Should You Buy, Sell, or Hold FMS Stock Before Q1 Earnings?

Fresenius Medical Care FMS is scheduled to report first-quarter 2025 results on May 6, after market close.

In the last reported quarter, the company’s adjusted earnings per share of 48 cents beat the Zacks Consensus Estimate by 17.1%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Let us look at how things have shaped up for FMS prior to the announcement.

Factors That Might Have Driven FMS’ Q1 Performance

As Fresenius Medical Care prepares to report its first-quarter 2025 results, several underlying factors from late 2024 are likely to shape its performance trajectory. A major driver is the continued execution of the FME25 transformation program, which has already delivered EUR 567 million in cumulative savings, well ahead of schedule. These efficiencies, spanning back-office functions, manufacturing, and supply chain, are helping to cushion the impact of persistent headwinds such as elevated U.S. dialysis patient mortality and portfolio divestitures.

Operationally, the company entered 2025 with positive momentum in U.S. same-market treatment growth, which turned positive in the fourth quarter of 2024 (0.5%), reflecting successful efforts to streamline clinic operations and reduce missed treatments. With weather disruptions largely mitigated and early-year patient trends looking solid, the first quarter is expected to reflect further stabilization, even as management monitors flu season risks and volume recovery dynamics closely.

Another area to watch is the Care Enablement segment, which showed a sharp turnaround with a 10% organic revenue increase and a six-fold jump in operating income, driving the margin to 7.8%. This momentum, supported by ongoing price strength and improved operational efficiency, is likely to extend into the first quarter. Meanwhile, while the commercial launch of the FDA-approved 5008X Hemodiafiltration system will ramp more meaningfully in the second half, its strategic significance and clinical potential could begin to feature in management commentary. Investors will also be looking for signs of further progress on FMS’s value-based care strategy and whether the company can sustain its 2024 margin gains as it targets 11%–12% operating income margins for 2025. Overall, the first quarter of 2025 is set to be a key checkpoint in FMS’s final year of its turnaround plan.

However, FMS continues to face challenges that may impact its performance in the first quarter of 2025. Elevated mortality rates in the U.S. dialysis market have persisted, affecting treatment volumes and overall growth. Additionally, labor cost inflation is expected to result in a net labor headwind of EUR 150 million to EUR 200 million in 2025, primarily due to wage increases. These factors, combined with the ongoing volatility in the value-based care sector and the implementation of volume-based procurement in China, pose risks to the company's financial performance in the upcoming quarter.

FMS’ Segmental Overview

Fresenius’ Care Delivery segment, which includes its core dialysis services, enters the first quarter of 2025 on a cautiously optimistic note. Despite facing headwinds from persistently elevated U.S. patient mortality and labor shortages, the segment showed stabilization in the fourth quarter of 2024, with U.S. same-market treatment growth turning slightly positive. The company has ramped up efforts to improve staffing and clinical efficiency, while also maintaining a strong focus on cost discipline. With ongoing benefits from the FME25 transformation program and early signs of patient volume recovery, Care Delivery is poised to post moderate sequential growth. However, the segment will continue to be challenged by inflationary labor costs and possible fluctuations in treatment volumes due to flu season and other seasonal mortality effects.

The Care Enablement segment—which comprises FMS’s products, including dialysis machines and related services—is expected to show stronger momentum in the first quarter of 2025. The segment is riding on recent wins such as the FDA approval of its new 508x hemodialysis machine, a critical innovation expected to drive product sales and differentiate the company in mature markets. Moreover, the execution of supply chain improvements and progress on manufacturing optimization from the FME25 initiative have helped this segment return to profitability in 2024, and this trajectory is likely to continue. The main risk remains the implementation of volume-based procurement regulations in China, which could pressure pricing and margins. Nonetheless, the higher adoption of new technology and the resilient demand for it in North America and EMEA regions support a positive outlook.

Fresenius Medical Care AG & Co. KGaA Price and EPS Surprise

Fresenius Medical Care AG & Co. KGaA price-eps-surprise | Fresenius Medical Care AG & Co. KGaA Quote

Q1 Estimates

The Zacks Consensus Estimate for revenues is pegged at $5.25 billion, implying growth of 2.3% year over year.

The Zacks Consensus Estimate for earnings per share is pinned at $0.43, suggesting an improvement of 19.4% from the prior-year level.

What the Zacks Model Unveils

Our proven model does not conclusively predict an earnings beat for FMS this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy), or 3 (Hold) increases the chances of an earnings beat. This is not the case here, as you will see below.

Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is -9.94%. You can uncover the best stocks to buy or sell before they are reported with our Earnings ESP Filter.

Zacks Rank: The company carries a Zacks Rank #3 at present.

FMS’ Long-Term Growth Potential

Fresenius Medical Care is executing a robust transformation under its FME25 program. It is now targeting EUR 750 million in sustainable cost savings by the end of 2025—an upgrade from the previous EUR 650 million goal. As of year-end 2024, the company had already achieved EUR 567 million in savings, driven primarily by a more efficient operating structure, supply chain optimization, and manufacturing enhancements. These initiatives have helped stabilize margins, with Care Delivery reaching more than 10% and Care Enablement jumping to 6.1%, nearly tripling year over year. This strong operational turnaround lays a resilient foundation for long-term margin expansion and profitability, with 2025 expected to deliver high-teens to high-20s percent growth in operating income. Moreover, portfolio optimization, such as divestitures of non-core businesses, including Spectra Labs and exits from several dialysis markets, further streamlines operations and frees up capital for reinvestment into higher-return areas.

Innovation is a core growth pillar for FMS, with the upcoming full commercial launch of the FDA-approved 5008X Hemodiafiltration (HDF)-capable dialysis machine in 2026. This next-generation device has already begun initial treatments and is expected to dramatically enhance patient outcomes. HDF, already standard in Europe, is linked to a 23% reduction in all-cause mortality compared to conventional dialysis. The company believes this breakthrough could not only improve care but also boost patient volumes in the United States, helping reverse the recent stagnation caused by elevated mortality and chronic disease burdens. The rollout of the 5008X will form a strategic centerpiece of FMS's Capital Markets Day in June 2025, where further innovations are expected to be unveiled, reinforcing its transition from a dialysis service provider to a technology-enabled care company.

FMS also continues expanding its value-based care model through InterWell Health, a joint venture managing over $11 billion in medical costs by 2025. Although the division posted a negative EBIT contribution of EUR 20–40 million in 2024, revenue grew to EUR 1.8 billion, and management expects breakeven performance in 2025. This model aligns financial incentives with patient outcomes and is central to the company’s long-term strategy of holistic kidney care, spanning early-stage CKD, dialysis, transplantation, and home-based therapies. The strategic shift toward managing total patient care rather than just treatments positions FMS for more sustainable, scalable growth as healthcare systems worldwide prioritize cost efficiency and quality outcomes.

Our Take on FMS

FMS’s shares have gained 10.5% in the year-to-date period against the industry’s decline of 9.1%. The broader S&P 500 Index declined 5.8% in the same time frame.

The company’s challenges may lead to mixed performance going forward. Per the Zacks Style Score, a proprietary method for evaluating stocks, the company looks moderately valued (Value Score: B) with a moderate chance of continued uptrend (Growth Score: C). However, the pace is likely to be sluggish (Momentum Score: F).

As the Zacks Rank, coupled with the style score for FMS, does not conclusively predict that the company may beat on earnings this reporting cycle, we caution against any new investment bet in FMS at present. Those who have already invested in the stock may sell a portion of their investments and book profits.

Stocks Worth a Look

Here are some medical stocks worth considering, as these have the right combination of elements to post an earnings beat this time:

ANI PharmaceuticalsANIP has an Earnings ESP of +0.86% and a Zacks Rank #1. The company is slated to release first-quarter 2025 results on May 9. You can see the complete list of today’s Zacks #1 Rank stocks here.

ANIP’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 17.32%. The Zacks Consensus Estimate for the company’s first-quarter EPS is expected to increase 30.6% from the year-ago quarter figure.

CencoraCOR has an Earnings ESP of +0.82% and a Zacks Rank #2. The company is slated to release first-quarter fiscal 2025 results on May 7.

The company’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 4.94%. The Zacks Consensus Estimate for COR’s fiscal first-quarter EPS is expected to rise 7.1% from the year-ago reported figure.

Hims & Hers Health HIMS has an Earnings ESP of +34.35% and a Zacks Rank #2. The company is slated to release first-quarter 2025 results on May 5.

HIMS’ earnings surpassed estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 40.42%. The Zacks Consensus Estimate for Hims & Hers Health’s first-quarter EPS is expected to increase 180% from the year-ago quarter figure.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research