FMS Stock Gains Following Stake Sale to Reduce Debt & Boost Profit

Fresenius Medical Care’s FMS parent company Fresenius SE raised nearly €1.1 billion ($1.2 billion) through a strategic sale of shares in Fresenius Medical Care AG and the issuance of exchangeable bonds linked to the dialysis firm, per a Bloomberg report.

The move involved selling 10.6 million shares in FMS, generating approximately €471 million, and issuing €600 million in three-year zero-coupon exchangeable bonds. These transactions accounted for about 7% of FMS' outstanding shares.

Despite the divestment, Fresenius SE remains committed to its role as the largest shareholder, retaining at least 25% plus one share in FMS. The strategy aims to capitalize on recent stock price gains, enhance financial flexibility and strengthen its core businesses, which include the hospital business Helios and the drug and medical device supplier arm Kabi.

Likely Trend of FMS Stock Following the News

Following the announcement on March 4, shares of the company gained 0.7% and closed at $23.72 on Wednesday. So far this year, FMS’ shares have gained 4.7% compared with the medical instrument industry’s 0.9% growth. The S&P 500 has decreased 2.1% in the same time frame.

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A Leaner and Profitable Structure for FMS

The stake sale aligns with Fresenius’ broader restructuring efforts under CEO Michael Sen, who has been steering the company toward a leaner and more profitable structure.

The deconsolidation of FMS in 2023 was a pivotal step in this transformation, allowing Fresenius to sharpen its operational focus. With the proceeds from the latest share sale and bond issuance, the company aims to reduce its leverage and drive profitability into 2025, even amid rising costs in the hospital sector.

FMS also announced the divestment of select laboratory assets to Quest Diagnostics last month, reinforcing its focus on core dialysis operations while leveraging Quest's expertise in laboratory services. The company is streamlining its operations by selling select assets of its wholly owned Spectra Laboratories to Quest. This strategic divestment enables FMS to concentrate on its primary dialysis care business while benefiting from Quest’s clinical expertise in laboratory diagnostics. Under the agreement, Quest will acquire select renal-specific laboratory assets and provide dialysis-related laboratory and water testing services to FMS-owned and affiliated clinics across the United States. This transition is expected to be completed by early 2026 following regulatory approvals.

For FMS, the transaction is part of a broader portfolio optimization strategy aimed at divesting non-core and lower-margin assets. Quest, in turn, will expand its capabilities by incorporating dialysis-related water testing into its service offerings, enhancing efficiency and service quality for dialysis clinics nationwide. This move aligns with FMS’ three-year turnaround plan, now in its second year, focused on sustainable growth in strategically aligned markets.

Fresenius Medical Care AG & Co. KGaA Stock Price

Fresenius Medical Care AG & Co. KGaA price | Fresenius Medical Care AG & Co. KGaA Quote

FMS’ Zacks Rank and Other Key Picks

Fresenius Medical Care currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader medical space are Masimo MASI, Boston Scientific BSX and Cardinal Health CAH. At present, Masimo sports a Zacks Rank #1 (Strong Buy), whereas Boston Scientific and Cardinal Health carry a Zacks Rank #2 each.

Masimo

Masimo’s shares have rallied 30.1% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Estimates for MASI’s 2024 earnings per share (EPS) have increased 1.2% to $4.10 in the past 30 days. MASI’s earnings beat estimates in each of the trailing four quarters, the average surprise being 17.1%. In the last reported quarter, it posted an earnings surprise of 16.6%.

Boston Scientific

Estimates for Boston Scientific’s 2025 EPS have jumped 2.9% to $2.85 in the past 30 days. Shares of the company have surged 56.7% in the past year compared with the industry’s growth of 12.5%. BSX’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 8.25%. In the last reported quarter, it delivered an earnings surprise of 7.69%.

Cardinal Health

Estimates for Cardinal Health’s fiscal 2025 EPS have increased 1.5% to $7.94 in the past 30 days. Shares of the company have jumped 15.2% in the past year against the industry’s 4.1% decline. CAH’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.6%. In the last reported quarter, it delivered an earnings surprise of 10.3%.

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This article originally published on Zacks Investment Research (zacks.com).

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