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Fresenius Medical Care AG & Co. KGaA ADR - Stock Quote FMS

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Morningstar's Fresenius Medical Care AG & Co. KGaA ADR Stock Analysis

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Supreme Court Ruling Raises Uncertainty for DaVita and Fresenius

Julie Utterback, CFA Senior Equity Analyst

Analyst Note

| Julie Utterback, CFA |

Shares of U.S. dialysis service providers declined substantially on June 21 after the U.S. Supreme Court offered a surprising decision in the case of Marietta Memorial Hospital Employee Health Benefit Plan versus DaVita. In that decision, the majority of the court ruled that Marietta's decision to keep DaVita (and its key peer Fresenius Medical Care) out-of-network for Marietta's insured population did not break the law since it treated all insurance plan holders equally. As a result of this ruling, we are raising our uncertainty ratings for DaVita and Fresenius Medical Care to high from medium (and keeping Fresenius SE's uncertainty rating at high) since this decision could allow insurers to push outpatient dialysis services out of network for all plan members, including dialysis patients. We suspect such a shift, if unchecked by a statutory language change by Congress for example, could create a significant financial burden on the roughly 10% of U.S. dialysis patients that currently receive treatment through commercial insurance plans and represent the vast majority of U.S. dialysis service-related profits.

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Fresenius Medical Care AG & Co. KGaA ADR's Company Profile

Business Description

Fresenius Medical Care is the largest dialysis company in the world, treating about 345,000 patients from over 4,100 clinics across the globe as of September 2021. In addition to providing dialysis services, the firm is a leading supplier of dialysis products, including machines, dialyzers, and concentrates. Fresenius accounts for about 35% of the global dialysis products market and benefits from being the world's only fully integrated dialysis business. Services account for roughly 80% of firmwide revenue, including care coordination and ancillary operations, while products account for the other roughly 20%. Products typically enjoy a higher margin, making them a strong contributor to the bottom line.

Else-Kroener-Strasse 1
Bad Homburg, HE, 61352, Germany
T +49 61726090
Sector Healthcare
Industry Medical Care Facilities
Most Recent Earnings Mar 31, 2022
Fiscal Year End Dec 31, 2022
Stock Type
Employees 122,635

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