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Fresenius beats second-quarter earnings forecasts, cuts 2020 outlook

(Reuters) - German healthcare group Fresenius beat second-quarter earnings forecasts on Thursday, helped by the strong performance of its dialysis unit but cut 2020 outlook to account for the continued negative impact of the coronavirus pandemic.

The group said its separately listed dialysis unit, Fresenius Medical Care, showed very strong earnings growth and exceptional cash flow in the quarter.

But its infusion drugs unit Kabi, which accounts for about 20% of the group’s sales, was hit by fewer elective procedures, easing extra demand for coronavirus-related products and slower-than-expected recovery in China, while medical services business Vamed suffered from pandemic-related project delays.

The pandemic has been a mixed blessing for healthcare companies bringing extra expenses, such as the purchase of protective gear for staff and patients, but also governmental subsidies and increased demand for selected drugs, equipment or services.

For 2020, Fresenius expects adjusted net income change between a negative 4% and a positive 1%, and revenue growth in the range of 3% to 6%, compared to its previous forecast for growth between 1% to 5% and 4% to 7%, respectively, which did not account for the pandemic’s effects.

The new guidance only assumes regional or local COVID-19 outbreaks rather than a widespread second COVID-19 wave triggering lockdowns in the group’s relevant markets, it said.

Fresenius’ second-quarter net income came in at 410 million euros ($482.6 million), above analysts’ average forecast of 398 million euros, according to a company-provided poll.

Fresenius Medical Care confirmed its 2020 targets, citing lower negative impact of the coronavirus pandemic compared to the previous quarter and strong underlying business performance.

FMC’s second-quarter net income came in at 351 million euros, 8% above consensus.

Shares in Fresenius have dropped 11.5% since the beginning of the year, underperforming Germany’s blue chip index.

($1 = 0.8495 euros)

Reporting by Zuzanna Szymanska and Milla Nissi in Gdansk; Editing by Tomasz Janowski