RHÖN-KLINIKUM AG | 06/13/2012

Annual General Meeting of RHÖN-KLINIKUM AG on 13 June in Frankfurt/Main

Results for financial year 2011

  •  11.5 % increase in patient treatments is once again proof of the trust in the high quality of medical services
  • Growth in revenues and earnings despite tougher framework conditions demonstrate sustainability of growth course
  • Net consolidated profit, EBITDA, EBIT and operating cash flow at record level
  •  Dividend rises according to proposal of Board of Management and Supervisory Board by 22 % to 0.45 € per non-par share

Q1 2012 results

  • Rise in patient numbers by 5.2 % to a total of 609,896 cases underscores our good start into the new financial year
  • Revenues climb 5.4 % to reach € 682.3 million
  • Net consolidated declines by 10.3 % to € 34.1 million

Record figures in 2011 – Growth despite difficult framework conditions

“Last year, RHÖN-KLINIKUM AG again broke records and confirmed its growth course. This result was achieved despite the legislated cuts in healthcare spending that entered into force at the beginning of 2011 and confirms the Company’s growth course”, said the chairman of the Board of Management of RHÖN-KLINIKUM AG, Wolfgang Pföhler, on Wednesday at the Annual General Meeting of the Company in Frankfurt.

The path taken for the development of the Company from classic operator of hospitals to an integrated healthcare provider had once again proven to be the right growth path for the Company. During the year 2011 also, the hospitals within the network of RHÖN-KLINIKUM AG had demonstrated that even amid a difficult environment they can raise service volumes and realise efficiency reserves to meet their earnings targets.

In the first quarter of 2012, the positive growth trend continued. Between January and March a total of 609,896 patients were treated at the Group’s facilities, 5.2 per cent more than in the same period last year. Revenues totalled 682.3 million €, a rise of 5.4 per cent compared with the first quarter of 2011.

Despite the higher patient numbers, net consolidated profit showed a slight decline compared with the previous year and stands at 34.1 million €. This slight decline comes chiefly as a result of demands on the part of the health insurance funds regarding the remuneration discount on surplus volumes to be agreed as well as the discounts of 65 per cent for service volumes exceeding that. Besides the issue of surplus service volumes, the quarterly result was burdened by additional costs in the personnel area and delays in payment for the medical faculties of the university hospitals of Gießen and Marburg.

According to Pföhler, the result of financial year 2012 was particularly affected by the acquisition of Dr. Horst Schmidt Kliniken (HSK) in Wiesbaden. The result would be diluted by the assumption of the current losses by an amount in the low double-digit range at HSK, which was included in the group of consolidated companies as at 30 April 2012. In addition, it was already foreseeable today that the takeover offer by Fresenius, regardless of the outcome, would have an impact on the Company’s performance. Firstly, in this special situation there was additional expenditure for consultancy fees. Secondly, the uncertainty that this potential transaction is creating was having a noticeable effect on the day-to-day business. However, these effects could not be precisely quantified at the present time. It was therefore premature to speak of possible consequences for the full-year forecast.

This year, too, Pföhler expects demand for hospital services to rise. That said, he urged the regulator to come up with solutions for the future because growth in service volumes and efficiency were being penalised by discounts – and that generally and regardless of the causes. Despite the hospital financing measures that were currently the subject of political debate, there was still no solution to the fundamental problem of how rising demand for medical services should be financed in future. Given the surpluses within the system of statutory health insurance, Pföhler emphasised that not only did the question of the correct distribution of the money have to be raised but that new ways of financing the system of statutory health insurance also had to be discussed. Higher burdens and overregulation would have a permanent adverse impact on the healthcare industry which already today was one of Germany’s largest employers.

Besides giving some examples of medical excellence among the Group’s facilities, Pföhler also addressed the subject of Gießen and Marburg University Hospital (UKGM). Pföhler underscored that the public debate currently being witnessed obscured the view of the positive facts. At the biggest employer of Central Hesse, more persons were employed than at the time of the privatisation. The investment commitments were being made good on and since 2006 had exceeded the amount of 367 million €. With the completion of the modern new buildings early 2011 in Gießen, the Company had once again demonstrated its expertise. Pföhler called on all those involved to pursue “a joint strategy for a successful future of UKGM.” “We must engage in a dialogue with one another constructively. In this regard we will not always share the same opinion and will arrive at a solution by way of compromise. This compromise then also has to be accepted by all sides.”

Regarding the takeover offer of Fresenius, Pföhler in his speech referred to the Statement of the Board of Management of 28 May 2012 in which the Board of Management, after weighing up all known aspects and information and giving due regard to all critical aspects, recommended acceptance of the offer. On a fundamental view, the assessment was shared that the general strategic logic of the merger of two large private hospital operators is correct. Pföhler said that the minimum acceptance threshold of 90 per cent plus one share is a high hurdle. Despite the recommendation by the Board of Management to accept the offer, each and every shareholder themselves has to consider and assess the overall circumstances.