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Table of Contents

v

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 July 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    

Form 40-F    

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 and six months ended June 30, 2021 and 2020

Page

FINANCIAL INFORMATION

Management’s discussion and analysis

Forward-looking statements

2

Financial condition and results of operations

4

Overview

4

Discussion of measures

9

Results of operations, financial position and net assets

17

Recently issued accounting standards

34

Financial Statements (unaudited)

Consolidated statements of income

35

Consolidated statements of comprehensive income

36

Consolidated balance sheets

37

Consolidated statements of cash flows

38

Consolidated statement of shareholders' equity

39

Notes to consolidated financial statements

40

Quantitative and qualitative disclosures about market risk

58

Controls and procedures

59

OTHER INFORMATION

Legal proceedings

60

Submission of matters to a vote of security holders

60

Exhibits

62

Signatures

63

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, included in our Annual Report on Form 20-F for the year ended December 31, 2020 (our "2020 Form 20-F").

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 legal challenges to the ACA;
the outcome of government and internal investigations as well as litigation;
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, laws and regulations in relation to environmental, social and governance topics, the impact of health care, tax and trade law reforms, in particular the potential U.S. and international 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 was repealed and replaced by the new EU Medical Device Regulation, which became applicable 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;

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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 in 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;
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 2d) and note 8 of the notes to the consolidated financial statements (unaudited) included in this report, in note 22 of the notes to the consolidated financial statements included in 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.

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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. For a discussion of our critical accounting policies, see note 2 of the notes to the consolidated financial statements included in our 2020 Form 20-F.

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 estimate that 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 (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 six months ended June 30, 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 the ESRD PPS, a single bundled payment rate which provides a fixed payment rate, 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%.

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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 our operating results in the past and will continue to do so after the suspension is lifted.
On July 9, 2021, CMS issued a proposed rule for the ESRD PPS rate for calendar year (“CY”) 2022. The proposed base rate per treatment for CY 2022 is $255.55, which represents a 1.0% increase from the CY 2021 base rate of $253.13. The increase of 1.0% is based on a market basket increase of 1.6% partially offset by a 0.6% multifactor productivity adjustment that is mandated by the ACA. The updated base rate includes an adjustment for the wage index budget-neutrality. CMS estimates that, on average, large dialysis organizations will receive a 1.2% increase in payments in CY 2022 compared to CY 2021 under this proposed rule. The proposed Acute Kidney Injury payment rate for CY 2022 is to equal the CY 2022 ESRD PPS base rate. As a result of the projected 1.2% overall payment increase, CMS estimates that there will be an increase in beneficiary co-insurance payments of 1.2% in CY 2022. CMS is also considering two products for the transitional add-on payment adjustment for new and innovative equipment and supplies (“TPNIES”) in CY 2022, a catheter-based treatment monitoring platform for peritoneal dialysis patients and a home hemodialysis machine as developed or manufactured by third parties. Should competing products qualify for TPNIES and, thus, receive favorable reimbursement treatment, this could have an impact on our results. CMS will make a final determination on the TPNIES payment in the final rule.
Under the ESRD QIP, CMS assesses the total performance of each facility on a set of measures specified per payment year (“PY”) and applies up to a 2 percent payment reduction to facilities that do not meet a minimum total performance score (“TPS”).  In the CY 2022 proposed rule, CMS proposed to adopt a special scoring and payment policy for PY 2022 of the ESRD QIP to address the issues in the scoring system caused by the impact of the COVID-19 Public Health Emergency on QIP data. Under the proposals, the scoring and payment methodologies would be modified to provide that no facility would receive a payment reduction for PY 2022. CMS further proposed that the existing ESRD QIP measure set remain the same for PY 2024 and 2025. CMS also proposed to set performance standards for PY 2024 using CY 2019 data, which is the most recently available full calendar year of usable data due to the impact of COVID-19 on CY 2020 data. CMS is seeking feedback on a number of topics related to the QIP including potential future COVID-19 vaccination measures.
On July 19, 2021, CMS issued the CY 2022 proposed rule for hospital outpatient and ambulatory surgery center payment systems. The proposed rule to update the Ambulatory Surgical Center ("ASC") Fee Schedule for CY 2022 generally increases the reimbursement rates for certain vascular access services. For the range of procedures provided in an ASC, the average increase is 2.3% compared to the prior year. CMS is also proposing that the device offset percentage will be calculated using ASC rates and not hospital outpatient department rates as was the previous practice. This means that any procedure in which the device cost is 30 percent of the overall ASC procedure rate will receive device-intensive status. If finalized, certain device intensive procedures will receive the higher device intensive reimbursement. CMS also updated the Physician Fee Schedule for CY 2022. On July 13, 2021 CMS released the annual Physician Fee Schedule proposed rule which cut reimbursement in CY 2022 for certain specialty services, including those related to cardiovascular and vascular access care. The proposed CY 2022 physician fee schedule conversion factor is $33.58, a decrease $1.31 from the CY 2021 physician fee schedule conversion factor of $34.89, after the expiration of the 3.75 percent payment increase provided for in CY 2021 by the Consolidated Appropriations Act, 2021.

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 matters, see Item 4B, “Information on the Company—Regulatory and Legal Matters—Health Care Reform” in our 2020 Form 20-F. Although Congress' efforts to date to repeal the ACA have been unsuccessful, and on June 17, 2021, the U.S. Supreme Court dismissed litigation seeking to declare the ACA as unconstitutional, further efforts to repeal or revise the ACA may affect the law’s future prospects in ways which we currently cannot quantify or predict.

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).

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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”) entitled “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 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 (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.

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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 Health and Human Services (“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 transplants 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 this model are based on a random selection of thirty percent of the Hospital Referral Regions. As of June 30, 2021, 981 of our U.S. dialysis facilities, representing approximately 35% of our U.S. dialysis facilities, 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 of HHS 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 transplants. 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.

On July 9, 2021, CMS issued a proposed rule that proposes modifications to the ETC model, including changes to the home dialysis rate and transplant rate, the achievement and improvement benchmarking and scoring methodology, and a process for sharing certain beneficiary attribution and performance data with ETC participants. CMS has proposed additional programmatic waivers and other flexibilities regarding the Kidney Disease Education (“KDE”) benefit under the ETC model such that the KDE benefit can be furnished via telehealth. CMS is also proposing changes to the ETC model to address health and socioeconomic disparities. CMS is proposing to add a Health Equity Incentive to the improvement scoring methodology for both the home dialysis rate and the transplant rate. Participants who demonstrate significant improvement in rates of home dialysis or transplantation among beneficiaries who are dual-eligible or low-income-subsidy (“LIS”) recipients could earn additional improvement points. CMS is also proposing to stratify achievement benchmarks by proportion of beneficiaries who are dual-eligible for Medicare and Medicaid or are LIS recipients, so ETC participants who see a high volume of these patients would not face negative financial consequences as a result. Finally, CMS has requested feedback on a number of topics related to beneficiary experience in home dialysis.

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

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II. Discussion of measures

Non-IFRS measures

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

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FRESENIUS MEDICAL CARE AG & Co. KGaA

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, consistent with the respective adjustments made in the determination of adjusted EBITDA below (see "Net leverage ratio (Non-IFRS Measure)", 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) 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 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

June 30,

    

March 31,

    

December 31,

    

September 30,

    

June 30,

2021

    

 2021

    

2021

    

 2020

    

2020

    

2020

Total assets

 

32,987

 

33,159

 

31,689

 

33,049

 

34,190

Plus: Cumulative goodwill amortization and Impairment Loss

 

602

 

598

 

583

 

405

 

421

Minus: Cash and cash equivalents

 

(1,408)

 

(1,073)

 

(1,082)

 

(1,599)

 

(1,890)

Minus: Loans to related parties

 

(6)

 

(1)

 

(1)

 

(51)

 

(49)

Minus: Deferred tax assets

 

(359)

 

(333)

 

(351)

 

(429)

 

(391)

Minus: Accounts payable to unrelated parties

 

(685)

 

(635)

 

(732)

 

(729)

 

(678)

Minus: Accounts payable to related parties

 

(102)

 

(105)

 

(95)

 

(132)

 

(135)

Minus: Provisions and other current liabilities (1)

 

(3,528)

 

(3,436)

 

(3,180)

 

(3,641)

 

(3,799)

Minus: Income tax payable

 

(218)

 

(232)

 

(197)

 

(269)

 

(212)

Invested capital

 

27,283

 

27,942

 

26,634

 

26,604

 

27,457

Average invested capital as of June 30, 2021

 

27,184

 

  

 

  

 

  

 

  

Operating income

 

1,992

 

  

 

  

 

  

 

  

Income tax expense (2)

 

(525)

 

  

 

  

 

  

 

  

NOPAT

 

1,467

 

  

 

  

 

  

 

  

Adjustments to average invested capital and ROIC

in € M, except where otherwise specified

    

June 30,

    

March 31,

    

December 31,

    

September 30,

    

June 30,

2021

    

 2021

    

2021

    

 2020 (3)

    

 2020 (3)

    

 2020 (3)

Total assets

 

 

 

111

 

117

 

122

Minus: Cash and cash equivalents

 

 

 

(3)

 

(3)

 

(1)

Minus: Provisions and other current liabilities (1)

 

 

 

(6)

 

(6)

 

(6)

Invested capital

 

 

 

102

 

108

 

115

Adjustment to average invested capital as of June 30, 2021

 

65

 

  

 

  

 

  

 

  

Adjustment to operating income (3)

 

3

 

  

 

  

 

  

 

  

Adjustment to income tax expense (3)

 

(1)

 

  

 

  

 

  

 

  

Adjustment to NOPAT

 

2

 

  

 

  

 

  

 

  

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Reconciliation of average invested capital and ROIC (Non-IFRS Measure)

in € M, except where otherwise specified

    

June 30,

    

March 31,

    

December 31,

    

September 30,

    

June 30,

2021

    

 2021

    

2021

    

 2020 (3)

    

 2020 (3)

    

 2020 (3)

Total assets

 

32,987

 

33,159

 

31,800

 

33,165

 

34,311

Plus: Cumulative goodwill amortization and Impairment Loss

 

602

 

598

 

583

 

405

 

421

Minus: Cash and cash equivalents

 

(1,408)

 

(1,073)

 

(1,082)

 

(1,599)

 

(1,890)

Minus: Loans to related parties

 

(6)

 

(1)

 

(1)

 

(51)

 

(49)

Minus: Deferred tax assets

 

(359)

 

(333)

 

(351)

 

(429)

 

(391)

Minus: Accounts payable to unrelated parties

 

(685)

 

(635)

 

(732)

 

(729)

 

(678)

Minus: Accounts payable to related parties

 

(102)

 

(105)

 

(95)

 

(132)

 

(135)

Minus: Provisions and other current liabilities (1)

 

(3,528)

 

(3,436)

 

(3,186)

 

(3,647)

 

(3,806)

Minus: Income tax payable

 

(218)

 

(232)

 

(197)

 

(269)

 

(212)

Invested capital

 

27,283

 

27,942

 

26,739

 

26,714

 

27,571

Average invested capital as of June 30, 2021

 

27,250

 

 

  

 

  

 

  

Operating income (3)

 

1,995

 

  

 

  

 

  

 

  

Income tax expense (2), (3)

 

(526)

 

  

 

  

 

  

 

  

NOPAT

 

1,469

 

  

 

  

 

  

 

  

ROIC

 

5.4%

  

 

  

 

  

 

  

Adjustments to average invested capital and ROIC (excluding Impairment Loss)

in € M, except where otherwise specified

    

June 30,

    

March 31,

    

December 31,

    

September 30,

    

June 30,

2021

    

 2021

    

2021

    

 2020

    

2020

    

2020

Total assets

 

 

 

195

 

 

Plus: Impairment Loss

 

 

 

(195)

 

 

Invested capital

 

 

 

 

 

Average invested capital as of June 30, 2021

 

 

  

 

  

 

  

 

  

Adjustment to operating income

 

195

 

  

 

  

 

  

 

  

Adjustment to income tax expense

 

(52)

 

  

 

  

 

  

 

  

NOPAT

 

143

 

  

 

  

 

  

 

  

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Reconciliation of average invested capital and ROIC (Non-IFRS Measure, excluding Impairment Loss)

in € M, except where otherwise specified

    

June 30,

    

March 31,

    

December 31,

    

September 30,

    

June 30,

2021

    

 2021

    

2021

    

 2020 (3)

    

 2020 (3)

    

 2020 (3)

Total assets

 

32,987

 

33,159

 

31,995

 

33,165

 

34,311

Plus: Cumulative goodwill amortization

 

602

 

598

 

388

 

405

 

421

Minus: Cash and cash equivalents

 

(1,408)

 

(1,073)

 

(1,082)

 

(1,599)

 

(1,890)

Minus: Loans to related parties

 

(6)

 

(1)

 

(1)

 

(51)

 

(49)

Minus: Deferred tax assets

 

(359)

 

(333)

 

(351)

 

(429)

 

(391)

Minus: Accounts payable to unrelated parties

 

(685)

 

(635)

 

(732)

 

(729)

 

(678)

Minus: Accounts payable to related parties

 

(102)

 

(105)

 

(95)

 

(132)

 

(135)

Minus: Provisions and other current liabilities (1)

 

(3,528)

 

(3,436)

 

(3,186)

 

(3,647)

 

(3,806)

Minus: Income tax payable

 

(218)

 

(232)

 

(197)

 

(269)

 

(212)

Invested capital

 

27,283

 

27,942

 

26,739

 

26,714

 

27,571

Average invested capital as of June 30, 2021

 

27,250

 

  

 

  

 

  

 

  

Operating income (3)

 

2,189

 

  

 

  

 

  

 

  

Income tax expense (2), (3)

 

(577)

 

  

 

  

 

  

 

  

NOPAT

 

1,612

 

  

 

  

 

  

 

  

ROIC (excluding Impairment Loss)

 

5.9%

  

 

  

 

  

 

  

Adjustments to average invested capital and ROIC for the Effect from IFRS 16

in € M, except where otherwise specified

    

June 30,

    

March 31,

    

December 31,

    

September 30,

    

June 30,

2021

    

 2021

    

2021

    

 2020

    

2020

    

2020

Total assets

 

(4,177)

 

(4,242)

 

(4,130)

 

(4,261)

 

(4,421)

Minus: Deferred tax assets

 

(35)

 

(30)

 

2

 

4

 

3

Minus: Provisions and other current liabilities (1)

 

(132)

 

(134)

 

(128)

 

(134)

 

(140)

Minus: Income tax payable

 

1

 

1

 

1

 

 

Invested capital

 

(4,343)

 

(4,405)

 

(4,255)

 

(4,391)

 

(4,558)

Adjustment to average invested capital as of June 30, 2021

 

(4,390)

 

  

 

 

  

 

  

Adjustment to operating income

 

(128)

 

  

 

  

 

  

 

  

Adjustment to income tax expense

 

34

 

  

 

  

 

  

 

  

Adjustment to NOPAT

 

(94)

 

  

 

  

 

  

 

  

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FRESENIUS MEDICAL CARE AG & Co. KGaA

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

    

June 30,

    

March 31,

    

December 31,

    

September 30,

    

June 30,

2021

    

 2021

    

2021

    

 2020

    

2020

    

2020

Total assets

 

28,810

 

28,917

 

27,865

 

28,904

 

29,890

Plus: Cumulative goodwill amortization

 

602

 

598

 

388

 

405

 

421

Minus: Cash and cash equivalents

 

(1,408)

 

(1,073)

 

(1,082)

 

(1,599)

 

(1,890)

Minus: Loans to related parties

 

(6)

 

(1)

 

(1)

 

(51)

 

(49)

Minus: Deferred tax assets

 

(395)

 

(364)

 

(349)

 

(426)

 

(388)

Minus: Accounts payable to unrelated parties

 

(685)

 

(635)

 

(732)

 

(729)

 

(678)

Minus: Accounts payable to related parties

 

(102)

 

(105)

 

(95)

 

(132)

 

(135)

Minus: Provisions and other current liabilities (1)

 

(3,661)

 

(3,570)

 

(3,314)

 

(3,781)

 

(3,946)

Minus: Income tax payable

 

(217)

 

(231)

 

(196)

 

(269)

 

(212)

Invested capital

 

22,938

 

23,536

 

22,484

 

22,322

 

23,013

Average invested capital as of June 30, 2021

 

22,859

 

  

 

  

 

  

 

Operating income (3)

 

2,061

 

  

 

  

 

  

 

  

Income tax expense (2), (3)

 

(543)

 

  

 

  

 

  

 

  

NOPAT

 

1,518

 

  

 

  

 

  

 

  

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

 

6.6%

  

 

  

 

  

 

  

Reconciliation of average invested capital and ROIC (Non-IFRS Measure, unadjusted)

in € M, except where otherwise specified

    

December 31,

    

September 30,

    

June 30,

    

March 31,

    

December 31,

2020

    

2020

    

2020

    

2020

    

2020

    

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%

  

 

  

 

  

 

  

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FRESENIUS MEDICAL CARE AG & Co. KGaA

Adjustments to average invested capital and ROIC (excluding Impairment Loss)

in € M, except where otherwise specified

    

December 31,

    

September 30,

    

June 30,

    

March 31,

    

December 31,

2020

    

2020

    

2020

    

2020

    

2020

    

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

    

December 31,

    

September 30,

    

June 30,

    

March 31,

    

December 31,

2020

    

2020

    

2020

    

2020

    

2020

    

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%

  

 

  

 

  

 

  

Adjustments to average invested capital and ROIC for the Effect from IFRS 16

in € M, except where otherwise specified

    

December 31,

    

September 30,

    

June 30,

    

March 31,

    

December 31,

2020

    

2020

    

2020

    

2020

    

2020

    

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)

 

  

 

  

 

  

 

  

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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

    

December 31,

    

September 30,

    

June 30,

    

March 31,

    

December 31,

2020

    

2020

    

2020

    

2020

    

2020

    

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 noncontrolling interests subject to put provisions.

(2)

Adjusted for noncontrolling partnership interests.

(3)

Including adjustments for acquisitions and divestitures made within the reporting period with a purchase price above a €50 M threshold.

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FRESENIUS MEDICAL CARE AG & Co. KGaA

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 six months ended June 30, 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, was 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 determining compliance with the leverage ratio threshold under the new €2 billion syndicated multicurrency sustainability-linked revolving and swingline credit facilities agreement that we entered into on July 1, 2021 (“Syndicated Credit Facility”) (see note 11 of the notes to the consolidated financial statements (unaudited) included in this report), which could limit asset disposals.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 June 30, 2021 and December 31, 2020, see “III. Results of operations, financial position and net assets - Financial position - Sources of Liquidity.’’

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Table of Contents

FRESENIUS MEDICAL CARE AG & Co. KGaA

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, chronic kidney disease and transplantation as well as future innovations, we have adjusted the presentation of consolidated and operating segment data to reflect the integration 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 also 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

    

For the six months ended

June 30,

June 30,

    

2021

    

2020

    

2021

    

2020

Total revenue