Fresenius Medical Care AG & Co KGaA (FMS) Q3 2021 Earnings Call Transcript

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Fresenius Medical Care AG & Co KGaA (FMS 4.53%)
Q3 2021 Earnings Call
Nov 5, 2021, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

I'm Natalie your Chorus Call operator. Welcome, and thank you for joining the Fresenius Medical Care report on the Third Quarter Earnings and FME25. Throughout today's recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. [Operator Instructions]

I would now like to turn the conference over to Dominik, Head of Investor Relations. Please go ahead.

Dominik Heger -- Executive Vice President & Head of Investor Relations

Thank you, Natalie. As mentioned by Natalie, we would like to welcome you to our earnings call for the third quarter 2021 and for FME25. We appreciate you joining today for an extended session and hope that all of you are equipped with food and some water. We will start with our third quarter presentation, followed by a Q&A session focused on the quarter only. At around 4:30 CET, we will then pick up on FME25 with a separate Q&A session to follow.

I will start out the call by mentioning our cautionary language that is in our safe harbor statement, as well as in our presentation and in all the materials that we have distributed earlier today. For further details concerning risks and uncertainties, please refer to these documents as well as to our SEC filings. In order to allow time for the FME25 presentation and a second Q&A session, we would like to limit the number of questions again to two in order to give everyone the chance to ask questions on each of the calls. It will be great if you could make this work again in both parts of the session.

With us today is, of course, Rice Powell, our CEO and Chairman of the Management Board; and Helen Giza, our Chief Financial Officer and Chief Transformation Officer for FME25.

I will now hand over to Rice. The floor is yours.

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

Thank you, Dominik. Welcome, everyone. Thank you for joining us today, not only for the first call, but for the second call. Before I begin my prepared remarks, I'd like to say and tell you how proud I am that we have been recognized as number two of America's most loved workplaces and healthcare services as determined by Newsweek. Our employees all over the world do a fantastic job in caring, innovating, producing and delivering products for our patients even during this pandemic situation and please, each and every one of you out there, please accept my gratitude and thanks for the incredible jobs that you do.

I will begin my prepared remarks with the third quarter presentation, and let's start with slide four, if you will. During the third quarter, we faced a stronger-than-projected headwind from COVID effects as patient access mortality reversed trend and significantly increased as a result of the global spread of the Delta variant. Despite this significant headwind, our business delivered organic growth in the quarter of 1%. We've seen a very solid number of patient new starts around the world, which tells us that the underlying drivers are, in fact, intact. We are confirming our full year 2021 guidance. However, we now expect to come in at the lower end of our revenue and net income ranges due to the significantly higher than projected excess mortality.

COVID is a challenge for our industry right now. Significant resources are rightfully focused on ensuring that our patients continue to receive the life-sustaining dialysis treatments that they need. That makes the continued progress on our strategic priorities, all the more impressive in the quarter. First, we are extremely excited about what FME25 will mean for the future of our business, not just in terms of savings, but really unlocking value and further growth potential for our business. Helen and I both look forward to discussing FME25 following this Q3 update. Please hang in there with us. Secondly, in the third quarter, we have crossed the 15% level of treatments performed in a home setting in the US. This is a great achievement by our team and even more so when you consider all of the efforts spent on managing the pandemic within the quarter. We are very optimistic about the continued growth potential for home, especially as we're able to shift resources from pandemic management and back to training the many patients interested in home treatments. This will continue, obviously, to be a very important priority given the current labor situation that we are experiencing in the US.

Thirdly, we are continuing to move the market with our leading value-based care capabilities. Alone in the US, the addressable market for chronic kidney disease patients in Stage 4 and five is more than US$20 billion. We've built up significant experience and have managed medical cost of around US$20 billion since 2016. While this year, we managed around US$2.4 billion of medical costs and covered roughly 32,000 lives. With the CKCC models on track to start in just a few months, we expect our medical costs under management to exceed US$6 billion.

Fourthly, we are making important progress with our global sustainability initiatives. On November 18 at 4:00 p.m. CET, Dr. Frank Maddux, our Global Chief Medical Officer and Charlotte Stange, our Global Head of Sustainability will host an expert call on sustainability in patient-centered care. I'll leave the sustainability update for that time and hope that you are able to join us and spend some time with Frank and Charlotte.

And then finally, last Friday, the final ESRD prospective payment system rule for 2022 was published by CMS. With $257.90 per treatment, this will be an increase of 1.9% or $4.77. The final rule has improved against the original proposal. CMS finalized the proposal to eliminate the QIP penalties for 2022 in light of the ongoing COVID-19 public health emergency.

Turning to Slide 5; during the first nine months of this year, we've delivered over 39 million dialysis treatments to around 345,000 patients. The decrease in the number of patients and the number of treatments directly relates to the tragic impact of the COVID-19 pandemic and the many, many lives that is touched in a negative way of our patients. The 2% clinic growth mainly relates to growth in North America due to acquisitions and newly opened clinics that were initiated about 18 to 24 months or so ago.

Turning to Slide 6; we continue to see stable anemia as well as bone and mineral metabolism control, demonstrating that our patients are receiving consistent high-quality dialysis care even during the pandemic.

Please turn to Slide 7. This slide compares the development of COVID infections worldwide to the number of cases we have seen across our Fresenius Medical Care patient population. As seen with the general population, the fourth wave of COVID with the Delta variant has extended the pandemic phase of this viral illness, leading to increased morbidity and mortality despite the protection and mitigation that the vaccines have provided. However, we have seen infection rates declining since the end of last quarter. We continue to advocate that all of our patients be vaccinated. We have seen increases in vaccination rates since our Q2 results at the end of July. Today, both in the United States and globally, around 78% of our patients have received at least one dose. And in the United States, the majority of our patients are fully vaccinated with both doses where necessary.

The vaccines have provided distinct benefit to our patients despite known breakthrough cases. We see vaccinated patients with only one third to one half of the rate of COVID compared to our unvaccinated patients in the same communities. We are encouraging our vaccinated patients to receive boosters. Now that the US has approved the boosters for Pfizer, BionTech, Moderna and J&J vaccines, we are starting to see a pickup in booster rates as well. We have an active campaign in the US to have all of our vaccinated patients receive a booster dose by November 11, two weeks before the Thanksgiving holiday when the indoor holiday season as we like to refer to it, does begin.

While it is hard to predict how the pandemic will evolve, there are signs that the COVID pandemic will ultimately become endemic. This will make COVID a more manageable medical condition. In the general population more and more people will have been infected and developed their own immunity. And at the same time, it looks to be vaccine approval for children five years and older is becoming a reality. This should support broader community based herd immunity.

Moving to Slide 8; during the first six months of the year, excess mortality hit trended downwards, never reaching the pre-pandemic levels as we had hoped. With the global spread of the Delta variant over the summer, we saw a reversal of this trend with excess mortality increasing again throughout the third quarter. Excess mortality reached approximately 2,700 globally within the quarter. The background local rates of infection and mortality mimic the curve seen in the general local population at both the state level and country level throughout the globe. During the third quarter, the impact was particularly pronounced in North America and to a lesser extent, in EMEA.

Globally, on a last 12 month basis, excess deaths further accumulated to approximately 11,500 since the start of the pandemic, we've seen them accumulate to approximately 18,200. As we saw new COVID cases declining, we are projecting excess mortality in the fourth quarter to be somewhat below the level of third quarter.

Turning to Slide 9; in the third quarter we achieved revenue of EUR4.4 billion, reflecting 1% growth in constant currency. Our net income, excluding special items, declined by 21% on a constant currency basis. Costs related to FME25 will be treated as a special item. And during the third quarter, we had EUR5 million in FME25 related costs pre-tax. As already mentioned, the pandemic negatively impacted our top and bottom line. Our third quarter net income includes a negative net COVID effect of EUR108 million. Excluding this impact, our net income growth in the third quarter would have been approximately 7% above the 2020 base. We are also continuing to face macroeconomic inflationary pressures related to both labor and raw materials in the quarter. Our third quarter earnings were slightly impacted by a negative foreign exchange effect.

Turning to Slide 10; despite the challenges related to the pandemic, we delivered organic growth during the third quarter with North America, Asia Pacific and Latin America, all contributing positively. In EMEA, organic growth not only faced negative impacts from COVID, but growth in the region was also hindered by the timing of some export sales.

With that, I'll turn it over to Helen, who'll take you through the development in greater detail.

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

Thank you, Rice. Hi, everyone. I'll pick up on the services on Slide 12.

In the third quarter, Healthcare Services delivered revenue growth of 2% at constant currency overall. The adverse COVID impact on organic growth in Healthcare Services amounted to approximately 390 basis points for the third quarter. Nevertheless, organic growth increased despite these negative impacts from the pandemic in all regions. It was also negatively impacted by customer metrics in North America. Asia Pacific stood as a strong regional contributor in the third quarter, supported by a rebound in elective procedures and solid dialysis services. With the spread of the Delta variant and increased level of excess mortality, same-market treatment growth decreased by 2% in the third quarter, while new patient starts were on a solid level.

I'll now move to the Products business on Slide 13. Revenue for our Products business was stable in the third quarter, and organic growth was flat overall. On a regional basis, North America delivered growth despite continued pressure from the pandemic. Lower sales of in-center disposables, particularly in EMEA and Asia Pacific, as well as lower overall sales of peritoneal dialysis products were offset by a positive impact from foreign currency translation and higher sales of machines chronic treatment.

Turning to Slide 14. Here, we show the margin development for the first nine months of the year. As we have discussed, the biggest impact on margins year-to-date relates to COVID. The effects of excess mortality on both our core dialysis and downstream businesses are a large component of the COVID impact. Higher cost for labor, raw materials and healthcare supplies, mainly due to macroeconomic inflationary effects have been the next biggest negative drivers of our margin in the first nine months of the year. Wage inflation is not a new challenge for us, and our outlook for 2021 factored in the usual 3% wage increase. This is one of the reasons that growth in home dialysis has been and continues to be an important strategic priority for us.

Like many companies operating in the US, we have a very high number of open positions that are taking time to fill. The level of open positions has stabilized since July, but it is something that we are continuing to monitor and need to take into account for 2022. We also see inflationary pressure as it relates to raw materials. These are mostly related to higher prices for plastic used for the production of disposables, which in our case, are often indexed with oil prices.

On the positive side, we saw an improved payer mix due to growth in Medicare Advantage. Medicare Advantage continues its growth at the usual intra-year pace in the third quarter and remains like in the last years, our fastest growing book of business. Our Medicare Advantage mix right now represents roughly 30% relative to our entire US patient population.

Our nine month development also benefits from overall reimbursement rate increases and an impairment for a license held by our joint venture with Vifor Pharma last year, which lowered the 2020 days. Some of the headwinds that I've just outlined will continue to impact us in 2022. With excess mortality continuing to accumulate, the annualization effect is lasting longer. We face a very tight labor market that triggered higher than normal wage inflation, a general macroeconomic inflationary environment, sequestration release expiring and some of the PPE costs potentially continuing depending on CDC protocols. However, the solid underlying patient new starts, the growth in Medicare Advantage, the start of CKCC models and our FME25 savings should be on the positive side.

Next on Slide 15; during the third quarter we generated operating cash flows of EUR692 million and a resulting margin of 15.6%. The decline was mainly due to the US federal government's payments in the second quarter of 2020 under the CARES Act, and the continued recoupment of these advanced payments. EUR195 million were recouped during the quarter and EUR354 million year-to-date. With the recoupment of funds and driven by our lower EBITDA, we have seen our net leverage ratio of 3.1 moved back into our target range of 3x to 3.5x. The weightings presented at the bottom right were all reconfirmed earlier in 2021 and support our solid financial position.

Turning to Slide 16; we are confirming our 2021 guidance range of low to mid-single digit revenue growth and net income to decline at high-teens to mid-20s percentage rate against the 2020 base. However, we are now expecting to be at the lower end of both of these ranges. When we provided guidance back in February, we had assumed an accumulation of COVID-related excess mortality in the first half and a return to normal mortality patterns in the second half of the year. We know that predicting the full development of the pandemic would be hard, which is why we provided the ranges that we did.

As we have discussed already, the continued presence of COVID, along with the development of the Delta variants, has led to a significant increase in excess mortality that has not been included in our outlook assumptions. Rice has mentioned earlier that since the beginning of the quarter, we have seen declining infection rates. Therefore, we are now projecting excess mortality to decline again from the elevated level of the third quarter. As a reminder, we have not yet completed the budgeting process for 2022, and we will provide our outlook for 2022 at the time of our full year results in February, and we have already provided a mid-term outlook.

That concludes my prepared remarks relating to the third quarter. And I will now hand it back over to Dominik to begin the Q&A.

Dominik Heger -- Executive Vice President & Head of Investor Relations

Thank you, Helen. Thank you, Rice, for the presentation on Q3. I'm happy to turn it over to Natalie to open the lines for the Q&A, please.

Questions and Answers:

Operator

Thank you. [Operator Instructions] And the first question is from the line of Oliver Metzger from Oddo BHF. Please go ahead.

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

Hi. Good morning. Thanks for taking my questions. The first one is on excess mortality. Could you make a comment how many or which share of the incremental the past away patients were vaccinated? Number two is financial one on inflationary [Phonetic] and labor cost increases. So in the first month, you had reported an impact of 120 basis points on margins, which equates to around EUR11 million compared to last year. Now after nine months, it's already 170 basis points, which links to EUR24 million or additional EUR13 million [Phonetic] for the quarter. So could you comment which components drives this position the most and whether we should assume the current momentum to continue even to accelerate for last quarter? Oliver, it's Rice and Helen. I'll take number one, and Helen will take number two. So in the quarter, the excess mortality that we saw, the vast, vast majority of that was unvaccinated patients. We know from our data that generally our vaccinated patients are somewhere around one third to almost -- 30% to 50% less likely to be infected with COVID as a result of having been vaccinated. Now having said that, we had some vaccinated patients that pass away, but it would not be due to COVID, but it would be some of the other comorbid conditions, obviously, that you're well aware that they have to deal with through their chronic treatment. But I would say at this point, we believe the vast, vast majority of what we've seen in the excess mortality has been from on vaccination of patients. And I'll turn it over to Helen for number two.

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

Yes. Thanks, Rice. So Oliver, I would say we have two components of labor, and I'm going to separate them out because I think it's important to do so. Included in our COVID effect, we have some labor impact in that. As you can appreciate, with the number of excess mortality that we're dealing with, we're still operating some isolation clinics. We are having to adjust comp on adequate workforce, and critical pay, float differentials as we keep the clinic operational and manage our way through the COVID situation. And then secondly, I would say, in the labor bucket that you're referring to on the bridge, that's where we have kind of probably a netting effect of the positive impact from the open positions, but offset by what we're seeing on the wage compression. And obviously, it's that wage compression that we are watching closely as well as the overall labor market as we move into Q4 and into 2022. As I mentioned, it's really important for us -- in my prepared remarks, important for us to see how that open position number develops as we're seeing the current trends. So yes, no, your math is right, but the compression and obviously, the wage inflation is something we're watching hopefully as we go into 2022.

Oliver Metzger -- Oddo BHF -- Analyst

Okay. Thank you very much.

Operator

The next question is from the line of Veronika Dubajova from Goldman Sachs. Please go ahead.

Veronika Dubajova -- Goldman Sachs -- Analyst

Hi, Helen. Hi, Rice. Thanks for taking my questions, please. I have two. One, just following on, on the labor conversation, I guess. Helen, would love to understand at this point in time is the sort of pressure you're seeing primarily driving pressure in the P&L on a cost perspective? Or are you seeing any detrimental impact on revenue growth as well? And I guess, as you think about 2022 and the wage compression that you're observing between the rates you're paying and some of the other healthcare providers, how much more room do you have before your salaries kind of get to parity, and it becomes harder for you to recruit? So that's my first question.

And then, my second question is just very briefly on the weakness that you saw in the Products business in the third quarter, I would love to understand whether there is anything structural there or just some timing impacts? And related to that, I'm going to sneak in a quick follow-on on which is any thoughts the incremental reimbursement for the Tableau [Phonetic] and whether that changes how you're thinking about home through 2022 and beyond in the next stage competitive positioning? Thanks, guys.

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

One, and I'll do two and three.

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

Sure. Yes. Hi, Veronika. So yes, on labor, look, I think a massive call out to the North America team. I think they -- obviously, the open positions mean that they are juggling those operations and making sure that no patient goes without-goes without dialysis and that we keep everything running as smooth as we can. I would say so far, the impact has been more on managing the cost, as we obviously move our employees around to cover what we need to, to keep the clinics operational. Obviously, the situation in the labor market is quite unique and unprecedented for us. And we obviously keep an eye on that weight. Yes, I mean there's a shortage on healthcare workers in general. There's definitely a war on talent. We expect to have to put more into rate over the course of the next year. But I think it shouldn't be lost on us. In Rice's opening comments about number two of employers, sorry, in healthcare services, we are seeing loyalty from our employees that is helping -- as we've gone through COVID and it's helping keep that turnover lower. But without a doubt, it's a challenge out there, and we're doing everything we can to kind of keep the recruiting of the open positions. I would say back in the summer, the number was much more significant than we appreciated it could ever be, but the team has done a nice job of bringing that down over the past few months. So, I think it's a trend that we're watching really closely, Veronika on how it unfolds over the coming months here and obviously, a key part of our 2022 forecasting.

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

Hey, Veronika, it's Rice. As it relates to products, I would say I don't think we see something structural or something that's gone away [Phonetic] if you will. I think it's just, again, the continuation of excess mortality and the knock-on effect that brings you because you don't have patients utilizing products as they're being treated. And then secondly, remember, our Acute business, our Critical Care business ran hot all of last year as a result of what was going on in the ICUs and that has kind of trailed off in some of the regions, so that's, I'd say, the two primary impacts. And then we did have some timing of a couple of things in the export side of the house that we think will come back. We don't think they're -- that's missed forever. Tableau, as you guys may or may not know, so let me just kind of give you a little bit of a brief. The price differential on a Tableau machine versus an X-ray machine is almost double on the Tableau product. And so when you look at Tippani's [Phonetic] and what it's going to provide, it is not much of a gap closure, if you will. We don't really believe or see that that's going to be something that's going to fundamentally change the trajectory of our business with our next stage product line versus what we're seeing there. It's just not going to come nearly as close to offsetting that big differential between where they're priced and where we are.

Veronika Dubajova -- Goldman Sachs -- Analyst

Got it. Thank you, guys.

Operator

The next question is from the line of Lisa Clive from Bernstein. Please go ahead.

Lisa Clive -- Bernstein -- Analyst

Hi, there. Two questions on value-based care. First of all, David [Phonetic] is doing a significant amount of investment into 2022 to be able to handle the increase of patients in value-based care, largely on the back of the CKCC program. Can you just confirm that given your history with the ESCO program that you already have the infrastructure in place? Or if that's not the case, could you just give us an indication of what sort of investments we should be thinking about into next year? And then second, just on the trajectory of CKCC, you are -- obviously, ESCO program was a significant scale at almost 50,000 patients when you shut it down. How quickly could you get to that kind of figure with CKCC?

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

Hey, Lisa. It's Rice. I'll take those. So we will need to invest in value-based care to the degree we need to ramp up with some extra resources if the program begins to grow like we hope it will, I'll be happy to spend some money there. But generally, the level of investment that Dave [Phonetic] is talking about, we've been there a long time ago. So your assumption is correct, we're simply going to need to flex labor, depending on how the program is going up or down, up, we hope. But no, we don't see a lot of brick-and-mortar as we would call it, not in the traditional sense, but a lot of heavy investment. We think we have the systems and the capability to do what we need to do. So we're very comfortable there. And then looking at what happens with CKCC and how quick it ramps up and can we get to an ESCO volume? We've got some assumptions. I think we're probably trying to be conservative and wait and see how this plays out. I think what my guess would be ramp-up will start slow and then it may pick up later on. We'll have to see how that plays out. But I think we are feeling that we are going to see ramp up immediately. It's going to come. And then we'll see, is it really going to exceed where we were exactly where will the place be. But we're prepared, and we're ready for it to kind of rock and roll when we go into the New Year.

Lisa Clive -- Bernstein -- Analyst

Okay. And then just a follow-up, just on the revenue recognition, given the significant delays that you saw in ESCO, as you do ramp up CKCC and get several thousand patients enrolled in that program, will you recognize the revenue -- at what point will you recognize the revenue? Will it be like an 18 to 24 months delay? How should we just think about the modeling of that?

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

Well, they don't let me talk about revenue recognition, so let me turn it over to Helen. Go ahead, Helen.

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

Well, I think like with the ESCO program, we had to obviously put our best estimate of what the savings would be and then it was trued up once we got the report. So I'm anticipating it will be a similar situation, Lisa, that we will always be accruing to the latest reports that we get from them with an estimate of what we think those savings will be and obviously, the experience as we go through the quarters and so on, we'll get refined.

Lisa Clive -- Bernstein -- Analyst

So at some point, the revenue recognition should roughly match up with the quarter that it's in?

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

Yes, exactly. Exactly, yes. And we learned a lot from ESCO, too. So --

Lisa Clive -- Bernstein -- Analyst

Okay.

Operator

The next question is from the line of Tom Jones from Berenberg. Please go ahead.

Tom Jones -- Berenberg -- Analyst

Good afternoon. Thank you for taking my two questions. The first is just on hospitalization in COVID patients. We talk a lot about mortality. But I guess the other side of the volume coin is the issue of hospitalization. Because I know you picked some of that up through your Acute Care business, but perhaps not all. So I guess I wondered if you could make some comments around kind of hospitalization rates among your COVID-positive patients? And whether the same-store volume growth perhaps isn't as bad as it looks because as well as losing patients to mortality, you're perhaps losing more than usual to treatments in alternative sites. So just wondered if you could put some color around that? And then the second question was just on the final rule as it pertains to the ETC model. They seem to make some vaguely sensible adjustments to it. But I'm just wondering what your perspective on the final rule for the ESRD treatment choices model would be?

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

Hey, Tom. It's Rice. Thanks. I'll take those of those, and Helen will jump in when I go astray. So when we look at hospitalization COVID, cohort of patients, our acute care is down somewhere around 2.5%, 3%. So we've seen some decrement there. And then when we look at the -- or looking at the ETC, we got that as you did on Friday. So we're trying to unpack how we see some of that. I do think we were happy to see that what we had believed was a little bit of discrimination about large LDOs versus smalls and some of the things that were going on there that seemed to kind of gotten rationalized, if you will. But we're going to need to do some more work on that and unpack it. As you well know, it's not the most straightforward model that we're dealing with. But we're going to see each other here pretty soon again. And I'll come back around, and hopefully, we'll get it unpacked by the end and we can chat about that. Might leave anything out, Helen?

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

No, no.

Tom Jones -- Berenberg -- Analyst

Sorry, just to clarify on the hospitalization thing. I was talking more about the impact of COVID-related hospitalizations from your incentive patients going into hospital and therefore, missing treatments. So I just wondered how much of a factor that was in the dip in same-store volume growth that we saw in Q3?

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

I'm going to be probably making a guess on that. Can I come back to you on that Tom? Because as I said to Oliver earlier, our situation on hospitalization and ultimately, the excess mortality was on the non-vaccinated. But let me come back to you on that. Maybe we can even get back to you before we get off the call, OK?

Tom Jones -- Berenberg -- Analyst

No, that would be helpful. I'm happy to hang on.

Operator

The next question is from the line of Patrick Wood from Bank of America. Please go ahead.

Patrick Wood -- Bank of America -- Analyst

Perfect. Thanks. I'll keep it to one, and I'll try and make it one that's impossible to answer, if I can. I appreciate you guys -- you didn't want to talk about '22, but if I think of is just the basic bridge, right, you've got a little bits and pieces like California, you've got mortality as you site [Phonetic] co-sequestration, cost inflation. But then on the flip side, you've obviously got good patient starts and some of the cost savings. So I guess, if I ask it in as open-ended way as possible to try and fish for an answer, at this stage, when you're just conceptually looking at it from a top-down perspective, is it possible to commit to any kind of EBIT growth next year? Or is flat EBIT year-on-year or any other metric you like still on the table as a possible outcome? Thanks.

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

Well, Patrick, you know me well enough by now to know I'm not going to commit to 2020 guidance rates in November. But look, as you can all appreciate, there's a lot of moving parts for 2022. I think you've characterized a lot of the pluses and minuses appropriately. And Rice and I was having earlier, and we tend to talk about what we know and what we don't know. And a lot of those things that you've mentioned, I think we know. We can see the annualization of COVID, even though we don't know what Q4 truly looks like yet. We know where we are with sequestration, the ballot, we can make some assumptions on labor and inflation. And then I think on the positive side, we do expect volume to recover. And then for us, particularly, don't forget, when our volume recovers all the downstream effects that have hurt us this year should also recover as well. And then, of course, we've got the kind of the continued growth in VBC and CKCC coming online, a little bit unknown on PPE on what the protocols will be. Obviously, as you've already noted the Medicare reimbursement rate helps. And then I think we obviously have FME25 five that we'll talk about in the next hour of the call. So a lot of moving parts, and we will triangulate all of that with you with new bridges as we get into February. But as you can appreciate, they're all on the table and all being reviewed as we are actively going through our 2022 budgeting process right now.

Patrick Wood -- Bank of America -- Analyst

Perfect. I'll just give it a try. Thanks, guys.

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

Thank you.

Operator

The next question is from the line of David Adlington from JPMorgan. Please go ahead.

David Adlington -- JPMorgan -- Analyst

Hey. Thanks for the questions. So firstly, just on the staff vacancies, I just wondered if you could sort of quantify how many there are currently versus you would normally have? And what sort of tailwind you've had from those open positions? And how you expect those to be filled to go on from here? Or do you just not feel them as part of the FME25 program? And then secondly, on the Products business, as you called out the cost inflation on the raw materials sort of roughly how much you spend on plastics in a given year and what sort of inflation you're seeing?

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

Yes. I will have a go at the -- both of those, actually. The staff vacancies, I don't have the latest number other than we were seeing higher than normal early part of the year, and that's coming back and being filled as we go. But definitely, we are not and I want to reinforce that significantly. We are not leaving staff vacancies in clinics, our operations open as a result of FME25. FME25, we'll get into in a bit more detail, but that is not just leaving open positions as a path to get savings and not part of our strategy. But we can follow up on what the latest number was. I know back in the summer, we had about 6,000 open positions. I don't have the current number right now on at hand. But we definitely are doing all we can with active campaigns to recruit and fill the positions. That's really important to us. And then on your question on the plastics, I would say I don't have the exact amount of the base of plastics, but we definitely are seeing a low double-digit million euro impact in 2021. So you can kind of maybe around the EUR10 million impact in 2021 on those inflationary measures. But I don't have the base number to hand, David. Hopefully, those are both helpful.

David Adlington -- JPMorgan -- Analyst

Thanks. And have you entered into sort of contracts on those plastic prices or should we expect more inflation next year?

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

Yes. I mean they are standing contracts, but they are linked to the kind of the commodity indices. So you take the rise and the fall with those. And obviously, again, trying to predict what impact that could be next year as part of the '22 numbers.

David Adlington -- JPMorgan -- Analyst

Thanks very much.

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

Thank you.

Operator

The next question is from the line of Falko Friedrichs with Deutsche Bank. Please go ahead.

Falko Friedrichs -- Deutsche Bank -- Analyst

Hello, thank you. Two questions as well, please. Firstly, on excess mortality. So when we checked your Q2 presentation from the end of July, the excess mortality figure you gave for Q2 at that time was 1,489. When we look at your presentation today, the number for Q2 was revised up to 1,903. So that's almost a 30% increase. So maybe you can let us know what the reason was for that very steep increase here? And then related to that is, how big is the risk that your Q3 figure that you presented to us today will be revised up that significantly? Again, and all of the sudden, you might be looking at some risks surrounding your 2021 guidance. So any kind of comment here would be very helpful for us. And then secondly, on vaccinations, I think we've all been a little surprised that the number is only at 78%, given that your dialysis patients, obviously, in the super high risk group. Were there some logistical problems or other stuff that prevented some of the remaining 22% from getting a vaccination so far? Or can you already say that the 22% is unvaccinated, they are very unlikely going to go for it and they just feel like they're better off without it, that would be helpful, too? Thank you.

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

Hey, Falko. It's Rice. So you're absolutely correct on the change in the mortality and it really is in the case of simply, we had about 400 registered deaths come in after the quarter had actually closed. And that's really kind of just -- how should I say this is not a good way to say it, but the actual passing of the patient happened within the second quarter, but we didn't get the material back from the hospital system, if you will, where the pass occurred. Now in the case of what we're looking at now, I think we believe that there's a little bit better system. It moves a little better than we had imagined. If you look at the end of Q1, we were only 60. So it's a little bit variable. So we'll have to see where that goes. But we will always catch up and report where I'm glad you asked the question, so we'll let you know what it is. I don't think at this point, we believe we have no way to judge, does it mean we're going to be off in Q4 or what's going to happen, but we'll keep -- we'll give you those numbers so you can see that. Now on the case of vaccinations. We had no logistic issues. We had no problems there. This really comes down to, and this is predominantly a comment about the US. It's just simply that people have refused many religious reasons, other, I might say, foolish political reasons, whatever you want to say. As you well know, we worked very hard. We've had campaigns. We're doing everything humanly possible to get as many people vaccinated, but we cannot make them get vaccinated. So we don't think 78% is a great number either. I'd love to see it be 90%, but they're not many 90% around. So it is just simply a matter. It is an individual decision. And before COVID ever came, Falko, we know patients that would refuse to stay on their treatment for the full 3 hours and 45 minutes. They would say, I've got to go somewhere I need to come off the machine quicker. I want to get out of my treatment earlier because I have to go here or there or someplace else. So we do the best we can do to encourage, to help people understand the importance, but we don't have the ability just to force them for vaccination.

Falko Friedrichs -- Deutsche Bank -- Analyst

Okay. Thanks, Rice.

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

You bet, Falko.

Operator

The next question is from the line of James Vane-Tempest from Jefferies. Please go ahead.

James Vane-Tempest -- Jefferies -- Analyst

Hi. Thanks for taking questions. Two, if I can, please. Firstly, you've highlighted an expected decline in mortality in Q4. I'm just wondering because last year, there was a spike, I think after Thanksgiving, and there's a bunch of uncertainty here. So my question is, is lower mortality in Q4 required to meet your revised guidance at the low end? And to quantify guidance as well, if there's no further FX headwinds or changes in Q4, would that be around a 5% negative impact to reported net income? And then my second question is on -- I'll try my luck just like Patrick did. I guess, thinking about 2022, is Q4 a good quarter as a starting point to think about 2022? Or are there any seasonal one-offs we need to think about? And outside of the positives and negatives we've discussed in terms of the moving pieces, are there any catch-up effects we need to consider as well from trough levels this year? Many, thanks.

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

All right. You want to take some of that?

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

Yes. So James, I'll take this, and then Helen can pick up two and three. So when we look at the expectation we have for getting a decline in excess mortality, we're really looking at that, thinking about the fact that with continuing, albeit slowly, but continuing higher vaccination occurring among our patient base with the boosters now being available and being out there, and we have a push, as I'd mentioned in the prepared remarks of trying to get all of our patients in the US boosted before November 11. And then, just hoping that we continue to see kids getting vaccinated because we have pretty good data that says people haven't caught COVID in our clinics, they catch it at home, in the community, etcetera. We think that it's a fairly good expectation for us that we'll see some lessening of this. Yes, the one big risk point is what happens in the holiday season. I don't think we've blown out exactly at what percent do you think it gets in the way of guidance. As we've looked at this in the big picture, Helen, I think we believe it's manageable, if we're close to the assumptions that we've made on, what I would say, would be the improvement in not seeing as much excess mortality. And you want two and three --

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

Yes, yes. So James, your question on FX, not part of our guidance because we're guide in constant currency. I think the -- when you think about Q4, Q4 -- obviously, be in the guidance range of Q4 is looking like a big decline, and there's some things in that. Obviously, COVID effects in Q4 in 2021 looks a lot different to Q4 2020. If you can kind of -- if we can all even think back that far of what COVID looking in Q4 of 2020. And then we did have some onetime favorable year-over-year impact in 2020 as well from the equity investment, which was around EUR25 million. So, I think the phasing and that is probably not -- Q4 growth rate, probably not the best ohh to be taking. And of course, we'll lay that out in much more detail in February. But to Rice's point, we have an assumption of excess mortality for Q4. We will see how that translates on what the jumping off point is in excess mortality. And I think that's the key for going into 2022 where we're starting from. But I think right now, we have a pretty -- as good an assumption as we can have with the infection rates and how that four to six week lag translates into excess mortality. And then as we get closer to the end of the year and early part of next year, we'll be able to finalize those assumptions on mortality going into '22.

James Vane-Tempest -- Jefferies -- Analyst

Thank you.

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

Natalie, give me one moment, please. Hey, Tom, we did some -- look here and a little bit of quick math. I would tell you, in the quarter, we're thinking it's probably somewhere around 100,000 treatments or so that was the impact of the excess mortality.

Operator

So there are no more questions at this time, and I hand back to Dominik for closing comments.

Dominik Heger -- Executive Vice President & Head of Investor Relations

Yes, it's not really closing comments. So thank you for the accident question. You have handed in and asked. This is appreciated. I hope you still have enough energy for the next agenda point, which is FME25. So we want to give you a short break. Please stay on the line or in the webcast, don't discontinue. We will be back here at 4:25 CET or 11:25 ET. And we'll mute until then.

Operator

Ladies and gentlemen, thank you for standing by. Welcome back to the second part of the event, which is the update on Previous Major Care FME25 program. [Operator Instructions] I would now like to turn the conference back over to Dominik. Please go ahead.

Dominik Heger -- Executive Vice President & Head of Investor Relations

Thank you, Natalie. Welcome back, everyone, to the second part, and thank you for joining this part as well, after what is a tough reporting day for all of you know. Rice and Helen will now guide you through our FME25 transformation program. The presentation will now become available on our website. With this, I hand it back over to Rice, the floor is yours.

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

Thank you all for giving us some additional time with Helen and myself today. Next to managing the pandemic situation, FME25 has been one of the key focus areas for the management board over these last nine months, but we really appreciate the opportunity to share further details on the transformation program and address your questions. Please do keep in mind that we might be limited in some of the answers we can give on certain topics as we are subject to consultation with the workers' council, and we hope you understand that that we fully intend to comply with that relationship and the way that we're going to be able to comment on some things or not.

So, let's start with our strategy on Slide 4, please. With FME25, we will transform our operating model to better execute on our strategic priorities. This means we continue to execute on strategy 2025 as presented at our Capital Markets Day last year. We are positioning our business to deliver sustainable, profitable growth over the medium term and beyond. At the heart of our strategy is our core dialysis business where we are able to leverage our expertise in services, med tech and pharma to maximize the impact of vertical integration. Within the renal care continuum, we are extending our patient reach. As we try to treat patients with chronic kidney disease holistically as they move through different stages of kidney disease and the different treatment modalities. From CKD to transplant and from acute to [indecipherable] and in center is where we will support our patients throughout their journey.

The Renal Care Continuum represents the next level of our strategy with respect to value-based care. Data analytics and assets can help improve the quality of care here for our patients and also help us reduce the financial burden for the healthcare systems. We are the world leader in value-based care and are far on track to further expand value-based care arrangements in the U.S. and leverage these capabilities to other markets around the world as appropriate. Critical care and complementary assets further enhance our ability to treat patients holistically, provide new patient-focused therapy offerings and coordinate patients efficiently, which further ties into our value-based share capabilities. Sustainability is an integral part of our strategy. We are driven by our patient-centered mission to provide holistic care for patients with kidney disease around the globe.

To us, managing sustainability successfully means creating lasting value economically, ecologically and socially. And with the launch of our global sustainability program last year, we strive to continuously improve in these areas.

Moving to Slide 5. Our district experience run deep when it comes to treating patients with kidney disease. Through this, we have gained tremendous experience and developed unique core complex disease that provide us with the knowledge and skill to change the way chronically ill patients are treated. With our Strategy 2025 and looking out to the future, we have the opportunity to leverage these competencies even further. We have been market movers when it comes to value-based care in order to create better value for patients, payers and our sales while also expanding into new patient groups along the renal care continuum. We also plan to continue our long history of transforming renal care through innovation, most notably as it relates to new digital tools and medical science enabling both therapeutic and product innovations.

Critical Care is another area that we are expanding our med tech portfolio with innovative products, and we see the opportunity to enhance value creation by investing in a new operating model that is oriented toward our key value drivers.

If you would, please move to Slide 6. Vertical Integration is a hallmark of FMC's business model. We believe that pairing vertical integration with a fully globalized operating model that will allow us to further leverage the advantages of vertical integration. In bringing together our proven capabilities in engineering, patient care and medical science, we believe we can better capture identified growth opportunities. leverage expertise to accelerate value creation, enhanced capital allocation, increased transparency, both internally and externally and reduce administrative burden as it relates to cost and speed. And this allows us to advance a culture of clear, agility and innovation. We have the building lost in place already, and FME25 will help take our execution and delivery to the next level.

Turning to Slide 7. We have been on a journey since the formation of our company. And here, let's take a look at key milestones in the evolution of our operating model. 25 years ago, our business was created with the intent to realize the advantages of vertical integration. The founding of Fresenius Medical Care joined the preeminent dialysis products business with National Medical Care, the largest balanced service business at the time. This resulted in a global and vertically integrated company addressing patients with kidney disease. Our first quarter century was marked by geographical expansion and market consolidation. When I took over as Global CEO in 2013, the entire business had been run in distinct regional silos. An early initiative of my tenure was to start globalizing our manufacturing processes in our R&D capabilities. In 2019, we established a global medical office to enhance our patient-focused care business model and ensure that we harness the full potential of our global, vertically integrated approach to achieve the best clinical outcomes for our patients, their families and the payer community.

Last year as Helen started with her organization and a transformation to a new centralized and leaner DNA model through the creation of global finance, IT and procurement organizations. This brings us to the day and now the next [indecipherable] in our journey. We see the opportunity to achieve a different level of value creation. And through the FME25 program, we will reorient the business around key strategic value drivers in a global operating model. This will be fully implemented around 2023 along with enhanced transparency and report. The new operating model will not only support our midterm strategy, but also creating to further unlock value and drive greater growth and profitability beyond 2025.

Moving to Slide 9. This past February, we announced our plan to launch FME25. The intent behind FME25 is to transform our operating model and position our company for the next 25 years, while at the same time supporting the execution of our midterm strategy. To further strengthen profitability, we committed to invest up to EUR500 million by 2025 in order to sustainably reduce our cost base and improve operating income by at least the same amount. As part of FME25 we said that we would review all facets of our current operating model with the intent to simplify, streamline, apply what we have learned from the COVID pandemic and the result in new normals that affect us all as well as further accelerate our digitalization agenda.

Turning to Slide 8. So, I'd say also in the past 25 years we have grown by consolidating the market and expanding geographically. And that said, the decentralized to regional model allowed us to utilize local expertise and best practice sharing while optimizing the P&L for those particular regions. Now that our business has gained scale and experience and has maturity in many markets, the decentralized approach creates limitations in unlocking further value creation and driving future growth in line with our ambitions. Portal integration on a regional basis limits our ability to further leverage the benefits that we believe it offers. You can clearly see on the left, the redundancy of separate G&A organizations across our four retail operating segments and the other global functions, an example for you.

Today, we have split responsibility between R&D, product manufacturing and sales. The responsibility for each of those areas is in different parts of the current organization. What is missing is the direct feedback on responsibility for how to develop product, how to develop products, sell into different markets or what are the implications of new product features on manufacturability and distribution. Continuing this way with an ever faster changing innovation cycle from the competition will not allow us to create the value we envision. Integrating all of this in ohh segment under one responsibility will not only drive efficiency by faster and more effective feedback loops, but it will drive the focus on those innovations that meet market needs or unmet needs in the most profitable way.

Understanding these current limitations while recognizing the evolving and change or payer environment in effect on the COVID pandemic have been important factors in the design of our future operating model. In order to drive up value generation and reflect an evolving and changing payer environment with increasing headwinds from macroeconomic inflationary environments, we need to transform our operating model, if we could. We want to reorient our business around strategic value drivers rather than regions, unlock value by increasing reporting transparency and continue our transformation to a leaner G&A model while leveraging new opportunities for digitalization.

Join me on Slide 11, please, or Slide 12. This is the planned structure of our future globalized operating model. As just mentioned, by organizing the company around strategic value drivers rather than geographies, in streamlining the structure with end-to-end accountability, we can drive transparency, enhance capital allocation, increased operational agility and enable enhanced growth and returns. Our business will be realigned in two global operating segments, which are called care delivery and care enablement. Each segment will have full profit and loss accountability that we plan to increase our reporting transparency. In care delivery, healthcare services will be designed to strategically optimize our global service offerings in a value-based care future while driving growth in home dialysis and improving our operating leverage.

Share enablement comprises our Healthcare Products business. This segment enables an end-to-end focus on the highest market growth potential and global return opportunities within our MedTech portfolio. Through the global medical office, we will continue to implement the latest medical scientific and digital developments across the Care Delivery and Care Enablement segments in a consistent way. The new operating model as well as further developments in digital will enable us to sustainably lean cost base, in particular, for G&A functions through certification, standardization, eliminating all duplication and automating wherever we can in enhancing our shared service solutions.

I'll now hand this over to Helen, and she'll take you a bit deeper into the operating model and our plans.

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

Thank you, Rice. And I'm happy to share with you more details on our planned transformation journey that lies ahead of us. I'm really excited about how we will transform our company to be best to exist into the future and about the value we will generate not only with FME25 but what we can do beyond this based on the new foundation we are laying. I'm honored about taking on the additional role of Chief Transformation Officer and ensure that the plan becomes reality.

I will start with Slide 12. Rice has already laid out the overarching model. Now to the question on how will we transform our healthcare services business. consolidating healthcare services into ohh global operating segment will not only allow the implementation of the latest medical and scientific development at a global scale. It will help us enhance profitable growth at the same time, and this is really key to us, it will be improving quality and affordability of care. By consolidating the operations in ohh unit, we will be able to better leverage our global scale, expertise and standards as well as digitalization to improve profitability. Important to me is that the vertical financial accountability within care delivery will enhance San Parente [Phonetic] profitability and drive a more focused capital allocation within healthcare services. We will be able to apply our world-leading value-based can know-how originating from the U.S. across other mature markets to address new patient groups across the renal care continuum and to inspire other healthcare systems. The new packet will enable us to adjust fast new payer approaches or models like the CKCC model in the U.S.

Those of you who know me by now are well aware, I'm always looking for opportunities to simplify for the better. Also in care delivery, it is key to simplify and reduce organizational complexity. The commercial operations will have just two subsegments: the United States; and International. In those subsegments, we will have renal care continuum services and complementary services. The commercial operations will be supported by the core platforms outlined in the other boxes that you see on the slide. For example, breed [Phonetic] cycle management, clinical services and operational excellence. In a nutshell, this will be a fully integrated, efficient and agile healthcare service business with clear return-focused capital allocation priorities that delivers high quality of care to patients.

Let's move on to the question of how our Healthcare Products business we'll look in the future, on Slide 13. After the transformation, we have COVID operating segment, Care Enablement. Care Enablement will become a fully integrated MedTech operating segment designed to focus on accelerating innovation, drive cost share and commercial excellence. With an enhanced level of transparency, we will be able to further eliminate inefficiencies. We will be able to allocate capital more strategically balancing short- and long-term return enhancement in a more sophisticated way. In center, home and critical care will become fully integrated product verticals, each with full P&L accountability and encompassing strategy, R&D and product management. The three verticals will be supported by shared platforms of supply chain, quality management, manufacturing and regulatory affairs. Our go-to-market strategy will be better enabled by shared business services such as marketing communications and executed by commercial operations in the U.S. and international businesses.

To sum it up, this will be a fully integrated global cost competitive and innovation-leading MedTech business, also with clear returns-focused capital allocation priorities. As to how we will transform our G&A functions, let's move to Slide 14. In the finance organization, which includes IT and procurement, we have started the journey already to globalize G&A functions. Going through this with my team for more than a year, I know it's hold work, but I also know how much value we can generate by doing that. The new operating model will allow us to expand this more efficient approach of globalized or centralized G&A to other functions as well.

Moving from regions to segments and leveraging current bank practices of utilizing end-to-end process design, digitalization and capitalizing on our scale while optimizing with low-cost locations that will allow us to truly globalize our main G&A functions, all while adding value to the businesses we support. This will allow us to reduce organizational complexity, drive consistency by our standards and streamline increased functional performance and establish clear cost accountability and increase efficiency by origination.

In G&A, we will adapt a three pillars contract. Starting with the business partner concept to deliver high value add by reducing the operational burden and being a strategic partner to the business segments we serve. We'll also create functional centers of excellence focusing on specific expertise and know-how and then global shared strategies to leverage resources and drive efficiency at scale. Transforming our G&A functions will be an important driver for reducing our annual cost base while improving the quality of internal services.

I will now move on to the timing of the journey on Slide 15. Share of outline in the next step in approximate time line to transition into the new operating model. We have a clear plan for the complex journey, which we will execute step-by-step. In this current quarter, we will define and finalize the governance structure and management reporting model as well as the road map to transition to the new operating model, and we will further detail the planned cost savings initiative. In 2022, we will begin the transition to the new operating model. For our new care delivery and care enablement segment, we will design in detail how the new organization model will look on all levels. And then we begin to match the old structure to the new model layer by layer.

Within G&A, we'll initiate the transition to a globally centralized model and began infrastructure modifications that they can support the new operating model as soon as possible. When the operating model is fully in place around 2023, we will be able to introduce our new external reporting with care delivery and care enablement of the two key operating segments.

In U.S., general reporting will provide a high degree of transparency into our healthcare services and our MedTech business, while being simpler to understand, this should help the capital markets to better understand the strategic priorities growth opportunities and potential future value contribution of the different operating segments. We do not see this really stopping in 2023 either. Once the new operating model is in place, we will be able to look beyond 2025 to further growth opportunities and potential efficiency measures. Throughout this entire transition to a new operating model, we will strive to advance a corporate culture of agility, innovation and accountability. We recognize this as a time change for our organization, and we are committed to making decisions in a timely, consistent and responsible manner as we align to the new model.

Important to me is that you not only take away what we have identified already, but that we will focus on identifying further growth opportunities and efficiency measures from the new operating model enables one to implement that. Of course, we work on this in parallel to executing on the identified efficiency initiative. We also need to be conscious about how much change in organization can manage while operating a full scheme sell in a pandemic, and it is key to minimize disruptions to our operational businesses.

So let's take a look at how this translates to numbers on Slide 16. At the start of the program, we initially estimated onetime span of up EUR500 million for a minimally matched amount of annual savings. Following our intensive review of the operating model over these past few months, we now confirm the expected sustainable reduction of our annual cost base by EUR500 million by the end of 2025. This will include an FTE reduction of up to 5,000, which will be managed in a socially responsible way. In the past few months, the entire Management Board is working intensively on taking the right course for our ambitious plan. Due to the extensive work and progress over these few months, we have already clear line of sight into around EUR400 million to EUR450 million of savings. Moreover, we have identified further initiatives that are under pressure testing at the moment, and we will continue to add further initiatives into the funnel.

The positive effect of these savings in our operating income will continuously ramp up every year. We seemed to have reached the 50% level of savings by the end of 2023. And to achieve these annual savings, we are anticipating an investment level of EUR450 million to EUR500 million, and this will be taken to special items. Of this EUR450 million to EUR500 million, we expect that we will have invested around 80% by 2023. So, how do those numbers now square from a phasing perspective?

As previously communicated, we expect that the onetime investment in the year 2023 will be lower than we achieved reduction of the annual cost base under the FME25 program by the end of 2023. This means we would turn net positive with the FME25 program around the end of 2023. As mentioned earlier, with FME25, we have started and implemented the process to continuously identify improvement opportunities, which we will not start to continue to identify those areas for further savings as well. In terms of where the savings will come from, please understand that we're in final planning stages and changes that we need to discuss with the Workers' Council before we would be able to share more detail.

To the extent that we can, we did want to provide you with some idea for what we anticipate through the major savings category and how they are contributing. We expect around 20% of savings come from Within Care Delivery. Here, we see, for example, potential desire clinic operations efficiencies, standardize delivery models and leverage best-in-class products and optimize our real estate. Care enablement should contribute around 30% of savings with the opportunity to standardize product offering globally, footprint optimization, productivity improvements and cost of product improvement remain just some examples.

The remaining 50% of savings will come from G&A functions as the global operating model will allow us to eliminate duplication, leverage global shared services and roll out global standards and end-to-end process will also enable us to harmonize and standardize our IT infrastructure as well as leverage benefits of further digitalization. I hope this helps to understand how deep the analysis and detailed the planning is and how significant our transformation will be. This will not only make us more efficient but truly enable new growth opportunities.

I will now move to my last slide which is Slide 17. We see FME25 going hand-in-hand and complementing our strategy to create the future of healthcare for chronically initial patients across the renal care continuum [Phonetic]. We are very excited about the transformation of our operating model and how that will position us to execute on our midterm strategy while creating shareholder value and establishing a base for sustainable profitable growth beyond 2025. As we continue to move the market with our leading value-based care capabilities and grow our MedTech business with focus on leading innovation, we believe the simplification and globalization of our future operating model will result in greater end-to-end accountability, more agile decision-making and focused capital allocation.

With that, I will hand back to Dominik to open up to Q&A.

Dominik Heger -- Executive Vice President & Head of Investor Relations

Thank you, Helen. Thank you, Rice, for the presentation. I would say I'm happy to turn it straight over to Q&A. Natalie, could you please open the line?

Operator

[Operator Instructions] The first question is from the line of Veronika Dubajova from Goldman Sachs.

Veronika Dubajova -- Goldman Sachs -- Analyst

Helen, just to get lastly get a little bit more color from you, in particular, on the G&A because obviously, it's a fairly significant proportion of the savings that you're expecting? And maybe if you can give us a little bit of flavor for the structure of that assumption where it might be located? And just give us a bit more detail on how that accounts for 50% of the savings is pretty substantial in the context of the plan. And then apologies I've got the sum questions also for Helen which is -- Helen, you've, obviously, to transform other businesses in your prior roles and looking at this transformation plan with your new CPO hat on. Kind of curious what you see as the biggest risks to the execution on both from a time line and magnitude perspective and, of course, you're welcome to lean on that as well.

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

Yes. Thanks, Veronika. Yes, the G&A is significant, but I think very doable. When you look at the picture that we walked you through that shows kind of four regions is with our own G&A structure. You see some of the global functions each with a G&A structure. That regional model works for us for a while. And the approach we've already taken with finance, IT and procurement, in particular, is to do a lot of benchmarking. We've done detailed analysis of what work gets done where. And then taking a step back to say, how do we do it different. And I think that 3-pillar model is key here. and the business partnering, we obviously want the best business partners we can, supporting the business and supporting the strategy of the business. And then we want to build out true centers of excellence. Not everybody in the region, and I got me to be disposing a toll when I say this, but not everybody in the region is as expert or treasury expert. So how do we build those centers of excellence where we build this capability and consolidate that experience. And then shared services. We do have shared services around the globe. They're very regionalized. But again, they're not really focused on true end-to-end process and automation. In terms of where the work will be done in the future, I can't comment too much on that because of the workers council consultation. But we will, obviously, look to do it in a more streamlined consolidated efficient way, taking into account the cost structure. But truly, the key here on G&A Veronika is really consolidating and reducing the duplication.

Within G&A, there's, obviously, the functions themselves. There's also kind of a significant IT transformation that needs to happen in using technology. And also, as we continue to -- on the journey of procurement, really globalizing procurement and getting some significant savings there as well. In terms of your question, kind of, in a new CTO hat, have I done this before? Yes, and it's different. There's a lot of things we are the same, which is about how do you go through such a change in the company that make sure you create the right priority, you're tied to strategy and create the right culture for the future. In the previous line, I was involved in taking two companies into 1. This is taking one company and transforming it and really aligning around the strategic drivers. So I think it's -- as we move from a regional view to a segment view, there's a lot that has to change internally, mapping our international regions to the new segment kind of splitting some of the businesses into products and services where they can probably integrate it in the past and then transforming the overall back office support, if you will. Obviously, our management reporting and systems need to come along on that journey as well. So I think the key is we, kind of, also focused on in terms of significant pandemic right now, the -- trying to stay focused, making sure we're not disrupting everybody. That is really -- how do I say this, but we've got very detailed integrated project plans that we can move through at pace to get to where we need to by 2023. And I think the value unlock in people really being able to see our two segments and the profitability that goes with them what's really excites about. But the fair amount of work ahead of us and we acknowledge that.

Operator

The next question is from the line of Oliver Metzger from ODDO BHF. Please go ahead.

Oliver Metzger -- Oddo BHF -- Analyst

Hi, thanks a lot for taking my questions. First one is, I understand it's a trade-off between the local strength and centralization. So for some areas, the reduction of cost and expenses, some of it might be harder. To which extent have you evaluated to leave certain areas or regions of the new strategy? And the number two is you execute a massive transformation of the new organization. So it appears that the product business with a more centralized characteristic might be also eligible to be separated at one other time. So could you share with us some of us why an integrated offering of dialysis service and products would make sense and where do you see the synergies in future?

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

Yes. So Oliver, on your low-cost locations and centralization, I fully agree that there are trade-offs to be made. But I think particularly where -- you look at these areas of expertise in the shared service world. You obviously have to take a long hard look at where your -- what is a global hub or what is regional. So looking to see where capabilities exist where the locations best set for our business is key. And I think there's different trade-offs for business partnering if there are centers of excellence to what there are shared services, and we have to make sure that we have all things in the right place, but ultimately, we're here to support the business. So if we can support the business better in a more efficient way, that's what we plan to do. Obviously -- and I think if I understood your second question correctly, it's about, we have some countries where they already have projects and services and vesting in the region. And how do we think about the transformation of those countries where now they are shifting the [Phonetic] products and services. I think the first thing I would say is bringing all of the product pieces together under one MedTech umbrella is a big move for us and a critical one. The example that we gave shouldn't be lost on you so that when we're really trying to think about innovation, where we invest our product offering, our R&D pipeline, the cost structure for products that all being under one umbrella is really key.

And then the same on the services, right? We've got some businesses that are purely PLE services and majority of services. Don't forget on our journey, we have about 100 countries that are projects only in about 50 countries that are projects and services. And we have to be thoughtful about how we handle those countries that have both and aligning them to where the value unlocks can be in the services vertical. And I think the disruption there is something that we're very mindful of and are trying to minimize so that we can get at the maximum opportunity to unlock value in the service business. But obviously, the split of international and North America -- actually international and U.S.. I have to get used to that will be key as we stand up those verticals.

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

Yes. Oliver, your part two to that and maybe to your question 3, if you're thinking that would be ultimately enough at some point, spinning off one or the other, that's not the intent. We still completely believe we are unique in vertical integration and moving to value-based care makes the most sense. But we recognize we've gone about as far as we think we can effectively go being regionally focused in being able to go into these two reportable segments, shine lights on what we want to get done and how we want to do it makes the most sense. This is not, in my mind, in any stress of precursor that we would spend something off. In fact, we think we're going to be just as tight as we need to be, but we want to look at it in EP elephant in a couple of smaller bikes, if you will, in order to maximize the value that we believe sits within our capabilities.

Oliver Metzger -- Oddo BHF -- Analyst

Great. Thank you.

Operator

The next question is from the line of [indecipherable].

Unidentified Participant

Just clearly, there's a lot of mention of sort of shifting the services organization to be ready for more value-based care opportunities. Can you give us some comments on what your BBC platforms look like in markets outside of the U.S. I remember two years ago, we were doing a bunch of things in Portugal maybe also in Spain. Just wondering whether you're starting largely at zero in the international markets or whether there are some pilot programs going on? And then in care enablement as a sort of independent business unit, how should we think about -- and you mentioned sort of innovation potential in there. How should we think about the focus for R&D there? I mean is this something where you'd be interested in doing more work on wearable kidneys, there's been a lot of academic work here, but it always seems like an actual product is a decade away, but this is clearly something that you guys would be uniquely positioned to be good at. But at the same time, big companies are not necessarily known for innovation. So is this an area where actually you'd be looking at more sort of small M&A tuck-in targets.

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

Yes. Thanks, Lisa. I think the idea about the -- Europe to Dubai, value-based care keeps out of our strategy, and we, obviously, have some significant success here in North America and really excited about the shape of these models in the future. I think the benefit of putting the international service market under that umbrella is that we can apply those learnings and look out for opportunities elsewhere in international where they make sense. I mean they sniffed out, right? The entire healthcare system is looking for better outcomes at a lower cost. So we want to be prepared for those developments in the international market. I don't have -- at least I'm -- I don't have the history of Portugal, what we may have done there, where we are with that, honestly. But I think it's trying to get us prepared for those markets that may evolve in the future, and we've seen some of that in Asia Pacific.

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

Yes. I would say, Lisa, given your history and my history together, Portugal is not as far as long as we had thought. They were really looking at some pretty crazy things a while ago, and I think the economy and things kind of got in the way of that. Spain is actually doing some pretty interesting things. Nobody does value-based care exactly like we do in the U.S. since all the payment systems are different. But what we find is health economics in being able to go in and give governments and payers a sense of vehicle value-based care goes, curious what better outcomes, etcetera, lead you to and what you guys ever think about working in more of a concept of us being able to think about how would we look at reimbursement versus the things that we're doing with the outcome and the interplay between there. Those are things, I think, will develop over time. My crystal ball did tell me that two or three years from now. But I think everything we've learned about predictive analytics and the way we take risk just is now going to be more shareable, it's going to be more transportable as we look at the opportunities that present themselves in that regard.

And on your second question, it's a good question. What I would say is I'm excited about the fact that by putting people in these verticals. Now we have a set of people that get up every day, and I'll just focus on home in a moment, and they live in an eye by home. And then there's a group for critical care and group for in center. And we will put the R&D functions in those appropriate verticals. I think when we had more of a massive people trying to do a little bit of everything. It wasn't nearly as effective as it can be when you get people in a much simpler environment, you make them accountable and you sort of try to lose to go do things. When you think about innovation, remember, we still have our venture fund, and we are we are invested in a number of places. I think if you remember, our investment in Humacyte and the relationship we'll have with AM for acellular vesicles and being able to solve a huge unmet need; that PCSE grants [Phonetic]. Grants don't really last forever. They tend to be pin cushion like actual -- natural living vessel is going to make this a lot easier for people. I think the wearable kidney may not actually be a mechanical wearable kidney. I think what we're really thinking about is Genesis and xenotransplantation, I know you're aware. We just had that done successfully in New York City. We have an investment there as well. I think the ultimate wearable kidney is more transplantable kidneys, whether that be human or RB forcing. So I think those are the things that we believe by standing up these verticals and getting people focused within their area, it's going to allow us to be faster, be quicker, if you will.

Unidentified Participant

Okay. And then Helen, can I just follow up in terms of the new reporting structure, are we actually going to get margins for the products business separately for the first time? And will we lose the granularity on the regional split?

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

That is my intent, Lisa, that we would have a margin for the project reticles vertical we will report revenue on the geographical split. So we'll be able to go take some time for us to get through the 2022, but we're going to achieve out the full P&L for care delivery and care enigma. And that, quite frankly, is why the G&A transformation is so important. We need to kind of be able to get -- right now, we have margins on regions and then we have corporate costs, and then we have G&A. Our goal is to kind of streamline the G&A and then have some -- how do we call it pragmatic allocation methodologies back to the operating segment so that we'll be able to show a full project P&L for both a delivery and care enablement. And yes, it is actually more meaningful for us as we move forward. particularly on how both segments will evolve over the coming years.

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

And we'll figure out the KPIs that go with those. All of that is kind of what we're going to be busy doing next year as well as the remaining part of this year.

Operator

The next question is from the line of Tom Jones from Berenberg. Please go ahead.

Tom Jones -- Berenberg -- Analyst

Good afternoon. I just had kind of big picture question really. There's been a lot of focus on the EUR500 million reduction in your cost base, but actually probably was more important. It's the kind of EUR5 billion of cost that you'll still have once you're done with all this? Because if that $15 billion grows at 1% quicker than you expected for the next three years, then the ZAR500 million is probably gone that you end up at 0. So I guess the question is, maybe you could pull out for all over EUR5 million [Phonetic] information you've given us? What are the three or four key things within this transformation that you think will sustainably reduce the rate of cost growth within the business rather than just in cost on a kind of one-and-done basis. One of the key things that will stop that EUR15 billion from growing faster than expected in effect of engaged all the efforts that you made to save costs on an absolute basis in other parts of the business.

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

Great question, Tom. And for me, it's FME25, it's not just another cost efficiency program. And I think we feel very strongly about that. This is about organizing our company along the strategic drivers, getting a lean cost structure. But I think more importantly, it's setting us up for future growth. that we can lever that infrastructure. That will be enough to sure that we can drive the top line and make investments in capital allocation that will be more accretive than maybe what we could do in the current structure. So I think that's the important piece. It's the value unlock. With that dedicated focus on services and products and the investment in the kind of the innovation and the new models that we think we'll see in services, that for us is the exciting thing that's what -- could we be kind of the program that is just a hatcheted cast, of course, we could, but that wasn't what the initiative is about. It truly was a blank sheet of paper strategic exercise aligned with our objectives of CMD and then saying, how do we prepare ourselves for future success and head of challenges that we know we're going to have that we probably don't even see today. So I think you see the underlying kind of realistic cost base that we can use to grow. But the focus of the strategy is coming from Cadila green enablement [Phonetic] leaders, I think, will be a big name [Phonetic].

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

Yes, this would just come in the cost cutting, we wouldn't necessarily have to go through the operating model change or what we're doing. I can tell you the best experience I've had in my career sort of like 25 years SMC was being in a business model structure where we took a big animal and we carved deduction verticals, and I got put in the verticals that they just said will make it happen, legally, compliantly, etcetera, but it's trying to promote selling when I get that because we really woke up every day focused on that one thing and not worry about the overall big business and all pieces of the business. But there's no question that the operating model and the creation of value here really comes from focusing people in a different way. Doing our business differently, I mean we're probably never going to go back to the kind of travel expense we used to have, but we figured out virtually how we can do some things quite well. It is really kind of the summation of everything we've learned going through COVID. What Helen's learned in her lifetime and what I have seen as an old product side, when you break down that big products business into verticals and you get people focused on it. it's going to take some of all of that, but there is absolutely no intent that we're going to run through this $500 million and $15 billion is going to be coming out of cost around our net. You deal with that and you manage that because you've got growth in new markets. You've got new products and you're back into kind of a growth mode that everybody wants to see us back into.

Tom Jones -- Berenberg -- Analyst

And then just one technical question on the implementation. Where are we with the federal monetisation trying to do something like this for the Federal Margining about the places kind of an extra layer of -- are we done with that? Or is that still rushing for a little bit?

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

Yes. So we are still in the monitor show. And we are hoping that, that will relieve itself of us next year toward end of the year. But we sat down with the monitor, and we've had very open discussions about what we think we can do within the work that's going on and that it shouldn't upset our interfere with where we're trying to get to with the monitor and then there are some places that we don't think it's prudent that we would be making a change at this point in time. So I think we've reached an agreement to how we'll do it. And I would say to you, yes, we won't go as far as we might want to because we need to make sure this mine for ship is closed out in the effective and appropriate way. But we thought through that. We've had discussions on it. With federal monitor sonominus but I -- and it can be -- but I would say we've got a good relationship with our monitor, and they want to see it succeed. So I think we've made some provision for how we're going to work our way through that time.

Operator

The next question is from the line of James Vane-Tempest from Jefferies. Please go ahead.

James Vane-Tempest -- Jefferies -- Analyst

Hi, thanks for taking my questions. I've got two, if I can. just kind of curious, how much of this is inwardly looking within FME's business versus any changes to the patient experience? And how do you think about patient continuity in managing execution risks when there are so many changes to the delivery model. I also -- as I remembered a few years ago, I think there was a change in the patient onboarding process in the U.S., which resulted in fewer corporate patients and the material impact of the business. So I'm just kind of curious how you're sort of managing and thinking about sort of inward versus outward. The second question I've got is just regarding sort of structuring toward vertical financial accountability and full P&L. I'm just wondering one, does this extend to looking at allocating existing financial leverage between the different businesses? And is that part of the strategic review because if the company is being run by operating segment rather than by geography, are all the individual businesses within each of the operating segments core? Or does this present some other streamlining opportunities? And does the structure also give more options potentially to the broader review being carried out by representing [Phonetic]?

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

James, it's Rice. I'll take one and then Helen will take number two. So when we started debating looking at how we were going to go forward, what's the plan, where do we go? There were a couple of things that were absolutely foundational. One is that this -- yes, it's in really looking, but at the end of that view, it's got to be patient and the patient experience can only be equal to or better as we go through this process. So we have been hourly focused on how do we make these things work and the patients never miss it beat the only thing they will feel is even more individualized treatment and better outcomes. And we tried to think our way through that as it relates to payers as well as regulators, back to Tom's question about the monitor in the U.S. government, if you will. So we've tried very hard to make sure that we're going to do this in exactly the right way and that we won't wait a couple days, feel like we did a great job and find out the patient experience, hasn't been what we wanted it to be. In fact, I think this helps us continue to do when our patients are telling us more of them want to be at home. We're going to continue to find ways to make that happen for them. etcetera. So it really is not meant to be so inwardly looking that we could get the fundamental purpose of what it is, we can help them do every day, whether that's an enablement in its innovation in production and distribution of goods or if it's in delivery where we are truly touching patients.

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

Yes. I'll now take the second one. A big question. And I think how I would answer it is, of course, as we structure around the vertical capital allocation and how we think about if you kind of use the word allocating leverage is key. My anticipation is the leaders of those segments will be taking a strategic review at all components of that. And as we move from geographies to having kind of quite high visibility on the profitability that we don't necessarily have today on an operating segment deal we will really take a hard look at that achieve where we can unlock value. And I think that's the key driver here is how do we kind of continue to unlock value as we think about being a services company and a MedTech company and other brand of the two where the transparency is how to tease out. I'm not going to comment on what the broader review of our [indecipherable] has always been to maximize the shareholder returns for FMC. And we do believe that organizing around these segments will do that for us as I mentioned to, it's more than just the efficiency program. It's really the focus review of these segments by the leaders in the future on where we can invest or divest if the kind of the performance isn't where we needed to be to unlock value to ultimately deliver even more on the top line and bottom line. And just to clarify that, so will we have full P&L down to net income with sort of debt allocated to finish the different businesses? Or is it just going to be down to the EBIT level, just to understand?

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

Yes. Yes. No, I think that's something we have to work through. It's probably more likely to be down to the EBIT level, but with G&A allocated getting all the way down to the -- maybe on a sticky question allocation leverage. -- yes. And I think that's going to be quite challenging to do. But having it down to as much data as we can in a way that makes sense and it's dramatic for us, James.

James Vane-Tempest -- Jefferies -- Analyst

Thank you.

Operator

The next question is from the line of David Adlington from JP Morgan. Please go ahead.

David Adlington -- JPMorgan -- Analyst

Hey, guys. So, I'm not be doing that [indecipherable]; a bit slow as said before, but I'm not sure I get the cadence of the EUR500 million for year 1, year two to how should we be thinking about how you get toward that EUR500 million, particularly the next year it's useful just to have an idea of what you're thinking about in terms of savings. And then just on the care delivery statement, just will talk about clinical operations efficiency and standardized delivery models. I would have thought that's something you've been still doing already. So, I'm just wondering what's actually kind of new here? Just a bit of further color would be useful. Thank you.

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

Yes. As far as the EUR500 million phasing is concerned David, we'll give the detail for 2022 that we've assumed when we do our guidance in 2022. What we have put out there today is that we expect about half of those savings to be delivered by 2023; so in broad-brush, you should expect to see a full EUR250 million of savings improvement in our P&L by the end of 2023. And then on the onetime cost, we said that those costs will be more front-end loaded. We should be about 80% of that through 2023. And as we're finalizing these plans and how we can get to work, particularly as we're navigating some of the workers' council consultation, of course. We'll be able to refine those numbers in a little bit more detail to 2022. In terms of care delivery, as you think about the clinic operations, of course, that's what we do day in, day out. But what we're looking at now is to say, is there any further opportunities with if you think about all of our clinical infrastructure to make improvement in that overall overhead and how it's gone? Are there any benefits that we can apply from how we the North America clinics, for example, to the international operations. other things within the clinical operation even within the globe that are duplicated today. So can we pre-mine those structures and overhead structures that do we need different systems, different platforms, different ways of doing things -- So that's how we're thinking about care delivery. But of course, we're always trying to run those operations as efficiently as we can. Now it's collaborating that that scale on a global or centralized view rather than four individual regions.

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

Yes. I mean, if you think about it, David, it's 20% of the 30% enable and 50 G&A and part of the 20% is because they are pretty darn efficient. But look, nothing stands to steel. So we grew up with ohh employee health record, ohh clinical data management system for international and ohh for the U.S. And guess what, those are getting old. And so what we'd really like to do is have ohh system that's extremely efficient across the world. So those are the kinds of things that we're looking at from an efficiency standpoint where a necessity years ago, digitalization wasn't in place that allowed us to have ohh answer for a global question, we think this is going to give us the opportunity to be able to do that from the transformation.

Operator

The next question is from the line of Christoph Gretler from CS.

Christoph Gretler -- Credit Suisse -- Analyst

Thank you, operator. Hi, Helen and Rice. Just one question with respect to these cost savings program. Is there any kind of intention to reinvest some of these kind of savings to drive growth. So it is basically truly in term of net savings, the EUR500 million net saving kind of that we basically after tax could kind of mechanically add to kind of in our models. And the other question is just I don't want to spoil kind of your day, nobody is enough. But I just wanted to come back to these midterm targets you set out back in 2020 at the Capital Market Day of high single digits kind of net income growth of these [indecipherable] how should we kind of know -- see that kind of in the context of these FME25 programming.

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

Yes. Thanks, Chris. So I think I'll take the first question. So right now, the way we're thinking about the $500 million savings from FME25. Is that -- that will help offset the impact from the decline in net income from some covers that we've experienced. At our Capital Markets Day back [indecipherable]. If you recall, we said that with the outlook that we had that we would create additional firepower. And we said around $5 billion at that time, and that was the COVID. But that we would invest, we would look at opportunities to invest in ourselves. And that's how I think about this $500 million of FME25 investment that this is an investment in ourselves to drive a sustainable lower cost pay. Now does that mean that we're not going to do any other investments? Of course, not. I think the phasing due to COVID probably looks a little different than what we did when we were at Capital Markets Day, that we will -- and I think this is the baby of the operating segment now is that we will continue to look for opportunity to invest to fuel growth, whether that be acquisitions, low partnerships. But those in will now be very, very closely aligned to the strategy in the care delivery and care enablement. So we see this is helping offset the COVID effect. But obviously, that sustainable cost base, helping to continue to create that firepower so we can invest in even more growth opportunities in the future. And, Rice, you'll take the second question?

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

Yes. Chris, hey, you're not going to rule our debt, don't worry about that. And to your question -- yes. No. Our midterm targets are still a lot. Now the phasing may be a little different throughout the planning period, if you will. But no, they are still alive, living breathing things that we're working to make sure we bring those home. But I would say the phasing may adjust a little bit as we get further into this.

Operator

We have a follow-up question from [indecipherable].

Unidentified Participant

Sequentially the international services business, and I guess we'll have a bit more visibility now that products will be reported separately. But it's look like that business just gets a bit less profitable as the year has gone. I guess it's probably because you're expanding improved lower-margin regions. So -- how should we think about the footprint of the international services business is a potential rationalization of that footprint in the cards? Or is that something that you would get to once this corporate reorganization is sort of more firmly bedded in.

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

Yes, it's a fair question, Lisa. And I would say, look, -- Is there going to be a rationalization Sure, we're going to turn over every stone. We're going to look at it. We've got emerging markets that actually do very well. I mean along comes some trouble like COVID and reimbursement is not great. So we have to go through and think our way through that and evaluate those kind of situations. But part of the discipline, I think, that we'll bring into this process is if we're in a place where it's marginal profitability, how do you fix it and if you have a plan to fix it, you don't fix it. You mitigate whatever the issue is. If you give it that try it still just doesn't seem like it's going to work, then obviously, that's a different decision that we have to make. But we've got great operators, everybody is pretty realistic upfront about what they need to do. So we're going to do the -- we're going to do the work. We'll do the evaluation. We'll figure out how to fix it. And if there's something that just makes this unfixable, and we'll have to deal with that as well. But I'll put my money on our operators. I think we'll figure it out, but we want to be ruthless about our efficiencies and the things we need to do to make sure we can fix something in how is the best way to turn something or as we go through the process.

Operator

There are no further questions at this time. I hand back to Dominik.

Dominik Heger -- Executive Vice President & Head of Investor Relations

Thank you, Natalie. Okay. We have no further questions, then I would say, ladies and gentlemen, thank you very much for hanging in for such a long time with that call. And this is highly appreciated. And see you soon, hopefully. Take care. Bye.

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

Stay well, everyone.

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

Thanks, everyone. Bye-bye.

Operator

[Operator Closing Remarks]

Duration: 120 minutes

Call participants:

Dominik Heger -- Executive Vice President & Head of Investor Relations

Rice Powell -- Chief Executive Officer & Chairman of the Management Board

Helen Giza -- hief Financial Officer & Chief Transformation Officer, FME25

Oliver Metzger -- Oddo BHF -- Analyst

Veronika Dubajova -- Goldman Sachs -- Analyst

Lisa Clive -- Bernstein -- Analyst

Tom Jones -- Berenberg -- Analyst

Patrick Wood -- Bank of America -- Analyst

David Adlington -- JPMorgan -- Analyst

Falko Friedrichs -- Deutsche Bank -- Analyst

James Vane-Tempest -- Jefferies -- Analyst

Unidentified Participant

Christoph Gretler -- Credit Suisse -- Analyst

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