Fresenius Helios

Fresenius Helios achieved excellent results in 2009. We aim to secure our continued growth by guaranteeing best-in-class care for our patients. Our goal is to keep improving the high quality standard in treatment and care.

Key Figures of Fresenius Helios

  • Hospital operation
in million € 2009 2008 Change
1 Net income attributable to the parent company of the respective business segment.
Sales 2,416 2,123 14 %
EBIT 205 175 17 %
Net income 1 107 80 34 %
Operating cash flow 219 225 - 3 %
Capital expenditure / acquisitions 203 140 45 %
Order Intake n / a n / a  
Employees (December 31) 33,364 30,088 11 %

in million € 2009 2008 Change
1 Net income attributable to the parent company of the respective business segment.
Sales 2,416 2,123 14 %
EBIT 205 175 17 %
Net income 1 107 80 34 %
Operating cash flow 219 225 - 3 %
Capital expenditure / acquisitions 203 140 45 %
Order Intake n / a n / a  
Employees (December 31) 33,364 30,088 11 %

HELIOS is one of the largest German private hospital operators. The HELIOS Group operates 61 proprietary clinics: In addition to 42 acute care hospitals, including 5 maximum care clinics in Berlin-Buch, Erfurt, Krefeld, Schwerin, and Wuppertal, the HELIOS Group has 19 post-acute care clinics. 24 medical centers and 4 nursing homes are also affiliated with HELIOS. The Group has more than 18,500 beds and treats approximately 600,000 inpatients and about 1.6 million outpatients each year. The company had more than 33,000 employees at the end of 2009.

BUSINESS DEVELOPMENT

In 2009, Fresenius Helios increased its sales by 14 % to € 2,416 million (2008: € 2,123 million). Excellent organic sales growth of 7 % was achieved (2008: 5 %), mainly driven by an increase of inpatient and outpatient admissions. Acquisitions contributed 8 %, while divestitures reduced sales by 1 %. One acute care clinic was deconsolidated as of January 1, 2010. It contributed revenues of € 11 million in 2009. The acute care clinics accounted for 89 % of sales (2008: 88 %), while the post-acute care clinics accounted for 9 % (2008: 10 %). 2 % was attributable to other revenues (2008: 2 %).

These figures reflect the high confidence that patients and doctors place in us. They are also evidence for the successful restructuring of the acquired clinics.

in million € 2009 2008 Change
1 Net income attributable to HELIOS Kliniken GmbH.
Sales 2,416 2,123 14 %
thereof acute care 2,142 1,873 14 %
thereof post-acute care 211 205 3 %
EBITDA 286 251 14 %
EBITDA margin in % 11.8 11.8  
EBIT 205 175 17 %
EBIT margin in % 8.5 8.2  
Net income 1 107 80 34 %

in million € 2009 2008 Change
1 Net income attributable to HELIOS Kliniken GmbH.
Sales 2,416 2,123 14 %
thereof acute care 2,142 1,873 14 %
thereof post-acute care 211 205 3 %
EBITDA 286 251 14 %
EBITDA margin in % 11.8 11.8  
EBIT 205 175 17 %
EBIT margin in % 8.5 8.2  
Net income 1 107 80 34 %

As the table shows, earnings were much improved: EBITDA increased by 14 % to € 286 million (2008: € 251 million). The EBITDA margin was at the previous year’s level of 11.8 %.

Fresenius Helios achieved an excellent EBIT growth of 17 % to € 205 million (2008: € 175 million). The EBIT margin also improved, climbing to 8.5 % (2008: 8.2 %). Net income 1 was € 107 million, an increase of 34 % (2008: € 80 million).

At HELIOS’ established clinics, sales rose by 7 % to € 2,253 million. Their combined EBIT increased strongly to € 213 million, while the EBIT margin improved to 9.5 % (2008: 8.3 %). The acquired clinics (consolidated for less than one year) contributed sales of € 163 million. EBIT was € - 8 million.

The hospital operations business exhibits stable cash flows. The cash flow ratio was 9.1 % (2008: 10.6 %). In 2009, days sales outstanding were 36 days (2008: 38 days) thanks to very good receivables management. This is also reflected in the low loss on revenue of 0.2 % (2008: 0.3 %).

GROWTH IN HOSPITAL ADMISSIONS AND TREATMENTS

The introduction of Diagnosis Related Groups (DRGs), with standardized base rates in each federal state, means hospitals in Germany face increasing competition for patients. The HELIOS clinics have successfully adjusted to the changed reimbursement and competitive conditions. Due to the broadening of services being offered and our high treatment quality, we were able to increase the number of inpatients treated in Germany. These rose in 2009 to a total of 620,268, an excellent increase of 13 % (2008: 548,383). The number of outpatients treated at our HELIOS clinics rose substantially by 15 % to 1,634,170 (2008: 1,418,325).

  2009 2008 Change
Inpatient and semi-inpatient admissions 620,268 548,383 13 %
Acute care clinics 586,123 513,990 14 %
Post-acute care clinics 34,145 34,393 - 1 %
Outpatient admissions 1,634,170 1,418,325 15 %

  2009 2008 Change
Inpatient and semi-inpatient admissions 620,268 548,383 13 %
Acute care clinics 586,123 513,990 14 %
Post-acute care clinics 34,145 34,393 - 1 %
Outpatient admissions 1,634,170 1,418,325 15 %

As the table shows, our other structural data and performance indicators also improved:

  2009 2008 Change
1 Germany only
Acute care clinics 43 38 13 %
Beds 15,116 13,733 10 %
Length of stay (days) 1 7.1 7.1
Post-acute care clinics 19 19
Beds 3,467 3,516 - 1 %
Length of stay (days) 1 29.7 30.1 1 %
Occupancy 1 83 % 83 %

  2009 2008 Change
1 Germany only
Acute care clinics 43 38 13 %
Beds 15,116 13,733 10 %
Length of stay (days) 1 7.1 7.1
Post-acute care clinics 19 19
Beds 3,467 3,516 - 1 %
Length of stay (days) 1 29.7 30.1 1 %
Occupancy 1 83 % 83 %

At the acute care hospitals, the average length of stay was at the excellent previous year’s level of 7.1 days. The 83 % occupancy level at the post-acute care clinics was also equivalent to that of the previous year. The average length of stay at the post-acute care clinics improved to 29.7 days.

INVESTMENTS IN HOSPITAL BUILDINGS

In 2009, Fresenius Helios invested € 272 million in its clinics (2008: € 200 million). Own investments were € 124 million (2008: € 135 million). € 27 million of this was invested in new buildings under construction at two hospitals in Krefeld; a total of € 180 million will be invested in Krefeld and Hüls by 2014. Other important projects were investments at our Berlin-Buch and Schwerin locations.

in million € 2009 2008 Change
1 Total of purpose-related public investment subsidies according to § 9 of the Hospital Funding Act (KHG).
Investments 272 200 36 %
Own investments in property, plant and equipment 124 135 - 8 %
Subsidies 1 69 60 15 %
Acquisitions 79 5

in million € 2009 2008 Change
1 Total of purpose-related public investment subsidies according to § 9 of the Hospital Funding Act (KHG).
Investments 272 200 36 %
Own investments in property, plant and equipment 124 135 - 8 %
Subsidies 1 69 60 15 %
Acquisitions 79 5

The purchase price for the five newly acquired clinics was paid in full in 2009. We also have investment commitments at these five locations of € 66 million until 2014. € 2 million of company funds were already invested in the new clinics in 2009. These investments assure high long-term standards of medical quality at all locations. The level of public subsidies was at the previous year’s level of 45 %.

WAGE TARIFF AGREEMENT

HELIOS aims to be an attractive employer. HELIOS concluded the first – widely admired – trade union wage tariff agreement in the German hospital market with ver.di (the United Services Union), in force since the end of 2006, followed by an agreement with the Marburger Bund, in force since the beginning of 2007.

In mid-2009, HELIOS concluded a new wage tariff agreement with ver.di which had retroactive effect as of March 2009. Among other things, this provided for pay increases and a one-off payment for non-medical staff, employment programs, and workplace improvements for students and apprentices. The pay scales defined with the Marburger Bund in October 2008 were adopted with retroactive effect for the approximately 3,000 doctors covered by the wage tariff agreement.

POSITION IN THE HOSPITAL MARKET

HELIOS’ business model is based on growth through acquisitions. One element of our acquisition strategy is the regional proximity of hospitals – sufficiently close to one another to form networks (clusters). Regional clustering enables cost savings, especially by concentrating non-medical services (for example, laundry or catering) in one hospital. Moreover, patients benefit from the bundling of medical expertise from the HELIOS clinics in the region. For instance, doctors on emergency duty can consult the HELIOS Group’s stroke centers via a videoconferencing link. Supported by experts at the larger clinics, they can make an efficient diagnosis and act fast.

After a hospital is acquired, we carry out modernizations. Besides structural improvements, this also includes alterations – in some cases even the construction of completely new buildings – and investment in medical equipment. We also reorganize the hospital’s internal processes and implement the proven HELIOS quality management system. This ensures a target-driven, performance-oriented management of the hospital. Our goal is to increase the EBITDA margin of an acute care clinic to 15 % within five years after acquisition.

The restructuring plan of our acute care clinics includes all clinics within the Group according to their years of consolidation.

In year 5, the negotiated budget for one clinic was not recorded in the financial statements. This is due to the fact that the competent regulatory authority must approve the budget before it becomes effective. Adding this effect to total EBITDA of the acute care clinics, HELIOS again achieved the overall EBITDA restructuring target. Furthermore, the EBITDA in year 5 was influenced by reconstruction at one clinic.

In 2009, we successfully consolidated our position in the German hospital market. The following clinics were added to the HELIOS Group as of January 1, 2009:

  • the HELIOS clinic in Sangerhausen (348 beds)
  • the HELIOS clinic in Lutherstadt Eisleben and
  • the HELIOS clinic in Hettstedt (total: 508 beds),
  • the HELIOS Albert Schweitzer Clinic in Northeim (273 beds)
  • the HELIOS clinic in Bad Gandersheim (110 beds).

Restructuring Plan acute care clinics 2009


  Years in portfolio
  < 1 1 2 3 4 5 > 5 Total
Number of clinics 6 4 7 2 24 43
Revenue in million € 176 244 170 283 1,269 2,142
Target                
EBITDA margin, in % n. a. 3.0 6.0 9.0 12.0 15.0 15.0  
EBITDA in million €   5.3 14.6 15.3 42.5 190.4 268.1
Reported                
EBITDA margin, in % - 3.8 6.9 11.9 9.3 16.6 12.5
EBITDA in million € - 6.7 16.8 20.2 26.4 210.3 267.0
Number of clinics > target 3 5 17 25
Number of clinics < target 6 1 2 2 7 18

  Years in portfolio
  < 1 1 2 3 4 5 > 5 Total
Number of clinics 6 4 7 2 24 43
Revenue in million € 176 244 170 283 1,269 2,142
Target                
EBITDA margin, in % n. a. 3.0 6.0 9.0 12.0 15.0 15.0  
EBITDA in million €   5.3 14.6 15.3 42.5 190.4 268.1
Reported                
EBITDA margin, in % - 3.8 6.9 11.9 9.3 16.6 12.5
EBITDA in million € - 6.7 16.8 20.2 26.4 210.3 267.0
Number of clinics > target 3 5 17 25
Number of clinics < target 6 1 2 2 7 18

As an experienced privatization partner, HELIOS is in an excellent position to make further acquisitions and will continue to focus on expanding its market position in Germany. Great strides were made in integrating the HELIOS clinics in Krefeld and Hüls. Their admissions once again increased by 4 % in only their second year with the HELIOS Group. This was due to the above-mentioned measures that HELIOS swiftly implements after successfully acquiring a clinic. They have significantly improved the medical standards at the clinics in Krefeld and have helped remove the public’s reservations about a private hospital operator. In fact, HELIOS clinics are perceived as vital providers within the infrastructure of the entire region, not only in Krefeld.

HELIOS SERVICE SPECTRUM

The HELIOS Group offers patients competent services in acute and outpatient care as well as post-acute care and residential care for the elderly. Our goal is to provide high standards of medical care in all areas and at all levels.

Acute care is the group’s core focus. 42 acute care clinics cover virtually the whole medical spectrum, with a broad-based portfolio ranging from basic and standard care hospitals through to maximum care hospitals. There are 24 specialist centers attached to the clinics, which also have an excellent reputation outside their local regions.

The total medical care we provide for our patients also includes outpatient care needed after they leave the hospital. Possibilities for treatment at the clinic itself, our medical centers, and the collaboration with numerous external doctors enable a seamless integration of outpatient and inpatient care within the HELIOS network. The success of our concept was once again demonstrated by the high number of outpatient admissions in 2009.

Our acute and outpatient care concept is supplemented, both regionally and medically, by our post-acute care clinics. The numbers speak for themselves: in 2009, we again treated more than 34,000 patients at our post-acute care clinics.

At our nursing homes, the mission is to provide quality residential care with dignity and respect. Residents additionally benefit from the close links with our acute care facilities, which assure fast and optimum treatment.

GOAL: BEST-IN-CLASS MEDICAL RESULTS

In 2009, HELIOS continued its program for further improving the quality of its medical results. A unique quality management system, developed in-house, assures continuous improvement in the standards of patient care. More information on quality management and the “Initiative of Quality Medicine (IQM)” co-founded by HELIOS can be found here.

HELIOS MEDICAL PORTAL

On the HELIOS Medical Portal, we electronically provide external doctors with medical data, diagnoses, and treatment outcomes of their patients, whom we treat at our clinics. Our hospital doctors and the external doctors treating the patients after they leave the clinic can use the portal to retrieve all the relevant documents on their patient, e. g. medical certificates issued when the patient is discharged, surgery reports, laboratory results, x-rays, and other findings. This enables all those involved in a patient’s therapy and care to obtain detailed, up-to-date information about the course of a patient’s ailment and the therapy. External doctors can use the portal free of charge and access it via a secure, certified data link. Privacy protection is fully assured.

We are continuously striving to improve the standard of medical quality at HELIOS. As always, we will determinedly pursue our goal of achieving a standard of treatment quality that is better than the national average – or other international benchmarks – in all important areas in 2010. For further information, please see Fresenius Helios’ website at www.helios-kliniken.de (German only).

Please see here for the 2010 financial outlook of Fresenius Helios.

Information on the German hospital market can be found here and here.

1 Net income attributable to HELIOS Kliniken GmbH.

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