Thank you, Sugi. As mentioned by Sugi, we would like to welcome you to our earnings call for the first quarter 2021. We appreciate you joining today to discuss the quarterly results.

Now it is my pleasure, as always, to start out the call by mentioning our cautionary language that is in our safe harbor statement as well as in our presentation and in all the materials that we have distributed earlier today. For further details concerning risks and uncertainties, please refer to these documents as well as to our SEC filings.

We are aware that it is an outstandingly busy reporting day with so many companies in the sector reporting..

Thank you, Dominik. Welcome, everyone. Thank you for joining our presentation today and for your continued interest in Fresenius Medical Care. I'll begin my prepared remarks on Slide 4. We delivered solid first quarter results in what continues to be a challenging environment as the COVID-19 pandemic persists.

As we expected, organic volume growth for the quarter continued to be negatively impacted by COVID-19. The first quarter revenue and earnings were adversely impacted by exchange rate effects. Our business development was supported by an improving payer mix driven by an increased patient base and Medicare Advantage plans.

And we additionally benefited from an increase in the Medicare ESRD prospective payment system bundle rate. Earnings development during the quarter was supported by phasing unexpected lower SG&A expense.

Items such as travel and meeting spend as well as corporate costs related to our monitor were favorable in the first quarter, but are expected to increase in the remainder of the year. We are very encouraged by the vaccination progress. Around 51% of our patients worldwide have received at least the first dose.

We continue to make progress with around 1,200 to 1,400 patients being vaccinated on a daily basis. However, as we all know, COVID-19 infection rates remain high in several markets around the world. We continue to make good strategic process - progress in several key areas.

First, home dialysis experienced continued momentum in the first quarter with home hemodialysis treatments in the United States increasing at a mid-20s growth rate against last year. In the first quarter, around 14.6% of our treatments in the U.S. were performed in a home setting.

Secondly, we recently announced an expanded products agreement with DaVita to bring our home technology to their patients, further validating that our NxStage machine is the superior reliable home hemodialysis product on the market today..

Thank you, Rice. Hi, everyone. I hope you're all staying safe and well. I'll pick up on Slide 14. For the first quarter, total group operating income amounted to EUR474 million, which is a decline by eight percent at constant currency. The chart on the left illustrates the contribution from each region as well as the corresponding regional margins..

Thank you, Helen. Thank you, Rice, for the presentation. I do hand it back to Sugi to open the Q&A. Sugi, please go ahead..

The first question is from the line of Tom Jones, Berenberg. Your question please..

Thanks for taking my questions. I suppose I'll keep it to two. The first was just one for Helen maybe. I wondered if you could give us a ballpark idea of what you thought the excess COVID-related costs were in Q1, the uncompensated costs.

So I'm not talking about the operating leverage effects, but just the pure additional cost for PPE and child care, etc., etc. And then the second question, which is probably more for Rice.

Just looking at the absolute patient numbers across the business at the end of Q1 versus the end of Q4, the decline in terms of overall patient numbers was less than one percent. So it won't take much of a swing, I guess, in excess mortality to get you back to quarter-on-quarter patient growth across the entirety of the business.

Is it reasonable to expect that metric to turn positive in Q2? Or is that something we should really not be thinking about until Q3?.

Thank you.

Helen, do you want to go ahead?.

Yes, happy to, Rice. Tom, hope you well. So the direct costs themselves, as you mentioned being the PPE and the ongoing supporting cost there is roughly around 30 of that 79 on a net income level. So that's, I think, a direct comparable EUR30 million, I should say, in terms of the direct cost impact.

Yes, obviously, as you know, the - yes, there's the revenue impact and the downstream impact as well that we incur. But the kind of the direct cost is roughly around EUR30 million..

Perfect.

And then on the patient growth?.

Yes. Tom, I hope you're doing well. I would say I'd be thrilled for it to be in Q2. I think it's probably going to be in Q3. But if we see some good movement in - Q2 is going to happen, we'll communicate that. But I think it may be - very end of Q2 into Q3. So we'll kind of split it that way, I guess, I would say..

And then maybe just a quick follow-up, if I can be cheeky. If we look at H2, a number of other commentators in the industry have talked about potentially lower-than-normal mortality through the back half of the year, assuming COVID goes away.

Is that something you would go so far as to comment on? Or would you prefer to reserve judgment on that at the moment?.

I think it would be great to comment on it, but my better judgment tells me, let's let it sit, and then we'll keep you updated. I don't know that I want to be as bullish as that at the moment..

The next question is from the line of Veronika Dubajova from Goldman Sachs. Your question please..

Thank you for taking my questions. I will also keep it to two. My first one is just sort of a follow-on to Tom. Just trying to understand the shape of the excess mortality, those 3,000 patients that you saw. I hate to ask for month-by-month numbers, but I'm going to.

And maybe if you have a comment on sort of how April has shaped up given that a significant amount of progress you've made on vaccinations. That would be really helpful to understand that shape of the distribution of the 3,000 excess deaths. And then my second question is looking back at the U.S. business.

And Helen, thanks for the simplified disclosure, but I must say, it's made understanding revenue per treatment movement a lot more difficult. So if I can just ask for a quantification of what happened to revenue per treatment year-on-year in the first quarter.

I know you've alluded to sort of obviously good progress, but if we can actually precisely getting number for where that revenue per treatment stood and how you're thinking about the sustainability of that number into the remainder of the year. Thank you..

Veronika, it's Rice. I'm just looking at my notes here. So on the excess mortality, I don't have it month-to-month. I'd have to get it for you, quite honestly. And I'm willing to do that. I just don't have it, as I sit here, look at all my notes, that's something we didn't have.

I guess what I don't know where April is today, my assumption, which is always dangerous for me to assume anything, but my assumption would be it probably should be a little better based off what we saw. But let's see where that goes.

Any other clarity I can give you? I just don't have those actual numbers on a month-to-month basis to be able to give them to you at fingertips..

And I'll jump in on the RPT. Obviously, we have stayed away from speaking to the RPT and I know that causes some frustration. But I think maybe what I would just reconfirm here are the pluses and minuses that are going into that revenue development. As you know, we've got the positives from Medicare Advantage increasing.

We've got the bundle rate increase, we got stable commercial mix. On the negative side and the significant negative that we always flagged in half one was the calcimimetics piece. And then don't forget we've got the impact in this quarter of the prior year revenue work adjustments as well.

So I think you can tease out the pieces that you are familiar with there, Veronika..

And Helen, do you feel comfortable with this revenue per treatment? I guess one of the questions that's come up on your competitor's call was just that commercial mix element.

And to the extent it's COVID driven, is there a risk, as you guys think about it, that revenue per treatment softens as we move through the remainder of the year? Or do you kind of looking out at this point in time, feel this is a pretty sustainable - adjusting for noise around calcimimetics, you feel this is a pretty sustainable level?.

Yes. I think we've been consistent in how we spoke about commercial mix. And we are saying that the COVID effect is across our entire book of business and it's not discriminating in one book of business or the other. So for us, we're seeing very stable commercial mix, and that's unchanged. So yes, I think your comments and observations are right.

We have the noise on calcimimetics, but we feel really good about how the rate and the mix is developing..

That's really helpful, Rice. And I'll follow up with Dominik on the monthly numbers. That's fine. Thanks guys..

You bet. Thanks, Veronika..

The next question is from the line of Lisa Clive, Bernstein. Your question please..

Hi, Rice and Helen, I was surprised not to see an update to guidance given the profit boost from the extension of the sequestration suspension. You mentioned the offset was the nine months delay to the CKCC program.

Can you give us more color on your plans for the structure and size of that program? The implication is that you're expecting an annual EBIT contribution of something like $60 million from this program.

So is my math right here? And then second, in the absence of any specific details on RPT or the size of Care Coordination stand-alone, can I make a plea for some sort of quarterly details so that we can monitor progress? I guess RPT doesn't really make sense anymore because some of your customers are included - are giving you a bundled rate, including both dialysis and integrated care.

So RPT is actually slightly artificial. But could you give us numbers like the number of patients in an integrated care program on a quarterly basis? I'm just thinking of other things that could potentially be helpful for us to monitor. And then very last question.

Medicare expansion to the 60 to 64 population, what proportion of your private patients are in this age bracket? And if you could give any color on whether they're coming through exchanges or whether they're actually mainly insured, I'm just trying to understand the potential implications if that expansion does happen..

Lisa, you want to go ahead, Helen, on sequestration on CKCC and the RPT question?.

Yes. No, as I mentioned on the call, we broadly expect the sequestration extension of CKCC delay to mostly offset each other. I think you're a little high in your numbers of the kind of the CKCC net income impact in 2021.

But I think we're probably closer to maybe more of a $40 million, not the number that you quoted due to the lower patient numbers in that you mentioned? Rice, do you want to take the other?.

Yes. And Lisa, I would say there was a time when we did talk about patients that we gave numbers on the number of patients in integrated care models. So I think we could think about doing that again, if that's helpful for you.

I appreciate you understand RPT really is kind of sliding by the wayside given how much value-based care we're doing, and those sort of things. So I think Helen and I can think about that. Can you just repeat your third question? I was too busy writing. I didn't get it all down just right.

I know it was an age bracket, but just would you repeat it, please, for me?.

Yes.

Just thinking through the potential for Medicare to expand to the 60 to 64 population, what proportion of your private patients are in this age bracket roughly? And also, are these mainly EGHP plans? Are they exchange plans? I'm just trying to get a sense for the potential leakage if that expansion does happen?.

Okay. I got you. To be honest, I don't know that I could tell you what that percent is today. Let me take a different approach from everything that we're doing and everybody I'm talking to in D.C. I don't think it's likely we're going to see a movement. Right now, I think the Biden administration, he's got a bigger fish to fry, things he wants to do.

The progressives don't like it, but it seems like to me that the other side of the party does not want to go there. So at this point, I think it's less likely - that doesn't excuse me not trying to give you a range, but I honestly don't know today, but we can follow up with that.

And who's our next question coming from, Dominik?.

The next question is from the line of Oliver Metzger, Commerzbank. Your question please..

Thanks for taking my questions. The first one is on patient mortality. A little bit in the direction to ask, Veronika asked off. So as we saw a peak of infection rates in January, so mortality will peak in Q2.

Do you have the infection rate over the last six weeks among your patients, vis-à-vis was different to the overall infection rates in the respective countries? So that's question number one. The second one, I'm a little bit surprised because of your wording.

So I've observed a more prominent reporting of the ESRD bundle rates compared to previous years. We had a similar increase in the rate in the last years. Now this year, we have Medicare Advantage, that's for sure.

But is there any reason why you mentioned this rate increase even more prominent than in previous years?.

Oliver, it's Rice. I'll take both of those. So we did see the decline in January. As I say, I don't actually have a February number in front of me because we look at it on a basis. So I'll have to come back and get that at some point. Infections over the last six weeks, we've certainly had some. I can tell you the last data I saw was in early April.

The way we pull the data together and analyze it, I don't have that as through the last six weeks specifically, and we're bridging over a month or two. So we'd have to do some work on that. But I think generally, we're going to continue to report on a quarterly basis.

But obviously, we think we're headed in the right direction at this point, hoping that we can continue to see vaccinations grow and that the variants kind of stay out of our hair, if you will. I think I wouldn't overly read anything into my comment about the ESRD bundle rate.

I'm happy to get an increase whenever we get it, but just in the things that we believe were important to note that are working to our advantage, if you will, in the quarter was obviously what we're seeing with Medicare Advantage.

But hey, we're not going to walk away and not talk about the fact that government saw fit to give us 1.6% increase, we'll take it and we'll mention it. It's always important, Oliver, that you don't shoot a gift horse in the mouth, if you will..

The next question is from the line of Michael Jungling, Morgan Stanley. Your question please..

Thank you, and good evening and good morning everyone. I have two questions.

Firstly, on the independent dialysis clinics, can you comment on what you're observing with respect to their own financial strength where the COVID-19 has weakened them resulting in sort of excess closures of these independent clinics and whether those could fuel you like-for-like store growth over the coming months and quarters? And then secondly, on Medicare Advantage, can you comment on what is happening to the rate relative to what we saw - what you incurred last year? Are insurance companies now pushing back harder as they have to accept more patients, and therefore, trying to press you on price or perhaps focus you a lot more on saving costs for the year for the patient? Thank you..

Hey Michael, it's Rice. I'll take number one. And Helen, if you wouldn't mind, you could jump in on number two. What I would say at this point, Michael, we are certainly aware in the independent some folks that are struggling. There's a number of ways that, that can play itself out. It could be outright acquisitions.

It could be that you just try to help them figure out where they're going to go in terms of do they want to keep that clinic, do they want to sell, do they want to join, do they want to merge.

So we're open to all of those sorts of things, which get at exactly what you're asking me is, is that a way to get some of your growth back? Certainly, it would be. But I have to say I'm not hearing from my guys in North America that this is a weekly occurrence that they're hearing about this at this point. But we would certainly be open to that.

And we know what's happening in some cases and would expect it's probably going to continue, but we'll see where that plays out..

Michael, this is Helen. On your second question on the Medicare Advantage pricing, most agreements are locked in from a pricing and rate perspective beyond 2022. So that's not much of a current discussion.

And I'm sure as you can appreciate, we are also kind of increasing significance in more value-based care contracting in this book of business as well, as we mentioned with the Aetna-CVS agreement. So we're kind of feeling good with where that's still progressing..

The next question is from the line of Falko Friedrichs, Deutsche Bank. Your question please..

Thank you very much. Two questions, please. Firstly, on FME25, when do you plan to provide the details for this program to us? Rice, I think you mentioned in the fall.

Would that mean with Q2 results or rather later than that? And then secondly, could you provide an update on home dialysis and the progress you were able to make in Q1 and just in general, how the training is really working out for home dialysis in this pandemic environment?.

Hi Falko, nice to see you or nice to hear from you. FME25, I would not put a lot of stake in Q2, which I think when we talked about back half of the year, everybody kind of gravitated to, "Well, is that going to be July when you do your Q2?" I sincerely mean the fall, and that leaves us some room as to when we do that.

We are neck in work and analysis and the things that we're doing, and we don't want to rush sitting down and giving you a sense of how we're going to go forward and where it's going to go. This is - it's a big task when you think about relooking at your entire operating model and how you want to go forward. So I would stick with the fall.

I can't say July's fall, so that's not going to happen. But I look at the fall in September and beyond that. So if we are ready sooner, we're certainly going to be willing to do that.

But in fact, when I think about the work we've yet to do and decisions we need to make and things we need to consider and start to consider the implementation on, I think, probably fall is where I will leave our next communication opportunity. Home dialysis, thank you for asking, is continuing to do well.

We had - again, we were up about 20 basis points sequential quarters in terms of the number of treatments at home. We continue to see home hemodialysis in the mid-20% growth. And PD is still growing in the single digits. So we are feeling good about where we are. The training seems to be working.

I think the infrastructure and the assets that we put together are working well. We continue to learn and to make changes as we need to, to be as effective as training as we can.

I think a good bellwether, if you will, Falko, on what we're doing here is also the fact that DaVita has come to us, and we've included the NxStage product line in our latest agreement that we've signed with DaVita. They have traditionally done a lot of PD at home, but not much HHD. And the fact they've come to us on HHD, we feel good about that.

So I think we're making good progress. We just keep working at it..

The next question is from the line of Veronika Dubajova from Goldman Sachs. Your question please..

Thank you for squeezing me for follow up. I just was going to ask about the SG&A savings in the first quarter that you called out, Helen, in your prepared remarks.

Can you quantify them? And I guess, what's your expectation about how they get phased in through the rest of the year?.

Yes. Thanks, Veronika. We obviously have some tough comps for Q1 and Q2 as it relates to kind of how we got hit with the COVID valuation effects last year. So I would roughly say of the SG&A decrease that we saw quarter-over-quarter probably breaking it into 2/3 related to last year, 1/3 where I'm seeing just lower spend levels in the quarter.

And that will be phasing that we kind of had some delay with the monitorship visits, for example, due to travel. So we start to see that spend catch up in the back half. So the last three quarters, not in half already.

So yes, that's how I would break it down, like a 2/3, 1/3 split of prior year effects and then 1/3 that would come back over the course of 2021..

Okay.

And that's when you look versus Q1 of last year?.

Yes, exactly. Exactly and then yes, of course, what we'll have in Q2 is the true-up of all those not just the COVID expenses, but we saw this big fluctuation in the valuations as well in Q1 and Q2. So that's also distorting some of the SG&A base from a valuation perspective..

There are no further questions at this time. I hand back to Dominik for closing comments..

So thank you very much for joining the call today. I know it was a tiresome day for all of you. Nevertheless, thanks for joining. And with that, we wish you good rest of the week and hope to hear you at the latest with the next quarterly results. Take care..