Bloomberg News

Fresenius Medical Declines on Credit Suisse Medicare View

January 10, 2013

Fresenius Medical Care AG, the world’s biggest provider of kidney dialysis, headed for a 13 1/2-month low after Credit Suisse reduced its recommendation because U.S. government health-cost cuts may hurt earnings.

Fresenius Medical fell as much as 4.8 percent and was trading down 1.5 percent at 49.46 euros as of 2:47 p.m. in Frankfurt, the lowest since Nov. 25, 2011, based on closing prices. Parent company Fresenius SE dropped 1.8 percent to 84.27 euros, the steepest decline since Nov. 1. The stocks were the among the three worst performers on Germany’s benchmark DAX Index (DAX) today.

Medicare-program dialysis pricing envisioned under the U.S. budget agreement passed this month could shrink Fresenius Medical’s medium-term operating profit by $165 million to $225 million, Christoph Gretler, an analyst at Credit Suisse in Zurich, wrote in a report to clients today. Gretler reduced his recommendation on Fresenius Medical to neutral from outperform, the first cut this year among 33 analysts covering the company, according to data compiled by Bloomberg.

Cuts in the Medicare program of U.S. government health insurance for the elderly would make margin growth “difficult,” and Fresenius Medical has yet to disclose much about its medium-term financial plans, Gretler wrote.

Fresenius SE owns about 30 percent of Fresenius Medical, and both companies are based in the Frankfurt suburb of Bad Homburg. The parent company also has businesses in private hospital operations, health-care services, and intravenous drugs and devices.

To contact the reporter on this story: Naomi Kresge in Berlin at nkresge@bloomberg.net

To contact the editor responsible for this story: Phil Serafino at pserafino@bloomberg.net


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