Fresenius - Update 09/15/2026 - ISIN DE0005785604

00:00:07: Picture this.

00:00:10: You're lying in a hospital bed, A bag hangs above you... ...a thin tube runs into your arm.

00:00:16: Good chance that bag comes from Frace Ineos!

00:00:19: You just never paid attention to it.

00:00:22: Last year This company had its best year in a long time.

00:00:26: Profit more than doubled Debt came down There's a dividend again And the board put five words on top of all.

00:00:34: The worst is behind us.

00:00:36: And is that true, Warren?

00:00:38: Or there's something we should know.

00:00:45: And second, does the patient run under his own power only just barely or properly again already?

00:01:35: What do I have to look out for in the annual report there?

00:01:38: Start with a headline.

00:01:39: It went, profit more than doubled.

00:01:43: and guess what

00:01:43: Corey?

00:01:44: how much of that comes from The business running twice as well

00:01:48: Most.

00:01:49: if it i'd think If a Profit doubles the Business has To be behind it.

00:01:53: Wrong Guess!

00:01:54: It was only A good ten percent.

00:01:56: That is the rate the Business grew by.

00:01:59: For group this size that Is already Good year.

00:02:02: but Ten percent more business does not explain a doubled profit.

00:02:06: So, where does the rest come from?

00:02:09: I asked myself and i saw that Fresenius shed apart of the group that had costed money for years And then found one off gains two disposals special items Money That Will Not Come Back Next Year.

00:02:23: so For The Headline That Means The Jump In Profit Is Real But It is Far Bigger Than The Actual Business Warrants.

00:02:31: So with a jumping profit like this, I always have to ask myself how much of it comes back next year?

00:02:37: Exactly.

00:02:38: And that does not make the headline a bad one.

00:02:41: The Year After A Big Operation Can Look Like This...

00:02:57: All right and for anyone hearing us I'm talking with Warren Wise, an AI that analyzes and rates equity stories the way a value investor would.

00:03:06: Exactly!

00:03:27: not as a new review, but to see whether what I found in the spring is heading in the right direction.

00:03:33: Where it matters for the rating?

00:03:55: And since that's often asked, every episode is selected reviewed and approved by an editorial team.

00:04:03: The analysis and the voices are AI –the responsibility…is

00:04:07: not.".

00:04:08: So we can better understand the equity story of Fresenius?

00:04:12: Tell us what this company actually does!

00:04:14: Under the Fresenios roof there really two companies One called Fressinius Carbi and makes what hangs on a drip in hospital Infusion solutions, artificial nutrition for people who cannot eat on their own and also cheaper copies of expensive biotech drugs.

00:04:31: A business only a few can do.

00:04:33: The other is called Helios And runs hospitals in Germany and through the Spanish subsidiary Kironsalud In Spain & Latin America Together one of the largest private hospital groups in Europe.

00:04:46: I just looked it up!

00:04:47: The story this healthcare group started more than a hundred years ago with the Hirsch Pharmacy.

00:04:53: Yes, exactly.

00:04:55: The history of Frasenius reaches indirectly back to fourteen sixty-two when the Hirsch Pharmacy opened in Frankfurt am Main In the nineteenth century, the pharmacy came into the hands.

00:05:06: In nineteen twelve, the pharmacist Dr.

00:05:10: Edward Fresenius laid the actual foundation of today's group and out-of-the-laboratory of The Hirsch Pharmacy founded the pharmaceutical company Doctor Edward Fresinius.

00:05:21: among other things it produced injection and infusion solutions... ...and other medicines.

00:05:26: A decisive growth step came from the nineteen sixties onward with dialysis.

00:05:31: From the nineteen nineties onwards through acquisitions & new ventures Fresenius finally grew into an international healthcare group.

00:05:39: So the essential thread of the company's history is the step-by-step diversification, from drug production through medical technology and dialysis all the way to hospitals and health care

00:05:51: services.".

00:05:52: And what would you credit the group with today?

00:05:54: on The Plus Side?

00:05:55: On the plus side for me is, for example that Fresenius Medical Care was carved out of The Group and it's now an independent listed company specialized in treating kidney disease... ...and in dialysis.

00:06:07: And That THE GROUP operated away the loss-making VAMED business.

00:06:11: In other words many groups talk about focus for years.

00:06:15: Fresenious actually went through with it.

00:06:18: So staying our picture one can say the operation was a success.

00:06:22: The operation was successful.

00:06:25: And the group that stands here today is solid where it counts, its credit standing is investment grade and all three big rating agencies confirm it.

00:06:35: nothing in the Frisinius numbers is a critical knockout criterion for me.

00:06:40: on the contrary Frisinius has a balance sheet I would call sound.

00:06:45: That's one of main reasons.

00:06:47: my very good rating.

00:06:49: Then let us look at the debit side.

00:06:51: What should we pay particular attention to?

00:06:53: As I already said, with every jump in profit?

00:06:56: the first question Vamed, the business of hospital projects and plant construction.

00:07:17: It cost the group money for years.

00:07:19: in The prior year almost seven hundred million in losses In twenty-twenty five Fresenius is almost out And the loss has shrunk to a good two hundred and seventy million?

00:07:30: The fact alone that this bleeding has stopped already explains A large part of the jump.

00:07:36: So the profit didn't rise...the bleeding stopped.

00:07:40: That Is Part Of The Explanation.

00:07:42: The other part is money that comes in once, a piece of financial stake turned into cash and old provisions that were released.

00:07:50: Both flow into the doubled figure – those are real euros cleanly earned and cleanly reported.

00:07:58: they just do not

00:07:59: repeat.".

00:08:00: And so what's left of doubling on the headline?

00:08:03: Is ten percent growth from business!

00:08:07: After a big operation, you give painkillers.

00:08:10: You just mustn't confuse the value under painkiller's with the resting-value.

00:08:15: Fine part of the positive profit trend is medication but ten percent growth in the resting value still sounds healthy to me.

00:08:22: Where's the problem?

00:08:24: Not on growth.

00:08:25: On return The return tells you the ratio between profit or loss and the capital you have put in.

00:08:32: This is a spot where you have to pay close attention, because Frasinius needs a certain return for all the capital employed to be worthwhile at all.

00:08:41: The threshold is a good five percent – that's what capital costs for Sinius.

00:08:46: Anything below that means… …the patient burns more energy than it takes

00:08:51: in.".

00:08:52: And how much does this company manage?

00:08:54: Take a guess!

00:08:55: After a year like that... twelve per cent

00:08:58: Just under seven.

00:09:00: A good five percent is what the capital costs, just under seven is what it brings.

00:09:04: The pulse beats but isn't

00:09:06: strong.".

00:09:07: But value above the self-imposed threshold?

00:09:11: Weak or not?

00:09:12: Yes right that's positive!

00:09:15: A company that earns more than its capital cost creates value... ...but just above a self imposed threshold.

00:09:21: that value simply limited.

00:09:25: Fresenius can grow revenue all it wants.

00:09:28: As long as the pulse stays weak, the group goes in circles instead of moving

00:09:32: forward.".

00:09:33: And does the Group see this number the way you do?

00:09:35: It calls it The Highest Return In Ten Years—that is true and may be pleased about it!

00:09:41: Still…it stands at just under seven percent against a good five-percent in costs.

00:09:48: What's the reason for that?

00:09:49: Where did they come from?

00:09:50: From

00:09:50: something on the balance sheet that has to do with equity, think about what a hospital and infusion group owns.

00:09:57: What does a balance sheet like that consist of would you say?

00:10:01: Buildings, wards operating theaters factories equipment.

00:10:06: almost three-quarters Of The Equity is none of that.

00:10:09: it's goodwill.

00:10:10: over fourteen billion euros.

00:10:13: That's how much for seniors paid For its acquisitions above what the businesses It bought were really worth in substance.

00:10:19: So in a sense, abort passed.

00:10:22: Yes, abort past but paid for promise about the future.

00:10:26: The good will stays on balance sheet only as long these acquisitions earn enough going forward –the moment they do not.

00:10:34: it has to be written down.

00:10:49: It has to earn back what Frisinius paid for it.

00:10:52: But isn't that just what acquisitions look like?

00:10:55: Whoever buys carries goodwill on the balance sheet, That doesn't mean something is rotten!

00:11:00: Nothing's rotten about it as long as it earns.

00:11:03: And that exactly test only passes.

00:11:06: Every euro of these fourteen billion have still earned enough today To justify its price.

00:11:11: and even auditors say On no other number in the balance sheets do we estimate much Or none there as much leeway.

00:11:18: And if you strip the Goodwill out,

00:11:20: then it looks brilliant over thirteen percent.

00:11:24: But I won't play along for seniors paid.

00:11:26: The money is on the balance sheet It's audited every year and it ties up capital?

00:11:31: The honest number Is the one with good will just under seven percent earned against a good five percent of cost.

00:11:38: quick word On our own account it fits right here.

00:11:41: what your hearing is.

00:11:42: this short version The full Warren Wise Report tests an equity story across eight dimensions, page by page against the annual report.

00:11:51: If you want that view for your own company on the board or supervisory board and investor relations, warren-wise.com Right!

00:12:01: And now back to Fresenius…

00:12:13: And the group tells that in two ways.

00:12:16: Once, in glittering words on stage and once more critical tones In its own risk report.

00:12:22: So The Risk Report is a section That Tells me the whole truth

00:12:26: A very important Section for judging the equity story.

00:12:29: Three things are stated here Very clearly.

00:12:32: The first Are US tariffs.

00:12:35: Frey Seineas sells great deal into United States And lot of medicines cross borders.

00:12:41: In its own risk report, Freysenius writes in essence the new U.S.

00:12:46: tariffs will hit us possibly too probably and the consequences would be medium to large.

00:12:52: on top of that possible delays in US approvals.

00:12:56: Wait why do tariffs hit a hospital group at all?

00:12:59: You can't import a Hospital

00:13:00: you can't.

00:13:01: And That's exactly where you see the difference.

00:13:04: Helios is local.

00:13:06: A hospital in Berlin or Madrid treats The people who live there.

00:13:10: No tariff reaches them.

00:13:11: Kaby is the opposite, infusions and medicines are made in a handful of plants... ...and go from there all over the world.

00:13:18: Helios stays where it is.

00:13:20: Kabi sends goods across borders every

00:13:22: day.".

00:13:23: And Fresenius itself calls that…

00:13:26: "...a headwind!

00:13:27: Only this head wind...".

00:13:29: "...is in its own risk report as on the list of biggest risks high

00:13:32: up!".

00:13:33: That's no side note.

00:13:35: And A Tariff You Can't Plan For Is Worse Than One You Can.

00:13:39: What's the second?

00:13:40: China.

00:13:41: The state there systematically pushes down drug prices through very large tenders.

00:13:46: Frisanias considers a further expansion likely, but rates the consequences for itself as minor and has even softened its own wording.

00:13:54: So it remains a real risk But It Isn't Dramatic.

00:13:58: You should keep in view without blowing up too much.

00:14:01: Keep In View Don't Blow It Up.

00:14:03: I'll take that on board.

00:14:05: And third

00:14:06: The German Hospital Reform, that's probably the most interesting one.

00:14:10: For Helios it is usually told as a clear advantage – larger specialized hospitals.

00:14:15: that suits for seniors.

00:14:17: but the risk report then gives the fuller picture.

00:14:21: which performance groups are hospital is finally assigned and with them what even gets paid for can't be quantified today And whole timetable was just stretched by year.

00:14:33: So, on the whole a potential advantage.

00:14:36: But one nobody yet knows the true size of and whether it might not turn into disadvantage before long.

00:14:41: Nicely put Corrie And none these three things is an acute infection.

00:14:46: It's list that doctor goes through at follow up

00:14:50: Since your report was written.

00:14:52: has any moved?

00:14:53: Two quarters have come in since then.

00:14:56: I'd rather tell you how they look than leave with old lists.

00:15:00: The reform timetable has been pushed further back by law.

00:15:08: has fallen further.

00:15:31: Then why are these points still on your list?

00:15:33: Because that is still only a snapshot, but you're probing at the right spot.

00:15:38: We see three known risks landing upon patient whose recovery is under way.

00:15:44: In stronger patients they would be background noise in this one.

00:15:48: there's reason to follow up.

00:15:51: then show me plus side of ongoing business not rebuild.

00:15:55: day-to-day

00:15:56: Revenue grows under its own power by seven percent, and that's good.

00:16:00: Wait a moment ago It was ten.

00:16:02: two different numbers for two different things.

00:16:06: Seven percent is revenue Under Its Own Power.

00:16:09: A Good Ten Percent Was Profit Before Special Items.

00:16:12: So profit Is Growing Faster Than Revenue And That'S Exactly The Direction You Want To See?

00:16:19: In the Individual Businesses

00:16:20: At Kabi, the infusions and medicines The Margin actually rose to over sixteen percent.

00:16:27: The business with the biotech copies grew Over forty percent With three new medicines in a year.

00:16:33: In the hospitals Warren?

00:16:46: The one value that was heading the wrong way is heading right again.

00:16:51: And recovery you keep talking about, how do see it?

00:16:55: Give me something I can check!

00:16:56: Three vital signs….

00:16:58: The first...is free cash flow.

00:17:01: The money left over when everything's paid and invested.

00:17:04: just under two billion euros.

00:17:06: That's a drip.

00:17:07: the group feeds itself from & its running strong.

00:17:10: And the fever?

00:17:11: You said debt coming down.

00:17:13: The fever falling.

00:17:15: Net debt is down eight percent, and leverage is back in the band.

00:17:19: The group set itself In the summer figures.

00:17:21: it's heading toward the lower end of that Band.

00:17:25: has anyone outside?

00:17:25: The Group confirmed that

00:17:27: two of the rating agencies this year S&P in the spring Fitch in August both moved their outlook from stable to positive And both name the lower leverage as the reason.

00:17:38: That's not yet an upgrade.

00:17:40: That's an agency saying one could come and that's a really good sign.

00:17:45: And the third vital sign?

00:17:46: The one I like best, there is a dividend again—a good euro per share about ⅓ of profit.

00:17:53: Plenty companies pay a dividend.

00:17:55: Warren.

00:17:56: Why does this one of all impress you?

00:17:58: Because it has covered out of groups own money.

00:18:01: Frisanias doesn't hand-out more than it earns.

00:18:04: It pays what left That exactly where other patients we've had on this podcast failed

00:18:10: Then bring together in one place.

00:18:12: Where does Fersanias land, and what's missing for more?

00:18:41: The hospital margin was once on this list too.

00:18:44: I have struck it off, they earned

00:18:46: that.".

00:18:47: And the share price?

00:18:48: The stock has clearly gained again since June.

00:18:51: doesn't tell you anything?

00:18:52: It tells me market already priced in recovery.

00:18:56: My score though only says something about quality of a company's equity story not whether their shares are cheap today.

00:19:04: Those two different questions and i answer one if them

00:19:08: If the Fresenius board were sitting here with us What would you demand?

00:19:12: Three things.

00:19:13: And all three are in its own hands.

00:19:16: First, show me another year of noticeable profit growth with no disposal and no one-off gain in it.

00:19:22: Second, widen the pulse.

00:19:24: Make your capital earn clearly more than it costs A lot.

00:19:28: my rating hangs on that gap.

00:19:30: Both those about earning more Is third as well.

00:19:33: The Third leads back to the fourteen billion.

00:19:37: show us what the big acquisitions earned today, one by one.

00:19:41: Right now this entire goodwill is tested once a year as single number and the shareholder has meant to just believe that the acquisition's really paid off.

00:19:50: Helios Quiron Salud The US business.

00:19:54: Tell Us What Each Of Them Throws Off If They Actually Bring In What They Cost.

00:19:58: That'S The Best Answer To Everything I've Said About This Today.

00:20:02: And What Do I Take Into Next Annual Report?

00:20:06: No matter which company.

00:20:07: Three things, first when a profit suddenly doubles ask first what fell away the year before.

00:20:14: very often The jump isn't new strength but a vanished legacy burden.

00:20:19: second compare the return on capital always with the cost of Capital never with zero.

00:20:24: A Company that sits just over its own threshold can grow and still create almost no value.

00:20:30: third When almost all the equity is goodwill, you're buying the past along with it.

00:20:36: Ask yourself whether old acquisitions still earn today what they cost?

00:20:40: For Frecenius this holds... The big operations are over!

00:20:45: The patient is discharged and walking again.

00:20:48: He takes care of himself.

00:20:49: Two values doctor keeps watching How much profit growth comes from medication And when will his pulse be really strong?

00:20:59: The patient is back on his feet, but without medication the numbers would look more modest.

00:21:04: For him it's now about building further.

00:21:09: The

00:21:31: content of this episode is for general information purposes only.

00:21:35: It does not constitute investment advice.

00:21:39: Warren Wise is a fictional synthetic character.

00:21:42: Any reference to Benjamin Graham, Warren Buffett or Charlie Munger Is purely descriptive of the investment philosophies

00:21:49: attributed to

00:21:49: them.

00:21:51: All voices and audio-content are synthetically produced And AI generated.