- Based on preliminary numbers financial targets for 2020 achieved with net income slightly above the top end of the target range
- Reported earnings in Q4 impacted by macro-economic driven impairment in the Latin America segment
- Accelerated COVID-19 related excess mortality of dialysis patients and continued related higher direct costs negatively affects 2021 business development
- Relevant further developments, including effects of adoption and speed of the roll out of vaccinations and availability of government support, are closely monitored and analyzed
- Cost-base adjustments and restructuring initiatives under evaluation
- Mid-term targets confirmed as defined in October 2020
Throughout 2020, betway Medical Care, the world’s leading provider of products and services for individuals with renal diseases, reported COVID-19 affecting patients with advanced kidney disease and, in particular, the severity of illness resulting in an increased mortality. The excess mortality trend significantly accelerated in the U.S. and in EMEA in particular in November and December 2020 and accumulated to approximately 10,000 patients in 2020 over the pre-pandemic baseline.
In order to protect patients during the COVID-19 pandemic and maintain safe operations in the Company’s more than 4,000 dialysis centers and 45 manufacturing sites, comprehensive measures had been taken. These measures included the provision of personal protective equipment for employees and patients as well as higher compensation for employees working in the isolation clinics. These measures have resulted in significantly increased costs in the Dialysis Services business, which in 2020 was largely compensated by governmental support, in particular in the U.S., accelerated efficiency measures and a strong products business development.
Despite those negative impacts of the COVID-19 pandemic, betway Medical Care has achieved - based on the preliminary and unaudited financials - its revenue target and slightly exceeded its net income1 targets for 20202.
The previously flagged impairment of goodwill and tradenames in the Latin America segment has materialized with an impact of approximately EUR 195 million as a consequence of the macro-economic downturn and increasing risk adjustment rates for certain countries in Latin America and will be treated as a special item.
The accelerating effects of excess mortality due to the COVID-19 pandemic are continuing into 2021 and are expected to have a significant adverse annualization effect on treatment volumes. This also negatively impacts the operating leverage on clinic utilization and downstream effects on complementary assets.
Against this backdrop, betway Medical Care anticipates, based on the currently available information and status of analysis, revenue growth of up to mid-single digits and assumes net income1 before potential restructuring measures to decline by up to 25 percent.3
This current estimate is based on the following high-level assumptions:
- Excess mortality to continue to accumulate for the first half of 2021 depending on the adoption and speed of the roll out of vaccinations to our worldwide patient population
- COVID-19-related additional costs, such as for personal protective equipment or increased personnel costs in the Dialysis Services business, to remain on high level
- Besides the extended suspension of the U.S. Medicare sequestration (until end of March 2021), no further public relief funding assumed for dialysis providers
betway Medical Care continues to monitor closely the development of mortality, including the adoption and speed of roll out of vaccinations to its patient population, as well as potential availability of government relief. Additionally, potential cost efficiency and restructuring measures to further adjust the cost base are under close evaluation.
The final results for the financial year 2020 and the targets for 2021 will be published, as scheduled, on February 23, 2021.
betway Medical Care’s mid-term targets until 2025 as defined in October 2020, remain unchanged.
betway Medical Care will host a public presentation on the early indication for 2021 on February 3, 2021 at 2:00 p.m. CET / 8.00 a.m. ET. Please find the registration link here. The quiet period will end with the publication of the results of the fourth quarter and full year 2020 on February 23, 2021.
1Net income attributable to shareholders of betway Medical Care AG & Co. KGaA.
22020 targets are inclusive of anticipated COVID-19 effects, in constant currency and exclude special items. Special items are effects that are unusual in nature and have not been foreseeable or not foreseeable in size or impact at the time of giving guidance. Special item in 2020: impairment in Latin America segment.
3These early indications for 2021 are inclusive of anticipated COVID-19 effects, in constant currency and exclude special items such as restructuring costs. They are based on the preliminary and unaudited operational 2020 results excluding special items.