement for dialysis services, and the status of the ACA. For additional information regarding these proceedings, see Item 4B, "Information on the Company—Regulatory and Legal Matters—Health Care Reform" in our 2020 Form 20-F. Changes to the ACA (including a determination in litigation presently before the U.S. Supreme Court, that the measure is unconstitutional) could adversely affect us.

For additional information, see "Risk Factors" included in our 2020 Form 20-F.

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, also known as Medicare Part C, plans offered by private health insurers approved by CMS to provide their members with Medicare Part A, Part B and usually Part D benefits ("Medicare Advantage" plans).

Premium assistance programs

On August 18, 2016, 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 Item 3.D,"Key information—Risk Factors" in our 2020 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

5


Table of Contents

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. Plaintiffs in the litigation, including FMCH, consented to the stay, which was granted by the court.

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.

Participation in new Medicare payment arrangements

Under CMS's Comprehensive ESRD Care Model (the "Model"), dialysis providers and physicians formed entities known as ESRD Seamless Care Organizations ("ESCOs") as part of a payment and care delivery pilot program that ended March 31, 2021 which sought to deliver better health outcomes for Medicare ESKD patients while lowering CMS's costs. Following our initial participation in six ESCOs, we ultimately expanded our participation in the Model to 23 ESCOs formed at our dialysis facilities. ESCOs that achieved the program's minimum quality thresholds and generated reductions in CMS's cost of care above certain thresholds for the ESKD patients covered by the ESCO received a share of the cost savings, adjusted based on the ESCO's performance on certain quality metrics. ESCOs may also owe payments to CMS if actual costs of care rise above set thresholds. As of March 2021, approximately 34,800 patients were aligned to ESCOs in which we participated.

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 (€59.0 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 ESCOs produced more than $66.1 M (€56.0 M) in gross savings, an average 1.9% reduction in expenditures per patient. For the fourth performance year (CY 2019), CMS published the final settlement reports on October 31, 2020. In total, the Company's ESCOs produced more than $10.8 M (€9.6 M) in gross losses, an average 0.3% increase in expenditures per patient. For the fifth performance year (CY 2020), CMS gave 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. All of our affiliated ESCOs signed amendments to extend participation in the program through March 31, 2021 and 22 of our ESCOs accepted the financial changes related to COVID-19. The Model ended on March 31, 2021. We anticipate that CMS will publish final settlement reports for the last performance year in October 2021.

We have also entered into risk-based and value-based arrangement with certain payors to provide care to commercial and Medicare Advantage ESKD and CKD patients. Under these payment arrangements, our financial performance is based on our ability to manage a defined scope of medical costs within certain parameters for clinical outcomes.

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 2027. 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

6


Table of Contents

this model are based on a random selection of thirty percent of the Hospital Referral Regions. As of March 2021, 978 of our U.S. dialysis clinics, representing approximately 37% 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 2027).

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 ESKD, 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. Prior to January 1, 2022, each KCE will elect whether to continue its participation at-risk beginning in the first Performance Year which starts on January 1, 2022 and ends December 31, 2022. Two of the 28 KCEs elected to drop out of the CKCC model during the implementation period. Once implemented, the CKCC model is expected to run through 2026. The commencement date of the voluntary professional model was originally set to begin on April 1, 2021, but was extended by CMS to January 1, 2022 and, relative to our 2021 expectations, we expect to both incur additional expenses and recognize no revenue as a result of this extension. 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 ESKD 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 measures are revenue and operating income. 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 as well as certain legal costs, 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. Our global research and development as well as its Global Medical Office, which seeks to standardize medical treatments and clinical processes within the Company, are also centrally managed. These corporate activities do not fulfill

7


Table of Contents

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, all of 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 11 of the notes to consolidated financial statements (unaudited) found elsewhere in this report for a further discussion on our operating segments.

8


Table of Contents


FRESENIUS MEDICAL CARE AG & Co. KGaA

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, our compliance with financial covenants and enhanced transparency as well as comparability of our results. Non-IFRS financial measures should not be viewed or interpreted as a substitute for financial information presented in accordance with IFRS.

Our presentation of 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 (or "net income") includes 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 not to consider these measures in isolation, but to review them in conjunction with 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 included within "Results of operations, financial position and net assets," below, we believe that a separate reconciliation would not provide any additional benefit.

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 investment projects. Additionally, we have excluded the impairment of goodwill and trade names in the Latin America Segment driven by a macro-economic downturn and increasing risk adjustment rates for certain countries in the region ("Impairment Loss") (see note 2 a), "Significant judgments and sources of estimation uncertainties—Recoverability of goodwill and intangible assets," of the notes to the consolidated financial statements included in our 2020 Form 20-F) to increase comparability of the underlying financial figures of certain Management Board compensation performance targets with the Company's operating performance

9


Table of Contents

and to adequately recognize the actual performance of the members of the Management Board. 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 "Effect from IFRS 16") 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 tables show 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:

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

2021
  March 31,
2021
  December 31,
2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
 

Total assets

    33,159     31,689     33,049     34,190     34,072  

Plus: Cumulative goodwill amortization and Impairment Loss

    598     583     405     421     430  

Minus: Cash and cash equivalents

    (1,073 )   (1,082 )   (1,599 )   (1,890 )   (1,405 )

Minus: Loans to related parties

    (1 )   (1 )   (51 )   (49 )   (40 )

Minus: Deferred tax assets

    (333 )   (351 )   (429 )   (391 )   (382 )

Minus: Accounts payable to unrelated parties

    (635 )   (732 )   (729 )   (678 )   (762 )

Minus: Accounts payable to related parties

    (105 )   (95 )   (132 )   (135 )   (134 )

Minus: Provisions and other current liabilities(1)

    (3,436 )   (3,180 )   (3,641 )   (3,799 )   (2,577 )

Minus: Income tax payable

    (232 )   (197 )   (269 )   (212 )   (200 )

Invested capital

    27,940     26,634     26,604     27,457     29,002  

Average invested capital as of March 31, 2021

    27,527                          

Operating income

   
2,224
   
 
   
 
   
 
   
 
 

Income tax expense(2)

    (605 )                        

NOPAT

    1,619                          

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

2021
  March 31,
2021
  December 31,
2020(3)
  September 30,
2020(3)
  June 30,
2020(3)
  March 31,
2020(3)
 

Total assets

        111     116     121     124  

Minus: Cash and cash equivalents

        (1 )   (1 )   (1 )   (1 )

Minus: Provisions and other current liabilities(1)

        (6 )   (6 )   (6 )   (6 )

Invested capital

        104     109     114     117  

Adjustment to average invested capital as of March 31, 2021

    89                          

Adjustment to operating income(3)

   
5
                         

Adjustment to income tax expense(3)

    (1 )                        

Adjustment to NOPAT

    4                          

10


Table of Contents

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

2021
  March 31,
2021
  December 31,
2020(3)
  September 30,
2020(3)
  June 30,
2020(3)
  March 31,
2020(3)
 

Total assets

    33,159     31,800     33,165     34,311     34,196  

Plus: Cumulative goodwill amortization and Impairment Loss

    598     583     405     421     430  

Minus: Cash and cash equivalents

    (1,073 )   (1,082 )   (1,599 )   (1,890 )   (1,406 )

Minus: Loans to related parties

    (1 )   (1 )   (51 )   (49 )   (40 )

Minus: Deferred tax assets

    (333 )   (351 )   (429 )   (391 )   (382 )

Minus: Accounts payable to unrelated parties

    (635 )   (732 )   (729 )   (678 )   (762 )

Minus: Accounts payable to related parties

    (105 )   (95 )   (132 )   (135 )   (134 )

Minus: Provisions and other current liabilities(1)

    (3,436 )   (3,186 )   (3,647 )   (3,806 )   (2,583 )

Minus: Income tax payable

    (232 )   (197 )   (269 )   (212 )   (200 )

Invested capital

    27,940     26,738     26,713     27,571     29,118  

Average invested capital as of March 31, 2021

    27,616                          

Operating income(3)

   
2,228
   
 
   
 
   
 
   
 
 

Income tax expense(2),(3)

    (606 )                        

NOPAT

    1,622                          

ROIC

   
5.9

%
 
 
   
 
   
 
   
 
 

Adjustments to average invested capital and ROIC (excluding impairment loss)
in € M, except where otherwise specified

2021
  March 31,
2021
  December 31,
2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
 

Total assets

        195              

Plus: Impairment Loss

        (195 )            

Invested capital

                     

Average invested capital as of March 31, 2021

                             

Adjustment to operating income

   
195
                         

Adjustment to income tax expense

    (53 )                        

NOPAT

    142                          

11


Table of Contents

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

2021
  March 31,
2021
  December 31,
2020(3)
  September 30,
2020(3)
  June 30,
2020(3)
  March 31,
2020(3)
 

Total assets

    33,159     31,995     33,165     34,311     34,196  

Plus: Cumulative goodwill amortization

    598     388     405     421     430  

Minus: Cash and cash equivalents

    (1,073 )   (1,082 )   (1,599 )   (1,890 )   (1,406 )

Minus: Loans to related parties

    (1 )   (1 )   (51 )   (49 )   (40 )

Minus: Deferred tax assets

    (333 )   (351 )   (429 )   (391 )   (382 )

Minus: Accounts payable to unrelated parties

    (635 )   (732 )   (729 )   (678 )   (762 )

Minus: Accounts payable to related parties

    (105 )   (95 )   (132 )   (135 )   (134 )

Minus: Provisions and other current liabilities(1)

    (3,436 )   (3,186 )   (3,647 )   (3,806 )   (2,583 )

Minus: Income tax payable

    (232 )   (197 )   (269 )   (212 )   (200 )

Invested capital

    27,940     26,738     26,713     27,571     29,118  

Average invested capital as of March 31, 2021

    27,616                          

Operating income(3)

   
2,423
                         

Income tax expense(2),(3)

    (659 )                        

NOPAT

    1,764                          

ROIC (excluding Impairment Loss)

   
6.4

%
                       

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

2021
  March 31,
2021
  December 31,
2020
  September 30,
2020
  June 30,
2020
  March 31,
2020
 

Total assets

    (4,242 )   (4,130 )   (4,261 )   (4,421 )   (4,388 )

Minus: Deferred tax assets

    (30 )   2     4     3     3  

Minus: Provisions and other current liabilities(1)

    (134 )   (128 )   (134 )   (140 )   (143 )

Minus: Income tax payable

    1     1              

Invested capital

    (4,405 )   (4,255 )   (4,392 )   (4,558 )   (4,529 )

Adjustment to average invested capital as of March 31, 2021

    (4,427 )                        

Adjustment to operating income

   
(127

)
                       

Adjustment to income tax expense

    34                          

Adjustment to NOPAT

    (93 )                        

12


Table of Contents

Reconciliation of average invested capital and ROIC (Non-IFRS Measure, excluding Impairment Loss and the Effect from IFRS 16)
in € M, except where otherwise specified

2021
  March 31,
2021
  December 31,
2020(3)
  September 30,
2020(3)
  June 30,
2020(3)
  March 31,
2020(3)
 

Total assets

    28,917     27,865     28,904     29,890     29,808  

Plus: Cumulative goodwill amortization

    598     388     405     421     430  

Minus: Cash and cash equivalents

    (1,073 )   (1,082 )   (1,599 )   (1,890 )   (1,406 )

Minus: Loans to related parties

    (1 )   (1 )   (51 )   (49 )   (40 )

Minus: Deferred tax assets

    (364 )   (349 )   (426 )   (388 )   (380 )

Minus: Accounts payable to unrelated parties

    (635 )   (732 )   (729 )   (678 )   (762 )

Minus: Accounts payable to related parties

    (105 )   (95 )   (132 )   (135 )   (134 )

Minus: Provisions and other current liabilities(1)

    (3,570 )   (3,314 )   (3,781 )   (3,946 )   (2,727 )

Minus: Income tax payable

    (231 )   (196 )   (269 )   (212 )   (200 )

Invested capital

    23,534     22,483     22,321     23,013     24,589  

Average invested capital as of March 31, 2021

    23,188                          

Operating income(3)

   
2,297
                         

Income tax expense(2),(3)

    (625 )                        

NOPAT

    1,672                          

ROIC (excluding Impairment Loss and the Effect from IFRS 16)

   
7.2

%
                       

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

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

Total assets

    31,689     33,049     34,190     34,072     32,935  

Plus: Cumulative goodwill amortization and Impairment Loss

    583     405     421     430     420  

Minus: Cash and cash equivalents

    (1,082 )   (1,599 )   (1,890 )   (1,405 )   (1,008 )

Minus: Loans to related parties

    (1 )   (51 )   (49 )   (40 )   (72 )

Minus: Deferred tax assets

    (351 )   (429 )   (391 )   (382 )   (361 )

Minus: Accounts payable to unrelated parties

    (732 )   (729 )   (678 )   (762 )   (717 )

Minus: Accounts payable to related parties

    (95 )   (132 )   (135 )   (134 )   (119 )

Minus: Provisions and other current liabilities(1)

    (3,180 )   (3,641 )   (3,799 )   (2,577 )   (2,452 )

Minus: Income tax payable

    (197 )   (269 )   (212 )   (200 )   (180 )

Invested capital

    26,634     26,604     27,457     29,002     28,446  

Average invested capital as of December 31, 2020

    27,628                          

Operating income

   
2,304
   
 
   
 
   
 
   
 
 

Income tax expense(2)

    (688 )                        

NOPAT

    1,616                          

ROIC

   
5.8

%
 
 
   
 
   
 
   
 
 

13


Table of Contents

Adjustments to average invested capital and ROIC (excluding Impairment Loss)
in € M, except where otherwise specified

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

Total assets

    195                  

Plus: Impairment Loss

    (195 )                

Invested capital

                     

Adjustment to average invested capital as of December 31, 2020

                             

Adjustment to operating income

   
195
                         

Adjustment to income tax expense

    19                          

Adjustment to NOPAT

    214                          

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

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

Total assets

    31,884     33,049     34,190     34,072     32,935  

Plus: Cumulative goodwill amortization

    389     405     421     430     420  

Minus: Cash and cash equivalents

    (1,082 )   (1,599 )   (1,890 )   (1,405 )   (1,008 )

Minus: Loans to related parties

    (1 )   (51 )   (49 )   (40 )   (72 )

Minus: Deferred tax assets

    (351 )   (429 )   (391 )   (382 )   (361 )

Minus: Accounts payable to unrelated parties

    (732 )   (729 )   (678 )   (762 )   (717 )

Minus: Accounts payable to related parties

    (95 )   (132 )   (135 )   (134 )   (119 )

Minus: Provisions and other current liabilities(1)

    (3,180 )   (3,641 )   (3,799 )   (2,577 )   (2,452 )

Minus: Income tax payable

    (197 )   (269 )   (212 )   (200 )   (180 )

Invested capital

    26,634     26,604     27,457     29,002     28,446  

Average invested capital as of December 31, 2020

    27,628                          

Operating income

   
2,499
                         

Income tax expense(2)

    (669 )                        

NOPAT

    1,830                          

ROIC (excluding Impairment Loss)

   
6.6

%
                       

14


Table of Contents

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

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

Total assets

    (4,130 )   (4,261 )   (4,421 )   (4,388 )   (4,356 )

Minus: Deferred tax assets

    2     4     3     3     2  

Minus: Provisions and other current liabilities(1)

    (128 )   (134 )   (140 )   (143 )   (140 )

Minus: Income tax payable

    1                  

Invested capital

    (4,255 )   (4,392 )   (4,558 )   (4,529 )   (4,494 )

Adjustment to average invested capital as of December 31, 2020

    (4,445 )                        

Adjustment to operating income

   
(134

)
                       

Adjustment to income tax expense

    40                          

Adjustment to NOPAT

    (94 )                        

Reconciliation of average invested capital and ROIC (Non-IFRS Measure, excluding Impairment Loss and the Effect from IFRS 16)
in € M, except where otherwise specified

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

Total assets

    27,754     28,788     29,769     29,684     28,579  

Plus: Cumulative goodwill amortization

    389     405     421     430     420  

Minus: Cash and cash equivalents

    (1,082 )   (1,599 )   (1,890 )   (1,405 )   (1,008 )

Minus: Loans to related parties

    (1 )   (51 )   (49 )   (40 )   (72 )

Minus: Deferred tax assets

    (349 )   (426 )   (388 )   (380 )   (359 )

Minus: Accounts payable to unrelated parties

    (732 )   (729 )   (678 )   (762 )   (717 )

Minus: Accounts payable to related parties

    (95 )   (132 )   (135 )   (134 )   (119 )

Minus: Provisions and other current liabilities(1)

    (3,309 )   (3,775 )   (3,940 )   (2,720 )   (2,592 )

Minus: Income tax payable

    (196 )   (269 )   (212 )   (200 )   (180 )

Invested capital

    22,379     22,212     22,899     24,473     23,952  

Average invested capital as of December 31, 2020

    23,183                          

Operating income

   
2,365
                         

Income tax expense(2)

    (629 )                        

NOPAT

    1,736                          

ROIC (excluding Impairment Loss and the Effect from IFRS 16)

    7.5 %                        

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

(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.

15


Table of Contents

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 internally generate the cash required to 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.

For a reconciliation of cash flow performance indicators for the three months ended March 31, 2021 and 2020 which 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, see "III. Results of operations, financial position and net assets—Financial position—Sources of Liquidity."

Net leverage ratio (Non-IFRS Measure)

The net leverage ratio is a performance indicator used for capital 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.

Adjusted EBITDA, a non-IFRS Measure, is also the basis for determining compliance with certain other covenants contained in our Amended 2012 Credit Agreement (including a maximum permitted consolidated leverage ratio, which could limit our ability to incur additional indebtedness) 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.

For a reconciliation of adjusted EBITDA and net leverage ratio as of March 31, 2021 and December 31, 2020, see "III. Results of operations, financial position and net assets—Financial position—Sources of Liquidity."

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.

In accordance with the update to our Company strategy to leverage our core strategic competencies in order to achieve our goal of providing health care for chronically and critically ill patients across the renal care continuum ("Strategy 2025"), which encompasses new renal care models, value-based care models,

16


Table of Contents

chronic kidney disease and transplantation as well as future innovations, we have adjusted the presentation of consolidated and operating segment data to reflect the integrated nature of Dialysis and Care Coordination in our business model. Therefore, we do not present Dialysis and Care Coordination metrics separately. As such, Care Coordination information previously presented separately for the North America Segment and the Asia-Pacific Segment is now included within the corresponding Health Care metric. This presentation more closely aligns our external financial reporting with the manner in which management reviews financial information to make operating decisions and evaluate performance of our business.

Results of operations

Segment data (including Corporate)
in € M

 
  For the three months ended March 31,  
 
  2021   2020  

Total revenue

             

North America Segment

    2,899     3,186  

EMEA Segment

    670     679  

Asia-Pacific Segment

    471     443  

Latin America Segment

    159     168  

Corporate

    11     12  

Total

    4,210     4,488  

Operating income

             

North America Segment

    399     463  

EMEA Segment

    80     101  

Asia-Pacific Segment

    85     77  

Latin America Segment

    7     7  

Corporate

    (97 )   (93 )

Total

    474     555  

Interest income

    15     9  

Interest expense

    (91 )   (113 )

Income tax expense

    (94 )   (100 )

Net income

    304     351  

Net income attributable to noncontrolling interests

    (55 )   (68 )

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

    249     283  

Revenue and operating income generated in countries outside the eurozone are subject to currency fluctuations. The table below summarizes the development of the euro against the U.S. dollar as well as the revenue and the operating income, as a percentage of the consolidated results, generated in U.S. dollars for the three months ended March 31, 2021 and 2020:

Currency development and portion of total revenue and operating income

 
  For the three months ended
March 31,
 
 
  2021   2020  

Currency development of euro against the U.S. dollar

    negative impact     positive impact  

Percentage of revenue in U.S. dollars

    69 %   71 %

Percentage of operating income generated in U.S. dollars

    84 %   83 %

17


Table of Contents

Three months ended March 31, 2021 compared to three months ended March 31, 2020

Consolidated financials

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

 
  For the three months ended
March 31,
  Change in %  
 
  As
reported
  Currency
translation
effects
  Constant
Currency(1)
 
 
  2021   2020  

Revenue

    4,210     4,488     (6 )%   (7 )%   1 %

Health care services

    3,325     3,595     (7 )%   (8 )%   1 %

Health care products

    885     893     (1 )%   (5 )%   4 %

Number of dialysis treatments

    13,004,009     13,190,874     (1 )%            

Same Market Treatment Growth(2)

    (1.5 )%   3.4 %                  

Gross profit

    1,207     1,391     (13 )%   (6 )%   (7 )%

Gross profit as a % of revenue

    28.7 %   31.0 %                  

Selling, general and administrative costs

    712     810     (12 )%   6 %   (6 )%

Selling, general and administrative costs as a % of revenue

    16.9 %   18.0 %                  

Operating income

    474     555     (15 )%   (7 )%   (8 )%

Operating income margin

    11.3 %   12.4 %                  

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

    249     283     (12 )%   (6 )%   (6 )%

Basic earnings per share in €

    0.85     0.95     (10 )%   (6 )%   (4 )%

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

(2)
Same market treatment growth represents growth in treatments, adjusted for certain reconciling items including (but not limited to) treatments from acquisitions, closed or sold clinics and differences in dialysis days ("Same Market Treatment Growth").

Health care services revenue decreased by 7% as compared to the three months ended March 31, 2020 (+1% at Constant Exchange Rates) driven by a negative impact from foreign currency translation (–8%) and the absence of a prior year partial reversal of a 2019 revenue recognition adjustment for accounts receivable in legal dispute (–1%), partially offset by contributions from acquisitions (+1%) and an increase in organic growth despite impacts from COVID-19, including excess mortality rates among patients due to COVID-19, ("COVID-19-Related Impacts") in certain of our operating segments, which are further described in the discussions below, and lower reimbursement for calcimimetics (+1%).

Dialysis treatments decreased by 1% as a result of a reduction in same market treatments (–2%), partially offset by contributions from acquisitions (+1%). The decreases in treatments and Same Market Treatment Growth were significantly affected by COVID-19-Related Impacts.

At March 31, 2021, we owned, operated or managed 4,110 dialysis clinics compared to 4,002 dialysis clinics at March 31, 2020. During the three months ended March 31, 2021, we acquired 14 dialysis clinics, opened 22 dialysis clinics and combined or closed 18 clinics. The number of patients treated in dialysis clinics that we own, operate or manage decreased by 1% to 344,476 at March 31, 2021 (March 31, 2020: 348,703). The decrease in patients was driven by COVID-19-Related Impacts.

Health care product revenue decreased by 1% (+4% at Constant Exchange Rates) driven by a negative impact from foreign currency translation, lower sales of products for acute care treatments, acute cardiopulmonary products as well as in-center disposables, partially offset by higher sales of machines for chronic treatment, peritoneal dialysis products and home hemodialysis products.

Gross profit decreased by 13% (–7% at Constant Exchange Rates) primarily driven by COVID-19-Related Impacts, a negative impact from foreign currency translation and higher personnel expense across all regions. Additionally, we were impacted by an unfavorable impact from manufacturing (North America Segment), the absence of a partial reversal of a revenue recognition adjustment for accounts receivable in legal dispute which affected the first quarter of 2020 favorably (North America Segment), higher implicit price concessions (North America Segment) as well as lower reimbursement for calcimimetics (North America Segment). These impacts were partially offset by a higher reimbursement rate driven by the shift of patients into Medicare Advantage plans and other payor mix effects, increased

18


Table of Contents

treatment volumes (including growth from acquisitions) as normalized for COVID-19 as well as higher reimbursement from our value-based care payor programs, all within in the North America Segment.

Selling, general and administrative ("SG&A") expense decreased by 12% (–6% at Constant Exchange Rates) primarily driven by a positive impact from foreign currency translation, lower costs related to COVID-19 (in particular, an absence of net valuation losses recorded in the first quarter of 2020), a favorable impact from foreign currency transaction effects and lower travel expense across all regions, partially offset by an unfavorable impact from a gain on the sale of cardiovascular clinics in the prior year and higher personnel expense, both within the North America Segment.

Research and development expenses increased by 6% to €49 M from €46 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 Medical, Inc., our subsidiary, in-center and critical care program development as well as activities in the field of regenerative medicine, partially offset by a positive impact from foreign currency translation and increased capitalization of development costs in 2021.

Income from equity method investees increased by 36% to €28 M from €20 M. The increase was primarily driven by higher income from Vifor Fresenius Medical Care Renal Pharma Ltd., an entity in which we have ownership of 45%.

Operating income decreased by 15% (–8% at Constant Exchange Rates) largely driven by the decrease in gross profit as well as a negative impact from foreign currency translation, partially offset by the decrease in SG&A expenses, as discussed above.

Net interest expense decreased by 27% (–22% at Constant Exchange Rates) to €76 M from €104 M primarily due to the positive impact from foreign currency translation, lower variable interest rates, lower interest rates on lease liabilities and a lower debt level.

Income tax expense decreased to €94 M from €100 M. The effective tax rate increased to 23.6% from 22.3% for the same period of 2020 largely driven by the prior year impact from the release of a liability for uncertain tax treatments, the decrease of tax-free income related to equity method investees and the effect of a tax-free gain related to divestitures of centers in the comparative prior year period.

Net income attributable to noncontrolling interests decreased by 18% (–11% at Constant Exchange Rates) to €55 M from €68 M due to lower earnings in entities in which we have less than 100% ownership and a positive impact from foreign currency translation.

Net income attributable to shareholders of FMC-AG & Co. KGaA decreased by 12% (–6% at Constant Exchange Rates) to €249 M from €283 M as a result of the combined effects of the items discussed above as well as a negative impact from foreign currency translation. COVID-19 resulted in a negative impact to net income attributable to shareholders of FMC-AG & Co. KGaA in the amount of €79 M for the three months ended March 31, 2021 as compared to €41 M for the first three months ended March 31, 2020, primarily driven by COVID-19-Related Impacts in certain of our operating segments, as well as various other effects from the pandemic including, but not limited to, increased costs for personal protective equipment and increased labor costs, partially offset by certain lower operating costs including patient screening, facilities management and marketing.

Basic earnings per share decreased by 10% (–4% at Constant Exchange Rates) primarily due to the decrease in net income attributable to shareholders of FMC-AG & Co. KGaA described above coupled with a negative impact from foreign currency translation, partially offset by 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 292.9 M on March 31, 2021 (March 31, 2020: 297.8 M), primarily as a result of our share buy-back program which concluded on April 1, 2020.

We employed 124,995 people (full-time equivalents) as of March 31, 2021 (March 31, 2020: 121,403). This 3% increase was primarily due to organic growth in our business and acquisitions.

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.

19


Table of Contents

North America Segment

Performance indicators for the North America Segment
in € M, except where otherwise specified

 
  For the three months ended
March 31,
  Change in %  
 
  As
reported
  Currency
translation
effects
  Constant
Currency(1)
 
 
  2021   2020  

Revenue

    2,899     3,186     (9 )%   (8 )%   (1 )%

Health care services

    2,643     2,908     (9 )%   (8 )%   (1 )%

Health care products

    256     278     (8 )%   (8 )%   0 %

Number of dialysis treatments

    7,926,555     8,096,332     (2 )%            

Same Market Treatment Growth

    (3.0 )%   3.1 %                  

Operating income

    399     463     (14 )%   (8 )%   (6 )%

Operating income margin

    13.7 %   14.5 %                  

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

Revenue

Health care services revenue decreased by 9% (–1% at Constant Exchange Rates) mainly due to a negative impact from foreign currency translation (–8%), the absence of a prior year partial reversal of a 2019 revenue recognition adjustment for accounts receivable in legal dispute (–1%) and a decrease in organic growth as a result of COVID-19-Related Impacts and lower reimbursement for calcimimetics (–1%), partially offset by contributions from acquisitions (+1%).

Dialysis treatments decreased by 2% largely due to a reduction in same market treatments (–3%), partially offset by contributions from acquisitions (+1%). At March 31, 2021, 209,279 patients, a decrease of 2% (March 31, 2020: 213,221), were treated in the 2,655 dialysis clinics (March 31, 2020: 2,597) that we own or operate in the North America Segment. The decreases in treatments, Same Market Treatment Growth and patients were significantly affected by COVID-19-Related Impacts.

Health care product revenue decreased by 8% (remained stable at Constant Exchange Rates) driven by a negative impact from foreign currency translation and lower sales for in-center disposables, partially offset by higher sales of products for acute care treatments and machines for chronic treatment.

Operating income

Operating income decreased by 14% (–6% at Constant Exchange Rates) primarily related to unfavorable effects from COVID-19-Related Impacts (including a partial offset by net valuation losses recorded in the first quarter of 2020), higher personnel expense, a negative impact from foreign currency translation, an unfavorable impact from a gain on the sale of cardiovascular clinics in the prior year, an unfavorable impact related to a partial reversal of a revenue recognition adjustment in 2020 for accounts receivable in legal dispute and an unfavorable impact from calcimimetics, partially offset by a higher reimbursement rate driven by the shift of patients into Medicare Advantage plans and other payor mix effects, increased treatment volumes (including growth from acquisitions) as normalized for COVID-19 as well as higher reimbursement from our value-based care payor programs.

20


Table of Contents

EMEA Segment

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

 
  For the three months ended
March 31,
  Change in %  
 
  As
reported
  Currency
translation
effects
  Constant
Currency(1)
 
 
  2021   2020  

Revenue

    670     679     (1 )%   (2 )%   1 %

Health care services

    332     341     (3 )%   (4 )%   1 %

Health care products

    338     338     (0 )%   (2 )%   2 %

Number of dialysis treatments

    2,441,914     2,511,370     (3 )%            

Same Market Treatment Growth

    (2.7 )%   2.4 %                  

Operating income

    80     101     (21 )%   0 %   (21 )%

Operating income margin

    11.9 %   14.9 %                  

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

Revenue

Health care service revenue decreased by 3% (+1% at Constant Exchange Rates) largely as a result of a negative impact from foreign currency translation (–4%), a decrease in dialysis days (–1%) and the effect of closed or sold clinics (–1%), partially offset by contributions from acquisitions (+3%). Including the effects from COVID-19-Related Impacts, organic growth remained stable.

Dialysis treatments decreased by 3% mainly due to a reduction in same market treatments (–3%), a decrease in dialysis days (–1%) and the effect of closed or sold clinics (–1%), partially offset by contributions from acquisitions (+2%). As of March 31, 2021, 64,978 patients, a decrease of 3% (March 31, 2020: 66,843), were treated at the 809 dialysis clinics (March 31, 2020: 786) that we own, operate or manage in the EMEA Segment. The decreases in treatments, Same Market Treatment Growth and patients were significantly affected by COVID-19-Related Impacts.

Health care product revenue remained stable (+2% at Constant Exchange Rates) due to lower sales of in-center disposables and a negative impact from foreign currency translation, mostly offset by higher sales of machines for chronic treatment, home hemodialysis products and products for acute care treatments.

Operating income

Operating income decreased by 21% (–21% at Constant Exchange Rates) mainly due to a revaluation gain of an investment in the prior year which did not repeat in the first quarter of 2021, an unfavorable country mix within our product business, the impact of a decrease in dialysis days, higher cost for personnel and supplies in certain countries, an impact from a favorable legal settlement in the prior year and unfavorable foreign currency transaction effects, partially offset by lower bad debt expense.

Asia-Pacific Segment

Performance indicators for the Asia-Pacific Segment
in € M, except where otherwise specified

 
  For the three months ended
March 31,
  Change in %  
 
  As
reported
  Currency
translation
effects
  Constant
Currency(1)
 
 
  2021   2020  

Revenue

    471     443     6 %   (4 )%   10 %

Health care services

    228     218     5 %   (3 )%   8 %

Health care products

    243     225     8 %   (3 )%   11 %

Number of dialysis treatments

    1,169,169     1,157,675     1 %            

Same Market Treatment Growth

    7.4 %   5.9 %                  

Operating income

    85     77     11 %   (3 )%   14 %

Operating income margin

    18.1 %   17.3 %                  

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

21


Table of Contents

Revenue

Health care services revenue increased by 5% (+8% at Constant Exchange Rates) largely as a result of an increase in organic growth (+10%) and contributions from acquisitions (+2%), partially offset by a negative impact from foreign currency translation (–3%), the effect of closed or sold clinics (–3%) and a decrease in dialysis days (–1%).

Dialysis treatments increased by 1% mainly due to growth in same market treatments (+7%) and contributions from acquisitions (+1%), partially offset by the effect of closed or sold clinics (–6%) and a decrease in dialysis days (–1%). As of March 31, 2021, 33,334 patients, an increase of 6% (March 31, 2020: 31,337) were treated at the 399 dialysis clinics (March 31, 2020: 376) that we own, operate or manage in the Asia-Pacific Segment.

Health care product revenue increased by 8% (+11% at Constant Exchange Rates) mainly due to higher sales of machines for chronic treatment and in-center disposables, partially offset by lower sales of products for acute care treatments, a negative impact from foreign currency translation and lower sales of acute cardiopulmonary products.

Operating income

Operating income increased by 11% (+14% at Constant Exchange Rates) primarily due to favorable business growth and a favorable impact from manufacturing, partially offset by the prior year impact of a gain from the deconsolidation of clinics.

Latin America Segment

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

 
  For the three months ended
March 31,
  Change in %  
 
  As
reported
  Currency
translation
effects
  Constant
Currency(1)
 
 
  2021   2020  

Revenue

    159     168     (5 )%   (22 )%   17 %

Health care services

    115     121     (5 )%   (23 )%   18 %

Health care products

    44     47     (6 )%   (20 )%   14 %

Number of dialysis treatments

    1,466,371     1,425,497     3 %            

Same Market Treatment Growth

    2.4 %   4.9 %                  

Operating income

    7     7     (3 )%   (6 )%   3 %

Operating income margin

    4.2 %   4.1 %                  

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

Revenue

Health care service revenue decreased by 5% (+18% at Constant Exchange Rates) as a result of a negative impact from foreign currency translation (–23%), a decrease in dialysis days (–1%) and the effect of closed or sold clinics (–1%), partially offset by an increase in organic growth (+15%) and contributions from acquisitions (+5%).

Dialysis treatments increased by 3% mainly due to contributions from acquisitions (+3%) and growth in same market treatments (+2%), partially offset by the effect of closed or sold clinics (–1%) and a decrease in dialysis days (–1%). As of March 31, 2021, 36,885 patients, a decrease of 1% (March 31, 2020: 37,302), were treated at the 247 dialysis clinics (March 31, 2020: 243) that we own, operate or manage in the Latin America Segment. The number of treatments, as well as the related Same Market Treatment Growth, and patients was also affected by COVID-19-Related Impacts.

Health care product revenue decreased by 6% (+14% at Constant Exchange Rates) due to a negative impact from foreign currency translation, partially offset by higher sales of in-center disposables and products for acute care treatments.

22


Table of Contents

Operating income

Operating income decreased by 3% (+3% at Constant Exchange Rates) due to a negative impact from foreign currency translation.

Financial position

Sources of liquidity

Our primary sources of liquidity are typically cash provided by operating activities, cash provided by short-term debt, 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 March 31, 2021, our available borrowing capacity under unutilized credit facilities amounted to approximately €2.4 billion. The Amended 2012 Credit Agreement accounted for approximately €1.4 billion in unutilized available borrowing capacity.

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. The following table shows the reconciliation of adjusted EBITDA and net leverage ratio as of March 31, 2021 and December 31, 2020.

Reconciliation of adjusted EBITDA and net leverage ratio to the most directly comparable IFRS financial measure


in € M, except for net leverage ratio

 
  March 31,
2021
  December 31,
2020
 

Debt and lease liabilities(1)

    12,900     12,380  

Minus: Cash and cash equivalents

    (1,073 )   (1,082 )

Net debt

    11,827     11,298  

Net income(2)

   
1,390
   
1,435
 

Income tax expense(2)

    494     501  

Interest income(2)

    (48 )   (42 )

Interest expense(2)

    388     410  

Depreciation and amortization(2)

    1,575     1,587  

Adjustments(2),(3)

    253     249  

Adjusted EBITDA

    4,052     4,140  

Net leverage ratio

   
2.9
   
2.7
 

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

(2)
Last twelve months.

(3)
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 (2021: €6 M), non-cash charges, primarily related to pension expense (2021: €49 M; 2020: €50 M) and impairment loss (2021: €198 M; 2020: €199 M).

At March 31, 2021, we had cash and cash equivalents of €1,073 M (December 31, 2020: €1,082 M).

Free cash flow (Net cash provided by (used in) operating activities, after capital expenditures, before acquisitions and investments) 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.

The following table shows the cash flow performance indicators for the three months ended March 31, 2021 and 2020 and reconciles free cash flow and free cash flow in percent of revenue to Net cash provided

23


Table of Contents

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 three months ended March 31,  
 
  2021   2020  

Revenue

    4,210     4,488  

Net cash provided by (used in) operating activities

    208     584  

Capital expenditures

    (184 )   (282 )

Proceeds from sale of property, plant and equipment

    5     2  

Capital expenditures, net

    (179 )   (280 )

Free cash flow

    29     304  

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

    4.9 %   13.0 %

Free cash flow in % of revenue

    0.7 %   6.8 %

Net cash provided by (used in) operating activities

In the first three months of 2021, we generated net cash provided by operating activities of €208 M, compared to €584 M in the first three months of 2020. Net cash provided by operating activities in percent of revenue decreased to 5% for the first three months of 2021 as compared to 13% for 2020. Net cash provided by (used in) operating activities is impacted by the profitability of our business, the development of our working capital, principally inventories, receivables and cash outflows that occur due to a number of specific items as discussed below. The decrease in net cash provided by operating activities was largely driven by an increase in trade accounts and other receivables from unrelated parties primarily related to seasonality in invoicing and periodic delays in payment by public health care organizations as well as a decrease in accounts payable to unrelated parties related to the timing of payments.

The profitability of our business depends significantly on reimbursement rates for our services. Approximately 79% of our revenue is generated by providing health care services, a major portion of which is reimbursed by either public health care organizations or private insurers. For the three months ended March 31, 2021, approximately 28% of our consolidated revenue was attributable to reimbursements from U.S. federal health care benefit programs, such as Medicare and Medicaid. Legislative changes could affect Medicare reimbursement rates for a significant portion of the services we provide as well as the scope of Medicare coverage. A decrease in reimbursement rates or the scope of coverage could have a material adverse effect on our business, financial position and results of operations and thus on our capacity to generate cash flow. See "I. Overview," above.

We intend to continue to address our current cash and financing requirements using net cash provided by operating activities, our existing and future credit agreements, issuances under our commercial paper program (see note 5 of the notes to the consolidated financial statements (unaudited) included in this report) as well as from the use of our Accounts Receivable Facility. In addition, to finance acquisitions or meet other needs, we expect to successfully complete long-term financing arrangements, such as the issuance of bonds.

Net cash provided by (used in) operating activities depends on the collection of accounts receivable. Commercial customers and government institutions generally have different payment cycles. Lengthening their payment cycles could have a material adverse effect on our capacity to generate cash flow. In addition, we could face difficulties enforcing and collecting accounts receivable under the legal systems of, and due to the economic conditions in, some countries. Accounts receivable balances, net of expected credit losses, represented Days Sales Outstanding ("DSO") of 60 days at March 31, 2021, an increase as compared to 50 days at December 31, 2020.

DSO by segment is calculated by dividing the respective segment's accounts and other receivables from unrelated parties and contract liabilities, converted to euro using the average exchange rate for the period presented, less any sales or value added tax included in the receivables, by the average daily sales for the last twelve months of that segment, converted to euro using the average exchange rate for the period. Receivables and revenues are adjusted for amounts related to acquisitions and divestitures made within the

24


Table of Contents

reporting period with a purchase price above a €50 M threshold as defined in the Amended 2012 Credit Agreement.

The development of DSO by reporting segment is shown in the table below:

Development of days sales outstanding

in days
  March 31,
2021
  December 31,
2020
  Increase/decrease primarily driven by:

North America Segment

    43     26   Seasonality in invoicing and periodic delays in payment by public health care organizations

EMEA Segment

   
85
   
90
 

Improvement of payment collections and increased sales with shorter payment terms in the region

Asia-Pacific Segment

   
102
   
110
 

Improvement of payment collections in the region

Latin America Segment

   
128
   
134
 

Improvement of payment collections in the region

FMC-AG & Co. KGaA average days sales outstanding

   
60
   
50
   

Due to the fact that a large portion of our reimbursement is provided by public health care organizations and private insurers, we expect that most of our accounts receivable will be collectible.

For information regarding litigation exposure as well as ongoing and future tax audits, see note 9, of the notes to the consolidated financial statements (unaudited) included in this report.

Net cash provided by (used in) investing activities

Net cash used in investing activities in the first three months of 2021 was €224 M as compared to net cash used in investing activities of €312 M in the comparable period of 2020. The following table shows our capital expenditures for property, plant and equipment and capitalized development costs, net of proceeds from sales of property, plant and equipment as well as acquisitions, investments and purchases of intangible assets for the first three months of 2021 and 2020:

Capital expenditures (net), acquisitions, investments, purchases of intangible assets and investments in debt securities
in € M

 
  Capital expenditures, net   Acquisitions, investments,
purchases of intangible
assets and investments in
debt securities
 
 
  For the three months ended March 31,  
 
  2021   2020   2021   2020  

North America Segment

    93     149     91     13  

thereof investments in debt securities

            11     1  

EMEA Segment

    24     29     9     7  

Asia-Pacific Segment

    10     37          

Latin America Segment

    9     6         15  

Corporate

    43     59     17     3  

Total

    179     280     117     38  

The majority of our capital expenditures in the first three months of 2021 was used for maintaining existing clinics and centers, equipping new clinics and centers, maintaining and expanding production facilities, capitalization of machines provided to our customers and capitalization of certain development costs. Capital expenditures accounted for approximately 4% of total revenue in the first three months of 2021 as compared to approximately 6% of total revenue during the same period in 2020.

25


Table of Contents

Investments in the first three months of 2021 were primarily comprised of purchases of debt securities and equity investments. In the first three months of 2021, we received €72 M from divestitures. These divestitures were mainly related to the divestment of debt securities. Acquisitions in the first three months of 2021 relate primarily to the purchase of dialysis clinics.

Investments in the first three months of 2020 were primarily comprised of purchases of equity investments and debt securities. In the first three months of 2020, we received €6 M from divestitures. These divestitures were mainly related to the divestment of debt securities. Acquisitions in the first three months of 2020 relate primarily to the purchase of dialysis clinics.

Net cash provided by (used in) financing activities

In the first three months of 2021, net cash used in financing activities was €36 M as compared to net cash used in financing activities of €232 M in the first three months of 2020.

In the first three months of 2021, cash was mainly used in the repayment of long-term debt (including the repayment at maturity of bonds in an aggregate principal amount of $650 M (€473 M as of the date of issuance) and €300 M on February 15, 2021), the repayment of lease liabilities (including lease liabilities from related parties) and distributions to noncontrolling interests, partially offset by proceeds from short-term debt (including borrowings under our commercial paper program).

In the first three months of 2020, cash was mainly used for repayment of long-term debt (including the repayment of Convertible Bonds with a principal amount of €400 M at maturity in January 2020), shares repurchased as part of a share buy-back program, repayment of short-term debt and the repayment of lease liabilities, partially offset by the proceeds from short-term debt (including short-term debt from related parties) and the utilization of the Accounts Receivable Facility.

Balance sheet structure

Total assets as of March 31, 2021 increased by 5% to €33.2 billion as compared to €31.7 billion at December 31, 2020. In addition to a 4% positive impact resulting from foreign currency translation, total assets increased by 1% to €32.1 billion from €31.7 billion primarily due to increased trade accounts and other receivables from unrelated parties related to seasonality in invoicing, increases in goodwill and right-of use assets related to translation adjustments, increased inventory related to a higher demand for specific products and higher safety inventory levels and an increase in property, plant and equipment, partially offset by a decrease in other current assets.

Current assets as a percent of total assets remained consistent period over period at 23% for March 31, 2021 and December 31, 2020, respectively. The equity ratio, the ratio of our equity divided by total liabilities and shareholders' equity, increased to 40% at March 31, 2021 as compared to 39% at December 31, 2020, primarily driven by an increase in equity from currency translation and net income attributable to shareholders of FMC-AG & Co. KGaA. ROIC increased to 5.9% at March 31, 2021 as compared to 5.8% at December 31, 2020. Excluding the Impairment Loss as well as excluding both the Impairment Loss and the Effect from IFRS 16, ROIC was 6.4% and 7.2%, respectively, at March 31, 2021 (December 31, 2020: 6.6% and 7.5%, respectively). For further information on ROIC, see "II. Discussion of measures—Non-IFRS measures—Return on invested capital (ROIC) (Non-IFRS Measure)" above.

Report on post-balance sheet date events

Refer to note 12 in the notes to the consolidated financial statements (unaudited) included in this report.

Recently issued accounting standards

Refer to note 1 of the notes to the consolidated financial statements (unaudited) included in this report for information regarding recently issued accounting standards.

26


Table of Contents


FRESENIUS MEDICAL CARE AG & Co. KGaA

Financial statements

Consolidated statements of income

(unaudited)

Consolidated statements of income
in € thousands ("THOUS"), except per share data

 
   
  For the three months
ended March 31,
 
 
  Note   2021   2020  

Revenue:

                 

Health care services

  2a     3,325,459     3,594,663  

Health care products

  2a     884,666     893,133  

        4,210,125     4,487,796  

Costs of revenue:

 

 

   
 
   
 
 

Health care services

        2,568,382     2,707,649  

Health care products

        435,086     389,592  

        3,003,468     3,097,241  

Gross profit

       
1,206,657
   
1,390,555
 

Operating (income) expenses:

 

 

   
 
   
 
 

Selling, general and administrative

        711,515     809,917  

Research and development

  2b     48,645     45,917  

Income from equity method investees

  11     (27,756 )   (20,409 )

Operating income

        474,253     555,130  

Other (income) expense:

 

 

   
 
   
 
 

Interest income

        (15,256 )   (8,751 )

Interest expense

        91,328     112,970  

Income before income taxes

        398,181     450,911  

Income tax expense

        93,847     100,542  

Net income

        304,334     350,369  

Net income attributable to noncontrolling interests

        55,388     67,650  

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

        248,946     282,719  

Basic earnings per share

  2c     0.85     0.95  

Diluted earnings per share

  2c     0.85     0.95  

   

See accompanying notes to unaudited consolidated financial statements.

27


Table of Contents


FRESENIUS MEDICAL CARE AG & Co. KGaA

Consolidated statements of comprehensive income

(unaudited)

Consolidated statements of comprehensive income
in € THOUS

 
  For the three months
ended March 31,
 
 
  2021   2020  

Net income

    304,334     350,369  

Other comprehensive income (loss):

             

Components that will not be reclassified to profit or loss:

   
 
   
 
 

Equity method investees—share of OCI

    (7,432 )    

FVOCI equity investments

    5,856      

Actuarial gain (loss) on defined benefit pension plans

    54,302      

Income tax (expense) benefit related to components of other comprehensive income not reclassified

    (16,956 )    

    35,770      

Components that may be reclassified subsequently to profit or loss:

   
 
   
 
 

Gain (loss) related to foreign currency translation

    545,796     105,678  

FVOCI debt securities

    (9,925 )    

Gain (loss) related to cash flow hedges

    (1,766 )   7,427  

Cost of hedging

    84     (1,139 )

Income tax (expense) benefit related to components of other comprehensive income that may be reclassified

    2,118     (1,878 )

    536,307     110,088  

Other comprehensive income (loss), net of tax

   
572,077
   
110,088
 

Total comprehensive income

    876,411     460,457  

Comprehensive income attributable to noncontrolling interests

   
103,981
   
90,094
 

Comprehensive income (loss) attributable to shareholders of FMC-AG & Co. KGaA

    772,430     370,363  

   

See accompanying notes to unaudited consolidated financial statements.

28


Table of Contents


FRESENIUS MEDICAL CARE AG & Co. KGaA

Consolidated balance sheets

(unaudited)

Consolidated balance sheets
in € THOUS, except share data

 
  Note   March 31,
2021
  December 31,
2020
 

Assets

                 

Cash and cash equivalents

        1,073,478     1,081,539  

Trade accounts and other receivables from unrelated parties

        3,740,713     3,153,045  

Accounts receivable from related parties

  3     153,437     91,438  

Inventories

  4     1,989,405     1,895,310  

Other current assets

        832,376     1,053,978  

Total current assets

        7,789,409     7,275,310  

Property, plant and equipment

       
4,147,440
   
4,056,864
 

Right-of-use assets

        4,268,203     4,129,888  

Intangible assets

        1,401,497     1,381,009  

Goodwill

        13,638,912     12,958,728  

Deferred taxes

        333,286     351,152  

Investment in equity method investees

  11     726,595     761,113  

Other non-current assets

        853,197     774,972  

Total non-current assets

        25,369,130     24,413,726  

Total assets

        33,158,539     31,689,036  

Liabilities

                 

Accounts payable to unrelated parties

        635,422     731,993  

Accounts payable to related parties

  3     105,446     95,401  

Current provisions and other current liabilities

  2d     3,792,747     3,517,076  

Short-term debt from unrelated parties

  5     1,126,911     62,950  

Short-term debt from related parties

  5     13,714     16,320  

Current portion of long-term debt

  6     785,475     1,008,359  

Current portion of long-term lease liabilities from unrelated parties

        617,467     588,492  

Current portion of long-term lease liabilities from related parties

  3     20,697     20,664  

Income tax payable

        145,094     118,389  

Total current liabilities

        7,242,973     6,159,644  

Long-term debt, less current portion

 

6

   
6,315,270
   
6,800,101
 

Long-term lease liabilities from unrelated parties, less current portion

        3,907,002     3,763,775  

Long-term lease liabilities from related parties, less current portion

  3     113,948     119,356  

Non-current provisions and other non-current liabilities

        804,329     931,590  

Pension liabilities

        679,199     718,502  

Income tax payable

        86,947     78,872  

Deferred taxes

        809,215     785,886  

Total non-current liabilities

        12,715,910     13,198,082  

Total liabilities

        19,958,883     19,357,726  

Shareholders' equity:

                 

Ordinary shares, no par value, €1.00 nominal value, 362,370,124 shares authorized, 292,888,145 issued and outstanding as of March 31, 2021 and 362,370,124 shares authorized, 292,876,570 issued and outstanding as of December 31, 2020

        292,888     292,877  

Additional paid-in capital

        2,887,037     2,872,630  

Retained earnings

        10,500,006     10,254,913  

Accumulated other comprehensive income (loss)

        (1,681,856 )   (2,205,340 )

Total FMC-AG & Co. KGaA shareholders' equity

        11,998,075     11,215,080  

Noncontrolling interests

        1,201,581     1,116,230  

Total equity

        13,199,656     12,331,310  

Total liabilities and equity

        33,158,539     31,689,036  

   

See accompanying notes to unaudited consolidated financial statements.

29


Table of Contents


FRESENIUS MEDICAL CARE AG & Co. KGaA

Consolidated statements of cash flows

(unaudited)

Consolidated statements of cash flows
in € THOUS

 
   
  For the three
months ended
March 31,
 
 
  Note   2021   2020  

Operating activities

                 

Net income

        304,334     350,369  

Adjustments to reconcile net income to net cash provided by operating activities:

                 

Depreciation, amortization and impairment loss

  11     388,202     400,687  

Change in deferred taxes, net

        (6,054 )   (29,271 )

(Gain) loss from the sale of fixed assets, right-of-use assets, investments and divestitures

        (8,024 )   17,709  

Income from equity method investees

  11     (27,756 )   (20,409 )

Interest expense, net

        76,072     104,219  

Changes in assets and liabilities, net of amounts from businesses acquired:

                 

Trade accounts and other receivables from unrelated parties

        (476,560 )   (286,867 )

Inventories

        (41,423 )   (82,230 )

Other current and non-current assets

        170,572     83,873  

Accounts receivable from related parties

        (3,964 )   32,219  

Accounts payable to related parties

        6,237     14,736  

Accounts payable to unrelated parties, provisions and other current and non-current liabilities

        (111,529 )   83,290  

Income tax payable

        67,610     53,048  

Received dividends from investments in equity method investees

        1,075     1,143  

Paid interest

        (104,607 )   (111,538 )

Received interest

        15,256     8,751  

Paid income taxes

        (41,793 )   (35,662 )

Net cash provided by (used in) operating activities

        207,648     584,067  

Investing activities

                 

Purchases of property, plant and equipment and capitalized development costs

        (184,301 )   (281,977 )

Acquisitions and investments, net of cash acquired, and purchases of intangible assets

        (106,489 )   (37,085 )

Investments in debt securities

        (10,739 )   (715 )

Proceeds from sale of property, plant and equipment

        5,376     1,444  

Proceeds from divestitures

        1,841     (1,954 )

Proceeds from sale of debt securities

        70,259     7,954  

Net cash provided by (used in) investing activities

        (224,053 )   (312,333 )

Financing activities

                 

Proceeds from short-term debt from unrelated parties

        1,070,531     182,217  

Repayments of short-term debt from unrelated parties

        (8,593 )   (177,570 )

Proceeds from short-term debt from related parties

            498,811  

Repayments of short-term debt from related parties

        (2,606 )    

Proceeds from long-term debt

        9,693     12,664  

Repayments of long-term debt

        (888,215 )   (568,648 )

Repayments of lease liabilities from unrelated parties

        (164,249 )   (172,352 )

Repayments of lease liabilities from related parties

        (5,144 )   (4,117 )

Increase (decrease) of accounts receivable facility

        12,450     270,936  

Proceeds from exercise of stock options

        575     415  

Purchase of treasury stock

            (216,123 )

Distributions to noncontrolling interests

        (69,523 )   (61,806 )

Contributions from noncontrolling interests

        9,166     4,041  

Net cash provided by (used in) financing activities

        (35,915 )   (231,532 )

Effect of exchange rate changes on cash and cash equivalents

        44,259     4,281  

Cash and cash equivalents:

                 

Net increase (decrease) in cash and cash equivalents

        (8,061 )   44,483  

Cash and cash equivalents at beginning of period

        1,081,539     1,007,723  

Cash and cash equivalents at end of period

        1,073,478     1,052,206  

   

See accompanying notes to unaudited consolidated financial statements.

30


Table of Contents

FRESENIUS MEDICAL CARE AG & Co. KGaA
Consolidated statements of shareholders´ equity
For the three months ended March 31, 2021 and 2020 (unaudited)

Consolidated statements of shareholders´ equity
in € THOUS, except share data

 
   
   
   
   
   
   
   
  Accumulated
other comprehensive income (loss)
   
   
   
 
 
   
  Ordinary shares   Treasury stock    
   
  Total
FMC-AG & Co.
KGaA
shareholders'
equity
   
   
 
 
  Note   Number of
shares
  No par
value
  Number of
shares
  Amount   Additional
paid in
capital
  Retained
earnings
  Foreign
currency
translation
  Cash flow
hedges
  Pensions   Fair value
changes
  Noncontrolling
interests
  Total
equity
 

Balance at December 31, 2019

          304,436,876     304,437     (6,107,629 )   (370,502 )   3,607,662     9,454,861     (664,987 )   (10,460 )   (363,098 )       11,957,913     1,269,324     13,227,237  

Proceeds from exercise of options and related tax effects

          7,565     7             213                         220         220  

Purchase of treasury stock

                  (4,992,660 )   (322,164 )                           (322,164 )       (322,164 )

Purchase/ sale of noncontrolling interests

                          (4,565 )                       (4,565 )   (29,731 )   (34,296 )

Contributions from/ to noncontrolling interests

                                                      (56,179 )   (56,179 )

Put option liabilities

    10                         (5,339 )                   (5,339 )       (5,339 )

Net Income

                              282,719                     282,719     67,650     350,369  

Other comprehensive income (loss) related to:

                                                                                     

Foreign currency translation

                                  87,623     (237 )   (4,152 )       83,234     22,444     105,678  

Cash flow hedges, net of related tax effects

                                      4,410             4,410         4,410  

Comprehensive income

                                                  370,363     90,094     460,457  

Balance at March 31, 2020

          304,444,441     304,444     (11,100,289 )   (692,666 )   3,603,310     9,732,241     (577,364 )   (6,287 )   (367,250 )       11,996,428     1,273,508     13,269,936  

Balance at December 31, 2020

          292,876,570     292,877             2,872,630     10,254,913     (1,936,713 )   (7,706 )   (346,282 )   85,361     11,215,080     1,116,230     12,331,310  

Proceeds from exercise of options and related tax effects

         
11,575
   
11
   
   
   
431
   
   
   
   
   
   
442
   
   
442
 

Purchase/ sale of noncontrolling interests

                          13,976                         13,976     28,545     42,521  

Contributions from/ to noncontrolling interests

                                                      (47,175 )   (47,175 )

Put option liabilities

    10                         (3,853 )                   (3,853 )       (3,853 )

Net Income

                              248,946                     248,946     55,388     304,334  

Other comprehensive income (loss) related to:

                                                                                     

Foreign currency translation

                                  504,179     (380 )   (6,498 )   (98 )   497,203     48,593     545,796  

Cash flow hedges, net of related tax effects

                                      (1,195 )           (1,195 )       (1,195 )

Pensions, net of related tax effects

                                          38,877         38,877         38,877  

Fair value changes

                                              (11,401 )   (11,401 )       (11,401 )

Comprehensive income

                                                  772,430     103,981     876,411  
&#