Fresenius' new CEO starts strategic review as pressure rises

When Michael Sen took over as chief executive of Fresenius at the start of this month, he knew he was facing some big challenges. Now, a few weeks into the job, he is seeking a "reset" of the debt-laden healthcare group, amid speculation it may be under pressure to break up. Sen (pictured above) was barely in the new role before activist hedge fund Elliott Investment Management took what is reported to be a "substantial" stake in the group a couple of weeks ago, with market watchers now waiting to see if it will agitate for change. The new CEO has already confirmed a call with Elliott – which has also been pushing for change at GSK – to German financial newspaper Frankfurter Algemeine Zeitung. Fresenius is a sprawling healthcare company with four businesses – Fresenius Medical Care (FMC), which provides dialysis and other products and services for kidney disease patients, pharma division Fresenius Kabi, facility management unit Fresenius Vamed, and private hospital operator Fresenius Helios. FMC has been under pressure for some time, squeezed by inflation-related cost increases, staff shortages, disruptions in supply chains, and increased energy costs, and the group now expects net income to fall "in the high-teens to mid-twenties percentage range" this year, which will drag group profit down around 10%. Steps have already been taken to try to improve FMC's business operations in the US, but have yet to yield the expected gains, said Sen in the group's third-quarter results update, in which he promised a "top-to-bottom review of every business activity, looking at the entire corporate portfolio." On the plus side, Fresenius has been able to grow its revenues – up 5% to €10.46 billion in constant currencies in the third quarter, albeit against a year-earlier quarter badly affected by COVID-19. Meanwhile, earnings before income and taxes slumped 17% to €949 million and net income fell 22% to €371 million. One reason for the steep decline in net income was Fresenius Kabi's acquisition of mAbxience in August to grow its position in biopharma and biosimilar drugs, as well as its takeover of infusion pump specialist Ivenix. Excluding those, net income would have fallen 19%. "Everyone at Fresenius knows we must improve on what we do. My priorities are clear: reset the company, aiming at becoming a stronger company and delivering value for our shareholders," he said. Sen stepped up from being CEO of Fresenius Kabi, a position he held from April 2021, replacing Mats Henriksson, who left the pharma unit saying he disagreed with its strategic direction. Sen led Fresenius Kabi during its two recent acquisitions, before agreeing to take the top job at the group and succeed former CEO Stephan Sturm – who quit earlier this year in the midst of Fresenius' downturn in financial fortunes after 17 years at the company.