Fresenius Medical Care Q4 2008 Earnings Call Transcript

Mar. 2.09 | About: Fresenius Medical (FMS)

Fresenius Medical Care (NYSE:FMS)

Q4 2008 Earnings Call

February 19, 2009 9:15 am ET

Executives

Dr. Ben J. Lipps - Chief Executive Officer

Lawrence A. Rosen - Chief Financial Officer

Oliver Maier - Senior Vice President, Investor Relations

Analysts

Unidentified Analyst

Holger Blum - Deutsche Bank

Unidentified Analyst

Thomas Jones - J.P. Morgan

Kevin Ellis - RBC Capital Markets

Ilan Chaitowitz - Redburn Partners

Unidentified Analyst - Bank of America

Lisa Bedell - Sanford Bernstein

Unidentified Analyst

Oliver Maier

Thank you for joining Fresenius Medical Care’s Q4 full year 2008 analysts’ presentation. As normal, I have the easiest part up here actually for the next hour and a half. I just have to introduce you to the Safe Harbor statement. This presentation includes certain forward-looking statements. Actual results could differ materially from those included in the forward-looking statements due to various risk factors and uncertainties.

All these risk factors and uncertainties are described in detail in the company’s filings filed with the SEC and the Deutsche Borse. With that I think Berger introduced Fresenius Medical Care already. With us is Ben Lipps, the CEO of Fresenius Medical Care, and Larry Rosen, our CFO, and they will give you an update for the achievements for 2008 and on the actually good outlook for 2009. Ben, the floor is yours.

Dr. Ben J. Lipps

I am glad all you folks could join us today and a warm welcome to all of our employees and physician associates around the world, management board, and those who have joined us on the internet. I will cover the business update and Larry will cover the financials and then we will go back to questions and answers at the end of the program.

Now, let me say before I start, this was a very interesting and difficult year. We ended up with significant headwinds at the end of the year in terms of currency fluctuations basically also in terms of pharmaceutical costs, but I am really proud to say that the team did an excellent job. We had another record year, and we are also going to propose our 12th consecutive dividend increase. We saw our organic growth grow through the year as the Heparin issues basically were tackled and put behind us. We ended up with a very strong organic growth of 9% in the fourth quarter.

Now, through the year, in the last 2 years, we have been expanding our production facilities and also our de novo clinics, and I will talk a little more about that when we look at the different segments of our business but the reason for that was to be prepared to continue the growth that we see as we look forward into 2009 and 2010. We strengthened our renal pharmaceutical business with the agreement with Galenica. We are excited. We are actually in the process of delivering excellent iron products both in the international region and also in North America. So, I am very enthusiastic about 2009 and 2010.

We continue to see very strong interest in our high-quality products and services, and we have the capacity both in the clinics now and also in the production plants to meet those demands. If you also look at the pipeline in the renal products areas, we have a number of new products coming out in 2009 and 2010 in both hemodialysis and in peritoneal dialysis which I will cover later. So, we are very enthusiastic about 2009 and 2008 was clearly a difficult but very successful year, and you can see on the next slide here, we accomplished our target. Larry will talk more about them later. We had a 9% growth in top line of $10.6 billion. Our organic growth for the year on average was 7%, again that is at our high range of our guidance which is usually 6% to 9% and net income, of course, was, what you have seen in the announcements today, $818 million, again up 14%. We also had 13% earnings per share increase which because of stock options exercised in the last year, we ended up with a few more shares.

Turning now to looking at the revenues around the world and looking by region, North America delivered $7 billion worth of revenue this year, a 5% growth. Again, that accelerated during the year as the EPO administration situation basically stabilized, and I will talk a little bit about that. One of the very exciting things about the US operation is we have a very unique group of coalition members who work for the betterment of basically the patients and this is something that we have developed with basically our partners here who are the other LDOs, the medium-sized dialysis clinics, the drug manufacturers, the device manufacturers, the physicians, and the nurses, so we have a very strong coalition in the US that works together to solve basically our inner discipline issues, come out with one particular voice for the renal patients, and then that is why we were successful last year in accomplishing essentially an increased reimbursement and also getting a number of things arranged through the government. That group is still very active.

We are very interested in participating and supporting the new administration and some of their goals, and you will hear about those later in the year. The US then has really come together of players in the renal space and are doing an excellent job of working together.

Looking at international now, we had $3.6 billion in sales, excellent growth, 18%. Again we had a little tailwind in terms of the currency at the beginning of the year, about 5%, and we ended up with some acquisitions of about 1%, so we ended up with a very strong organic growth in the International of 12% and Europe is the major portion of that; 70% of the revenue. They did have an excellent year at an organic growth rate of 12%. So, again, and of course, we saw for the first time, we passed the $600 million revenue in Asia Pacific, and touched very close to the $500 million revenue in Latin America. So, each of the regions in the International grew double digit in constant currency; very strong year in the International region.

If you look by segment, you we will see that we are pretty stable at about 27% or 26% of our revenue in products and the other is in service, and this is not a particularly bad mix. This has been the way we have designed this, and I will talk a little bit about how we use the service in Latin America and in some other countries as we go along. We are basically quite pleased with the year and quite pleased with the performance of all other regions within the company.

Let’s now look at dialysis services. We had a 6% constant currency growth in services. Again, that was lead by the 18% constant currency growth in international and primarily, as I mentioned, Europe had an 18% growth, Latin America higher at 22%, and Asia Pacific about 10%. Our focus has been in the International area. I will show you the number of de novos we have been building at a 10% rate, so we have been expanding very rapidly our international service business.

This is an excellent platform then for the future because all of our other products from renal pharma to products that go through that, that particular network of clinics, and so this just gives us the long-term stability and the ability to actually innovate new therapies which are good for the patients and we get better outcome such as online hemodiafiltration, so this has been one of our strong investments this year, and it is paying off now and in the future. We treat about 185,000 or 186,000 patients and we have about 2400 clinics. So that is sort of the footprint we have today and as I said, we are very confident we have got, basically, the capability that indicates continued growth.

Let’s look at the dialysis products, again, a very strong year. We have had 11% constant currency growth, clearly above the market. The US had a 15% growth for the year. Now, again, let me break that out because we are including our renal pharma business in the products and the reason for that is that we envision over time that the actual equipment will be used to deliver some of the renal pharma drugs and at the same time, we are offering the renal pharma to all of our customers just like we do our machines and all of our other products, so this is clearly a situation where our intention is to help the industry around the world in terms of being able to basically depend on one very qualified and supportive source.

If you look at North America, the actual hemodialysis business grew in the 6% to 7% which is still double the market, and I think this year, we ended up with a high-water market of about 95% machine based in the US sales, so we clearly are doing quite well, but we were running out of head room in terms of essentially basically what else to sell in the products area. Our dialyzers continue to sale in the 10% range. The rest is basically the renal pharma which grew by 115%, so we have passed $100 million mark in terms of renal pharma in the US this year.

Turning to international, very strong 10% constant currency growth, again, driven by the products, although within the international region, we also have $100 million worth of basically pharma revenue, and we had very strong machine sales, 15% gaining market share and again, that is primarily driven by the new 5008 machine that we introduced 2 years ago in the international area. Dialyzers, again growing quite strongly, and that is the reason we expanded the actual capacity for dialyzers around the world in the last couple of years. Again, the products area has done very well for the year.

Looking at the region real quickly, not a whole lot has changed. Basically, we ended up with a 10% constant currency growth because the dollar basically strengthened against the Euro and a number of other currencies which Larry will talk about. We clearly saw a 6% growth in actual revenue but if you look at it constant currency it is around 10%. We also had a high water mark of the 9% organic, and I wanted to point that out. That was one of our best, absolutely at the top. We are usually looking between 6% and 9%, this is clearly at the top.

If you look at North America for the first time, they had an 8% organic growth and again what you will see here is everything was starting to click together, and the EPO discussion is over, and so we essentially are back on track and of course as we grew in the renal pharma business and some of these things, they add clearly to the business.

International, 4% organic growth, very similar to what they performed all year, so, fourth quarter was a very good sales quarter for us. We certainly had some headwinds in the currency and some costs, but clearly the revenue and the demand for the products continued very strongly.

Looking at services, fourth quarter was again one of our best quarters as far as service revenue. The US came in at 7% which clearly is a high water mark for them and international came in at 18% continuing the trend that they set for the whole year. So we clearly exceeded our expectations in the US which was 5% to 6% for the quarter and that brought us basically to the 4% where were in the 1% to 2% starting the year because of Heparin. Again, the services around the world did very well in the fourth quarter, and we leave the fourth quarter moving into the rest of the year, we are still really quite optimistic about some of the things that I will talk here in terms of revenue per treatment.

Now, this is a little more metric. I show this each time. I will try go through it in reasonably quick detail. This just sort of gives you a view in terms of how we look at the business. Starting first with organic growth, we had 8% organic growth in the service business for the quarter, if you look at basically International at 18% growth. It was 10% same market growth, 7% constant currency growth in terms of revenue per treatment. We are continuing to see, in the international area, the team was able to achieve reimbursement increases in 11 of the 32 countries we operate in and again, a very spectacular revenue per treatment increase. Now, that also reflects some of the good work that they are doing in Portugal where we have moved into the bundle starting in April and that is really a trend that we are interested long term and that is providing more and more services, which we do better than probably most groups, and we can clearly pass on that benefit to the patients and to the providers.

North America had a 3% growth in the same market, pretty much at the market, but they also had a 3% growth in revenue per treatment. Again, I will talk a little bit about that on the next slide but that was an excellent accomplishment on the part of the North America team. If you go down to de novos, we had a record build of de novos this year, as Larry will show you on our CapEx, but it was planned, and we built 129 de novos in the US of 81 and that is up from 51 the year before and in international, we built 48 de novos and that is up from 29. Now, , as Larry talks about our guidance for the next year, we are at a point now where we have got enough, basically clinics in the right positions, so we will probably slow back then to about $100 million less in terms of CapEx in 2009, but we have got what we need to accomplish the growth.

Basically, if you also look at the growth in terms of clinics, it averages out we were building clinics at the range of about 10% in International. We have over 700 clinics in North America, about 5%, so you can see that we basically have added a large number of clinics this year from the de novo standpoint.

Now, this is one of the slides that you have seen now for a long time. The only good part about this slide, I don’t have any EPO on this slide, and so what I want to show you here is we had a target to grow 2% basically in the fourth quarter of 2007 to the fourth quarter of 2008, and the reason we did year end to year end is because we had all the activities going on with respect to EPO administration and our target was to grow by 2% in North America year over year. We exceeded that target. We actually grew at 3%, and that is all basically commercial activity, because EPO was flat and we received no Medicare increase in 2008, so we are quite pleased with essentially the results and what the team accomplished this year, and we are basically back to where, I think the EPO is behind us, and so we are not talking about basically anything other than normal projections going forward.

Our target for next year is based on the average of the year because we believe now you will see here our average for the year only increased by 1% because of basically the EPO effect, but next year, we believe that is behind us and our target would be to grow by 2%, average for 2008 to average of 2009 and again, we get a little Medicare assistance next year because we got an increase from Medicare but basically, it is pretty much the same activity that we have been handling for the last few years, and the team is doing an excellent job.

Part of the reason I am comfortable about that is many of our commercial payers which clearly it is always that we treat them as customers. We would much rather be basically a partner with them than basically an antagonist, and so a lot of our commercial payers have adopted the concept that the government has been discussing and finally became part of the July bill and that is to go to some sort of bundle program on a longer term contract, so we have been successful, as I think the other large LDOs have, because it basically creates a more predictable revenue per treatment and at the same time, we are interested in helping them be as successful as they can and also without compromising patient care, so again, that’s where we are in the US as far as revenue per treatment, very successful year on part of the team, and I think I probably won’t have to talk about EPO, except as it affects quality.

The next chart is our quality chart. Again, I think everyone knows that we, like the other providers in the US and around the world, have a clear and absolute commitment to quality. I am excited about the fact that, I think the governments understand that now, all of our customers that buy our products, DaVita, the other large chain in the US. We are clearly sharing information to make sure that we get the best quality for the patients, so this is all about everybody pulling together for quality. Now, I think you can see that while here we are certainly at a KT/B of 1.2, that’s our target, how much therapy we give relative to what the doctor prescribes, both in international and in the US, we continue at 95%, probably never do any better than that, that is really excellent.

The next thing, I would like to point out is essentially to albumin. In the US, we are pretty well flat at about 80% due to all the various restrictive orders and laws, nothing will happen until we can get into some sort of comprehensive bundle where we can actually manage this. In the international area where you don’t have those restrictions, you can see much better outcomes at 85% and that’s really in the US, it will stay that way and you can see in the international area, we are making good progress. Some of our hemodiafiltration work shows even better, so we are always in the international, improving that metric.

The next metric is hemoglobin. We have put it in the range of 10 to 13. I started that last time. That is because there clearly are financial restrictions at 13 and I think everybody agrees below 10 is really not what you want to offer the patients, so I tried to get a consensus. Now, interestingly enough, if you now look at the hospitalization days and if you look at the hemoglobins above 11, which FMC has for at least 5 years from retrospective data that says that if you drop below 11, you clearly start getting into additional hospital days, and this may be just a fluke, but I wanted to point it out, and we will watch it, but for the first time in the number of years, you will notice that our hospital days are now going up slightly, and we will watch that, but again, our data would say that is absolutely related to the fact that we are probably not providing patients with the right amount of EPO. Now, that’s again, sitting here from 30,000 feet, but we have seen a correlation, and it is showing up and essentially we have also seen a slight drop in Europe, so we will watch that number with you, and hopefully, that will resonate with some other people.

Looking at the phosphate level, again, it is a major issue in the US. It is one of the unmet needs. We are really excited about it because some of the programs we have got going such as our phosphate kinetics modeling are really showing some excellent improvement, and of course, in Europe, you have got again a good track record, but again, in both areas, we are not at the 85% that we should be. So, if you look at our quality, it is the best in the industry in the world. There are some interesting things showing up in EPO, and we are still working pretty hard in the phosphate area, and that is where we are at the end of the year 2008.

Now looking at the products for the fourth quarter, I won’t spend too much time on it, pretty much a repeat of what we have seen this year. Again, external in the 12% constant currency range. Because of the headwind of the currency, you can see that we actually had our international products business actually had a drop versus last year, but strictly currency, you can see that it too was growing in the high 8% per year range. Again, our machine continue to do very well last year in international dialyzers, and in the US, pretty much the same, although I think at the end of the year in the US, but we had such a strong year last year, that they basically was slightly down in the 5% to 6% range in terms of the hemodialysis products, but we had a huge boost in the pharma business as we entered into the renal pharma and the IV iron area.

Now, what are the drivers going forward in 2009 and 2010? Clearly what we are seeing is we have either leveled or we are starting to go back on a worldwide basis in terms of patient growth and for many years, it was dropping, but now it looks like it has leveled, and it is going back up. That can be a combination of really certain countries deciding to support it because they were there all the time, or clearly, we are starting to see the effect of all of the work in the CKD program that has now built up a huge base of patients in the stage III and stage IV. We will keep an eye on it as we go, but the point is it is clearly, around the world, it is a 6% range. Again, as I mentioned, we are very excited about the fact that we have been able to, over time, get our message across to the providers, so we expect to see the reimbursements stable based on quality outcomes.

As far as new product launches, I think I talked about renal pharma. We clearly have expansion plans. We have put the clinics in place. We have a number of activities in that area, again with same market growth of 10% in the international. We clearly will continue that growth. We also have a program in the US called the Demonstration Project. We and DaVita are both working with CMS and the government. They have extended the program. It is what we call integrated care, comprehensive care. Again, it is doing very well. I think I talked about it at the end of third quarter, and we feel this is a model that we basically working with DaVita will be interested in expanding in the US and also making the new administration aware of the benefits for the patients, benefits for the pairs, and clearly this is an interesting area that we will be expanding this year. We have about 1000 patients in it now. We will move up to about 3000 patients.

Finally, we have got some new product launches. We are launching the 5008-S in international, and this product you know, the 5008, I talked about it 2 years ago, it won the German Innovation Award. The 5008-S is basically designed just for hemodiafiltration. The guys have done an excellent job of optimizing that therapy, and that product is launching in international. We have launched the Liberty Cycler in the US, again, very well received, and so the focus on the US is basically brining the Cycler. We just had 2008-T approved in the US by the FDA. Again, our program is once they are approved, you basically take a couple of years in your own clinics, work out all the, what I call, infant mortalities, that every time you develop a new product, it is never as reliable as the one that has been there operating for the last 8 to 10 years, so we have the new products in the machine area, in the PD area, and we are quite excited basically about those in 2010.

Now for the last slide, I think I am getting very close, I want to talk about the dividend. We have had an earnings driven dividend policy for every since we started Fresenius Medical Care in 1996 and essentially what I wanted to show you here, we did have a good year last year. Our dividend increase will be about 7%, 0.58 Euro cents for ordinary share next year, and if you look at it over that same time period, we had a net income growth of about 20% compounded, and our dividend has been about 11%, so we clearly have followed this policy for a number of years, and we are very pleased to recommend this additional dividend of payment to our shareholder in May, which we will, and we are proud to be able to offer that to our shareholders, so I think at this point, that is sort of the overview of the business for 2008, a little bit of projections going forward. I would like to turn it over to Larry now who will brief you on the financial results and talk more specifically about the average for 2008.

Lawrence A. Rosen

I am very happy to review our successful finish to an excellent year in 2008 and also outline our guidance for what we are sure is going to be another record year in 2009. With that, let’s review on the next slide, our performance against all the guidance metrics for 2008. For revenues, Ben already told you that we had $10.6 billion of revenues for the year. This represented an organic growth of 7%. We are very pleased about that and we saw the organic growth accelerate through the years, so it is a really good trend on revenue. Net income at $818 million was more toward the upper end of the range despite some of the headwinds that Ben talked about and that I will talk about in some more detail especially on the cost inflation side.

Debt to EBITDA, we ended the year below 2.7, our guidance was to be below 2.8, so we are really pleased about that. That stayed about constant as we invested a lot during the year in CapEx and acquisitions particularly geared to growth, but our EBITDA increased very significantly, and that allowed us to reduce leverage and leverage ratios, so we are very pleased about that. Our spending did come in at the guidance level of around $900 million combined. We are predicting $800 million through $1 billion, so we are pleased that we came in on target both for CapEx and acquisitions.

Now, let’s take a look and go through in some detail for P&L for the full year. Ben talked quite a bit about, again about the revenues, and all the factors influencing growth and products and services in the different geographic segments. I won’t spend much more time on that, but I do want to spend some time talking about operating income. It was up in total 6% for the year, margin was down 50 basis points. I mentioned we did have some headwind, and we did have headwind in both the US and the international segment. In the US, we had in particular increases in labor and personnel cost, in particular, agency costs for nurses went up in 2008. That is something we are managing through. We think it is going to relax a bit in 2009, and of course, we are being proactive about that with our nursing institute that we are just starting up in the Philippines, so we hope that is going to eventually reduce the increase in agency costs for nurses.

We also had increases in pharmaceutical costs, the biggest ones of which were EPO and heparin, and to some extent, those are continuing even in the first quarter. We did see increases also in rental or location costs as well as energy and utility costs. It is hard to remember all the way back to the second quarter when we were thinking about inflation, when oil was $140 a barrel and other energy utility costs were up, it seems like a long time ago, but some of the influences of those cost increases flowed through our costs even into the third and fourth quarter, and we still see some today.

In international, we are continuing to have a mix shift toward the service business and in particular, new service business in emerging markets, and we know that until you get up to a certain skill level in those markets, they tend to be lower margin than old established markets, where you have a good mix between product and service, so that is having some impact on margin, although fully expected and anticipated, and again, a lot of it is intentional. We are investing more in future growth. We have increased our R&D investment, and particularly in international in 2008. You saw the increase in de novo startups and to some extent that flows into operating margins as you have relatively low margins when you just start up a de novo and then later on it becomes quite profitable investment after 12 to 18 months.

In addition, we saw especially toward the end of the year, some FX losses, in particular, in Asia Pacific and the final factor was we had higher depreciation costs because of the investments especially in new plant capacity during 2007 and 2008, so you can say a lot of it was intentional, a lot of it was geared toward investing for future growth. We are overall pleased with margin. I will show the long-term trend on the next page, and I think it still is quite a good performance, and I think we are right on target with where we want to be.

Going to the non-operating areas, interest expense continued to do very well. There were 2 main factors that influenced the decline in interest expense, one was the repayment of the trust preferred, securities early in the year, and the other was the reduction in variable interest rates that we saw throughout the year, especially going toward the second half of the year, so that led to quite a good comparison on interest. Also on the tax rate, we are below 37% for the year and clearly benefiting from what Stefan talked about the German tax reform that was implemented as of January 1, 2008, and we saw increasing benefits from that throughout the year as we got more comfortable and experienced with it.

Finally, that income was up 14%, again toward the upper end of the 12% to 15% range of guidance that we have given, so also very consistent with our mid-term guidance of low to mid teens and our earnings growth on average on a year by year basis. So, all in all, we are quite pleased with the performance in 2008.

Just taking a look on the next page of the Q4 performance, it was also a good quarter. We reported 6% revenue growth, but this was 10% constant currency growth and again, represented a bit of an acceleration through the year. The fourth quarter was our highest absolute EBIT quarter for the year and the second best margin quarter, the second quarter was 16.1%, but that is something we generally expect in Q4. We do expect it to be the seasonally best quarter, and we were down 70 basis points compared to last year.

Basically, we had all the factors that I just talked about for the full year leading to the merge in comparison, but in addition, we had one more factor, and that was the implementation of new, so called, conditions of coverage in the US clinics. These are new regulations for all operators of clinics and the start up in the first implementation of those new conditions of coverage led to some higher costs. Those are continuing to some extent. We are still really in the initiation phase. They will continue to some extent in the first quarter and then I expect them to certainly level out in the following quarters.

Just taking a look at our little bit longer margin development, I think it is useful to put the 2008 margins in the perspective of where we have been in the last 5 years, and I think in that perspective, we look quite good especially considering the really exceptional performance that we had in 2007, and we know that there is going to be fluctuation from year to year in 2007 and 2006. For that matter 2007 was an exceptionally good year, and I think in 2008, we had some headwinds, as we talked about. I think things are going to level out over time. I think the important thing is that the operating business and the strategic direction of the business is really going in the right direction. We are achieving our strategic goals. We are geared for future growth, and I think the margin development is really okay with us.

Now let’s turn to cash flow, starting with our DSO development. We were flat in Q4, and we consider this a pretty good performance given the worldwide economic environment. Many of our payers are government especially for services, products are more toward private payers and of course, we have the private insurance payers in the US. Even governments can pay late sometimes, so we are very pleased. We paid a lot of attention to managing this and trying to keep it at least flat, or at worst, flat, and we are able to do that in the global economic environment that we had in Q4. We are quite pleased with that performance. Nevertheless, we were up a few days for the year. We saw most of that increase in the first half. There were some technical reasons for that as well as just some general slowdown in the first half, but again, we flattened that out, and we think for 2009, that it will be at worse flat, potentially slightly reduced.

If you look at our cash flow performance now for the full year, we are just at our target of 10% of revenues with $1.16 billion of operating cash flow for the year. It was slightly down from 2007, and most of that difference is due to the DSO performance. We were up 4 days last year in 2008, and we are down a couple of days in 2007, and so most of that, almost $200 million difference is due to that. On the spending levels, again, this was totally in line with our plan and our guidance to have increased spending to invest for growth in the future in 2008, and so free cash flow ended the year at $125 million.

If you look at Q4, it a little bit better comparison. We, again, with the flat DSO, we are just about up to the same level as 2007 at 11% of revenues, so a bit above our target. Spending was about in line with 2007, so we ended up with just a little better than breakeven cash flow for the quarter.

Now, turning again to our debt ratio, debt to EBITDA, we made further progress in Q4, and we are below 2.7, right at the end of the year. You know, our guidance was to be below 2.8. Our debt, as you see on the left side, stayed pretty constant throughout the year, around $5.7 billion and pretty constant with the end of 2007 level, but nevertheless, the very significant increases in EBITDA help this formula to improve all the way down to 2.69. Again, the level we are pretty comfortable with even in the current economic environment. We feel very good about our debt portfolio. Our main maturities are coming in 2011 and later. We are financed at very attractive interest rates for the most part, and we are hedged to 75% fixed, so our interest rate risk is not very big in the short term, and we are very pleased generally with the status of our debt portfolio and balance sheet generally.

Now, let me talk about an issue that has taken on increasing importance lately, and it is increasing because of our increasing size in many different markets around the world, but also because of extreme volatility, and that is exchange rate sensitivity. Clearly our largest exposure continues to be translation exposure for the Euro-US dollar. We have a lot of earnings in the Euro zone and when we translate those earnings to US dollars, that is our biggest single exposure, but it is important to note that other exposures are becoming more important, in particular, weakness in the non-Euro European currencies presents additional exposures in more than we have had in the past. Also that is true with Asian currencies as we continue to grow very quickly in Asia, we see that as well.

Interestingly, Latin America, we do have some exposure there, but not as much as in Asia or in the non-Euro zone, in particular, because we are so heavily weighted toward service in Latin America, and there we have, in particular, a very high local cost content, and to some extent we are trying to do that or we are in the phase of transitioning toward that in Eastern Europe as we, in particular, grow the service business and the service network, we have grown dramatically in the area in the last couple of years, but will do more so in the future, and so we will see that zone shift more and more to a less currency sensitive zone as we have in Latin America, but so far, we are not completely there, and so we do have some significant exposure and of course, the non-Euro zone also includes the UK, where we have seen the Pound do pretty weak recently. We also include in that zone, Turkey, where the currency has been quite weak lately, so we do have significant sensitivity to several currencies.

However, I think it is very important to note that the underlying business is very strong and on target, we are meeting our strategic objectives, and there are a couple of places where exchange rates are developing favorably in some key markets, and notable markets here are in Japan and China and then, of course, with us it is always important to remember that our main stock price hoard in is Euros and a strong US dollar as we have now compared to the last couple of years is certainly favorable for the Euro stock price evaluation.

Now, what I wanted to do is give you an idea of what a 10% appreciation or depreciation in various currency blocks versus the US dollar mean for our bottom line results. In the past, if you look in the first line under the Euro, you see that $0.10 equals about 1.2% and basically the only guidance we have given in this areas, the kind of rule of thumb, was that a $0.10 move up or down in the Euro is going to give us about 1% difference on the bottom line, and that still holds true. So, if you just convert that $0.10 which was only 6% or 7% to 10%, that translates now to 1.7% and you seen then the Europe non-Euro zone being kind of the second biggest exposure, accounting for 1.3% versus the US dollar with a 10% appreciation or depreciation.

In the non-Euro zone as well as the Asia zone, you have 2 things going one, different from the Euro zone; you have both translation exposure and transaction exposure, because we are translating the earnings from the earnings, but as well in many of those countries we are not producing products, and so we get a transaction exposure because we are shipping products made in the Euro zone into those countries and recreate a transaction risk. That is why the risk a little bit out of proportion for the size, and you can see the size of those blocks in terms of the amount of revenue that we had in 2008. So, China and Hong Kong only account for 1% of our sales but 10% move up or down will give us a 0.4% change in that income, so hopefully this is helpful to you as you look at what currencies are doing and see and think about what might be the impact on our bottom line.

Finally, I want to come to the guidance for 2009. We are projecting more than $11.1 billion in revenue. This is over an 8% constant currency. Net income is at $850 million to $890 million. This is about 4% to 9% growth, but it is certainly in line with our mid-term guidance when you consider currency impacts in 2009. If you just translate in Euros, you certainly can get to around our mid-term guidance of low to mid teens earnings growth based on this US dollar range of guidance and based on where the currencies currently are.

I also want to mention something that Stefan mentioned, just a word about Q1. Q1 is the seasonally weakest quarter typically for FMC. The main reason for that is that we have the fewest number of calendar days and therefore the fewer number of dialysis days in the quarter. Q1 of 2009, just because the way the calendar days fall, has one less day than usual. In addition, we have in particular difficult currency comparison. In Q1 of 2008, the dollar was very weak, the Euro was very strong and so, it is probably going to be the most difficult currency comparison quarter for the year, so with that, we can saw about Q1 that it will be at or even slightly below in absolute terms Q1 of 2008. However, I want to assure you that is fully considered in our guidance, and we are fully comfortable with that trend.

The leverage ratio again, we expect to be below 2.7 for the end of the year and CapEx and acquisitions 550 to 650 on CapEx and acquisitions in the 200 to 300 range. If you look at those two together in percent of revenues, it is 6.5% to 8.5%, so coming back to a more normalized level compared to last year where we had 8% to 10%. So again, still investing in growth and still seeing opportunities around the world but not in such a dramatic way as we did in 2007.

Thank you, very much for your attention, and we will be happy to answer any questions you may have.

Question-and-Answer Section

Oliver Maier

We start with the questions here in the audience.

Unidentified Analyst

Two questions please. Could you give us some guidance for the sensitivity of the shift for the reimbursement rate from between public and private care? What a percentage shift would mean in terms of earnings and how much confidence do you have that COBRA will give you some resilience given the market outlook? How many people and what percentage of people have been laid off really go for COBRA? The second question would be how far are you with the negotiations on the comprehensive bundling services?

Dr. Ben J. Lipps

Actually, as far as the shift in commercial revenue versus Medicare, we will show it basically in the 20s. We actually went up 90 basis points in terms of commercial revenue, so as I showed you here, we are pretty comfortable at this point in time that we have not seen any activity that was essentially concerned with the unemployment in the US and people losing their insurance, so actually it is essentially up for the year, and we don’t expect to see that either. As far as COBRA, clearly that is available. We monitor that with our patients. We have a system where we keep track of their insurance, and I think we have discussed in the public sector that there is a foundation, an American Kidney Fund, that actually can assist the patients if they do not have the funds for secondary insurance or for COBRA, so this fund is very helpful in taking care of the patients. So quite frankly, at this point in time, we don’t see the sensitivity to the unemployment rate. Again, in a couple of years from now, if it stays in the mid teens it might be different but at this point in time, we don’t see that as an issue.

Unidentified Analyst

And on the comprehensive bundling?

Dr. Ben J. Lipps

Yes, again the dialysis bundling will start in 2011. The coalition is working very carefully with CMS to make sure that the actual payment rates in 2011 are essentially proper in terms of the numbers and CMS is very helpful, so that part of the bundling will start in the ASRD bundle. As far as the comprehensive program, the demonstration project, we were very pleased that they extended it another year. It was due to essentially stop at the end of 2009, and CMS has extended it through 2010, also for DaVita, so both of us have these programs, and we believe it is the right way to go forward, but it is still too early to comment about how that will evolve into that system, but we are both expanding our programs this year and are interested in discussing them with the new administration which we are in the process of doing.

Holger Blum - Deutsche Bank

Just two questions on disease management programs, how much do you expect an uplift here now? You indicated that going forward, what would be the number which you can think of in 2009 and 2010 and the same, although kind of guidance for your renal devices. What kind of revenues do you target this year and next year?

Dr. Ben J. Lipps

Okay thanks, Holger. Again, the demonstrate project where we have about 1000 patients in the program now. We will increase it to probably 3000 patients this year and then beyond that, it will depend on what sort of arrangements that we work out with the CMS and the government. That does, because the margin is less on the disease management, than on the normal dialysis business, that probably has an impact in 2009 of 10 to 15 basis points over the margin, but clearly long-term, it is a very interesting program. Now, along the same lines in international, we have the ESRD bundle operating in Portugal and basically doing very well in terms of meeting the quality standards. We are getting close. I think it has been very successful. Manuel is sitting there nodding his head. Everything I see then is we are getting clear indication and following of that program as we go forward, so we think this, in international, it is primarily in Portugal. It the US it’s the demonstrate body. Now are far as the renal pharma, I believe we are about $250 million in sales this year and our target is $400 million in 2010, and I believe we are on target to get to reach that. I don’t know the exact target for 2009, but we said when we signed the iron deal that we would be at about a $200 million run rate in the US and of course, in international, we need to country by county move into the program, and that is going to take a little longer, but clearly, it will be in the range of a couple of 100 million additional pharma sales, I think, in 2009.

Holger Blum - Deutsche Bank

Coming back to Martin’s question about insurance coverage and so forth, just that I noticed, the debt expenses are clearly going up apparently year over year, so we have more than a 10% surge in those. Is that something we should worry about that people cannot co-pay any longer and probably look at a higher run rate going forward? And secondly, I am still trying to understand why are you using the 2008-T first in your own clinics? Are there any efficiency gains also associated with those? Is that standard really standard procedure that you’re testing the machine while in a couple of years, whatever in your own clinics before releasing it into the broader market?

Lawrence A. Rosen

So let me answer the question on bad debt. It did take up slightly in the US in Q4, but I think it’s worth noting that both in Q4 and for the full year, it stayed very close to the 2% level where it has been for a number of years. We did change our accruals slightly, but what I want to impress is that there is no underlying trend in the US business that is indicated that we have a bad debt issue or that bad debt is going up. We have just gone through a bit more conservative accrual policy and I don’t think that is any reason to conclude that there is any underlying trend going on.

Dr. Ben J. Lipps

With respect to introducing new machines, that is one of the benefits of being vertically integrated is the 5008, I think Emanuel, that we ran it for a couple of years in our clinics, and then when you go to the open market, you’re clearly at the same level of reliability of all your other machines that have been around for 8 or 9 years, and so, in the US, the K machine, we measured in terms of calls per month per thousand machine, in other words, they can call about anything, but it has to go down as a complaint. We are in the range of 10 to 15 calls per month per thousand machines, and so by running in our own clinics for a couple of years, we will get down in that range, so that when it comes into the market, it is totally reliable, and everybody is very comfortable, so it takes about 2 years to bring a new machine to the market no matter where you develop it and we usually do that within our own clinics because we clearly can get the data back very quickly.

Unidentified Analyst

Three quick questions, the first one is on the nurse cost, so if you can remind us what is the percentage of the total cost and what kind of inflation you are seeing currently? The second question is if you can give us a little bit more detail on this new regulation for the US clinics and also about what kind of costs does this imply? The last question is you mentioned head wind from energy cost. Is this because you had some hedges and when will we see some positive?

Dr. Ben J. Lipps

I will take a couple of those and Larry will take one of them. As far as the nursing, we have seen, I think if you look at our score card, we can see that labor has gone up this year, and again, we had quite and inflationary spiral starting mid year with everything in the US increasing with oil based on the oil prices, and of course, the easiest way for that to happen is the agencies raise their price immediately, and so we always use agencies, and that is why we are developing our own source through the Philippines. So, we saw a disproportionate rise in the agency nursing staff. That is starting to slow down a little bit. It is certainly not out of the system. It will take another 6 months, because with the decreasing 401-K’s and a lot of people losing their jobs, we are finding a number of nurses are coming back into the workforce, and our workforce in our times are very predictable, so they can basically come back and work one a week or two days a week, whatever they want to, they don’t have to worry about schedules, so I think, we are seeing that will drop off, but it will be about mid year, and we have got our own, so we are going to be brining our own nurses in this year, so I think that we will handle that.

Now, the conditions of coverage which we have had a change in the conditions of coverage in the US for 25 years, but because, I guess, it was due, and what this is CMS inspects our clinics every 2 years, and they have a complete list that they inspect to and so this has been developed and you have to train the technicians, they have to pass a test, there are a whole bunch of about 60 things that you now have to do that we didn’t do. I mean, most of them, if they were important, we did them, but now it is part of the law, and so we are doing them, and as Larry said, that all started fourth quarter, because they started inspecting to that, so we have got some start up costs. The guys are doing a great job. It will carry over into 2009, and eventually, we will become very efficient at it, but it is one of those things that basically CMS and the industry agreed that is probably worth doing, it is just that it is painful at the time, so that is the new conditions of coverage, and it will be 25 years before we have a new one, so we will get use to it.

Lawrence A. Rosen

On energy, you have a couple of different effects. You have the diesel to run the trucks to deliver your products and there you kind of see the impact right away. You also have the utility costs, electricity costs usually to operate the clinics, and then the utilities to run our plants, and there it is a little more sticky. We are just starting now to see some impacts in the plants we have. We don’t have hedges, but we sometimes have one-year contracts and so it takes a little while to really get the full impact of the energy cost decline that we have seen.

Unidentified Analyst

Just maybe on the cost for treatment which increased quite dramatically in 2008, I guess mainly related to heparin, the increase was 6%, so may be twice the rate of the revenue for treatment, so may be you can speak about the heparin issue and how do you expect the cost for treatments to develop and may be also how you can may be solve the heparin issue?

Lawrence A. Rosen

Well let me take at least the first couple of parts of that question. You know, if you look at the whole year, the cost increase was about 2% average year to average year, so the 6% was really only the fourth quarter, and there were a couple of special things that came together to make it a bigger than usual increase. One was clearly again the start-up costs, the initiation costs for these new conditions of coverage that was a significant issue in Q4. As well, we did have pharmaceutical cost increase that was probably the second most important fact along with the labor costs increases. We believe for 2009, the year average, we are again going to have about a 1.5% to 2% increase in costs in the US and reasonably similar in the international arena.

Dr. Ben J. Lipps

I will say just a little bit of discussion on the heparin. In our guidance for next year, we built it in at the same. Basically, we didn’t assume that we would use less, and we didn’t assume the price will go down, so it is essentially there at the rate that it is running at this point.

Oliver Maier

I know they had some questions lined up actually on the telephone lines, so I think at this point in time, operator, we can open up the lines for questions.

Operator

We will now take our first question from Tom Jones from J.P. Morgan.

Thomas Jones - J.P. Morgan

Good afternoon. I was just wondering if you can just clarify one thing for me and then the follow-up question after that. On the US revenue per treatment, you talked about doing 2% growth in 2009 on the average of 2008. Well, the average of 2008, if my calculations are right, is about $330 per treatment which a 2% growth will get you to $337 by the end of 2009 which is only a relatively small, just over 0.5% increase on where you were in Q4. Am I doing that right or should we be assuming something is going on over on the manage care side, because with the 1% increase in Medicare rates, you would expect a slightly better than 2% year-on-year increase given where you were in Q4?

Lawrence A. Rosen

With the average being $330 for 2008, we are saying will be $337 for 2009, not necessarily the year end. So, if we start the year slightly below that you will end the year slightly above it to get to the average of around $337. That is where we think we will come out in 2009.

Dr. Ben J. Lipps

And Tom, one other thing, the increase in Medicare is only on the composite rate, so it is 1%, but I think Larry, it translates to about 0.5%, and none of that is to signal anything changing in the commercial area.

Thomas Jones - J.P. Morgan

You made your comments about pair mix, but would you say the commercial pricing, you state it is sort of historic mid single digit year on year price growth in manage care has been the current, kind of, pricing environment?

Dr. Ben J. Lipps

We are trying to signal that we don’t see any major changes, but we don’t have the EPO effect, so we ought to look at it on a year over year, rather end of the year, and so we are not signaling any changes in the manage care environment next year.

Thomas Jones - J.P. Morgan

The second question, Kenn, on his calls mentions some issues about some backlogs in getting new clinics approved, particularly in Texas, and Texas is a fairly big market for you in the US. Are you saying similar issues in that state or any other that are limiting your ability to open clinics at the moment?

Dr. Ben J. Lipps

Yes. We have having the same issues that DaVita is having. I believe he commented that he had about 54 clinics waiting for certification. We are clearly in the same range, I think 48 or 50, and Texas appears to be the lead state, but clearly, all of them are 6 to 8 months slower than it has been in the past for manpower reasons. So, yes, we all have a number of clinics that are basically ready for certification.

Thomas Jones - J.P. Morgan

And I assume that you have kind of baked in that slower approval into your guidance for 2009?

Dr. Ben J. Lipps

Yes, we have, and it sort of hits in a couple of areas, obviously while you’re waiting for approval, you will need to dialyze patients, essentially you can’t get approved unless you’re actually dialyzing patients, so there is an additional cost to the de novos, but yes, this is all baked in, and we don’t expect it to get any worse quite frankly, but it clearly is a fairly major backlog for both of us.

Operator

Our next question comes from Kevin Ellis from RBC Capital Markets.

Kevin Ellis - RBC Capital Markets

The first question that I have is looking at your 2009 acquisition expenditure guidance, it looks to be a little bit higher than 2008. I was wondering if you can talk about your pipeline and where you see the biggest opportunities, and DaVita also talked about how some of the privately-backed MDOs in the US are interested in selling, have you been approached to ask or asked to put in a bid yet?

Lawrence A. Rosen

We do see good opportunities for acquisitions both in the US and in several areas in the international markets. In addition, we have not seen EBITDA multiples or evaluation come dramatically down yet, but we have seen them slightly soften and so, we think doing acquisitions in this environment or how we think the environment might be in 6 or 9 months is potentially quite an attractive thing. I think in terms of discussions or approaches that we may or may not have with medium-sized companies, I think we are generally talking to a lot of people in the markets, and you know, I wouldn’t want to comment on any specific discussions that we may or may not have had.

Kevin Ellis - RBC Capital Markets

Okay, fair enough, and the may be a question for Ben. You know, with some of the upcoming alternatives to EPO, such as CERA and Affymax’s Hematide, I was wondering what your opinion is of going to may be a once in a month EPO, if indeed, that is approved since it is in phase 3, do you think a nephrologists would be receptive to this, and how do you see it playing out?

Dr. Ben J. Lipps

Well, I’m certainly not an expert on EPO, but we have clearly looked at that a few years ago when we had the opportunity to have Aranesp in the US for the renal dialysis market very the EPO Alpha, and one of the things with the reimbursement situation where you essentially no longer get paid after 3 months above 13, it becomes really, from what we can tell, really dangerous to night titer. In fact, what we are doing now, is we are taking hemoglobins every week and the physicians are tittering the dose, so in that economic environment, I think it is very risky to bring, and that is essentially why it has not come to the US. Now, if you don’t have that upper limit, then obviously if there is a valued offering at once every two weeks or once a month that certainly is open at that point. I believe that as you go to the bundle that might be less of an issue, but that is 2011 and 2012 and going forward, so we are very pleased. We think anemia management is pretty much solved. The only area opened is optimizing essentially the IV iron, but we have excellent result with the EPOs that are on the market around the world, and so we don’t see that as a medical need at this point.

Operator

Our next question comes from Ilan Chaitowitz from Redburn Partners

Ilan Chaitowitz - Redburn Partners

A few questions; on the international business, you have had very robust growth in your revenue per treatment on an underlying basis, I would make it about 6% revenue increase, is that sustainable into 2009 and beyond, and can you give some insight into which countries are really driving that? Second question relates to your new clinics, and we have seen a 5% increase in North America, will that translate into a 5% patient growth over 2009 in North America? The final question is relating to the corporate expenses. We have seen that jack up quite aggressively over 2008. Can you give some sort of feel as to how that might end up in 2009?

Dr. Ben J. Lipps

I will take the first two and let Larry handle the corporate expenses. Basically, I think we are just absolutely excited about the revenue per treatment growth that we have seen in the international and again, it was driven by Portugal and a number of countries where we have got good relationships with the pairs. Clearly, I don’t think we expect to continue to grow at that level. Again, we do expect that they will value the excellent outcomes that we provide them, but again, you have also the effect of the labor cost, so it is a balancing type of act if there clearly is a reduction in raises around the world, then clearly there will be probably, an also we don’t need the 7% growth in terms of revenue per treatment, so our target over time has been between 2% and 4% and the fact that it is 7% is just overachievement. As far as the North America patient growth, yes we have built 5% of the clinics, but obviously, they are all not operating yet, as if we have got a backlog of 50 of them waiting to operating, so I think that our target and what we have built in the model is in the low 3’s in terms of percent growth not to 5% because those clinics are not available to us and I think this is essentially probably not doable with respect to the growth rate in North America which is about 3%, so we clearly have those waiting but we don’t expect to grow much more than the low 3’s.

Lawrence A. Rosen

I think there are a couple of factors. One is that we have indeed increased corporate expense, in particular, again in investing for the future. One factor is the increase in the number and amount spent for global R&D projects, another was the acquisition we did in late 2007 of RSI. Again, looking at sorbents as a technology in particular for the home markets, that we think is really going to be a great product for that market, and we are still in primarily the research and testing phase and expect to have some products out probably in 2010. The third factor is if you look at the whole year, certainly currency was a factor in terms of corporate costs. I think if you look at underlying corporate cost, we would not expect them to continue to increase at the rate that they did in 2008, but flatten out significantly more from this point forward.

Ilan Chaitowitz - Redburn Partners

Can you give some insight as to what the weighting of the Euro is then in the corporate cost line item, so we get a feel for the underlying growth rate?

Lawrence A. Rosen

I think if I understood the question correctly, what’s the weighting of the Euro, it is heavily weighted toward Euro in terms of that line.

Operator

Our next question comes from Michael (inaudible) from Bank of America.

Unidentified Analyst

Firstly, on the dialysis equipment, can you give us an indication of what you’re seeing with respect to the demand profile amongst the independents in the US particularly with respect to the capital equipment machines and secondly, can you highlight what the single-user dialyzer penetration is in the US amongst the independent as well as at the end of Q4.

Dr. Ben J. Lipps

Yes, we have not seen any slow down anywhere in the world yet in terms of equipment, and again, as I mentioned a couple of analyst’s calls before, 5 years ago, we did see that and again, these are valuable customers, they need the machines because they growing, so we usually offer them some sort of bundle because they usually are people that are using our disposable products, so during that time, essentially still keep moving the machines but you just arrange some sort of payment program for them that is conducive to whatever they need. Now again, we don’t see that because obviously we have just not been that far into it, and I don’t expect to see too much of it either, and it won’t have much impact on us because machine business is less than 5% of our revenues, so it is not something that we worry about at night, but it is important to maintain our market share with machines because so many things are built on that machine going forward. So, we are very protective of our market share in the machine area which is growing in international and is at an all-time high in North America.

The second question, could you repeat that one, I have a note here, but I can’t read it.

Unidentified Analyst

It is just a question about the penetration of single-use dialyzers in the US at the end of Q4 with the independence?

Dr. Ben J. Lipps

Actually I wrote the number down, but I couldn’t remember the question. 65% is what the penetration is in the independent market, anyhow, that is where we are, and we are quite pleased, and I think again, I want to mention that, and I didn’t in the quality, we have seen almost a 350 basis point improvement in our mortality over the last 5 years, and again, I think it is really quite impressive, and so, I believe at the end of the day, we probably made the right move many years ago, but we do see it at about 65% in the independent market.

Operator

Next question comes from Lisa Bedell from Sanford Bernstein.

Lisa Bedell - Sanford Bernstein

Two questions, both related to bundle pricing. The first is could you walk us through some areas where you see potential cost savings under bundle pricing and secondary do you think your home dialysis patient population would change, I think in the past you have said that you may want to expand you home dialysis treatment, and if you could just talk through that opportunity a little bit?

Dr. Ben J. Lipps

Yes. When it comes to the bundle and where do we get the 2% administrative savings that it will be imposed in 2011, if you join the bundle, we see that there is probably administrative activities that will get us the 2%. Beyond that, we really have not identified or basically spent much time looking at where the savings are and again at this point in time, we are in the process with CMS, developing what is a fair reimbursement for the bundle, so you really cannot comment about what you’re going to do with the bundle until it gets priced, and I think that will happen some time early 2010.

As far as what will the bundle do as far as home, again, we see on home hemodialysis, there are a number of papers showing up, it is really quite an imposition on the spouses and on the care givers, I think, when the new papers come out. We see long term. Yes, there might be a market there, but we see really peritoneal dialysis has been accepted. It is just not efficient enough, and so we see the opportunity for peritoneal dialysis as being a preferred home therapy if we can use the sorbents and get enough capacity in peritoneal, so our focus in 2011 is to see if we can come up with an improved peritoneal dialysis device that really gives adequate therapy to the patient.

Oliver Maier

Are there any further questions?

Operator

There are no further questions at this time.

Oliver Maier

I have one more from the internet which might be one for Larry. Our FMC’s Clinic activities in central Europe are affected by the downturn of the economies and will that reduce FMC’s growth pipeline?

Lawrence A. Rosen

I would say generally, we do not think about changing our overall strategy towards central and Eastern Europe. We believe that in medium and long-term, it is a very attractive market and many of the countries continue to be attractive even today. I would say we would be somewhat more selective as we think about where to place new investments in the region and if we see that countries are unable or completely unwilling to give a fair reimbursement, then clearly we might slow down investment in those countries and invest more in others that seem more attractive in the mid term, but overall, I think the strategy is completely intact. We do believe it is a very attractive region and will continue to invest there generally going forward.

Oliver Maier

Are there any further questions here in the audience?

Unidentified Analyst

I have a question concerning the demographics that were mentioned in the scorecard segment of the report. Are there any significant differences between the US dialyzers population and the international population if it concerns, for instance, prevalence of diabetes, age, weight, and so on, and I will make another follow up on this, what are beyond diabetes the most important underlying renal condition for dialysis, one or two or three?

Dr. Ben J. Lipps

Yes. I think the US certainly leads in the prevalence of diabetes. You can see that we have stabilized that about 53% of our patients are diabetic. They carry, and again we are working very hard and we have made improvements, but the mortality is about 200 basis points higher with basically for the diabetics. Now, we are doing foot checks and a number of things, but I do believe in the international, I have to look at it, I do believe that we are starting to see, in Europe, an increase in diabetics, and it’s 35%, so it really is a common problem in both areas. I think the other area that we are all focusing on is really malnutrition. This is one of the areas that quite frankly it is very, very important and that is why we always put out basically the albumin levels, because that defines malnutrition, so we think there is a lot of good things that could be done there if our hands were untied, and finally, I think the age is a little about the same between the two, around the early 60s, might be slightly less in Europe, which is about 50, so the age in the US is basically about 10 years more on average.

Oliver Maier

Okay. Thank you very much, everybody. That is going to close the presentation for Fresenius Medical Care for Q4 and the full year. Thanks for joining us today, here in the audience and also on the web.

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