• Continuity under new Group Management
• Personnel changes in executive bodies
• Excellent results in 2005

Results for financial year 2005

• Revenue and earnings forecast comfortably met
• Revenue raised by 35.5% to approx. € 1.416 billion 
• Consolidated profit raised by 10.1% to € 88.3 million
• 949,376 patient treatments in total (+ 58.6%)
• 21,226 employees as at year-end 2005

Forecast for the further course of 2006 ... and more

• Market environment, Cartel Office decision and future prospects
• Own forecast for 2006 confirmed with presentation of Q1 2006
• Revenue – barring further acquisitions – expected to reach € 1.9 billion
• Earnings target of € 93 million will be reached

Today’s results press conference of RHÖN-KLINIKUM AG in Frankfurt am Main was led for the first time by Wolfgang Pföhler, chairman of the Board of Management since the last Annual General Meeting of the listed hospital group headquartered in the Rhön. 

By way of introduction Pföhler drew attention to the personnel changes carried out within the management over the past months: Eugen Münch, co-founder of the Company and its long-standing chairman of the Board of Management, stepped down with the conclusion of the 2005 Annual General Meeting and since 1 September 2005 has held the position of chairman of the Supervisory Board. Mr. Caspar von Hauenschild has been leading a new Supervisory Board committee dealing with corporate integrity (the “Anti-Corruption Committee”). Established at the beginning of January 2006, this committee is to help ensure in future also – amid the Company’s buoyant growth – transparency and responsible corporate management at all times.

Manfred Wiehl, long-standing CFO of the Company, resigned his mandate on the Board of Management effective 31 December 2005 and since February 2006 has been serving as managing director of Universitätsklinikum Gießen und Marburg GmbH and at the same time as Divisional Head within the Group. Joachim Manz, who was responsible for Association Policy and the Regional Division of Brandenburg and Northern Germany, retired from the Board of Management on 31 December 2005 for age reasons but continues to act for the Company in a consulting capacity. Heinz Falszewski, who had served as Deputy Member of the Board of Management responsible for Company and Group Human Resources and as Works Director, resigned from the Board of Management effective 1 April 2006 for personal reasons but still advises the Company in the areas mentioned as an independent contractor. On 1 January 2006 Dr. Brunhilde Seidel-Kwem was appointed Deputy Member of the Board of Management for Western and Northern Germany; on 1 January 2006 Dietmar Pawlik was appointed Deputy Member of the Board of Management for Financing, Investor Relations and Controlling. 

Andrea Aulkemeyer as well as Wolfgang Kunz were confirmed as members of the Board of Management for further five-year terms. Gerald Meder, Deputy Chairman of the Board of Management, since February 2006 has also held the position of chairman of the management board of Universitätsklinikum Gießen und Marburg GmbH.

Excellent results in 2005 

“Financial year 2005 was extremely important for RHÖN-KLINIKUM AG”, emphasised Wolfgang Pföhler. “The privatisation of Universitätsklinik Gießen und Marburg GmbH is hitherto unique on the German hospital and university landscape, serving as a beacon and model for the future. The decision by the Hesse State Government on 15 December 2005 to sell Universitätsklinikum Gießen/Marburg to RHÖN-KLINIKUM AG marks yet another milestone in our Company’s development. With the acquisition of Universitätsklinikum Gießen und Marburg GmbH we have considerably strengthened our access to cutting-edge maximum-care medicine as well as to science and the innovation movers of the future.” At the same time the largest takeover in the Company’s history – with a total of 2,262 beds and almost 9,500 employees – represents a giant leap in growth. “With this acquisition alone we have raised our revenues by around 30 per cent”, Pföhler said. The Company not only was aware of the “market” opportunities created by the takeover but also saw the enormous efforts that would be involved in the integration of the university hospitals into the Group as a “complex management task”. “We will definitely be equal to this task”, Pföhler is convinced.

In Dippoldiswalde/Saxony and in Stolzenau/Lower Saxony the Group’s first two teleportal clinics opened their doors at the end of 2005. “These also mark a milestone in the Company’s history”, Pföhler said. “Teleportal” means that a hospital serves as a point of access. The treatment concept is integrated into a graduated system of basic and major/maximum care delivery. This graduation means that patients are brought to where they receive competent, routine and optimum treatment. “Teleportal” means that patient-oriented processes are organised on a cross-facility basis, based on the latest in telemedical applications. What is key here is the quality of the initial diagnosis. All data on a patient’s condition are gathered in the quality available at major hospitals. These data are then evaluated telemedically by specialists, regardless of where they work. The specialist makes an immediate and qualified diagnosis, transmits the same to the doctor at the teleportal clinic and recommends the actions to be taken. A key role in this regard will be played by teleradiology. “Particularly in rural regions, this means that healthcare can be delivered close to where patients live who then have the certainty of knowing that at all times – especially in emergencies – specialists are at hand and a transfer to a major centre is possible”, Pföhler explained.

The establishment of medical care centres (MVZs) represents the next logical development of teleportal clinics: through an integrated and harmonised provision of services, healthcare providers who in the past worked in isolation are now brought under the roof of a single highly efficient unit. For setting up these facilities, various operator and co-operation models with doctors working as independent contractors or salaried employees, respectively, can be contemplated. “We don’t just leave our ideas on the drawing board as theoretical models: Already in 2005, three medical care centres in Bad Neustadt, Waltershausen/Friedrichroda as well as in Bad Berka/Weimar came on stream. In 2006 a further five medical care centres were opened; we are planning to establish new ones at many more sites”, Pföhler reported.

Results for financial year 2005 

Helped by the first-time consolidation of the hospitals newly acquired in 2005 (Dachau, Indersdorf, Erlenbach, Miltenberg, München-Pasing, München-Perlach, Hildesheim, Gifhorn, Wittingen, Salzgitter-Lebenstedt, Salzgitter-Bad), revenues grew by 35.5% to € 1,415.8 million (previous year: € 1,044.8 million). EBITDA* rose 14.4% to reach € 206.9 million (previous year: € 180.8 million). The operating cash flow stood at € 155.6 million, 12.9% above the previous year’s level (€ 137.8 million). EBIT** posted a 13.2% gain to reach € 140.1 million (previous year: € 123.8 million). EBT *** saw a 10.4% rise to € 123.5 million (previous year: € 111.9 million).

2005 net consolidated profit according to IFRS – before minorities – rose by € 8.1 million (10.1%) to reach € 88.3 million (previous year: € 80.2 million), slightly exceeding the Management’s own expectations. Earnings-per-share (EpS) was € 1.61 (previous year: € 1.47, adjusted/ +9.5%). 

During the year ended 31 December 2005, the Group's hospitals treated a total of 949,376 patients (previous year: 598,485 /+58.6%), of which 410,585 (previous year: 287,204) in the acute inpatient, 529,860 (304,214) in the outpatient and 8,931 (7,067) in the rehab and other areas. The newly added hospitals raised bed capacities (+3,188) after the decline in beds at the long-standing hospitals (-182) by a total of 3,006 beds (from 9,211 to 12,217 /+32.6%).

At 31 December 2005, the Group employed a staff of 21,226 (previous year: 14,977).

The 45.2% rise in personnel expenditure to € 793.6 million (previous year: € 546.6 million) was slightly disproportionate to the trend in revenues. The trend comes notwithstanding the initial successes at the newly acquired clinics in optimising their personnel structures and procedures, as past experience shows that it takes some time before these measures can feed through to the numbers. Growth in material costs was slightly disproportionate to revenues (+36.1%) and stood at € 343.6 million (previous year: € 252.4 million). “This is where we see rationalisation potential”, said Dietmar Pawlik, board member with responsibility for Financing, Investor Relations and Controlling. 

Forecast for the further course of 2006 ... and more

“RHÖN-KLINIKUM AG was, is and will continue to be the market leader for healthcare services in Germany“, a convinced Wolfgang Pföhler declared. “Over the past five years the growth we have achieved has well outstripped the slightly stagnating/shrinking aggregate market, and have made good headway towards achieving our long-term goal of a market share of over 8%. With our current market share of just under 3 per cent, we still have a ways to go. 

The acquisition of Universitätsklinikum Gießen/Marburg not only represents a qualitative jump in growth but also puts us on a totally new trajectory as an aspiring corporate group: with our link-up to Gießen/Marburg we have gained direct access to the latest innovations in medicine. At the same time we are setting the pace in the medical area. With the construction of the world’s first combined proton/heavy ion unit in Gießen/Marburg – slated for completion by 2012 – we are catapulting ourselves to the very cutting edge of technological development.

Against the background of the most radical transformation in the history of the German hospital landscape, creative ideas and the courage to embrace new business models are called for to fix structural problems in the aggregate economy. Our concepts for removing long-standing inefficiencies inherent in the German healthcare system have their roots in history. They are born from what is perhaps the most comprehensive industry expertise and are largely owing to my predecessor and current chairman of the Supervisory Board, Mr. Eugen Münch”, Wolfgang Pföhler declared.

“Our strategy of taking over public hospitals amid mounting losses and of turning these into permanently profitable healthcare providers through investments in rationalisation and restructuring measures is wholly maintained.”

Here, RHÖN-KLINIKUM follows a two-pronged strategy: firstly, it continues to pursue takeover activities proactively. This is born out of the conviction that the German hospital market is being redistributed now, not in five years. Right now, then, failing to move forward automatically means moving backwards. Anyone today not participating proactively in the privatisation wave will tomorrow be counted among the losers in the vying for market shares.

Second, quickly integrating the newly acquired hospitals into the Group and bringing them up to its operating standards will also be key. “Our restructuring expertise will stand us in good stead here – our track record when it comes to the integration of new hospitals into the Group speaks for itself.”

The proceedings pending before the Düsseldorf Court of Appeals in the matter of the “hospitals of the district of Rhön-Grabfeld” will not stand in the way of the Group’s growth. The impression that the German Cartel Office is a serious obstacle is as superficial as it is misleading: from 31 December 2004 to February 2006 alone, 15 new hospitals were consolidated, including the heavyweight Gießen/Marburg – all of which were known to the Cartel Office without any objections being raised. RHÖN-KLINIKUM AG operates just 45 of the nearly 2,200 hospitals in Germany, making the – under German cartel law fully unobjectionable – privatisation and growth potential enormous. The interferences by the Cartel Office are thus confined to individual cases, and as such are annoying, but hardly of any quantitative significance.

Notwithstanding, RHÖN-KLINIKUM AG will continue to pursue the court proceedings unrelenting. 

Own forecast for 2006 confirmed with presentation of Q1 2006

The management of the Group sees their own revenue and earnings expectations for 2006 confirmed by the report on the first quarter of 2006: Revenues – excluding further acquisitions – are expected to reach € 1.9 billion, and the target for net consolidated profit is put at roughly € 93 million. 

_______________________

* Earnings before depreciation/amortisation, interest and income tax = operating result

** Earnings before interest and income tax

*** Earnings before tax / earnings from ordinary operations