Outlook

This Group Management Report contains forward-looking statements, including statements on future revenue, expenses, and investments, as well as potential changes in the healthcare sector, our competitive environment, and our financial situation. These statements were made on the basis of the expectations and assessments of the Management Board regarding events that could affect the Company in the future, and on the basis of our mid-term planning. Such forward-looking statements are subject, as a matter of course, to risks, uncertainties, assumptions, and other factors, so that the actual results, including the financial position and profitability of Fresenius, could differ materially – positively or negatively – from those expressly or implicitly assumed or described in these statements. For further information, please see our Opportunities and Risk Report.

General and mid-term outlook

In a generally improving economic environment, the Management Board continues to assess the business outlook of the Fresenius Group as positive at the time of preparing the Group Management Report. We continue to see steadily growing demand for our products, services, and therapies worldwide.

We are continuously striving to optimize our costs, adjust our capacities, and improve our product mix, as well as to expand our products and services business. This includes plans for cost-efficient production and a further-optimized procurement process. In addition, we can use digital technologies to accelerate central administrative processes and make them more efficient.

Fresenius recognizes very good opportunities to meet the growing demand for healthcare resulting from the aging population with its increasing need for comprehensive care and from technological progress worldwide. Fresenius expects that access to healthcare in developing and emerging countries will continue to improve and that efficient healthcare systems with appropriate reimbursement structures will develop over time. We will continuously review and optimize our activities and growth options in the global regions and look for opportunities to introduce further products from our portfolio in attractive markets that enable profitable growth.

The mid-term business outlook for Fresenius’ Operating Companies is determined by the following factors:

• Fresenius Kabi is focusing on three growth areas: broadening the biopharmaceuticals business, expanding the clinical nutrition business, and expanding the MedTech business. In the field of biopharmaceuticals, Fresenius Kabi specializes in the development of products for the treatment of autoimmune diseases and for use in oncology, and has a pipeline of molecules in various stages of development. The acquisition of a majority stake in mAbxience in 2022, which will enable a fully integrated vertical biopharma business, strengthens Fresenius Kabi’s presence in the high-growth biopharmaceuticals market. We expect these measures to boost the company’s earnings in the coming years. The clinical nutrition portfolio has grown successfully in recent years and will be further expanded, making the product offering more accessible from a geographical perspective. The MedTech portfolio was strengthened by the acquisition of Ivenix and its advanced infusion system. Fresenius Kabi continues to expand its MedTech product offering to keep pace with modern software and connectivity requirements. To strengthen the resilience of its high-volume IV drug business, Fresenius Kabi is developing generic drug formulations that are available at the time of market launch, i.e. immediately after the patents of the originator drugs expire. In addition, Fresenius Kabi is developing new formulations of already off-patent IV drugs, as well as ready-to-use products that are particularly user-friendly and safe, such as prefilled syringes and ready-to-use solutions in our freeflex infusion bags. Fresenius Kabi aims to further expand its product portfolio in selected countries where the company does not yet have a comprehensive offering, depending on the respective local market conditions.
• Fresenius Helios operates almost-nationwide hospital networks in Germany and Spain and provides outpatient care at various facilities. Patient care is to be further improved through the exchange of knowledge and experience (best practice) between Helios Germany and Helios Spain. The increasing number of privately insured patients opens up growth opportunities for Helios Spain, with a very deliberate and targeted allocation of capital for future expansion and hospital construction. Furthermore, the close integration of Helios Spain’s corporate health management facilities with its own hospitals offers additional growth opportunities. In addition to innovative therapies, digitalization creates potential to further expand our market position. Helios Germany and Helios Spain are developing innovative business areas such as digital offerings.

Healthcare sector and markets

The healthcare sector is considered to be widely independent of economic cycles. The demand, especially for lifesaving and life-sustaining products and services, is expected to increase regardless of the macroeconomic challenges, given that they are medically needed and the population is aging. Moreover, medical advances and the large number of diseases that are still difficult to cure – or are incurable – are expected to remain growth drivers.

In the emerging countries, the availability of basic healthcare and the demand for high-quality medical treatment are increasing. As per-capita income increases, individuals increasingly have to cope with the illnesses associated with lifestyle diseases.

On the other hand, experts estimate that further financial constraints in the public sector could result in more pricing pressure and a slowdown in revenue for companies in the healthcare industry. Some countries are experiencing significant financing problems in the healthcare sector due to the strained public finance situation. Especially in the industrialized countries, increased pressure to encourage saving can be expected as healthcare costs constitute a large portion of the budget.

It will be increasingly important for companies in the healthcare sector to increase patient benefit, to improve treatment quality, and to offer preventive therapies. In addition, especially those products and therapies that are not only medically but also economically advantageous will be of increasing importance.

The markets for biopharmaceuticals, clinical nutrition, MedTech, generic IV drugs, and IV fluids¹

It is forecasted that the market for biopharmaceuticals from the therapeutic areas of oncology and autoimmune diseases will experience high-single-digit percentage growth in the upcoming years, whereby the biosimilars segment is clearly in the double-digit range. Today, more than one in three new drug approvals is a biopharmaceutical and significant growth of this global market, especially biosimilars, is expected in the next few years and decades.

Going forward, we anticipate mid-single-digit growth in the clinical nutrition market. This outlook is underpinned by the growing awareness of the importance of early clinical nutrition, as emphasized in the latest guidelines. Moreover, the increasing adaption of mandatory screening for malnutrition² is contributing to the positive growth prospects. We see further potential in addressing the substantial number of malnourished hospitalized individuals who still lack access to nutrition therapies and in creating more awareness about malnutrition and our product offering in the community.

The MedTech Infusion and Nutrition System (INS) market should experience growth in the mid-single-digit range going forward, mainly driven by infusion management systems. In many countries, we continue to see strong demand in the infusion technology segment with drivers such as increase in chronic diseases, geriatric population, and the rising number of surgical procedures. In addition, the infusion pumps already placed in recent years will increase the demand for dedicated infusion sets.

In the MedTech Transfusion Medicine and Cell Therapies (TCT) market, we expect to see mid-single-digit growth in the near future, which is primarily driven by three segments. Firstly, the cell and gene therapy segment where we expect extraordinary double-digit growth due to an increase in approved therapies for first- and second-line treatments. Secondly, the hospital segment with double-digit growth in therapeutic apheresis and, thirdly, the plasma collection segment. In the blood center segment, we expect continued single-digit market growth, driven by increased platelet apheresis use in developing markets.

Going forward, the markets for generic IV drugs and IV fluids are expected to grow in the low-to-mid-single-digit range, with significant regional differences. The demand for generic IV drugs is expected to grow based on their relatively low cost advantage compared to originator drugs. The growth will continue to be driven by several other factors, including the aging population, the rising prevalence of chronic conditions, alongside the expansion of home healthcare and outpatient services. Technological advancements will also play a significant role.

Improved healthcare infrastructure, greater access to healthcare in emerging markets, and patent expiration of originator drugs contribute to the overall market of generic IV drugs globally. A factor working in the opposite direction is the price pressure on off-patent brands and generic drugs, as regulators seek to keep healthcare budgets under control, and it is expected that the competitive pressure in the market will further increase.

The hospital market³

Due to the increasing provision of treatments in the outpatient setting, in particular, as well as the growing acceptance and use of digital healthcare services, we assume that the number of inpatient hospital treatments in Germany will continue to remain on a constant level or have limited growth potential in the future. This is due in particular to an increase in outpatient care and the growing acceptance and use of digital health services.

According to calculations, the potential for outpatient treatment in German hospitals is around 20% of inpatient cases (excluding births)⁴. Increasing outpatient treatment is desirable, not least for reasons of the shortage of specialist staff. To promote ambulatory care, the first hybrid DRGs were introduced on January 1, 2024. In future, hybrid DRGs are to be extended to other service areas.

In addition, a stronger cross-sectoral integration of inpatient and outpatient medicine should ensure high-quality hospital care close to home. Helios is well positioned in terms of cross-sector medicine in Germany with its broad range of inpatient and outpatient services.

The increase in the remuneration of hospital services in Germany is determined, among other things, by what is known as the change value. It amounts to 4.41% for 2025. The hospital financing system also provides for various surcharges and discounts for acute hospitals.

From 2025, the costs of midwives will be included in the nursing budget, in addition to the costs of specialist and assistant nursing staff. The so-called other professions will be reintegrated into the DRG accounting.

German hospitals will still be facing challenges in 2025: According to the Hospital Barometer 2024 of the German Hospital Institute (DKI), only 6% of hospitals expect an improvement in their financial situation. On the other hand, 65% of hospitals expect their economic situation to deteriorate. The ending of energy cost subsidies is further worsening the financial situation of hospitals.

Helios expects to continue to grow profitably in Germany in 2025. Since its founding, the company has focused on good organization, cost efficiency, and measurable, high medical quality as well as transparency of medical results.

In November 2024, the German Bundesrat approved the hospital structural reform. It came into force in January 2025. The aim is to fundamentally restructure the hospital landscape in Germany. The key elements here are the expansion of hospital financing to include volume-independent maintenance flat rates linked to specific medical service groups, which in turn are subject to defined structural and quality criteria. This is intended to promote the quality-oriented bundling of care capacities and to increase the level of outpatient care, which is low by international standards. The reform is to be implemented over a period of several years, with a budget-neutral transition phase for 2025 and 2026. From 2027, the maintenance flat rates will be aligned with the assigned service groups.

In principle, Helios Germany considers itself to be well positioned for the upcoming reform as it has been strategically focusing on structural changes, new forms of care, and regional healthcare networks (clusters) for many years. Helios expects the hospital structure reform to be rather beneficial than detrimental to the company.

According to our expectations, we anticipate that the private hospital market in Spain in 2025 will continue to grow in the mid-single-digit percentage range in terms of revenue. The continuing increase in the number of privately insured patients should also open up opportunities for private operators in the future.

Relevant indicators, for example nationwide healthcare spending and bed density, indicate the further market development potential in the Spanish healthcare system compared with other EU countries. This also provides opportunities for the establishment of new hospitals. Investments are being made both by the public sector and by private hospital operators⁵.

In addition, the highly fragmented Spanish private hospital market offers further consolidation potential.

The availability of skilled workforce will continue to change in the coming years. It is expected that more people will leave the labour force than will enter it. This will also lead to changes in hospitals, which will aim to use existing resources efficiently and effectively. Digitalization, robotics, and innovative forms of collaboration offer possible solutions for meeting this challenge.

This is another reason to expect the trend towards digitalization in the healthcare sector to become even more important. Increasingly, the degree of digitalization will be central to the future viability and competitiveness of a hospital. Networks and the use of digital solutions are opening up new opportunities to make processes more efficient and safer and thus to break new ground in patient care. Digitalization is a core element in enabling agile responses to upcoming changes.

Group revenue and earnings

Trends towards a changing geopolitical order have been observable since the beginning of the 2025 fiscal year. The potential implications of this for customs duties, taxes, regulation, administration and political decision-making, for example, may have direct and indirect negative effects on the industry environment and the business activities of the Fresenius Group, although these cannot be estimated at present.

Regardless of this, the Management Board assesses the business prospects for the group as positive and expects a successful financial year in 2025.

Fresenius will continue to closely monitor the potential impact of increased volatility and reduced visibility on its business and balance sheet.

All of these assumptions are subject to considerable uncertainty.

Revenue and earnings of the Operating companies

In 2025, we expect revenue and earnings development in our operating companies as shown in the table below:

Expenses

For fiscal year 2025, we expect selling, general, and administrative expenses (before special items) as a percentage of consolidated net revenue to slightly increase compared to 2024 (2024: 11.8%).

Tax Rate

For fiscal year 2025, we expect a tax rate between 25% and 26% (2024: 25.9%).

Liquidity and capital management

For fiscal year 2025, we expect a cash conversion rate of around 1.0.

In addition, undrawn credit lines under syndicated or bilateral credit facilities from banks provide us with sufficient financial headroom.

Financing activities in 2025 will be largely geared toward refinancing existing financial liabilities maturing in 2025.

Net interest expenses are expected to be in the range of €400 million to €420 million, depending on the respective financing activities.

In 2025, deleveraging will remain a key priority for us and we therefore have adjusted our target corridor which is now set at 2.5 x to 3.0 x.

Without further acquisitions and divestments, Fresenius expects the net debt / EBITDA⁶ ratio at the end of 2025 to be within the new self-imposed target corridor of 2.5× to 3.0× (December 31, 2024: 3.0×).

Other than that, there are no significant changes in the financing strategy planned for 2025. In 2025, deleveraging will remain a key priority for us.

Investments

In 2025, we expect to invest about 5% of revenue in property, plant and equipment. About 56% of the capital expenditure planned will be invested at Fresenius Helios and about 38% at Fresenius Kabi.

Fresenius Helios will primarily invest in measures at the individual hospital locations in Germany and in new hospital buildings and expansions in Spain.

Fresenius Kabi will mainly invest in expansion and maintenance in 2025. This includes, in particular, the expansion of production facilities and in-licensing projects for biosimilar molecules.

With a share of around 88%, Europe is the regional focus of investment in the planning period. Around 8% of the investments are planned for North America and around 2% for Asia-Pacific, Latin America, and Africa. About 43% of total funds will be invested in Germany.

For 2025, we expect return on invested capital (ROIC) to be above 6.0% (2024: 6.2%).

Capital structure

For fiscal year 2025, we expect the equity ratio to increase about 2 percentage points compared to fiscal year 2024 (2024: 47%). Furthermore, we expect that financial liabilities in relation to total assets will slightly decrease in fiscal year 2024 (2024: 31%).

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.

Non-financial targets

The KPIs cover the key sustainability topics of medical quality and employees and these quantitative ESG KPIs are reflected in the short-term variable Management Board compensation (Short-Term Incentive – STI).

The topic of employees is measured with the key figure of the Employee Engagement Index (EEI) for the Fresenius Group. Fresenius is aiming for an EEI of 4.33 (achieved 2024: 4.02) for fiscal year 2025 (corresponds to 100% target achievement).

The Medical Quality topic is composed of equally weighted key figures that are defined at the business segment level. The indicators are based on the respective relevance for the business model.

Fresenius Kabi aims for an Audit & Inspection Score of at most 2.3 (achieved 2024: 1.7; 100% target achievement).

Helios Germany aims to achieve an Inpatient Quality Indicator (G-IQI) score of at least 88% (achieved 2024: 90.7%; 100% target achievement), and Helios Spain aims to achieve a score of at least 75% (achieved 2024: 73.3%; 100% target achievement).

¹ Market data refers to Fresenius Kabi’s addressable markets. Those are subject to annual volatility due to currency fluctuations and patent expiries of original drugs in the IV drug market, among other things. Percentage increase based on market value (price × volume).

² Sources: New ESPEN guideline on clinical nutrition and hydration in geriatrics. Clin Nutr. 2022 41:958-989; by Volkert D, Beck AM, Cederholm T, Cruz-Jentoft A, Goisser S, Hooper L, et al.; latest implemented e.g., in Portugal: “National Policy for effective screening implementation”; Directorate General of Health DGS

³ Sources: Company research; German Hospital Institute (DKI), Krankenhaus Barometer 2023

⁴ Care Compass BARMER Institute for Health Systems Research (bifg, 2023a)

⁵ Foreign Trade Center Madrid, The Spanish Economy – Austrian Chamber of Commerce 2022

⁶ 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