Risk areas

Overall economic risks and risks due to the operating framework

At present, despite the COVID-19 pandemic, the development of the global economy does not present a going-concern risk to the Fresenius Group. We expect the global economy to recover with the successful control of the COVID-19 pandemic. Depending on how the pandemic develops, we expect this to be the case in 2021. Moreover, Fresenius is affected only to a small extent by general economic fluctuations. We expect demand for our life-saving and life-sustaining products and services to continue to grow. Furthermore, Fresenius is striving for balanced distribution of its business in the main global regions and between established and emerging markets.

The risk situation for each business segment depends in particular on the development of their respective relevant markets. Country-specific political, legal, and financial conditions are therefore monitored and evaluated carefully, particularly in the current macroeconomic environment.

This applies, for example, to countries with budget problems as a result of their debt burden, in particular with regard to our accounts receivable.

This also applies to any initiatives by governments with regard to potential changes to the current health care programs.

This furthermore applies to the potential impact on our business activities resulting from the United Kingdom’s withdrawal from the European Union. We do not expect this to have a material impact on our business.

And this holds true in particular for current developments related to the COVID-19 pandemic.

Risks associated with the COVID-19 pandemic

The rapid global spread of the COVID-19 pandemic and the measures taken to contain it have led to a substantial dete­rioration in conditions for the global economy and financial markets have been significantly impacted. This development also had a negative impact on our business and operating result in 2020. We expect further negative effects on our business and operating result in 2021, in particular in the first half of the year. The COVID-19 pandemic may also continue to have an adverse effect on our financial position, liquidity and the recoverability of our assets, including goodwill. The pandemic poses significant risks to the health of our patients as well as to our supply chains, our pro­duction, the sale of our products and the provision of our services.

Negative effects on our business could be caused, for example, by a continued or even higher excess mortality among our dialysis patients, by restrictions on the business activities of our suppliers, customers and ourselves, including our personnel, resulting from regulatory requirements, orders and conditions at regional, national or international level. The unavailability of critical staff, increased costs, for example, from protective measures in our clinics and production sites, and a significant diversion of public health resources away from our products and services to address the COVID-19 pandemic could also negatively impact our business.

U.S. and state governments have taken broad, temporary actions in response to the COVID-19 pandemic that have affected the regulatory and legal environment. These measures include temporary exceptions and changes to certain laws, regulations and government reimbursement and financing programs. For example, the Coronavirus Aid, Relief and Economic Security Act (CARES Act) was passed to mitigate the negative financial impacts of the COVID-19 pandemic, including on the health care sector. Additional funds provided under the CARES Act, as well as other COVID-19-related assistance funds, are providing some financial support to our U.S. business. However, these measures cannot fully offset potential losses and increased costs. And while many of these measures are only in effect for the duration of the public health emergency, it is possible that some of these temporary measures could result in long-term changes that could affect especially Fresenius Medical Care’s business, financial position and operational results in ways that cannot be quantified or predicted at this time.

Fresenius Medical Care is furthermore experiencing increased mortality among dialysis patients due to the COVID-19 pandemic. During 2020, the company had already reported on the consequences of COVID-19 with sometimes severe impact of the disease on dialysis patients. This trend accelerated significantly in November and December of last year, particularly in North America and EMEA (Europe, Middle East and Africa), resulting in an excess mortality of circa 10,000 patients compared to pre-pandemic levels. The accelerated effects of excess mortality caused by COVID-19 are continuing in 2021. Accordingly, we expect a significant adverse annualization effect on the number of dialysis treatments performed. In addition, this will have an impact on the utilization of the clinic infrastructure and, downstream, on supporting business activities. This may have a negative impact on Fresenius Medical Care’s sales and earnings figures. Based on the information and analyses currently available, Fresenius Medical Care expects net income for 2021 to decline in a percentage range of high-teens to mid-twenties (in constant currency), excluding any restructuring measures.

The COVID-19 pandemic has had a significant impact on our hospitals in Germany and Spain, depending on the development of the pandemic at a given time.

Spain was heavily affected during the first COVID-19 wave from March to May 2020. A national state of emergency went into effect on March 14, 2020, and hospitals were not allowed to conduct normal operations. In Germany, the first wave was milder, but the Corona Ordinance prohibited hospitals from handling elective cases. These regulatory measures in both countries had a significant negative impact on our operational results. At Helios Germany, this was largely offset by the rescue package and COVID-19 reimbursements in Germany.

In addition, the COVID-19 pandemic response has several additional economic, social and hospital implications. For example, the minimum distance of 1.5 meters between two hospital beds required for infection control has reduced bed capacity in our hospitals. In addition, travel restrictions have a significant negative effect on the number of inter­national (private) patients in Germany and Spain. In Spain, the weaker economic situation and resulting high unemployment are also leading to fewer privately insured patients. This may continue to have a negative impact on our net assets, financial position and results of operations.

We expect the negative effects of the COVID-19 pandemic to persist in 2021, particularly in the first half of 2021. This will have a negative impact on our hospital business unless there is further and sufficient reimbursement in Germany and Spain.

Fresenius Vamed also experienced and continues to experience significant delays and additional costs due to the COVID-19 pandemic in its project business as a result of travel restrictions, restricted supply chains, disrupted project execution and the construction stops imposed.

The impact on all business segments of the Fresenius Group described here will intensify the longer the COVID-19 pandemic and the measures required to contain it continue, especially considering the newly emerging variants of the virus which increase the uncertainty of the further development of the pandemic.

We have demonstrated our special responsibility of being part of the healthcare system even under the difficult circumstances of the current COVID-19 pandemic. For example, our dialysis clinics and hospitals have taken extensive measures to ensure the continuity of patient care as far as ­possible. Fresenius Kabi has responded to the significant increase in demand worldwide for important drugs and infusion technology for the treatment of COVID-19 patients, especially for sedation drugs such as propofol, analgesics and infusion pumps. As a result, we have maximized the supply of all appropriate manufacturing capacity dedicated to these important products.

Risks in the health care sector

Risks related to changes in the health care market are of major importance to the Fresenius Group. The main risks are the financing of health care systems and the corresponding reimbursement systems, as well as the development of new products and therapies.

Financing of health care and reimbursement systems

In our largely regulated business environment, changes in the law – also with respect to reimbursement – can have a major impact on our business success.

National insurance systems are financed very differently. For example, health care systems in Europe and in the British Commonwealth countries are generally based on one of two financing models: systems with a mandatory employer and employee contribution and systems predominantly financed through taxes.

In the Asia-Pacific region, universal health care (UHC) is at different stages of implementation, so reimbursement mechanisms can vary significantly from country to country (and even from province to province and city to city).

In Latin America, health care systems are funded by public or private payers, or a combination of both.

Because a large portion of our sales are generated in the U.S. market, changes in the government reimbursement system, in particular in the reimbursement of dialysis treatments, for example, could have a considerable impact on our business. In 2020, approximately 32% of Fresenius Medical Care’s sales worldwide were attributable to U.S. federal health care benefit programs, such as Centers of Medicare and Medicaid Services (CMS). Medicare and Medicaid change their reimbursement methods and funding from time to time due to changes in legislation, economic conditions and policy. A reduction in reimbursement rates or reimbursed services could result in significantly lower sales and operational results.

Based on the Budget Control Act of 2011, Medicare has implemented an end-stage renal disease (ESRD) prospective payment system (PPS), which expanded the scope of the products and services covered by a bundled reim­bursement rate. Due to pressure to reduce health care costs, increases in the reimbursement rate by the U.S. government have been limited.

As part of the PPS, our dialysis clinics in the United States participate in the Quality Improvement Program (QIP). Medicare reimbursement benefits can be reduced by up to 2% based on the previous year’s benefits if clinics do not meet the quality standards of the QIP. Underlying quality measures are reviewed, extended, and amended annually by the CMS. A material failure by Fresenius Medical Care to achieve the minimum client quality standards under the QIP could materially and adversely affect our business, financial condition, and results of operations. The 2% benefit reduction was temporarily suspended from May 1, 2020 through March 31, 2021 due to the COVID-19 pandemic.

In addition, Fresenius Medical Care participates in various value-oriented compensation programs under which we receive fixed compensation to cover all or a defined amount of treatment costs for a defined number of patients:

  • Under CMS’s Comprehensive ESRD Care Model, dialysis providers and physicians can form what are called ESRD Seamless Care Organizations (ESCOs). The goal is to improve the health of patients with chronic kidney failure while reducing CMS costs. ESCOs that achieve the program’s minimum quality requirements and realize reductions in the cost of care for CMS above certain thres­holds will be reimbursed a portion of the cost savings. However, ESCOs are also required to share in the risk of cost increases and reimburse CMS for a portion of those increases.
  • On January 1, 2021, the treatment choices model for patients with chronic kidney failure (ESRD Treatment Choices Model (ETC model) was started. This is a mandatory model that provides financial incentives for home dialysis treatments and transplants. This model is scheduled to be in place from January 2021 to June 2026. The ETC model consists of two partial reimbursement programs: First, it includes increases in the three-year reimbursement offset for home dialysis treatments, and second, it includes a performance-based reimbursement offset for all dialysis claims. The model applies both positive and negative payment adjustments to claims submitted by physicians and dialysis facilities for dialysis patients. It applies to dialysis facilities and physicians in certain randomly selected geographic regions. About 35% of Fresenius Medical Care’s U.S. dialysis clinics are participating in the model.
  • Under the Comprehensive Kidney Care Contracting (CKCC) model, renal health care providers participate by forming an entity known as a Kidney Care Entity (KCE). Through the KCE, renal health care providers take responsibility for the total cost and quality of care for Medicare beneficiaries with CKD stages 4 and 5 as well as Medicare beneficiaries with ESRD. The voluntary models allow KCEs to take on various amounts of financial risk.
  • In addition, Fresenius Medical Care has entered into per capita sub-capitations and risk-based and value-based agreements with certain insurers to provide health care to private and Medicare Advantage patients with end-stage renal disease. These agreements provide for the establishment of a basic amount per patient per month. If we provide complete care at costs below the basic amount, we retain the difference. However, if the costs of complete care exceed the basic amount, we may be obliged to pay the difference to the insurer.

Inadequate pricing of products or an unsuitable cost estimate for the service portfolio for beneficiaries and ineffective cost management may have a material adverse effect on our financial position, net assets, and operational results.

Fresenius Medical Care mitigated the impact of the PPS and the additional above-referenced reimbursement models and other legislative initiatives by two broad measures:

  • First, Fresenius Medical Care works with medical directors and treating physicians to generate options for efficiency increases consistent with QIP and good clinical practice and negotiates cost savings on the purchasing of pharmaceuticals.
  • Second, Fresenius Medical Care introduces new initiatives in order to achieve efficiency increases and better patient outcomes by increasing care upon initiation of dialysis, increasing the percentage of patients using home dialysis, and generating additional cost reductions in its clinics.

The previous U.S. Administration had announced its intention to implement significant changes to currently existing health care delivery programs, including new payment models designed to encourage earlier detection and treatment of kidney disease and to strengthen home dialysis and transplantation. Although efforts to repeal or replace the Affordable Care Act (ACA) have not been successful and the current U.S. Administration has announced its intention to continue and expand ACA, the constitutionality of this law is currently reviewed. In addition, variations on restructuring the Medicare program into a defined contribution “premium support” model and converting Medicaid funding into “block grants” or a per capita arrangement that could provide greater flexibility for states are also under consideration.

The U.S. administration also announced its decision to end subsidies, known as cost-sharing reduction (CSR) payments, to health insurance companies to help pay out-of-pocket costs of low-income Americans, in 2017. Some private insurers have stated that they will need much higher pre­miums and may withdraw from the insurance exchanges created under the Affordable Care Act if the subsidies were eliminated. We cannot predict how the ongoing litigation in this regard might be determined. As a result, significant increases in insurance premiums and a reduction in the availability of insurance through such exchanges could reduce the number of Fresenius Medical Care’s privately insured patients and shift such patients to Medicare and Medicaid. Because Medicare and Medicaid reimbursement rates are generally lower than the reimbursement rates paid by private insurers, a shift of privately insured patients to Medicare and Medicaid could have a material adverse impact on the result of operations of Fresenius Medical Care.

Further requirements for dialysis clinics and changes in reimbursement from government and private insurers for our entire product and service portfolio in the United States could have a material adverse effect on our business and operating results. For example, the ballot initiatives introduced at the state level could result in further regulation of clinic staffing requirements, state inspection requirements, and a cap on private insurer margins. Such additional state regulations would increase the cost of operating dialysis clinics and create additional costs. This could have a material adverse effect on our business in the affected states.

A portion of dialysis treatment in the United States is reimbursed by private health insurance companies and managed care organizations, with reimbursements generally higher than the reimbursements provided by the government health care program. As a result, payments from private health insurers contribute a significant portion to Fresenius Medical Care’s profits. In 2020, approximately 36% of Fresenius Medical Care’s sales from health care services were attributable to private health insurance companies in the North American segment. If these organizations in the United States manage to push through a reduction in the reimbursements, or the share of reimbursements by private health insurers, it would significantly reduce the sales revenues and operating earnings for the products and services of Fresenius Medical Care.

A portion of Fresenius Medical Care’s patients who are currently covered by private insurers may elect to transition to government-funded reimbursement programs that reimburse us at lower rates for our services if efforts to restrict or eliminate the charitable funding of patient insurance premiums are successful.

Changes in reimbursement from government and private insurers for our entire product and service portfolio in the United States could have a material adverse effect on our business and operating results.

The same applies to the hospital market in Germany, where the DRG system (Diagnosis-Related Groups) is intended to increase the efficiency of hospitals while reducing health care spending. Patients are largely assigned to hospitals by the public health and pension insurers. It is therefore important for Helios Germany that the contracts between its hospitals and the insurers and health care institutions are maintained. We not only monitor legislative changes intensively, but also work together with governmen­tal health care institutions.

As a result of the Act to Strengthen Nursing Staff (PpSG), from 2020, nursing costs will be deducted from the standardized base rates (DRG), and the costs for direct patient care will instead be fully reimbursed by the health insurance companies via separate care budgets. In 2019, each additional or increased nurse position at the bed was completely refinanced by the health insurers. Beginning in 2021, the inclusion criteria for the long-term care budget will change. The allocation of nursing staff to the care budget is adjusted to the current definitions of “nursing specialist” and “nursing assistant” / “other professions” in the Ordinance on the Minimum Requirements for Nursing Personnel in Hospitals (PpUGV). For the 2021 care budget, nursing staff costs for direct patient care in bedside wards are included. Helios Germany is reviewing appropriate measures to limit as far as possible the consequences for patients, employees and the company’s economic situation.

In the German market, Helios Germany sees a general trend towards outpatient treatment, which could lead to lower growth in the number of inpatient cases. In response to this trend, Helios Germany is expanding outpatient services offerings in a separate division. If Helios Germany does not succeed in sustainably adapting its business model through suitable measures, this could lead to a decline in the number of cases and have a material adverse effect on our business and result of operations.

Quirónsalud, our private chain of clinics in Spain, operates hospitals through PPP contracts (Public-Private-Partnership), among other methods. These are part of the public health system in Spain. The company has thus been given responsibility in certain areas of health care for the citizens of Spain with statutory health insurance. Quirónsalud receives compensation for its services in the form of a per capita lump sum or remuneration for the specific service rendered. If Quirónsalud were to lose the concession to operate hospitals with PPPPPP (public-private partnership model)Public-private partnership describes a government service or private business venture that is funded and operated through a partnership of government and one or more private-sector companies. In most cases, PPP accompanies a part-privatization of governmental services. contracts or renegotiations with public or private insurance companies resulted in worse conditions for doing so, or if hospitals are not able to compensate for lower reimbursement rates by cutting costs, this could have a material adverse effect on our net assets, financial position, and results of operations.

Reductions in health care spending could also negatively affect the pricing of Fresenius Kabi products.

Changes in the law, the reimbursement method, and the health care programs could affect the scope of payments for services, as well as for insurance coverage and the product business. This could have a significant adverse impact on our business operations as well as net assets, financial position, and results of operations. Generally, our aim is to counter such possible regulatory risks through enhanced performance and cost reductions.

Development of new products and therapies

The introduction of new products and services, or the development of advanced technologies by competitors, could render one or more of our products and services less competitive or even obsolete, and thus have a significantly negative impact on future sales, the prices of products, and our range of services. This includes the introduction of generic or patented drugs by competitors, which may have an impact on sales and operational results.

Cooperation with medical doctors and scientists allows us to identify and support relevant technological innovations. These enable us to keep abreast of developments in alternative treatment methods and to evaluate and adjust our corporate strategy, if necessary.

Operating risks

Our operational business around the world is exposed to a number of risks and to extensive government regulation, which include, among others:

  • The quality, safety, and efficacy of medical and pharmaceutical products, supplies, and therapies;
  • The operation and licensing of hospitals, other health care facilities, manufacturing facilities, and laboratories;
  • The planning, construction, equipment, and management of pharmaceutical and medical-technological production facilities;
  • The planning, construction, equipping, and management of health care facilities;
  • Permits from public authorities and monitoring of clinical and non-clinical research and development activities;
  • Product releases and approvals for new products and product modifications;
  • Checks and reviews by enforcement authorities of compliance with applicable pharmaceutical legislation;
  • Compliance with due diligence obligations, warranty obligations, and product liability regulations;
  • The accurate reporting of and billing for reimbursements by government and private insurers;
  • Discounting reimbursable pharmaceutical and medical device products and reporting drug prices to government agencies;
  • The labeling and designation of pharmaceutical products and their marketing;
  • Attracting qualified personnel;
  • Compensation of medical personnel and financial arrangements with physicians and other referral sources;
  • Access to, collection, publication, use, and security of health information and other protected data.

If Fresenius fails to comply with laws or regulations, this may give rise to a number of consequences: including monetary penalties, increased compliance costs, exclusion from governmental reimbursement programs, or a complete or partial curtailment of our authorization to conduct business, any of which could have a materially adverse effect on our business reputation, net assets, financial condition, or results of operations.

Significant risks of operations for the Fresenius Group are described in the following sections.

Production, products, and services

Our quality management systems enable us to ensure compliance with product specifications and production regulations. These systems are structured in accordance with the internationally recognized quality standards ISO 9001 and ISO 13485, among others, and take into account relevant international and national regulations. They are implemented by internal standards such as quality and work procedure manuals. Regular internal and external audits are carried out at the Group’s production sites, distribution companies, and dialysis clinics. These audits test compliance with require­ments and regulations in all areas – from management and administration to production and clinical services, all the way to patient satisfaction. Our production facilities comply with the Good Manufacturing Practice (GMP) of the markets they supply. Our facilities are audited by local public health authorities, such as the U.S. Food and Drug Administration (FDAFDA (U.S. Food & Drug Administration)Official authority for food observation and drug registration in the United States.) or the European Medicines Agency (EMA), and other authorities. If a regulatory authority identifies deficiencies, Fresenius immediately takes comprehensive and appropriate corrective action, such as in the context of the audits at our Melrose Park production facility in the U.S. in 2020.

Failure to comply with regulatory requirements at our production facilities or at our suppliers could result in regulatory action, including warning letters, product recalls, production interruptions, fines, or delays in the approval of new products. Any of these regulatory actions could adversely affect our business reputation and our ability to generate sales and result in significant expenses.

The global safety officers react promptly and appropriately to potential quality-related issues. They initiate and coordinate necessary actions on a global level, e.g., product recalls. With its early-warning system, Fresenius evaluates any quality-related information from various risk areas to identify risks at an early stage and take corrective and preventive actions. For example, information is obtained from databases for complaints and side effects, internal and external audits, and from key performance indicators used for internal control and optimization of quality processes. These systems enable Fresenius to evaluate the safety profile of any of its products at a global level. Product recalls are initiated as a risk-minimizing measure in cooperation with the responsible regulatory authority. At the same time, the cause of the recall is analyzed. Where necessary, corrective measures are taken to prevent the cause of the recall in the future.

In addition, changes in requirements and regulations by regulatory authorities affecting our production processes, for example, may lead to lower production volumes or jeopardize production during any transition period.

Furthermore, production could be adversely affected by events such as natural disasters, infrastructure disruptions, regulatory rulings, or supply disruptions, e.g., of raw materials, or technical failures. These risks are minimized, for example, by holding inventories to bridge short-term problems.

Potential risks arising from the start-up of new pro­duction sites or the introduction of new technologies are countered through careful planning, regular analysis, and continual progress reviews.

Providing medical services in our hospitals, rehabilitation clinics, and dialysis clinics is generally subject to inherent risks. For example, disruptions to processes, including causes such as natural disasters or technical failures, involve risks for patients and the clinic. In addition, there are operational risks, for example regarding hygiene. We counteract these risks with strict operating procedures, continual personnel training, and patient-oriented work procedures. Structured hygiene management at Fresenius Helios, for example, is designed to prevent infections within the hospital and to stop their spread as quickly as possible. Furthermore, we are constantly striving to improve the standard of patient treatment through our quality management systems.

Performance risks associated with Fresenius Vamed’s project business are countered through professional project management and control, and with a proven system tailored to each business activity for identifying, evaluating, and minimizing these risks. This system consists of organizational measures, such as standards for risk calculations when preparing quotations. Risks are assessed even before accepting orders and are subsequently updated during regular project controlling. To avert the risk of default, financial measures are taken, such as checking creditworthiness and, as a rule, safeguarding through prepayments, letters of credit, and secured credits.

Further information on our quality management can be found in the Sustainability Report.


In the procurement sector, potential risks arise mainly from price increases or the lack of availability of raw materials and goods. We counter these risks with an appropriate selection and cooperation with our suppliers, with longer-term framework agreements in certain purchasing segments, and with the bundling of quantities to be procured within the Group.

Another risk lies in the poor quality of externally sourced raw materials, semi-finished products and components. We counter this risk mainly through the precise quality requirements we impose on our suppliers. This includes a structured qualification process, which comprises audits, document and advance sample inspections, as well as regular quality controls of deliveries. We only purchase high-quality products with proven safety and suitability from qualified suppliers that conform to our specifications and standards.

Further information on our supply chains can be found in the Sustainability Report.


Growing competition, among other things induced by the reentry of competitors, particularly into the U.S. market, for generic IV drugs after production restrictions, may continue to have a materially adverse effect on the future pricing and sale of our products and services. The introduction of generic or patented drugs by competitors may have an impact on the sales and operational results of our products.

Generally, the health care markets are characterized by price pressure (including from tenders), competition and efforts to contain costs. These factors could result in lower sales and adversely affect our business, financial position and operational results.

In the U.S., Fresenius Kabi sells almost all injectable pharmaceutical products through agreements with group purchasing organizations (GPOs) and distributors. The GPOs have also contracted with other manufacturers. The bidding process is very competitive.

If Fresenius Kabi does not succeed in fulfilling and maintaining its existing contracts or if new contracts are concluded on less favorable terms, this could have an adverse effect on our operational results.

Similar developments with regard to price pressure in the tender business and increasing competition and price reductions are affecting our business in all major markets in Asia. In China, two Fresenius Kabi products were included in the negotiation round of the National Reimbursement Drug List (NRDL), the results of which will take effect in January 2020 and are expected to lead to a significant decline in prices. We also expect new rounds of negotiations to be conducted through National Volume Based Procurement (NVBP) for selected high-volume products. This is likely to be the basis of the new pricing model (in addition to pro­vincial competitive bidding) to further contain health care costs in a market in which volumes are steadily growing. This development could have a negative impact on our sales, financial position and operational results if Fresenius Kabi does not succeed in offsetting these price reductions, for example, through cost savings and efficiency gains in production.

Referrals from doctors

Our hospitals, rehabilitation clinics, and dialysis clinics are dependent on patients selecting them for their medical treatment. Patients rely to a large extent on the recommendation of their attending physician. They make their rec­ommendations based on a variety of factors, including the quality of medical treatment and the competence of clinic staff, as well as the accessibility of a clinic and the availability of treatment appointments. If we are unable to meet these criteria, physicians may recommend fewer or no patients at all to our clinics. In addition, Fresenius Helios could receive fewer referrals from doctors’ practices because they increasingly perceive Fresenius Helios’ outpatient services as competition or because they no longer take rehabilitation clinics with a certain medical focus into account when making their choice. These factors could result in lower sales and adversely affect our business, financial position, and operational results.

Payment defaults

As a rule, we assess the creditworthiness of new customers in order to limit the risk of late payment and defaults by customers. We also conduct follow-up assessments and review credit lines on an ongoing basis. We monitor receivables outstanding from existing customers, and assess the risk of default. This particularly applies to countries with budgetary problems and countries exposed to political risks. In 2020, we again worked on the status of our receivables, by taking measures such as factoring.

Human resources

The Company addresses potential shortages of qualified personnel through appropriate measures for employer branding, as well as recruitment, upskilling, and retention of qualified staff.

In order to increase the awareness and attractiveness of the Fresenius Group, our employer branding relies on a mix of university marketing, company-internal events (such as the Fresenius Career Day “Meet the Board” involving our top management), and digital employer branding (e.g., by expanding our career website and our presence on social media channels).

To ensure a sustainable supply of qualified staff, we offer, for example, targeted programs for young academic talent with subsequent retention programs, as well as comprehensive apprenticeships for students who just graduated high school.

With more than 5,900 apprentices and dual students, Fresenius is one of the biggest training companies in Germany. Fresenius offers 46 apprenticeships and 25 study programs throughout Germany. The number of our apprenticeships and study program offerings was further expanded nationwide. For the first time, the study programs or specializations Management in Medicine, Medical Technology Management and Business Informatics, as well as Data Science were offered in cooperation with the Technical University of Central Hesse and the Baden-Württemberg Cooperative State University, among others.

We provide information about our apprenticeship and study program offerings on our career website, as well as at our respective training locations through various marketing activities and vocational orientation offers (e.g., the career orientation app Aivy, vocational information days, Night of Apprenticeship, high school student internships, Apprentices’ Navigation System). In October, a virtual training fair was held for the first time, which is integrated into the careers website. This trade show format will be offered on a regular basis in the future. Furthermore, we offer young academic talent the opportunity to gain initial practical experience and to establish contacts within our company in the context of internships and working student positions before or during their studies or in the context of their final papers.

Depending on their customer and market structure, our business segments adopt different approaches and measures for personnel development. We strengthen employee loyalty to our company by offering our employees attractive development opportunities and fringe benefits and variable compensation and work time models. In addition, we promote international and interdisciplinary cooperation.

By using target-group-specific measures, Fresenius addresses the overall shortage of specialized hospital personnel. We thereby aim to recruit qualified and dedicated personnel, thus ensuring our high standard of treatment quality.

Since January 1, 2019, the German hospital market has also been subject to the “Verordnung zur Festlegung von Personaluntergrenzen in pflegeintensiven Bereichen in Krankenhäusern” (PpUGV – Ordinance on the Minimum Requirements for Nursing Personnel in Hospitals). This ordinance stipulates minimum staffing levels for nursing personnel in certain areas of the hospital. Further planned statutory regulations on minimum personnel levels in additional hospital departments with beds may further intensify com­petition for qualified nursing staff. Helios Germany is therefore working intensively on additional measures to make it particularly attractive as an employer for nursing staff. These include the compatibility of family and career (e.g., through childcare facilities at hospital sites or the possibility of part-time work), attractive further and advanced training opportunities, occupational health management, and career opportunities.

The Spanish hospital market is also currently being seriously affected by a shortage of qualified nursing staff. Due to the COVID-19 pandemic and the resulting additional demand for nurses, public hospitals have hired more nur­ses at more attractive rates than in the past. Quirónsalud implements various measures, such as online campaigns and other employer branding measures, to attract new employees. Furthermore, long-term job security and attractive working conditions, for example, should also help to retain existing employees.

Additional information on our measures to recruit, develop, and retain qualified personnel can be found in the Sustainability Report.

Financial risks

Currency and interest-rate risks

The international operations of the Fresenius Group expose us to a variety of currency risks. In addition, the financing of the business exposes us to certain interest rate risks. We use derivative financial instruments as part of our risk management to try to avoid negative impacts of these risks. However, we limit ourselves to non-exchange-traded, marketable instruments, used exclusively to hedge our under­lying transactions and not for trading or speculative purposes. The majority of our transactions are conducted with banks that have a high rating. For further information on the management of currency risk and interest rate risk, please refer to the Notes to the consolidated financial statements.

Our currency management is based on a policy approved by the Management Board. It defines the objecti­ves, organization and sequence of risk management processes. In particular, the policy assigns responsibilities for the deter­mination of currency risks, the execution of hedging trans­actions, and the regular risk management reporting. These responsibilities correspond to the decision-making structures in the other business processes of the Group. Decisions on the use of derivative financial instruments in interest rate management are made in close consultation with the Management Board. Hedging trans­actions using derivatives are carried out by the Corporate Treasury department of the Fresenius Group – apart from a few exceptions in order to adhere to foreign currency regulations. These transactions are subject to stringent internal controls. This policy ensures that the Management Board is fully informed of all significant risks and current hedging activities.

The Fresenius Group is protected, to a large extent, against currency and interest rate risks. As of December 31, 2020, approximately 78% of the Fresenius Group’s debt was protected against increases in interest rates either by fixed-rate financing arrangements or by interest rate hedges; consequently, approximately 22% was exposed to interest rate risks. A sensitivity analysis shows that a rise of 0.5 percentage points in the reference rates relevant for Fresenius would have an impact of approximately 1% on Group net income.

As a global company, Fresenius is widely exposed to translation effects due to foreign exchange rate fluctuations. The exchange rate of the U.S. dollar to the euro is of particular importance because of our extensive operations in the United States. Translation risks are not hedged. A sensitivity analysis shows that a one cent change in the exchange rate of the U.S. dollar to the euro would have an annualized effect of about €115 million on Group sales, about €20 million on EBIT, and about €6 million on Group net income.

As a globally active company, we have production facilities in all the main currency areas. In the service businesses, our revenue and cost base largely coincide. The Fresenius Group uses a Cash-Flow-at-Risk (CFaR) model in order to estimate and quantify such transaction risks from foreign currencies. The foreign currency cash flows that are reasonably expected to occur within the following 12 months, less any hedges, form the basis for the analysis of the currency risk. As of December 31, 2020, the Fresenius Group’s cash flow at risk was €77 million. Hence, with a probability of 95%, a potential loss in relation to the forecast foreign exchange cash flows of the next 12 months will not be higher than €77 million. Further details on financial risks can be found in the Notes.

Recoverability of assets

Financial risks that could arise from acquisitions and investments in property, plant and equipment, and in intangible assets, are assessed through careful and in-depth reviews assisted by external consulting firms. The intangible assets, including goodwill, product rights, trade names, and management contracts, contribute a considerable part to the total assets of the Fresenius Group. Goodwill and other intangible assets with an indefinite useful life carried in the Group’s consolidated balance sheet are tested for impairment each year. In 2020, Fresenius Medical Care Latin America recorded a goodwill impairment of €195 million. A significant deterioration in our prospects for the future or in the general economic environment could result in additional depreciation being necessary. Further information can be found in the Notes.

Taxes and duties

As a global corporation, Fresenius is subject to numerous tax codes and regulations. Risks arising therefrom are identified and evaluated on an ongoing basis. The Fresenius Group’s companies are subject to regular tax audits. Any changes in tax regulations or adjustments resulting from tax audits, and additional customs, import duties, and trade barriers could lead to higher tax duties payments. For example, based on the election campaign platformprogram of the new U.S. President Joseph Biden, a 4% to 7% increase in corporate tax rates could be implemented in the United States.

Debt and liquidity

Fresenius’ debt as of December 31, 2020, was €25,913 million including the lease liabilities according to IFRS 16. The debt could limit the Company’s ability to pay dividends, arrange refinancing, be in compliance with its credit covenants, or implement the corporate strategy. If Fresenius’ credit rating or the conditions on the relevant financial markets deteriorate significantly, financing risks for Fresenius could arise. We reduce these risks through a high proportion of mid- and long-term funding with a balanced maturity profile.

Some of our major financing agreements contain covenants requiring us to comply with certain financial ratios and additional financial criteria. Non-compliance with these covenants could result in a default and acceleration of the debt under the respective agreements. We counteract this risk by taking the relevant performance indicators into account in our Group planning and continuously monitoring their development. This enables us to take countermeasures at an early stage.

Additional information on conditions and maturities can be found in the Notes of the consolidated financial statements and in the Economic Report.

Inflation risks

As an international company, Fresenius is exposed to varying inflation rates and price developments. We are also active in high-inflation countries such as Argentina and Lebanon. Due to the development of inflation in Argentina and Lebanon, our subsidiaries operating there apply IAS 29, Financial Reporting in Hyper-inflationary Economies.

Risks associated with research and development and product approval

The development of new products and therapies always carries the risk that the ultimate goal might not be achieved, or it might take longer than planned. This is particularly true for the Fresenius Kabi biosimilar products. The development of biosimilar products entails additional risks, such as significant development costs and the still-developing regulatory and approval processes. Regulatory approval of new products requires comprehensive, cost-intensive preclinical and clinical studies. Furthermore, there is a risk that regulatory authorities either do not grant, or delay, product approval, or withdraw an existing approval. In addition, there is a risk that possible side effects of a product may not be discovered until after it has been approved or registered, so that it has to be withdrawn from the market in whole or in part. This withdrawal may be voluntary or may be based on legal or regulatory action.

For example, following the feedback from the European Medicines Agency (EMA) risk minimization measures for Fresenius Kabi’s hydroxyethyl starch (HES)-containing products were initiated in 2019 (such as controlled dispensing of hydroxyethyl starch (HES)-containing drugs to accredited hospitals, training and letters to healthcare professionals, and warnings on the packaging). Based on the results of a study examining routine use of HES in accredited clinics, the effectiveness of the interventions will be evaluated.

Similar measures could also be taken by authorities in non-EU countries. For example, two regulatory studies are currently underway to evaluate the long-term safety and efficacy of our HES products in surgical and trauma patients. As soon as the results of these studies are available, they will be evaluated by the European authorities.

The Fresenius Group spreads its risk widely by conducting development activities in various product segments. We also counteract risks from research and development projects by regularly analyzing and assessing development trends and examining the progress of research projects. We also strictly comply with the legal regulations for clinical and chemical-pharmaceutical research and development.

With IV drugs, it is also crucial that new products are continually brought to the market in a timely manner. Therefore, we monitor the development of new products on the basis of detailed project plans and focus on achieving specific milestones. In this way, we can take countermeasures if defined targets are called into question.

Fresenius Medical Care as well as Fresenius Kabi are subject to typical patent risks. This includes an inadequate protection by patents of the technologies and products that we developed. Competitors may copy our products without bearing comparable research and development costs.

Risks from acquisitions

The acquisition and integration of companies carries risks that can adversely affect the net assets, financial position, and results of operations of Fresenius. Acquisition processes often include closing conditions, including but not limited to antitrust clearance, fulfillment of representations and warranties, and adherence to laws and regulations. Non-compliance with such closing conditions by either party to an acquisition could lead to litigation between the parties or with third parties and thus to claims against Fresenius.

Following an acquisition, the acquired company’s structure must be integrated while clarifying legal questions and contractual obligations. Marketing, patient services, and logistics must also be unified. During the integration phase, there is the risk that key managers will leave the company, and that both the course of ongoing business processes and relationships with customers and employees will be harmed. In addition, change-of-control clauses may be claimed. The integration process may prove more difficult or require more time and resources than expected. Risks can arise from the operations of the newly acquired company that Fresenius regarded as insignificant or was unaware of. An acquisition may also prove to be less beneficial than initially expected. Future acquisitions may be a strain on the finances and management of our business. Moreover, as a consequence of an acquisition, Fresenius may become directly or indirectly liable towards third parties, or claims against third parties may turn out to be non-assertable.

We counter risks from acquisitions with structured and detailed due diligence prior to the acquisition decision and with detailed integration plans and dedicated integration and project management thereafter. This enables us to take countermeasures at an early stage in the event of deviations from expected developments.

Risks in the use of information technology

The Company’s processes are growing ever more complex as a result of the Fresenius Group’s steady growth and increasing internationalization. Correspondingly, the dependence on information and communication technologies, and on the systems used to structure procedures and – increasingly – harmonize them internationally, intensifies. A failure of these IT systems could temporarily lead to an interruption of other parts of our business and thus cause serious damage.

Due to the increased integration of IT systems, the integration of digital components and applications into medical technology products and services, and the use of new technologies, such as cloud computing, within our business processes, there is a possibility that cyber incidents could compromise the confidentiality, integrity, or availability of our internal and external systems.

The loss of sensitive data or the non-compliance with data protection laws, regulations, and standards could damage our competitive position, our reputation, and the entire company. Moreover, significant penalties could be imposed against Fresenius or one of its subsidiaries in case of a data protection breach. To comply with all legal requirements, we have implemented comprehensive data protection management systems, which provide the appropriate technical and organizational measures and controls for the protection of personal data.

Technological innovations also promise new therapeutic approaches in the treatment of diseases. Finally, IT appli­cations and digital components offer the potential to relieve medical staff and make health care more efficient. Fresenius is also opening up new markets with digital product solutions. At the same time, we take into account the risks involved in digitalization.

To minimize cyber risks, we have implemented security architectures and concepts that include preventive and awareness-raising measures. This enables us to detect cyber threats through monitoring mechanisms in our networks and on our end devices, such as desktops, servers, and mobile devices. The security of applications that process sensitive patient or personal data is regularly checked using penetration tests that simulate targeted attacks. Critical systems, such as central communication systems or clinical information systems, are subject to special protection concepts that, for example, offset the failure of a system.

In 2017, the Management Board of Fresenius Management SE adopted the “Cybersecurity Approach, Roadmap and Execution” (CARE) approach. Since 2018, CARE has served as a holistic cybersecurity program that exists alongside the organization and combines cybersecurity initiatives. CARE focuses on strengthening our resilience to protect and defend against cyber attacks.

We generally follow internationally recognized standards for information security, e.g., the ISO/IEC 27000 series, ISO/IEC 62443, KRITIS or the NIST Cybersecurity Framework. The central IT infrastructure, as well as critical infrastructures in the medical sector, for example, have ISO/IEC 27001 certification.

We have implemented a Group-wide cybersecurity approach to assessing risks and protecting systems and products: The Group Cybersecurity Policy defines core risks, measures, and principles that guide our actions. The existing cyber governance structure has proven its value: The management of the Group Cybersecurity function chairs the Cybersecurity Board, which includes all cybersecurity officers from the business segments. The committee defines risk-based measures and safety requirements across the Group and facilitates the Group-wide exchange of knowledge and best practices. We will continue to invest in cybersecurity and build our capabilities to improve our resilience to cyber attack threats to our systems and digital products and ­services.

At the beginning of the reporting year, we redefined numerous roles and responsibilities as part of the implementation of the new Cybersecurity Policy. In addition, the Group Cybersecurity Office (GCSO) was established in May 2020 as the central organization for managing cybersecurity at Fresenius SE & Co. KGaA. Further information on our cybersecurity strategy, organization, and measures can be found in the chapter Digital transformation and innovation.

Our cybersecurity management is reviewed at regular intervals by Internal Audit. In addition, various certification authorities such as the U.S. Food and Drug Administration (FDA) and Germany’s TÜV, as well as auditing companies, are involved in the auditing processes of our cybersecurity management.

Fresenius was the target of a deliberate cyber attack in the second quarter of 2020. Cyber criminals succeeded in infecting some IT systems at Fresenius with malware and encrypting data on them. This incident led to temporary disruptions in the IT network and IT-supported internal processes. As a precautionary measure under the safety pro­tocol developed for such cases, steps were taken to prevent the attack’s further spread. The situation was brought under control within a few days and further negative impacts were prevented.

In connection with this attack, patient data from dialysis centers in Serbia at Fresenius Medical Care were stolen and published without authorization. The company imme­diately filed a criminal complaint against the unknown per­petrators and reported the data protection breach to the relevant data protection authorities. The company is coop­erating fully with these authorities. In addition, Fresenius Medical Care has informed the patients who were or may be affected by the data theft and its illegal publication. Internal and external specialists are working continuously to prevent further attacks, data theft or the illegal publication of data.

The damage levels of cyber incidents are assessed quantitatively. We did not identify any significant amount of damage in the Fresenius Medical Care cybersecurity incident.

Compliance and legal risks

Compliance risks

Fresenius is subject to comprehensive government regulation and control in nearly all countries. In addition, Fresenius must comply with general rules of law, which differ from country to country. There could be far-reaching legal repercussions or reputation damage should Fresenius fail to comply with these laws or regulations.

We must comply with these rules and regulations, which particularly monitor the safety and effectiveness of our medical products and services. Corruption is a core risk area across all business segments. In addition, antitrust law, data protection, money laundering, sanctions and compliance with human rights are further significant risk areas. Therefore, it is of special importance to us that our compliance programs and guidelines are adhered to. Through compliance, we aim to meet our own expectations and those of our partners, and to orient our business activities to generally accepted standards and local laws and regulations.

At Fresenius, we have implemented risk-oriented Compliance Management Systems in each of our business segments. These systems take into account the markets in which the business segment operates and are tailored to the specific requirements of the business segment. Furthermore, we at Fresenius assess compliance risks using a standardized methodology.

Each business segment has appointed a Chief Compliance Officer to oversee the development, implementation, and monitoring of the relevant business segment’s Compliance Management System. In line with their organizational and business structure, the business segments have established compliance responsibilities at the respective organizational levels. The Corporate Compliance department of Fresenius SE & Co. KGaA supports the compliance officers in each business segment with standardized tools, processes, and methods, and reports to the Chief Compliance Officer of Fresenius SE & Co. KGaA.

Our compliance programs set binding rules of conduct for our employees. We believe that we have taken adequate measures to ensure that national and international rules are observed and complied with. Despite our comprehensive Compliance Program we cannot fully exclude any misconduct of individual employees or business partners that might cause damage to the Company.

Further information about our Compliance Management Systems can be found in the chapter Diversity.

Data protection

Fresenius’ business activities are also subject to data protection regulatory requirements. This includes compliance with the General Data Protection Regulation (GDPR) as well as compliance with other country-specific data protection regulations. Violations of these regulations or the GDPR can result in high fines as well as reputational damage and loss of trust.

The core element of data protection is the secure and lawful processing of personal data in line with these regulatory requirements. In addition to patient data, this also includes the personal data of employees as well as contractual partners and other persons.

Risk areas include compliance with data protection principles, information obligations, data subjects’ rights, risk analysis regulations, documentation of data processing activities, and ensuring secure data processing, including the creation of an appropriate level of data protection for (inter)national data transfers.

To comply with all legal requirements, Fresenius has implemented comprehensive data protection management systems, which provide the appropriate technical and orga­nizational measures and controls for the protection of personal data. Fresenius SE & Co. KGaA and all business segments have data protection organizations in accordance with their organizational and business structure. These include appointed independent data protection officers who report to the respective company’s management. The interdependence of data protection and IT security or cybersecurity created by increasing internationalization is also taken into account by the data protection organizations by the closest possible cooperation with the relevant departments.

Based on their organizational and business structures, the business segments have implemented processes and standards that also set internal requirements for the secure and appropriate processing of personal data. Furthermore, the individual data protection management systems also include appropriate control measures to enable compliance with regulatory and internal requirements to be adequately checked.

Further information about our data protection organization and Data Protection Management Systems can be found in the chapter Compliance and Integrity.

Legal risks

Risks arising in connection with litigation or official proceedings are identified, assessed and reported within the Group on an ongoing basis – if necessary, from an applicable materiality threshold. Companies in the health care industry are regularly exposed to claims or actions for breach of their duties of due care, product liability, breach of warranty obligations, patent infringements, treatment errors, and other claims. This can result in high claims for damages and substantial costs for legal defense, regardless of whether a claim is actually justified. This is especially true for legal disputes in the United States, where costs for legal defense and claims for damages can be exceptionally high. Furthermore, legal disputes or official proceedings decided against Fresenius may mean that risks of this kind cannot be insured against in the future or can no longer be insured against on reasonable terms.

The Fresenius Group is involved in various litigation and regulatory proceedings arising from its business activities. However, although the outcome cannot always be reliably predicted, we generally do not expect any material adverse effect on our net assets, financial position, and results of operations from the legal disputes and proceedings currently pending.

Information on litigation and regulatory proceedings which could potentially have a material adverse effect on our financial position, net assets, and operational results can be found in the Notes.

Other risks

Our international orientation also gives rise to the following risks, which could have an adverse effect on our business and thus on our financial position, and operational results:

  • Political, social, or economic instability, especially in developing and emerging countries;
  • Civil unrest, armed conflict, or outbreaks of disease, e.g., pandemics, for instance caused by the coronavirus;
  • Environmental risks;
  • Natural disasters, terrorist attacks, and other unforeseen events;
  • Different labor law conditions and difficulties in meeting the global demand for qualified personnel;
  • Different and less stable regulations protecting intellectual property;
  • Delays in the transport and delivery of our products.

More detailed information on environmental management at Fresenius and on assistance in the event of natural disasters and other crises can be found in the chapter Compliance and Integrity.

Risks involving management and control systems, were, based on our established risk management and controlling processes, not considered to be significant.


In its risk management, Fresenius uses the option to transfer certain risks to external insurers. Fresenius Versiche­rungsvermittlungs-GmbH is the Fresenius Group’s insurance department, which is organized as a captive insurance broker, and ensures appropriate insurance coverage for large parts of the Group. Other sub-groups ensure adequate insurance coverage through their own departments. The aim of these efforts is to protect the company’s employees and assets against possible hazards within the risk management process and by procuring insurance coverage that is appropriate to the risks. To this end, we purchase adequate coverage, taking into account the cost-benefit ratio. For example, Fresenius has all-risk insurance against property damage and loss of earnings due to, for example, fire, storms, water, earthquakes and other natural hazards, product liability insurance, insurance for volunteers and patients in clinical trials, hospital liability insurance, environmental liability insurance and environmental damage insurance and directors and officers insurance.

Risk management

Assessment of overall risk