Financial position

Financial management policies and goals

The financing strategy of Fresenius has the following main objectives:

• Ensuring financial flexibility
• Maintaining our investment grade rating
• Limiting refinancing risks
• Optimizing our cost of capital

Ensuring financial flexibility is key to the financing strategy of Fresenius. To remain financially flexible, we maintain adequate liquidity headroom. We are committed to our investment grade rating, which provides us with advantages with respect to market access and funding costs.

Refinancing risks are limited due to a balanced maturity profile which is characterized by a broad range of maturities with a high proportion of mid- and long-term debt up to 2033. Fresenius strives to tap different markets in order to diversify its funding sources and investor base.

Another key objective of Fresenius’ financing strategy is to optimize the cost of capital by employing an adequate mix of equity and debt. Due to the Company’s diversification within the healthcare sector and the strong market positions of its business segments in global, growing, and non-cyclical markets, we are able to generate predictable and sustainable cash flows. These allow for a reasonable proportion of debt. Measures to strengthen the equity base may also be considered in exceptional cases to support long-term growth.

Overall, there were no significant changes in our financing strategy in 2024. Fresenius has pursued a stringent capital allocation focused on organic growth and shown a strong commitment to deleveraging. The Company progressed well in reducing its leverage ratio (net debt to EBITDA¹) in 2024. In 2025, deleveraging will remain a key priority for us and we therefore have adjusted our target corridor. Our new self-imposed target corridor is now upgraded to 2.5× to 3.0×. This allows us to stay financially flexible while solidifying our solid investment grade rating.

Financing

Fresenius meets its financing needs through a combination of operating cash flows generated in the business segments and short-, mid-, and long-term debt. Important financing instruments include bonds, Schuldschein loans, bank loans, a commercial paper program, accounts receivable programs, and lease liabilities. In the selection of financing instruments, we take into account criteria such as market capacity, investor diversification, funding flexibility, cost of capital, and the existing maturity profile. We also take into account the currencies in which our returns and cash flows are generated.

Fresenius pursues a centralized financing strategy. The business segments Fresenius Kabi and Fresenius Helios are financed primarily through Fresenius SE & Co. KGaA in order to avoid structural subordination. Currency derivatives are used at Group level to hedge intercompany loans in foreign currencies.

FINANCING MIX OF THE FRESENIUS GROUP¹

Fresenius SE & Co. KGaA has a Debt Issuance Program, under which bonds of up to €15 billion can be issued in different currencies and maturities. Bonds constitute our main mid- and long-term financing instruments. In 2024, a CHF bond with a volume of CHF 225 million was issued to take advantage of the attractive financing conditions of the Swiss bond market. At year-end 2024, the Debt Issuance Program was utilized with €9.5 billion.

For short-term financing needs, Fresenius SE & Co. KGaA maintains bilateral credit lines and a commercial paper program. Under the commercial paper program, short-term notes of up to €1.5 billion can be issued. As of December 31, 2024, €70 million of the commercial paper program was utilized.

The €2 billion syndicated ESG-linked credit facility of Fresenius SE & Co. KGaA signed in July 2021 serves as a backup line and was undrawn at year-end 2024.

The proceeds of the financing activities in 2024 were mainly used for general corporate purposes, including the refinancing of existing financial liabilities.

The average maturity of our major financing instruments (excluding leasing) as of December 31, 2024 was 3.2 years and the average interest rate was 2.5%.

Detailed information on Fresenius’ financing activities can be found on pages 356 ff. of the Notes. Further information on financing measures in 2025 is included in the Outlook section.

MATURITY PROFILE OF THE FRESENIUS GROUP FINANCING FACILITIES^{1, 2}

€ in millions

Corporate Credit rating

The credit quality of Fresenius is assessed and regularly reviewed by the leading rating agencies Moody’s, Standard & Poor’s, and Fitch. Fresenius is rated investment grade by all three rating agencies. In June 2024, Standard & Poor’s revised the rating outlook from negative to stable. Other than that, there were no rating changes in 2024.

Effect of off-balance-sheet financing instruments on our financial position and liabilities

Fresenius does not use any off-balance-sheet financing instruments that are likely to have a significant impact on its financial position, results of operations, liquidity, investments, assets and liabilities, or capitalization at present or in the future.

Liquidity analysis

The main sources of liquidity are cash provided by operating activities and cash used in financing activities, i.e. short-, mid-, and long-term borrowings. Cash flows from operating activities are influenced by the profitability of Fresenius’ business and by working capital, in particular receivables. Cash inflows from financing activities are generated through the use of various short-term financing instruments. To this end, we issue commercial paper and draw on bilateral bank credit lines. Short-term liquidity requirements can also be covered by accounts receivable programs. Mid- and long-term financing is mainly provided by bonds, Schuldschein Loans, bilateral credit lines, and leasing liabilities. Fresenius has access to the €2 billion syndicated revolving credit facility as additional liquidity headroom. Fresenius is confident that the existing credit facilities, inflows from further debt financings, and cash inflows from operating activities and other short-term financing sources will be sufficient to cover the Group’s foreseeable liquidity needs.

Dividend

Fresenius is committed to generating attractive and predictable dividend yields as set out in the Fresenius Financial Framework. As part of the full-year reporting in February 2025, Fresenius defined a new dividend policy. Our target is to distribute ~30–40% of core net income (net income excluding FMC, before special items). The new dividend policy reflects the capital allocation priorities in line with the #FutureFresenius strategy. It also underscores our intention to reinvest in growth, reduce leverage, maintain a solid investment-grade rating and provide attractive shareholder returns.

Fresenius will propose to the 2025 Annual General Meeting to distribute a dividend of €1.00 for the 2024 fiscal year.

Cash flow analysis

Operating cash flow increased by 15% to €2,447 million (2023: €2,131 million). Operating cash flow in the 2024 fiscal year was mainly driven by the good development at Fresenius Kabi and Fresenius Helios. The cash flow margin was 11.4% (2023: 10.5%).

Capital expenditures (net) amounted to -€916 million (2023: -€1,026 million). As a result, the cash flow before acquisitions and dividends was €1,623 million (2023: €1,130 million).

The net cash inflow for acquisitions amounted to €314 million. Acquisition expenses mainly related to already-planned milestone payments in connection with the acquisition of the biosimilars business of Merck KGaA at Fresenius Kabi.

Dividends of the Group in total amounted to a cash inflow of €112 million (2023 cash outflow: €444 million). The dividend amount is calculated as follows: in total, there was a dividend payment of €0 million to the shareholders of Fresenius SE & Co. KGaA and dividends paid to third parties of €0 million. These payments were more than offset by the dividend of €112 million that Fresenius SE & Co. KGaA received as a shareholder of Fresenius Medical Care.

Free cash flow after acquisitions and dividends (continuing operations) was €1,911 million (2023: €347 million).

Payments from lease liabilities resulted in a cash outflow of €181 million (2023: -€186 million).

As a result, the free cash flow after acquisitions, dividends and leases (continuing operations) amounted to €1,730 million (2023: €188 million).

Cash used for financing activities was €1,976 million, (2023 cash provided: €899 million).

Cash and cash equivalents (net), as a result, decreased by €248 million, as of December 31, 2024. They were negatively influenced by currency translation effects of -€2 million (2023: -€43 million).

The cash conversion rate (CCR), which reflects the ratio of adjusted free cash flow to EBIT before special items, was 1.0 in the 2024 fiscal year (2023: 1.0).

Working capital increased by 1% to €4,514 million (2023: €4,478 million).

Investments and acquisitions

In 2024, the Fresenius Group spent €1,035 million (2023: €1,346 million) on investments and acquisitions. Investments in property, plant and equipment decreased to €960 million (2023: €1,136 million) or 4.5% of revenue (2023: 5.6%). This was below the depreciation level² of €1,125 million. A total of €75 million was invested in acquisitions (2023: €210 million). Of the total capital expenditure in 2024, 93% was invested in property, plant and equipment and 7% was spent on acquisitions.

Acquisition expenses mainly related to already-planned milestone payments in connection with the acquisition of the biosimilars business of Merck KGaA at Fresenius Kabi.

INVESTMENTS BY REGION

INVESTMENTS, ACQUISITIONS, OPERATING CASH FLOW, DEPRECIATION AND AMORTIZATION IN € MILLIONS – FIVE-YEAR OVERVIEW¹

The main investments in property, plant and equipment were as follows:

• Optimization and expansion of production facilities for Fresenius Kabi.
• New building and modernization of hospitals at Fresenius Helios. The most significant individual projects were, among other locations, hospitals in Wiesbaden, Duisburg, Wuppertal, and Niederberg, as well as investments in IT infrastructure.

Investment program at Fresenius Kabi

Fresenius Kabi has a global network of production centers. We manufacture our finished medicines in our own plants and, at some sites, also produce active pharmaceutical ingredients. Our investments aim, among other things, is to continuously modernize and automate as well as to increase the competitiveness of the plants at a consistently high level of quality.

Business unit Nutrition

In China, we are expanding our production capacity of nutrition products. In the reporting year, we finalized our latest investment in Wuxi into enteral nutrition products that have the status of Food for Special Medical Purposes. In the same site we also started an investment into a parenteral nutrition multi-chamber line, which will be finished by end of 2025.

In the Netherlands, we finalized by end 2024 investments into enteral nutrition tube feed production lines in our site in Emmer Compascuum with a total investment of around €160 million in this manufacturing site. At the end of 2024 a new investment into a production line for enteral nutrition sip feeds was approved with a total investment of €36 million to be spent in 2025 and 2026.

Business unit MedTech

Our Haina plant in the Dominican Republic is the central manufacturing facility for disposable products in the field of apheresis, cell therapy, and infusion systems.

Driven by the high market demand for plasma and cell therapy products, we have gradually expanded the plant in recent years. In the plasma collection business, in addition to disposable products for our Aurora plasmapheresis system, the disposable products of the successor system, Aurora Xi, are also produced in Haina. Aurora Xi disposable capacity expansion is still ongoing. Production transfer of Comtec sets, for our therapeutic apheresis system, was finalized in 2024.

We successfully transferred Ivenix set production in 2024 and are now also working on further capacity ramp up and automation. To meet the growing market demand for disposable products, we intend to expand our manufacturing plant in the coming years with highly automated production facilities and clean room capacities. In total, we expect to invest more than US$50 million in the Haina plant going forward.

Business unit Biopharma

In the last years, we spent €110 million on our core business, and we are investing a further €30 million in the vertical integration of our Biopharma business in Graz during 2024 and the following two years.

In Switzerland, we continued to invest into further growth of our Biopharma pipeline including in-licensing of Ustekinumab and first payments for the recently announced in-licensing project of Aflibercept for the United States and several Latin-American countries with SCD.

Business unit Pharma

In Austria, we are continuously expanding our production and logistics site in Graz. In the manufacturing plant, the mobile preparatory area has been enlarged, freeze-drying (lyophilization) expanded, and new filling systems implemented. The plant manufactures sterile drugs such as intravenously administered drugs and large-volume products for parenteral nutrition; the site also specializes in complex process requirements and innovative technologies.

In France, we continued with the modernization of our plant in Louviers. We have finalized a new building comprising an area of 3,300 square meters for the production of freeflex infusion bags there. This also allows us to further optimize the European production network as a whole. In total, €35 million was invested in the modernization.

In the United States we continued the ramp up of our IV Solutions site in Wilson. In total we invested €300 million in the facility and related equipment.

Divestments

As announced, Fresenius continued to focus and prioritize its core business areas in the 2024 fiscal year as part of its active portfolio management.

• As part of our ongoing portfolio optimization, we completed, among others, the sale of the Eugin Group on January 31, 2024.
• The disposal of the majority interest in a co-holding entity of the Clínica Ricardo Palma hospital in Lima, Peru, and the resulting exit from the Peruvian hospital business were completed on April 23, 2024.
• On March 1, 2024, Fresenius Kabi closed the transfer of its plant in Halden, Norway, to HP Halden Pharma AS, a company of the Prange Group.
• On September 30, 2024, the sale of Vamed’s rehabilitation business to the international private equity firm PAI Partners was completed. Fresenius retains a minority interest of 30% in the business.
• In Fiscal year 2024 the sale of Vamed´s operations in Austria to an Austrian consortium of the construction companies Porr and Strabag for a total purchase price of €90 million was decided. The transaction is expected to close in the first half of 2025.
• In February 2025, Fresenius entered an agreement with Worldwide Hospital Group (WWH) to fully divest Vamed’s international project business (Health Tech Engineering, HTE). In May 2024, Fresenius originally announced a gradual wind-down of the HTE project business, largely to be completed by 2026, as part of Fresenius’ structured exit from its Investment Company Vamed. Closing is expected mid-2025 and subject to the fulfillment of certain closing conditions. Until then, the business will be reported as a special item outside Fresenius’ core business. The transaction involves the transfer of liquidity and is expected to result in a negative special item amounting up to a low three-digit million euro amount.

¹ Both net debt and EBITDA calculated at LTM average exchange rates; pro forma closed acquisitions / divestitures; before special items; including leasing liabilities; including Fresenius Medical Care dividend

For a detailed overview of special items please see the reconciliation table.