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Fresenius Medical Care AG & Co. KGaA ADR FMS

Rating as of

Morningstar’s Analysis

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1-Star Price

PREMIUM

5-Star Price

PREMIUM

Economic Moat

PREMIUM

Capital Allocation

PREMIUM

Potential Healthcare Policy Changes Create Opportunities for MCOs, Caregivers

Julie Utterback, CFA Senior Equity Analyst

Analyst Note

| Julie Utterback, CFA |

Potential healthcare policy changes look set to expand U.S. insurance rolls through existing programs like the individual exchanges and Medicaid. That expansion provides opportunities for managed-care organizations and caregivers, which should largely offset (even override, in some cases) the potential U.S. corporate tax rate increase needed to pay for various U.S. government initiatives. We have confirmed our moat ratings and adjusted our fair value estimates for these effects, with relatively mild changes for the MCOs and much larger increases for some caregivers related to the latter's more significant margin expansion prospects and leverage that magnified that effect on residual equity values. This view follows our previous research on potential policy changes that highlighted the public option as the key downside risk for these sectors. With the public option not being considered in potential policy changes, we think the policy landscape is rife with opportunity rather than risk for MCOs and caregivers.

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Company Profile

Business Description

Fresenius Medical Care is the largest dialysis company in the world, treating over 345,000 patients from over 4,000 clinics across the globe as of December 2020. 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.

Contact
Else-Kroener-Strasse 1
Bad Homburg, HE, 61352, Germany
T +49 61726090
Sector Healthcare
Industry Medical Care Facilities
Most Recent Earnings Jun 30, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 123,538

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