Q2 2025 Fresenius SE & Co KGaA Earnings Call

Speaker #1: Good afternoon, and welcome to the conference call of Fresenius Investor Relations, which is now starting. May I hand you over to the next speaker and head of Investor Relations?

Speaker #2: Thank you, Valentina. Hello, yone. Welcome to our half-year and Q2 2025 earnings call and webcast. The presentation was emailed to our distribution list earlier today and is available on Fresenius dot com.

Speaker #2: On slide two of the presentation, you'll the usual safe harbor statements. Unless stated otherwise, we'll comment on our performance using constant exchange rates or CER.

Speaker #2: Today, I'm delighted to be joined by Michael and Sarah, who will take you through the guidance raised in another resilient business performance in these uncertain and volatile times.

Speaker #2: As usual, the call will last approximately one hour, with the presentation taking around 35 minutes and the remaining time for your questions. To give everyone the chance to participate, please limit your questions to one to two; we can always come back for a second round if needed.

Speaker #2: And with that, I will now hand the call over to Michael to kick things off.

Speaker #3: Thank you, Nick, and welcome to everyone joining us today. The future of Fresenius keeps delivering; our momentum continues with another quarter of performance driven by the resiliency and consistency of strong execution across the individual businesses within Kabi and Helios.

Speaker #3: Persistent macroeconomic volatility and emerging geopolitical tensions have led to a challenging operational environment in the first half of this year. However, we delivered another strong print with 8% core EPS growth, reflecting good operational progress and the continued execution of our future Fresenius strategy.

Speaker #3: Our direction remains unchanged. We've evolved into a simpler, more focused, adaptive, competitive, and performance-driven company. This is supported by a cultural shift that fosters accountability and a strong, results-oriented mindset.

Speaker #3: This change has led to consistent and disciplined execution with a significantly stronger portfolio and a strength and balance sheet providing the flexibility to navigate uncertainty while securing the delivery of our long-term ambitions.

Speaker #3: We are a relevant, system-critical healthcare company. Across our platforms, we deliver real impact for patients, caregivers, and hospitals around the world. We're also advancing our sustainability agenda, reflecting in our recently improved ISS ESG rating from B minus to B.

Speaker #3: A positive step in the right direction; our mission stands firm. We are committed to life. Now let's turn to the second quarter and the highlights of the quarter.

Speaker #3: Given the excellent performance in the first half, particularly on the strong top-line growth, we are raising our full-year organic revenue guidance from four to six to five to seven.

Speaker #3: I'm also especially encouraged by the sustained strength of our bottom line. Core EPS increased by 8%, driven by operating demand and a significant decrease in interest expense.

Speaker #3: In the first half, we now have 10% core EPS growth, and we expect this excellent momentum to continue. Kabi contributes to our enhanced profitability, delivering a strong 16.4% EBIT margin, which is within the upper half of our full-year range.

Speaker #3: This result is particularly impressive given the expected adverse impacts of our nutrition business in China, following the keto tender loss as part of VBP.

Speaker #3: Biopharma has once again demonstrated strong year-over-year EBIT margin expansion. At the beginning of the year, we laid out an ambitious rollout plan for Kabi.

Speaker #3: I am pleased to report that the execution against this plan is well underway, with strong progress across both our IV Generics and Fluids, and Biosimilars pipeline, fully in line with expectations.

Speaker #3: Similarly, our performance program, which we kickstarted at Helios, is advancing as we speak. With further anticipated value expected to be realized in the second half of this year and obviously beyond.

Speaker #3: Now let's double-click on our core businesses, starting with Kabi. In pharma, we launched six new IV generic products in US in the second quarter, great to see the strong momentum as we aim for 10 plus launches this year in this high cash generative business.

Speaker #3: Our US IV solutions business continues to grow, supported by the ramp-up of production at our Wilson North Carolina site, to meet growing customer demand for supply chain security.

Speaker #3: With supply levels now restored and surgical volumes as well as chronic disease treatments continuing to increase, we see a clear upward trend in demand, I would even say we picked up share.

Speaker #3: We clearly see how important it is to be a relevant player in essential medicines as stable backbone for future investments and strong contributor to our balance sheet.

Speaker #3: Moving to nutrition, we are driving innovation through continued investments in R&D to further advance and differentiate our enteral and parenteral portfolio. In MedTech, our cell and gene therapy segment delivered an outstanding 40% organic year-over-year growth in Q2. This was driven by the continued adoption of our Lovo and Q cell processing systems, great progress in a highly attractive and fast-growing market: cell and gene therapy.

Speaker #3: In biopharma, our positive momentum continued with the EU regulatory approval of Denosumab biosimilar. We anticipate launching in Europe towards the end of this year.

Speaker #3: In the U.S., we launched our Denosumab biosimilar in July. At the same time, our Tocilizumab biosimilar, Tian, has gained further market share, achieving 24% in Q2. It has also been approved in Brazil, an important and attractive market for us.

Speaker #3: Moreover, Fresenius Kabi has just signed an in-license deal to commercialize and market the autoimmune biosimilar Vidulizumab. An integrant receptor antagonist used in the treatment of ulcerative colitis or Crohn's disease.

Speaker #3: This exciting milestone underpins our strategy to bolster our biosimilar pipeline and become an even more relevant player in this attractive field. Congratulations to the entire biopharma team for this achievement.

Speaker #3: Overall, these developments demonstrate our commitment to delivering accessible, high-quality biologic medicines to patients. Staying with biopharma, a market that is not only accelerating in momentum but also holds significant strategic importance for us.

Speaker #3: With our global market size of around $20 billion and an expected 20% CAGR through the early 2030s, biosimilars represent a highly attractive growth opportunity, particularly in Europe and the U.S., the two largest markets.

Speaker #3: Looking ahead, the global loss of exclusivity LOE, the value of that loss over the next three years is estimated at $40 billion euros, including $17 billion euro in the US alone.

Speaker #3: We've structured our commercial organization to be ready and capitalize on this opportunity with an increasingly broad portfolio and vertically integrated clinical development and manufacturing capabilities.

Speaker #3: From a market adoption and diffusion perspective, we continue to see dynamic trends. While Europe is an already more established market for biosimilars, the U.S. is catching up meaningfully.

Speaker #3: Biosimilar penetration there now exceeds 40%, more than double the level in 2020. Even though there are still complexities around market access, we expect this trend to accelerate further and help to significantly reduce US healthcare costs.

Speaker #3: For biosimilars already launched in for biosimilars already launched in the US, the data we have confirms a strong uptake and broad acceptance across prescribers and payers, despite some of the market hurdles we just mentioned.

Speaker #3: This continues to be a very exciting space. We're well-positioned to capture long-term value for patients, providers, and shareholders. Let's take a closer look at the recent launch of Otulfi, or Ustekinumab, a medicine for treating conditions like moderate to severe platelet cirrhosis, Crohn's disease, and ulcerative colitis.

Speaker #3: This is a large and highly attractive market with a total value of around €11 billion. The majority of which is concentrated in the U.S.

Speaker #3: Following the regulatory approval in September last year in the US and EU, we've now launched in 10 markets, leveraging our established commercial infrastructure in autoimmune diseases to drive this early momentum.

Speaker #3: Our dual formulations, SC and IV, enhance the flexibility for both prescribers and patients. In May this year, the U.S. FDA granted an interchangeability designation, which means the medicine can be dispensed at the pharmacy as a substitute for the reference product.

Speaker #3: With a well-positioned product offering, we have signed various contracts in the U.S. and expect the ramp-up to accelerate over the coming quarters. This includes the recent signing of an agreement with Civica Script, who will be acting as the exclusive U.S. distributor of Fresenius Kabi's unbranded Ustekinumab product as our customer.

Speaker #3: Market dynamics are also trending in your favor. Since the first launch of an ustekinumab biosimilar, the class has continued to grow, and we've seen strong and consistent adoption across major European countries.

Speaker #3: With our strong customer relationships and integrated commercial infrastructure, we are very well positioned to capture significant value in this very space. Now moving to Tian, or Tocilizumab, we are progressing, and as of Q2, we have already launched in 22 markets in this highly attractive $3 billion market.

Speaker #3: Our biosimilars were first to market and benefited from so-called first-mover advantage, which is reflected in Tian's current market share. We have seen sequential market share growth in key regions, with 24% in the EU5 and encouraging momentum in the U.S.

Speaker #3: We expect uptake to remain strong throughout the remainder of the current fiscal year 2025. While in parallel, we continue to advance our tech transfer to MapScience, where we recently received European approval for our Garene site in Argentina.

Speaker #3: With the successful completion of the reset and revitalized phase of future Fresenius, we're now seeing the tangible benefits of the structural transformation. The simplification of our business, the enhanced strategic and performance-driven focus, and renewed momentum across the organization are clearly paying off.

Speaker #3: Looking at Kabi, our growth vectors are contributing more within the business, exactly as we had envisioned when we launched the transformation of Fresenius. The growth vectors are not only delivering accelerated top-line growth, but are also significantly enhancing our margin profile.

Speaker #3: Over the past two years, Kabi has delivered an impressive 13% EBIT CAGR, validating our strategy and operational execution. In parallel, we've also made structural improvements to our cost base, which continue to support margin expansion.

Speaker #3: Our growth vectors are the key engine behind the elevated profitability. Since 2022, the growth vectors' margin expanded by an outstanding 630 basis points. Our established pharma portfolio continues to provide a strong, resilient, and profitable foundation.

Speaker #3: Looking ahead, we're confident that this positive trajectory will continue, underpinned by increasing contributions from biopharma, improving profitability step by step in MedTech, and continued product momentum in nutrition also going into 2026.

Speaker #3: Now let's turn to Q2 highlights in our care provision platform, Helios. In Germany, we are continuing to advance the nationwide rollout of what we call the clustering strategy, strengthening ingrained regional care delivery and driving higher quality care outcomes through better integration and scale.

Speaker #3: In addition, we were encouraged that the government approved $4 billion in financial support for the hospital as part of their federal budget for Helios.

Speaker #3: This should be positive news, as hospitals are expected to benefit from the funding via a surcharge applied for the treatment of publicly insured patients served, you know, in November 2025 until October 31, 2026.

Speaker #3: In Spain, Kiron Salud continues to lead in AI and digital transformation. As a frontrunner in healthcare digitalization, our agentic AI tool Scribe was launched in 2024 and has been used for more than 1 million medical consultations so far.

Speaker #3: Scribe can automatically transcribe conversations between doctor and patient in real time. Identifying clinically relevant elements and generating a structured outcome report, including discharge letters.

Speaker #3: This process enhances consultation quality while optimizing patient care. Our proprietary patient portal, Cassiopeia, is also driving healthcare digital transformation even further. Today, virtually all medical activities performed are registered on this very platform.

Speaker #3: The combination of AI and digital tools is creating a seamless end-to-end experience for patients and providers, improving access and health outcomes. When we look at our two core segments and across all three platforms—pharma/biopharma, medical technology, MedTech, and care provision—we see structurally accelerated revenue growth as our future Fresenius strategy continues to unfold.

Speaker #3: With more focused business models, we're now delivering sustainable, stronger organic and profitable growth. At Kabi, our growth vectors remain the key driver of the group's top-line acceleration.

Speaker #3: Since we hit reset, the group's overall revenue CAGR has improved from 5% between 2019 to 2022 to 7%, so a 200 basis point improvement in the last two years.

Speaker #3: The growth vectors are even showing an impressive 13% CAGR in the same period. As you heard earlier, we are increasing this year's organic revenue growth guidance.

Speaker #3: At Helios, we continue to see solid, reliable organic growth numbers, reinforcing the resilience of our care provision platforms. In terms of capital allocation, our priority remains clear.

Speaker #3: We will focus on investing in organic growth with Rejuvenate. We're upgrading our core, scaling our platforms for relevance, and thus elevating our performance for the entire group.

Speaker #3: With that, I'll hand it over to Sarah.

Speaker #1: Thank you, Michael, and thank you all for joining. We continued our good momentum in line with expectations in the second quarter. Organic revenue growth of 5% for the group was driven by a strong and consistent top-line delivery at Kabi and a very solid performance at Helios.

Speaker #1: The flattish EBIT development at constant currency corresponds to the anticipated and well-flagged Q2 effect. Helios had to work against prior year energy relief payments in Germany, as well as the Easter effect.

Speaker #1: At Kabi, volume-based procurement in China started to affect cater sales in the second quarter. Our reported numbers were impacted by exchange rate effects. Organic and constant currency growth account for these translation effects.

Speaker #1: At group level, currency translation had an impact of around 2 percentage points on revenue and around 1 percentage point on EBIT. In addition, we saw transactional FX headwinds affecting our EBIT and EBIT margin, in particular at Kabi.

Speaker #1: Turning to our bottom line, we're very pleased to see our excellent EPS momentum continuing, with core EPS growing by 8% in the quarter. This impressive performance continues to be driven by a substantial decrease in interest expense.

Speaker #1: I will discuss this in more detail on the next slide. The tax rate was in line with our full-year expectation of 25% to 26%.

Speaker #1: Operating cash flow showed a very good sequential improvement in the second quarter; we will have a separate slide later. Finally, the slide increase in leverage compared to the first quarter was driven by the resumed dividend payment.

Speaker #1: We continue to expect to be within our target range of two and a half to three times net debt EBITDA by the end of the year.

Speaker #1: As we've always said, for 2025, we do not anticipate deleveraging at the same pace as in 2024. In the first half, core EPS has once again outpaced top-line growth.

Speaker #1: Showing an excellent 10% increase, Fresenius' strong turnaround in terms of bottom-line delivery becomes evident when looking at the trajectory over the past two and a half years.

Speaker #1: This not only demonstrates an accelerated value creation for our shareholders, but it is also a strong confirmation of our future Fresenius strategy, allowing us to work successfully on both sides of the equation.

Speaker #1: First, our rigorous focus on the core businesses and structural simplification provides the foundation for sustainable EBIT growth. Second, making debt reduction a top priority is clearly paying off.

Speaker #1: This has resulted in significantly lower interest expenses, with a year-on-year decrease of more than €50 million in the first half. Based on our strong progress, we now expect interest expense to be around €350 million in 2025, compared to the previous range of €370 to €390 million.

Speaker #1: A nice basis for further EPS growth in the second half. Let's move to the operating companies, starting with Kabi. With organic growth of 6%, Kabi delivered once in the upper half of our structural growth band.

Speaker #1: We're still seeing some positive pricing contributions from Argentina, which were, however, much less pronounced than last year. The growth vectors continue their good momentum, with organic growth of 7%.

Speaker #1: This was driven by biopharma, specifically through the Tian ramp-up in Europe and the U.S. Nutrition saw the first impacts of the cater volume-based tendering in China.

Speaker #1: Due to supply shortages from competitors, there was a delay in tender effects, leading to a slightly lower impact for Kabi in Q2. Going forward, we continue to expect a quarterly mid-double-digit million revenue impact relating to catering.

Speaker #1: Excluding the catering effect, nutrition was growing healthily in Q2, in line with our ambition range. Pharma achieved a strong 5% organic growth, driven by a broad-based positive development in Europe and the U.S.

Speaker #1: Kabi's EBIT margin stands at 16.4%, with an impressive year-on-year expansion of approximately 50 basis points, despite the FX transaction effects and the cater VBP in China.

Speaker #1: At Pharma, we saw a very positive underlying year-on-year margin expansion, particularly in Europe, with additional support from some one-timers. Both growth vectors, MedTech and Biopharma, increased their margins, while Nutrition was impacted by catering in China.

Speaker #1: On Kabi level, catering has a roughly 80 basis points margin impact. In absolute EBIT terms, this is a low to mid-double-digit million effect per quarter.

Speaker #1: Overall, the year-over-year margin expansion and EBIT growth at Kabi were also supported by the ongoing focus on cost and efficiency, as well as structural productivity increases across the business units.

Speaker #1: Helios achieved very solid organic growth of 5%, despite the Easter effect, which was more pronounced in Spain than in Germany, as anticipated. Helios delivered a resilient EBIT margin of 10% in the second quarter.

Speaker #1: The expected softness in Germany, due to the omission of energy relief funding, was partly offset by the good profitability in Spain. Helios Germany showed strong organic growth of 6%, driven by price effects, good activity levels, and case mix.

Speaker #1: The performance program is progressing, and we continue to expect a ramp-up in terms of EBIT contribution for the second half of the year. In Spain, 3% organic revenue growth includes the expected Easter effect.

Speaker #1: Year-to-date, organic growth was fully in line with our expectations at a solid 5%. Spain's EBIT and margin for the quarter must be viewed against a very strong prior-year base.

Speaker #1: But it continues to be well in line with a year-to-date EBIT growth of 7%. Let's have a look at the operating and free cash flow development over the last 12 months.

Speaker #1: Our reliable operating cash flow reflects an ongoing, rigorous focus on cash conversion. If you compare the second quarter year on year, please keep in mind that Helios' operating cash flow was exceptionally strong in 2024 due to catch-up effects and successful working capital measures.

Speaker #1: LTM numbers demonstrate our disciplined approach to CAPEX, which stands at 4.4% of revenue for the LTM period and at 3.8% in the second quarter.

Speaker #1: In line with our strategic roadmap for the rejuvenate phase, upgrading the core is clearly a focus when it comes to how we're deploying capital.

Speaker #1: LTM free cash flow was no longer supported by the 2024 dividend suspension. Instead, we distributed one euro per share, totaling €560 million in the second quarter of '25.

Speaker #1: This is in line with our commitment to provide attractive shareholder returns. The positive effect of the Fresenius Medical Care share sale in March continues to be reflected in the LTM free cash flow.

Speaker #1: Following the share buyback announcement by FME, we plan to sell FME shares in parallel to their share buyback program on a pro-rata basis, to maintain our current shareholding position of 28.6%.

Speaker #1: The size and tranching of the sale will be determined based on the announced structure of FME's share buyback program. Proceeds will be used in line with our focused capital allocation strategy.

Speaker #1: Building on our strong and consistent top-line performance with 6% organic growth year-to-date, we are raising our full-year guidance for organic revenue growth.

Speaker #1: We now anticipate revenue to grow organically between 5% and 7%, supported by ongoing structural demand for our products and services. This is a strong sign of confidence, especially given the current macroeconomic environment.

Speaker #1: I'm particularly pleased that the raise is driven by both the good performance at Helios as well as the positive momentum at Kabi, where launches and rollouts continue to fuel growth.

Speaker #1: Regarding EBIT, we're reaffirming our guidance and what we have been stating since February about phasing and our underlying assumptions. At Helios, Q4 will be the first quarter in 2025 in which we will not have an elevated prior year base due to energy relief payments.

Speaker #1: The performance program in Germany will see a ramp-up towards the end of the year and remains on track to achieve the expected EBIT contribution of around €100 million for the full year.

Speaker #1: Please also keep in mind the usual seasonality in the Spanish hospital business, which typically results in a softer Q3. At Kabi, we are very pleased with the strong year-to-date print and the momentum we're seeing.

Speaker #1: Kabi is showing good traction in terms of EBIT growth and margin, despite the mentioned FX transaction effect. Q2 was also the first quarter with the impact from cater VBP.

Speaker #1: This is expected to continue throughout the remainder of the year. In a fast-moving macroeconomic and geopolitical environment, our guidance continues to reflect current factors and known uncertainties, to the extent they can currently be assessed.

Speaker #1: It does not account for potential extreme scenarios. Regarding U.S. tariffs, as you are all aware, there remains a high level of uncertainty. Fresenius is well-positioned thanks to its broad base and diversified business.

Speaker #1: Yet we always said we're not totally immune to tariffs. Based on the current scope and level of U.S. tariffs, the resulting EBIT impact, which we expect to materialize in the second half of the year, is covered by our guidance for full year '25.

Speaker #1: As you are aware, our guidance is provided at constant currency rates, which means adjusted for translation effects. We expect continued FX volatility impacting our reported numbers in the second half.

Speaker #1: If FX rates would stay on the current level for the full year, we would see an effect of roughly 1 percentage point on revenue and roughly 2 percentage points on EBIT.

Speaker #1: And with that, back to you, Michael.

Speaker #2: Yeah, thank you, Sarah. Let me conclude by reiterating the highlights from a strong first half of this year. We have started rejuvenate positively I would say on our front foot with consistent and strong organic revenue growth.

Speaker #2: Leading to upgraded full year guidance for group revenue. At Kabi, the increased contributions from the growth vectors have significantly improved the margin structure of the business.

Speaker #2: In H125 alone, with a year-over-year increase of $110 basis points. Helios provides a solid hopefully rock solid foundation showing resilient margin development throughout the first half of 2025.

Speaker #2: So overall, our core EPS growth in the year to date has increased 10% underlining the effectiveness of our future Fresenius strategy. And our ability to drive consistent bottom-line growth.

Speaker #2: All our businesses are now well-positioned and geared to grow organically. Each with strong competitive positions in attractive and growing markets. We've built the structural and organizational foundation to aim higher with the right people, a sharpened focus, a solid financial framework, and a performance-driven culture.

Speaker #2: We're now focused on disciplined capital allocation to deliver increasing returns. We're scaling each of our three platforms, making them more relevant competitive and profitable over time.

Speaker #2: With this setup, we expect compound improvements across the board. Ultimately, delivering sustained profitable growth as we continue to elevate our performance. With that, Sarah and myself are happy to take your questions.

Speaker #1: We are now starting the question and answer session. If you'd like to ask a question, please press star followed by one on your touchstone telephone.

Speaker #1: The operator will announce your name when it's your turn to ask a question. In case ou wish to cancel your question, please press star followed by two.

Speaker #1: The first question is from Hugo Solveig from BNP Paribas. Please go ahead.

Speaker #3: Hi, guys. Congrats on the result and thank you for taking my questions. I have two please. First on pharma, very strong quarter top line and profitability.

Speaker #3: Could you maybe discuss the volume and price mix for this business? And also, I think, Sarah, you called out some one-timers. Into H2, do you see room to move slightly higher to the 4% revenue growth band?

Speaker #3: Second question, looking forward into 2026, obviously improving momentum in biosimilars. Michael, you mentioned some clinical nutrition launches and reliable growth at Helios. So from where you stand today, do ou think that you should be able to carry that mid to high single-digit sales growth momentum in 2025 into next year?

Speaker #3: Thank you.

Speaker #4: Yes. Hi, Hugo. Thanks for your question. On pharma, we are as happy as you are to see especially Q2 growing nicely. You know, Q1, by the way, was a little weaker.

Speaker #4: It was good on profitability. But at that time, we said, look, a few things slipped. So we were right. This was not only an argument for the call, but people had been working.

Speaker #4: In essence, what we see for pharma especially also in the US, it is the pharma business and the infusion therapy business. So we have been growing nicely with the capacity increasing on the manufacturing in the Wilson plant which also gives you fixed cost absorption.

Speaker #4: And then on pharma, with the portfolio we have, if I had a look the latest IQVIA data, the June data, we are I think now the third month in a row, the number one.

Speaker #4: So holding our position with the portfolio. The pricing, I mean, there's always competitive pricing on the molecule, but I think we can deal with that.

Speaker #4: What was really driving it was the volume, especially in the U.S., but also in Europe. This was a strong growth momentum.

Speaker #4: You know, everything else, you know, taking if we can take this momentum into 2026, we will answer that one in February of 2026. But what we try to give you is indications of what is backing up the growth trajectory and the revenue line in 2026.

Speaker #4: You know, there's a pretty nice news flow when you go into the middle of July, where we had the approvals for Denosumab and then you saw that we again in licensed Vidulizumab day before yesterday.

Speaker #4: Then yesterday, the news broke. We have been working, the team has been working very hard to even get that close. Before the call, with Civica, which is a special agreement.

Speaker #4: So there is a nice news flow which backs up the trajectory this is biopharma. If we go to nutrition, we have been reiterating that we are in this year, you ow, spending into innovation, into R&D, you know, it will start at some point being also commercialized next year.

Speaker #4: So these are all, let's say, indications but the real number next year.

Speaker #3: Thank you very much.

Speaker #1: The next question comes from Oliver Metzger from Otto BHF. Please go head.

Speaker #5: Yes, good afternoon and thanks for taking my question. So the first one is on Helios Germany. So you mentioned the $4 billion first charge for residential health insurance kicking in up from November.

Speaker #5: So is it the $4 billion for the market and do ou have a roughly 5% market share? Is it fair to assume a tailwind of around $200 million?

Speaker #5: For as a full effect up from Q4, a bit not close Q4 but up from November. And the second one that you mentioned, the tech transfer of Tian to MapScience, first of all, when do you think you have a full production shift over?

Speaker #5: And second, can you also give us an update on the other molecules, please?

Speaker #4: Yeah. Oliver, I'll try to start with the first question and Sarah can you know add. We also stated this as a positive sign. You know, I don't know whether you can take just the market share and divide it and then get to the total fund, but if you have nothing else, other than this information, maybe this is the first not iteration but approximation.

Speaker #4: There's still a few things in the paperwork missing. So there is a decision, but since you are German, you ow German bureaucracy, so we don't know when the money will really flow.

Speaker #4: It will flow at some point in time, via a surcharge on, you know, this the insured patients, the not privately insured patients in Germany, and then we will update you as it starts hitting the numbers.

Speaker #4: We said what the intention is, the intention is starting somewhere in November until next year, what did I say, September or something. But we'll have to see when it really starts.

Speaker #4: Anything to add on that one?

Speaker #1: Very little to add. I an, effectively it's an increment per invoice, so you can almost think of it as an additional on top of your DRG inflator if you so wish.

Speaker #1: And I ink part of the thinking behind is that in the current environment, we see a number of hospitals actually struggling with the inflationary environment and so on.

Speaker #1: And I think that was meant to put another on top of the DRG inflator if you so wish. So that is per invoice, and that's a nice one for us, obviously.

Speaker #1: If and when it starts, I think there are still some, let's say, details to be ironed out as Michael mentioned. But we expect that to be a positive and in particular to be a positive if you look at when it starts and when it ends.

Speaker #1: Should start November, should end October, 2026. So for us, that's a 2026 if you so wish, where we are looking at seeing the bulk of positivity coming.

Speaker #4: Yeah, and on the tech transfer, and then other molecules, I mean, this could be an answer which takes an hour, but let me try it.

Speaker #4: Not the tech transfer, but when we go through molecule by molecule. The tech transfer is progressing as planned. I just want to mention that this is not just an easy exercise.

Speaker #4: You know, you have to file, you have to file a lot of documents. You have to then get a regulatory approval. Then you need batches, to to get into the right quality.

Speaker #4: We're ing that as we are already commercializing. So we rather be careful. This is not, if you so wish, the utmost priority and suddenly the supply chain is broken, but it is more that we we do this with care?

Speaker #4: Yes, there is some, let's say, we want to do it as soon as we can. But there, you know, being careful as we as you again German sorgfalt vor Schnelligkeit.

Speaker #4: I would rather be diligent and not be too fast because this is a complicated documentary and regulatory approval process. But we are doing everything according to plan.

Speaker #4: The site in Argentina which MapScience has has already approval, for for Europe. But you know, we ed to cater the entire world. So we have to see which line can do what from which location, but overall it is, it is on track.

Speaker #4: Now, when it comes to, the other molecules, other limumab, we have always said, it will not make the the biggest economic impact. But you know, we see, we see uptake, we did sell, not only outside of the US, but also in the US uptake because we have changed the sales model.

Speaker #4: And what I said in the number from 2020 to now, 2022 to now, the uptake of biosimilars, like one and a half years, two years ago, the discussion would have been around, is this really a modality which is going to make it in the US?

Speaker #4: Now, we can still discuss whether it makes the super ambitious plans, but we see the diffusion, the adoption in the US. So Ada with, you ow, when we said we sell that on-branded with Notidacio, but other limumab AACF, we did make some inroads.

Speaker #4: We saw that in Q2. Ustekinomab or our Otulfi, as I said, our commercial structure is and was in place. The first incremental sale, little but first incremental sale was posted in Q2.

Speaker #4: And now we're ing to take it from there. That's why we are encouraged with with the Civica no, let's say special distribution contract which has a lot of hospitals under management, if you so wish.

Speaker #4: That's why I call it it's a special health system. It's something between a PBM and something else. And also the target product profile is a different one than we have been discussing maybe at that time with Vidasio because, you know, we have two formularies, we have interchangeability, so we see traction going on there.

Speaker #4: And now Denu we have the regulatory approval in the US and in so we are ready to launch so all commercial activities are starting, especially on the market access side.

Speaker #4: In Europe, it just was granted, so we got to ramp up here. And then take it from there. So what I'm trying to say, this excitement will go beyond Q3, Q4.

Speaker #4: And we'll have its trajectory into 2026.

Speaker #5: Okay, great. Thank you very much.

Speaker #1: The next question comes from Graham Doyle from UBS. Please go head.

Speaker #6: Afternoon, guys. Thanks for taking my questions. And yeah, really, really good quarter given how tough it is out there for a lot of people.

Speaker #6: Just one question in the guidance and then one on MapScience. In terms of the guidance, if you think about the midpoint at the EBIT guidance, it's sort of implies high single-digit, maybe even better growth in the second half of this year or sort of Q4.

Speaker #6: Is it, you know, is that a sensible like stopping-off point sort of to Hugo's question, but more on the BIT line? Is that sensible for how we think about next year?

Speaker #6: And your comfort in terms of how the business is becoming a sort of higher growth business on the EBIT line? And the second point is just I don't know how much you're willing to disclose around this, but with regard to the put call option with MapScience, obviously as you guys generate cash and deleverage, which kick in further in the end of the year, you know, one area we're clearly would be quite attractive is to buy out the rest that stake.

Speaker #6: So I don't know if you could update us on where you are there as well, please. Thank you.

Speaker #4: Yeah, so on the latter one, since everybody's listening to the call, we will not do it because then everybody can look into our cards.

Speaker #4: But you know that we are satisfied with MapScience. Well, first of all, Graham, thank you for your introductory remarks. And I deliberately mentioned your introductory remarks because you did highlight that it is tough out there.

Speaker #4: And by the same token, we're ready asking what's going to appen next year. If anybody knows what the status is on the tariffs, welcome, send us an email.

Speaker #4: And then we'll put it in our models. So there's a lot of unknown out there. So we will deliberately not discuss next year. But when it comes you know what is, I ink, important for the market on the guidance.

Speaker #4: Let us and I guess this will be a question for the next couple days. Let us try to explain how we think about it.

Speaker #4: And I'll start that this is the usual mode of operations, how we interact with the market. We tell you what the assumptions are. We tell you what is really already solid and tangible.

Speaker #4: And what may need to happen and if something may need to happen, it may happen or it may not happen. So you will have clarity on our assumptions.

Speaker #4: And then you can track against this one. Now, when we look at the first half, on revenue, I think it is clear. That's why we upgraded the outlook.

Speaker #4: On the EBIT, Q2 and you mentioned you ow higher growth EBIT, I think the EBIT is pretty, pretty nice if not very good. If I look at what was working against us in the first half and in Q2, there was energy relief funds, with the highest number by the way in Q2, there was keto, there was an Easter effect, and Sarah mentioned FX effects and FX, the transaction goes right into the bottom line.

Speaker #4: So if I take all of these headwinds, it would probably be a headwind a little north of 200 base points year over year on profitability.

Speaker #4: Yet if I compare Q2 with prior year Q2, we went from 12.2 to 11.7. By the way, sequentially, even increasing our margin from 11.6 to 11.7.

Speaker #4: Now what we now go into Q3, Q4, there are a few still, let's say, macro and environment activities where nobody has a crystal ball.

Speaker #4: Starting all the way with tariffs. By way, when we gave the guidance, the outlook in February, there was no tariff. You know, the US administration just started.

Speaker #4: In Q1, there was already the mention of tariff. And we had something in our models, if you so wish, but we reiterated the guidance.

Speaker #4: Now, incrementally to Q2, there is even more at least news and facts on tariffs. I.e., there will be tariffs. It may change, I don't know whether it's going be $250% on pharma.

Speaker #4: Like said Dave before yesterday, but the fact of the matter is there is something. You know, currently, if you look at what the facts say, it's 15%.

Speaker #4: So even that one we reiterate the guidance, which was incrementally not there to the prior quarters. So that is a headwind. And then there is maybe, let's say, call it some hedge volatility because we don't know how this whole thing is going to evolve.

Speaker #4: Because it's not only the tariff numbers, there is also then how do customers behave? What is the buying pattern in the US, for example?

Speaker #4: On this one. By the way, also on the big, beautiful bill. That's positive, but there's also stress, maybe on some hospital system. So this is one point.

Speaker #4: The other point coming from the business, keto will have the full effect in Q2. We already saw the effect. It was a ramp-up. It was an integral curve.

Speaker #4: In Q3, Q4, we will see the full effect. Sarah mentioned the number. Or at least gave you an indication on the number. And if you, you know, this this is almost again, 80 to 100 base points on the Kavi number, which is a headwind in Q3.

Speaker #4: There will be also again energy relief headwinds. And now comes the thing. Rejuvenate means a totally different earnings structure. That's y I was so hammering on this growth vector and their contribution.

Speaker #4: Biopharma compared to the first half will have to significantly ramp up with everything I told you on the news flow, on contracts. It is contract, we have visibility, we have contract, but now we need the sell-through.

Speaker #4: Only if it's sold, we can post revenue. And that needs to materialize in Q3, Q4, and that one is a steep mountain. It is doable, team is committed, not only committed, resources are behind that one.

Speaker #4: But it needs to be done. Concurrently, that's why I mentioned every news flow goes beyond Q3, Q4; it goes into 2026 and then 2027.

Speaker #4: So, we have also in Q3 an inflection point where there is some OPEX ramp-up. If the sales come, the sales obviously will overtake the OPEX ramp-up.

Speaker #4: And then everything is fine. But it first of all needs to come. So now we shared our full assumptions for Q3 and Q4. And that's why we will have, you know, reiterating that range on EBIT is good.

Speaker #5: Thank you. That is very, very clear. Appreciate it, Michael. Thank you.

Speaker #1: The next question comes from Hassan Al-Wakil from Barclays. Please go head.

Speaker #7: Good afternoon and thank you for taking my questions. A couple as well, please. So firstly, Michael, following up on your comment earlier regarding biosimilar news flow.

Speaker #7: We have indeed seen quite some biosimilar launches and strong progress on share dynamics at Tian, particularly in Europe. Does this make you more confident in our 26, 27 outlook for revenues for this business?

Speaker #7: And how are you thinking about upside risk to this number? And then secondly, if you could please comment on the nutrition performance ex-keto. Maybe across China and what you're seeing here.

Speaker #7: But also in Europe and in the US with the rollout of lipid emulsions in the latter. And then how are you thinking about the potential for further VBP in 2026?

Speaker #7: Thank ou.

Speaker #4: Yeah, Hassan, thank you. I an, look, for 26 and 27, I think it would be too bold of a statement right now because of everything I've said.

Speaker #4: And we will reiterate that in the next coming days. You have our thoughts and the news flow obviously will have to and we want them to materialize in real business.

Speaker #4: But there is work behind it and it starts with, you know, commercializing. Once the t is there and we have that, commercializing, market access, then you have to contract, then you need to pull through supply chain reliability.

Speaker #4: That's why Oliver's question on MapScience and so on and so forth. So all of this has to work and then we'll update you as we go along.

Speaker #4: On the nutrition, ex-China, actually very good. All across the board. Also in Europe, strong. You know, we came with already hitting the market with new formulation on pediatric, for ample.

Speaker #4: The stuff coming out on oncology. And the US, I may caution this one, it's a small base. It's a very small base. But you ow, every business started small.

Speaker #4: But very, very good. Very good. And glad you asked because what we're ing to do going to 26, it's not only going to be lipid emulsions, it's going to be that we're going to go from a product to a more nutrition portfolio.

Speaker #4: We're oking, you know, to add amino acids and so on and so forth. So rather than having the product where people now get used to three chamber bags and the like, then, you know, expand the portfolio.

Speaker #4: And again, it was a high, very high growth rate in the US on nutrition. Sarah, I don't ow.

Speaker #1: Yeah, maybe to add because you explicitly asked what it would be without the keto impact, right? If you look if you clean the keto so to say, we've seen a nice revenue growth on the nutrition business in line with our ambition range.

Speaker #4: Yeah. And on China, Hassan, for 25, we don't expect anything. On the contrary, we, as we said, because primarily out of keto, but also all these other things like VBP, but also, you ow, the general budget restriction, 25 is this is not going to be a growth market.

Speaker #4: In 26, this may change. As we, as you know, will, you know, on the nutrition side come with a factory, will come online three chamber bag.

Speaker #4: Then it will be there again, a volume gain. The factory being in China, it will, by the way, not only cater China, it will cater also neighboring countries.

Speaker #4: So hopefully getting the volume and having a better cost position because that product currently is being shipped from Sweden. To China. So therefore, a totally different makeup setup.

Speaker #4: We still see the budget restrictions. We have changed also our let's say commercialization go to market in in China, not only reducing the sales force, which is not needed for VBP, but also looking for not only products but also market segments outside the VBP.

Speaker #4: Which is then, you know, if you do a tiering model, it will not be Tier One hospitals. So it will be rather Tier Two, Tier Three hospitals.

Speaker #4: There you need a special sales force. Maybe the pricing is a different, but we're going down that route. What we did see, at least in IQVIA data, that on nutrition, the market has been I say stabilizing, not contracting anymore.

Speaker #4: And we even saw a little bit of market share gains on that one. But this is nothing which will move the needle for this year.

Speaker #7: Perfect, thank ou.

Speaker #1: The next question comes from Veronica Dubaiova from CT. Please go head.

Great for asking the question because I can get some more messages on this whole tariff thing I think it is important you guys know it but still it is important to know that if you look at it 90% of our portfolio is not exposed so when I take the group revenue numbers. This is the leftover to 10%.

Is basically the exposure to the U S than within the U S that especially on the pharma side.

We do manufacturing manufacturer warehouse distribute.

70% roughly 70% in the U S.

The second thing is one and a half years two years ago five years ago, We started a more in the America campaign, which also.

Was about more onshoring, but even going beyond us also in the supplier network.

One ingredient was that you also source local API as long as there is local API, but there is so building out the manufacturer supplier network, having the manufacturing footprint and then the seamless integration into the warehouses and the hubs.

<unk> also actually of the hospitals and this is I think.

In relative terms, we are not immune to tariffs that's why again coming back to the guidance question.

Immune to tariffs, but in relative terms, we feel very well positioned and yes, we invested in the U S. That's why we are happy that we see the volume picking up on IV solutions in the Wilson plan and we will further incrementally invest in the U S. But also because it is the lead market.

In terms of innovation and it is one of the largest markets also in terms of volume.

Understood. Thank you thanks Craig.

And the last question for today comes from Michael <unk> from Deutsche Bank. Please go ahead.

Okay.

Thank you good afternoon two questions. Please.

Firstly on <unk>.

Can you tell us how much of the 100 million of savings you have realized in the first half.

And secondly, I guess someone needs to ask the question with regards to your stake in FMC could you share your latest thinking on your strategy around that and does this planned pro rata of cells.

Spoken about does that change anything at all.

In regards to your thinking over the next time. Thank you.

Yeah.

Focal.

You could ask why are you asking the question, but anyway. So look on the FMC and cira can explain in detail how that how that works no. It does not change anything in.

No.

That will always be the question, but please.

I'll go one step back and look what we've been doing we have been starting on future present us.

Couple only a couple of months later, we announced the deconsolidation.

So these are really important and critical company decisions and not easily take and we did it.

Only then it took almost a year, one and a half years to consolidate because we need an extraordinary ECM and DRA area.

And then almost only a year later, we said we got.

Go down with a tangible transaction the ABB and the exchangeable.

Which brings us to the 28%.

And then we said we got up by now or for now the 25 plus one.

Which tells you there's still some room between 28 and 25.

And once we get there we will see what are we going to do.

Now them, having a share buyback program.

And that if they redeem the shares then obviously it would bring our proportionate up again now as we already went down to 28. We said. Okay. Then we are going to go in lockstep and to match <unk> as much as we can mirror.

Not matched with mirror, what whatever they do if and when they do it and then be back at the 28.

And then take it from there.

First thing I would say and that holds true a deep hole through true for the also.

Last couple of quarters or two years.

We believe there is value creation upside. We also saw what was disclosed yesterday.

We saw what was disclosed in the capital market day, and if I take those ambitions and the manage been working against those ambitions. There is value creation upside we believe in this value creation upside because we sold the exchangeable with an underlying of 53 something.

53, something per share. So if you believe on that one and see where the current trading is I think that's the answer.

Yes happy to comment on the E T. So.

I mean, we said it's around 100 million. We always said this is going to be more back end loaded as they need to initiate the things and then start execution. That's exactly what we're seeing right now and as of end of the second quarter. A roughly has achieved one third of that $100 million.

And I think maybe to give you an idea for example on the procurement I think we've seen really nice negotiations of terms on contracts.

Now what will happen is we need to see that first of all we need to see that volume.

Being bought and then the rebates being given and so on so you will see that nice ramp up as we continue in the second half.

It's also fair to say there is still a lot of work ahead of them and with the team, but they are fully focused and working themselves through it and on all the leaves us we.

Wanted to pull we have made good progress so far.

Okay. Thank you both.

We have no more questions from the phone back to you for any closing remarks.

Yes.

Thank you John Cena no further closing remarks on our sides just a sincere thanks for everyone for their participation in today's call and we look forward to catching up with you over the coming days and weeks. Many thanks. Thank you guys.

We want to thank Fresenius and other participants for taking part in this conference call Goodbye.

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