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Why Fresenius Medical Care AG & Co. KGaA Is Tanking Today

By Brian Feroldi - Updated Oct 17, 2018 at 11:04AM

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Shares tumble after management dials back guidance. Here's what investors need to know.

What happened

After management poured cold water on its financial outlook, shares of Fresenius Medical Care (FMS -0.22%), the world's largest provider of dialysis products and services, plunged 17% as of 10:55 a.m. EDT on Wednesday.

So what

Here's an overview of the financial guidance that management shared with investors today.

  • Fresenius Medical Care now expects its fiscal-year 2018 sales to grow between 2% and 3%. That's below its prior guidance that called for growth of 5% to 7%.
  • Net income is expected to grow by 11% to 12% in constant -currency terms. That's also below its previous call for growth of 13% to 15%. Adjusted net income is only expected to grow 2% to 3% in currency-neutral terms. That's also shy of its prior call for 7% to 9% growth. 
Businessman with coins falling through his hands.

Image source: Getty Images.

Given the disappointing news, it isn't hard to figure out why shares are getting whacked today.

Now what

Fresenius' investors have been patiently waiting for more than a year for the company's $2 billion deal to acquire NxStage Medical (NXTM) to go through. Since the closing of the acquisition might have helped the company to meet its financial targets, investors should hope that the deal gets finalized soon.

The latest update is that the merger agreement closing date has been extended to November of 2018. That should provide the company with enough time to complete the deal. However, should something go awry, Fresenius would owe NxStage Medical a $60 million acquisition termination fee, so the pressure is on for the company to execute.

Brian Feroldi has no position in any of the stocks mentioned. The Motley Fool recommends NxStage Medical. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Nxstage Medical, Inc. Stock Quote
Nxstage Medical, Inc.
Fresenius Medical Care AG & Co. KGaA Stock Quote
Fresenius Medical Care AG & Co. KGaA
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