(FMS) Fresenius Medical Care Completes IDC Buy

Fresenius Medical Care (FMS), the largest provider of dialysis products and services on the planet, has wrapped up its acquisition of Euromedic International’s (“Euromedic”) dialysis service division International Dialysis Centers (“IDC”) for €485 million (roughly $648 million). This follows the regulatory approvals of the deal (announced in January 2011) by the anti-trust authorities.

IDC provides treatment to over 8,200 hemodialysis patients mainly in Central and Eastern Europe and runs 70 clinics in nine nations. The acquisition enables Fresenius to expand its role in the dialysis care business, mainly in the fast-growing Eastern European markets, where IDC has a major presence. For its part, Euromedic will focus on cancer treatment and diagnostic arenas.

The newly acquired business is expectedto contribute about $180 million in annual revenues for Fresenius. Moreover, the acquisition is expected to be accretive to its earnings in the very first year following the transaction closure. Fresenius financed the acquisition with its internal cash flows and available borrowing capacity.

Fresenius operates a network of about 2,769 dialysis clinics across North America and overseas markets to provide dialysis treatment to 216,942 patients worldwide. Dialysis treatment is required by victims of chronic kidney failure, a condition that affects over 2 million people globally each year. Fresenius’ principal competitor in the U.S. is DaVita Inc. (DVA), which provides dialysis services for patients suffering from chronic kidney failure or end-stage renal disease.

Fresenius’ first-quarter 2011 profit rose 4.5% year over year on the back of higher sales which climbed roughly 5%. Its international sales were boosted by higher dialysis services revenues while domestic sales were hit by the unfavorable impact of the implementation of the new Medicare end-stage renal disease prospective payment system (the “bundled rate” system), which resulted in a cap in reimbursement.

During the quarter the company provided roughly 8.17 million dialysis treatments globally. Encouraged by its reasonably healthy first quarter results and factoring in the favorable impact of Medicare’s elimination of fees related to the new bundled system, Fresenius has raised its revenues and earnings guidance for fiscal 2011.

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