FRANKFURT (Reuters) – Shares in dialysis group Fresenius Medical Care fell as much as 5 percent on Tuesday after a proposed higher payment by a U.S. public health insurance company fell short of market expectations.
Analysts said the 1.6% base rate payment increase, which the Centers for Medicare and Medicaid Services (CMS) proposed for 2024 late Monday, fell short of the 3% to 4% expected by the market.
“This increases the challenge of achieving the 2025 targets as further savings may be required,” Jefferies analysts said in a note.
Fresenius Medical, the world’s largest provider of blood-purifying treatments, is cutting costs and seeking to sell a non-essential business after a U.S. staff shortage and cost inflation hit its bottom line last year, compounding an existing burden from rising COVID-19 deaths. . rate among her patients.
This also affected the performance of parent company Fresenius SE (FREG.DE), which led to the healthcare group’s decision to relinquish strategic control to Fresenius Medical.
Fresenius Medical shares were down 4% at 0814 GMT, giving up gains made over the past three trading sessions.
The German-based company said it will evaluate the proposal and provide feedback to CMS within 60 days.
“Overall, we have assumed only a moderate increase in Medicare payments for our 2025 margin goals,” it said in a statement.
The group is targeting 2025 operating income margin compared to sales of 10% to 14% in 2025, up from 7.9% in 2022.
CMS regulates US government coverage of dialysis services for people with kidney failure, which accounts for about 35% of Fresenius Medical Group’s sales, according to analysts at Credit Suisse.
Analysts added that the final decision on payment adjustments tends to be more favorable to dialysis providers. The company said final price decisions were expected in the fall.
Ludwig Berger reports. Editing by Maria Sheehan and Louise Heavens
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