Fresenius Medical Care AG (ETR:FME)

Investor Day 2020

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Oct 8, 2020

Hello, everyone. Good morning, good afternoon, or good evening, depending on where you are. When you are taking care of as many patients as we are, it is still impressive to see what it means through the eyes of a patient. It always touches me and makes clear what responsibility weighs on our shoulders. Welcome to what is the most unusual Capital Markets Day in the history of our company. As Dominic already said, our original plans for this day were completely different, of course. COVID nineteen has turned all of our lives upside down. But let me assure you, changing our Capital Markets Day into a virtual format was and is the least of the changes this pandemic has brought to us. First and foremost, what really counts is the way we handle these changes with respect to our patients. Protecting them is our number one priority. And this is true not only for the 350,000 patients we care for in our own dialysis clinics. It is also true for the millions of patients who depend on us to get their life saving products where and when they need them. I said it during the q two earnings call and I will say it again today. I am so proud of the way that we have handled this. I am proud of our employees who are doing such an outstanding job and I'm also proud of the network that we have built. We can weather this global storm just as we have weathered previous storms and we will weather the storms that are yet to come. It is at times like these that the true value of our network becomes evident. And I will be happy to tell you more about it as we go through today's material. Today, you will hear a lot about our future and also the new normal that comes as a result of the pandemic. You will learn about our strategy and where we intend to be five years from now. I will be telling you how we plan to create the future of health care for our patients. Before we look ahead, let's take a moment to reflect on where we are now and where we've come from. When we started the company back in 1996, we did that with a very clear vision in mind. The vision was vertical integration. It is the way to go. Why? Because it's good for patients, of course. And it's also good for health care systems and payers. Because it enables us to offer better quality. We knew back then that we could do this and we have done it. Today, we are the leading vertically integrated global player in the renal area. We serve more than half of the world's dialysis patients with our dialysis products every year, each and every year. We deliver more than 150,000,000 dialyzers and over 50,000 new dialysis machines to a 150 countries worldwide. We run the largest dialysis network with 4,000 dialysis centers in 50 countries. Every six tenths of a second, we treat a patient somewhere in this world. That means we provide more than 50,000,000 dialysis treatments to around 350,000 dialysis patients that we care for each year. And our revenues? As you well know from the quarterly updates, our revenue has grown as well. You have seen me showing these numbers before many times and you'll see me talking about them again today. Why? Because they are so much more than just figures. These figures show the responsibility that we as Fresenius Medical Care bear. First and foremost, for every single one of our patients. Then, as a close second, for our employees who make all of this possible. But these numbers also show our responsibility for the health care systems and payers we partner with around the world. We have a responsibility to act sustainably. And last but not least, these numbers show that we have successfully delivered on our strategy to date. We have a long history in the renal space and over these many decades, we have not only seen a growth in numbers, we have gained an enormous amount of experience. This experience dates back long before Fresenius Medical Care was founded in 1996. It began when Fresenius started selling its first dialysis products in 1966. Some years later, the company started out in product engineering. And thanks to the brilliant engineers at Fresenius, we were able to bring breakthrough innovations to the market in the nineteen eighties. Light synthetic polysulfone dialyzers or the balancing chamber for our hemodialysis machines. These engineering activities laid the foundation for an entire culture of innovation at Fresenius Medical Care. As many of you know, this culture of innovating products is what we are now proud to call one of our core competencies. Then came 1996 when Fresenius Medical Care was founded. We started out on our journey of vertical integration. This led to what is now our second core competency, operating outpatient facilities. Soon after that, around the turn of the millennium, we started standardizing medical procedures to create even more benefits for patients. And this became our third core competency. And finally, many of you here today were covering our company when we built our fourth core competency, which is coordinating patients efficiently to provide even better care. And today, today we are utilizing this competency to engage in an unprecedented home dialysis initiative. You have heard me talking about our competencies before, but I think it is worth mentioning them yet again. After all, they are much more than just past experiences. For us, they are the nuts and bolts of our work. They are essential to overcome the challenges ahead and capture new opportunities in the next phase of our strategy. With these core competencies in mind, let's take a look at what we call our recipe for success. Our patients are at the center of all of our efforts. They always have been and they always will be. We have built a network around them. We have a great leadership team with a unique wealth of experience. One that I venture to say you will not find anywhere else in this industry. It is the experienced leadership team that provides the foundation for our success. Fresenius Medical Care has always attracted experienced leaders and I'm very happy that you will have the opportunity to meet and interact with all the management board members who will be available during the breakout sessions later today. Under the guidance of our leadership team, our employees create value for our patients along the value chain based on our vertically integrated business model. Allow me to demonstrate this to you. Starting on the right, our medical experts have the job of identifying data insights and the latest scientific findings. Our research and development team uses these insights to innovate. Thanks to the close links between research and development and our 16,000 employees in manufacturing, we are able to bring these products to market in a short time frame and with high quality. Our 55,000 health care professionals use these innovative products to offer more than 50,000,000 treatments per year. The medical key performance indicators of these treatments are closely monitored and analyzed by our data scientists who in turn provide our medical experts with the insights that they need, bringing us full circle. This network with its wealth of expertise and capabilities is unparalleled in the renal industry, probably even in the health care sector as a whole, and it is a key factor in our success. So why are we doing all this? Our purpose and our vision, creating a future worth living for patients worldwide each and every day. This vision is rock solid. It always has been and it will continue to be so in the future. For us in the leadership team, this vision is our North Star. It is the maximum that drives our more than 120,000 employees. Our vision is at the forefront of our minds when we adapt our business model to our new strategy and when we prepare to meet future challenges and grasp new opportunities. We believe that in the future, health care will not be the same as what we have today. And the changes we see will bring many opportunities as well as some challenges. I'd like to take a brief look at different factors involved. An aging population and a rise in the incidence of chronic kidney disease will transform patient demographics. Fragmented care and health care staff shortages will create a need for new solutions. And at the same time, cost pressure and the limitations of current health care systems will call for these solutions to be deeply rooted at a systemic level. Digitalization disrupts the way we deliver health care today. Big data analytics and artificial intelligence provide us with new insights and new possibilities almost on a daily basis. We have COVID nineteen, which has transformed our lives in so many ways in such a very short time. Of course, we all know that the pandemic is far from being over. We must learn to live with it and adapt to the new normals. The coronavirus has and will continue to affect health care provision around the world in many, many different ways even after the pandemic has left us. One thing we at Fresenius Medical Care have understood is that an evolving environment presents us with opportunities to enhance our strategic thinking and approach. We can and will be part of the solution. And this brings us straight to what we see as our mission, to provide the best possible care and to do that sustainably in diverse health care systems. As you all know, health care in India or Indonesia is not the same as health care in France or Switzerland. All of these systems can be improved, but each requires a different approach. And we need to provide care for a growing number of patients around the entire world. Our mission combines care for our patients with sustainable partnerships with payers and health care systems across the globe. It is a reflection of the responsibility that we as FMC have. To live up to this responsibility, we need to overcome some major challenges if we want to offer our patients the best possible care. The biggest challenge for our patients is fragmented care. You can see what fragmented care means right here on this slide. People with chronic kidney disease have many questions when they get their diagnosis. They have medical issues as well as social ones. Their lifestyle changes. They need to digest lots of information and they must make decisions. Which therapy should they choose? What clinic should they go to? What medication should they take? What should they eat or drink? They must consider their comorbidities and always cost have to be considered and looked at. That's why we built our network. As I already explained, it wasn't something we did overnight. It has been a gradual process. The full value of this network and of our core competencies will become even clearer in the future. The fact that we can help patients in times of crisis, like during the coronavirus pandemic, or the many natural emergencies that impact their life and our work gives us a glimpse of what great value this network offers. We put a lot of effort into solving the challenges that are deeply rooted in health care systems, such as fragmented care. Just like in 1996, when we knew that vertical integration was the right path, today, we know that working together to coordinate care for our patients is the right way to go in the future. So to solve these problems and achieve our goals, we have focused our strategy on the renal care continuum. The idea behind this is creating the future of health care for chronically and critically ill patients across the renal care continuum. We will do this by leveraging our core competencies and by offering sustainable solutions with innovative products and services of the highest quality at reliable cost. I know that many of you will find this challenging. You may be asking yourselves, how can we achieve this? I am fully convinced that we can and we will achieve this. What I intend to do for the rest of this presentation is to give you an overview of the various aspects of this next level of our strategy. In the breakout sessions afterwards, our management board members will give you a deep dive and answer any questions that you may have. Before I go into the different aspects of our new strategy, I know that some of you are interested in what it all means in numbers. Helen will provide you with the details once I am done. At this point, I'll give you a short preview. Over the next five years, we have projected to grow our revenues in the mid single digit percentage range. And we plan to grow our net income at a higher rate than our revenues. This means high single digit net income growth. We've done a full analysis of the figures behind the strategy. A five year view and the COVID nineteen pandemic on top come along with uncertainties. So we decided to provide you with these projected growth rates and reserve some flexibility. This enables us to make the right decision for mid to long term value creation by partnering, making investments, or acquisitions that could generate an additional upside. Later, Helen will give you more background. Additionally, a new normal is evolving from the COVID nineteen pandemic, and we are currently analyzing the opportunities this might bring to us at FMC as an organization. Now let's look at the key drivers for our core dialysis business. As I said before when I explained our mission, the number of dialysis patients around the world is growing. Why is that? First, we have an aging global population. The number of people 65 will increase significantly to about 1,000,000,000 by 02/1930. Second, hypertension. Already one out of every four adults around the globe suffers from high blood pressure. Add to that the number of people with diabetes, which is set to grow more than half a billion by 02/1930. Our own projections show that by 02/1930, more than six million patients will need regular dialysis. Now think about this. Six million patients in need of dialysis products and six million patients in need of dialysis treatment. You know as well as I do that we are proud to be the leader in this industry. When you look at other key players, they are all very different. Some of them have their focus on dialysis products only. Others on dialysis care. Only a few of them have managed vertical integration, but none of them features a fully fledged product range and dialysis services in all regions of the world. This is the crucial aspect that sets us apart from the rest of the industry. We are the only company that has managed to combine full vertical integration and a holistic product offering with a significant global network. Some companies are trying to catch up and some seem to be holding back. There is not one company out there that is even close to having the holistic capabilities and the vertically integrated network that we have built. I gave you some thoughts on the value of this network just a few moments ago. Looking at our history of vertical integration, I think it's important to point out that vertical integration is not a fixed state. Even though we have come much further than any other company in the industry, it is not a done deal, not even for us. It is a process, a path we have to and want to follow, and we've already moved on to the next level. Our ongoing innovations, which you can see on this slide, add to the infrastructure that we've already built. These innovations are facilitated by our product expertise, our medical expertise, and data driven solutions. We will go into these in more detail during our breakout sessions. These innovations will make our network even more valuable. Just think back to the start of the coronavirus pandemic. When a crisis like that hits, you need to put fast yet effective and sound measures into place and we managed to do this successfully. We continue to protect our patients and our employees and deliver our products and services. Why or how did we do this? Because of this great global network we have built and because we have always driven innovation for a patient's benefit, we are now continuing on this path and are ready to meet whatever challenges may come. Our network does not only show its worth in times of crisis, It also plays a vital role in our daily interactions with our key stakeholders, our patients and payers. And it benefits both of them as we go beyond dialysis. First and foremost, our patients. By listening to them and responding to their individual needs, we can empower them and we can improve their quality of life with the very best care and clinical standards. But our network is also key for payers and health care systems. It allows us to take account of their needs at the same time. You have heard me say it many times before, but it's very important to keep this in mind. Working together with payers is essential. By doing so, we can help reduce their total cost of care, create a sound basis for dialysis in the future, and thereby secure our own future as a global health care provider. Our essential approach is here to develop programs for preventing and slowing down the progression of the disease. The way we drive the transformation of health care towards an optimal allocation of resources as we move forward. The focus on integrating our stakeholders is one of the reasons why we are not reliant on a specific political leader or party. We have an excellent reputation for reducing inefficiencies in today's health care systems and that should be in the interest of any government or private payer. This is why I am not worried about the outcome of the election in The United States. We will continue providing solutions for health care systems regardless of which president or party is in charge. And decision makers appreciate our reliability. The renal care continuum is our next logical step. It's the next step up from our four core competencies. It is a step up for our network and is a step in our quest for even more valuable solutions for our patients, as well as for payers and healthcare systems around the world. I will walk you through the details of the next level of our strategy in the following slides. In the breakout sessions after this presentation, we will provide you with more information on the different aspects and you'll have the chance to ask any questions that you may have. So here we go. What are the different aspects of the renal care continuum? First of all, new renal care models. We aim to transform renal care as it is today by applying new digital tools such as artificial intelligence and big data, to name a few. Digital solutions like these will give our business a major boost in the years to come. I'm talking about personalized dialysis and therapeutic innovations. And I'm also talking about more holistic home care. Frank Maddox, our global chief medical officer, will give you some more details in our Renal Care Continuum breakout session later today. The second ingredient of the next level of our strategy is value based care. What this essentially means is that we create value while ensuring that care remains affordable. You remember when we started our care coordination activities around seven years ago. At that time, there were a lot of discussions about our reasons for doing this. Now, I'm pleased to say that thanks to our care coordination activities, we are the most experienced value based care provider in The United States. We are in the best position to drive the change from fee for service to pay for performance. And why is that? Because we've built the network and we have the experience. We will continue along this path in The United States. At the same time, we will leverage our experience globally. After all, most health care systems in the world share the same challenges. Although they are all in very different positions with different regulatory frameworks and very different national and social systems, not to mention political leaders. But they share the same fundamental challenges that we discussed in the beginning. They benefit from solutions that we are in a position to offer. Bill Valley, our CEO for North America and Frank Maddox will provide further insights on this in our value based care session. Another aspect of the next level of our strategy takes us beyond dialysis to include chronic kidney disease and kidney transplants. Our aim is to treat patients holistically along their complete treatment path or across their renal care continuum as we prefer to call it. We have already started to expand value based care programs to include CKD. This has clear benefits for both patients and payers. For example, it means that we can slow down the progression of the disease and improve patients dialysis starts. In this way, we avoid unnecessary hospital visits because hospital stays are not great for patients and as we all know, they're expensive for payers. We also intend to boost home dialysis by educating patients more about their options and make sure that the late stage CKD patients can engage with nephrologists. But we want to go even further than that. The next level of renal care will also expand value based care programs to include kidney transplants. You all know that transplantation in many cases is the best choice for many patients. Again, Bill and Frank will give you more details later in the value based care and renal care continuum breakouts. It goes without saying that renal care innovations are also a core aspect of the next level of our strategy. Innovations have a lot to do with disruptive thinking. It basically boils down to disrupting the way we do dialysis today. One vehicle we use for these disruptive innovations is our company venture fund. FMC Ventures makes strategic investment in startups to gain access to new technologies in our core and in complementary businesses as well as new therapy approaches. We are continuously identifying and investing in startups and therapies that look promising. You have seen our press releases on several of these topics. For example, Unacyte, which deals with cell therapies to restore lost kidney function or Humacyte, a company that designs biomaterials that are functionally compatible with human organs. And Egenesis is making great progress in solving the challenges of xenotransplantation. We have selected these investments for a good reason. So I appreciate very much that Olaf Schiermeyer, responsible for global research and development, and Harry DeVitt, who runs our Asia Pacific business, will take the time to talk about these and other developments in the therapy innovations breakout sessions. Another aspect of the next level of our strategy is critical care. The number of patients needing continuous renal replacement therapy to treat acute renal failure is set to rise to one point six million by 02/1930. That's a growth rate of six hundred percent, even higher than the rate of patients requiring regular dialysis due to chronic kidney failure. We have all seen the upsurge in global demand for critical care as a result of the coronavirus. Over the next few years, we will leverage our expertise in the critical care business to address a variety of health care challenges. This is driven by our expertise in treating acute renal failure and technology to expand further into heart and lung support solutions. We are also planning innovative solutions for multi organ support to strengthen the growing critical care market. We already have some great products for critical care on the market today. Our Multi Filtrate Pro and NextAge System one are market leaders when it comes to providing highly effective renal replacement therapy or plasma exchange in the critical care setting. Our Xenios NovoLung system can be used to treat lung failure with therapies such as CO2 removal and oxygenation in the case of acute respiratory failure. These products have gained recognition for saving countless lives during the COVID nineteen pandemic. And as you all know, demand will continue to rise as this virus spreads further. But as I said before, we are not resting on our laurels and are planning to further expand our portfolio of products for the critical care market in the years to come. Katarzyna Mazur Hofsas, our CEO for Europe, Middle East and Africa, and Harry from Asia Pacific will provide you with further insights in the product business breakout. Creating additional medical value and saving cost requires complementary solutions. We achieved some important milestones and gained many insights on how to coordinate patients more efficiently. We will continue to leverage our core competencies in partnerships, investments, and acquisitions. This applies to each of our four core competencies. For example, we coordinate patients through our subsidiaries such as Fresenius Health Partners, Fresenius Rx, Ambulance, and ventures like SafeRide. We combine our competency in standardizing medical procedures and our ability to operate outpatient facilities through our National Cardiovascular Partners and Azure Vascular Care. We innovate products and medical procedures in our joint venture with Vifor or through our investments in UniSight or Egenesis. We will engage in new partnerships, make new investments, and continuously screen the market for exciting opportunities. With this approach, we extend in a capital efficient way our network of complementary assets building the base for future growth beyond 2025. We have the ability and the skills to create sustainable solutions in health care. We have also understood that sustainability needs to be fully implemented in our processes and operations. This is why we launched a global sustainability program to step up and drive integration of sustainability into our business. The multi year program establishes common goals, responsibilities, policies, and key performance indicators and is under my direct responsibility. We have also implemented non financial performance targets for management compensation. They reflect our aspiration to be measured by our commitment to continuously improve. Our long term focus is on sustainability opportunities that support our mission to provide the best possible care for a growing number of patients in different health care systems. Caring for patients is at the core of what we do and it's at the heart of our strategic sustainability activities as well. To wrap up, I'd like to briefly summarize the main points. We, at Fresenius Medical Care, will continue to provide the best possible care to a growing number of patients in the years to come. We can rely on our highly experienced management team to steer us through any crisis that comes our way. We will continue to develop our business model by offering sustainable solutions. We will do this by leveraging our core competencies across the renal care continuum in critical settings and in complementary assets. And last but not least, we will drive shareholder value in a sustainable way. Hi, everyone. It's a pleasure to be with you today and a warm welcome to our virtual Capital Markets Day twenty twenty. Following recent detailed presentation on how we will reach the next level in our strategic development of Fresenius Medical Care, it will now be my pleasure to explain to you how our Strategy 2025 will translate into the numbers. I will start with an overview of what we have delivered in the past five years. We have delivered the global expansion that we indicated in our twenty fourteen Capital Markets Day over the last years. On the services side, we have driven forward our regional expansion as well as the growth in our existing footprint. Today, FME provides dialysis services in around 50 countries around the globe. We are truly global. We operate clinics from Finland to South Africa, from The U. S. To Argentina, from Australia to China. We take care of patients around the world every day. On the product side, our global expansion was not only driven by continued growth in developing economies. We successfully diversified our portfolio, for example, by adding NextAge home dialysis and acute products as well as Xenio solutions for extracorporeal heart and lung support. This was also an expansion of our acute products portfolio. Today, we sell products in around 150 countries. This strong global footprint of our products business is an important basis for a potential future expansion of our services business in those countries. Growth at any price was and is not part of FME's strategy. We have tight control on costs and delivered sustainable profitable growth. Our net income outgrew revenues by around 200 basis points each year since we gave you our midterm outlook in 2014. This improvement was supported by comprehensive efficiency measures that I will describe later in my presentation. Our strong historical performance will continue over the next five years. The global expansion of the Services and Products business has translated into an average annual revenue growth of 6% between 2014 and 2019. This would be in the mid single digit growth range. Through 2025, we expect our revenue to deliver a compounded annual growth rate of mid single digits. As just mentioned, we delivered an even stronger net income growth of 8% or high single digit CAGR since 2014. For the coming years too, we expect our net income CAGR to grow at the high single digit pace. As always, these revenue and net income growth targets are before special items and in constant currency. To date, we can think of several developments that could further boost our sustainable profitable growth, such as earlier and higher contributions from investments, partnerships and acquisitions, to which I will come back later Additionally, a faster execution on our Renal Care Continuum strategy or regulatory changes that could support our activities in the area of value based care could accelerate our projected growth. COVID-nineteen has showed us what uncertainties there can be. Looking several years into the future, we, of course, also have to keep an eye on potential unknown headwinds. These could result from unfavorable regulatory changes, reimbursement rate cuts, abnormal labor cost inflation, and now more real than ever, the impacts of a pandemic. Our Strategy 2025, which Rice described in detail in his presentation, provides a very solid foundation for achieving our targets. You might remember the image on the left from Rice's presentation. It shows the natural evolution of our strategy. Through 2025, we plan to grow in three main areas: along the Renal Care Continuum, in Critical Care and we want to further leverage the value of our network by adding complementary assets, enabling us to enhance value creation by driving additional medical benefits or managing total cost of care. In 2019, we generated revenue of EUR 15,000,000,000 along the Renal Care Continuum. This underlines the strategic importance of our core business and explains why we have focused our strategy on this part of the business. In the five years ahead, we will continue to benefit from a steadily growing number of dialysis patients and the ongoing expansion of our Services and Products business. Critical Care Solutions accounted for almost EUR 1,000,000,000 of revenue in 2019. We will further leverage our broad experience in extracorporeal blood treatments and expand our product portfolio for acute kidney failure to capture growth opportunities in what we consider to be a promising business area for Fresenius Medical Care. The number of patients needing continuous renal replacement therapy to treat acute renal failure is set to rise at an even higher rate than the number of patients requiring regular dialysis due to chronic kidney failure. Furthermore, we have seen an upsurge in the global demand for critical care products as a result of the coronavirus. Around €1,500,000,000 of our revenues in 2019 were generated in what we call complementary assets. In this area, growth potentials arise from partnerships, investments and the expansion of services. These three types of assets will help us, for example, to coordinate patients efficiently and thereby add value in two dimensions: in terms of creating medical value add and in managing our patient related cost. With our Strategy 2025, we are set to capture sustainable, profitable growth over the coming years. But what will the way forward look like in terms of numbers? We expect our revenue in the Renal Care Continuum business area to deliver a compounded annual growth rate of mid single digit. This is driven by the underlying developments that Rice and I have already mentioned. Our core business will continue to contribute 80% to 85% to our overall revenue in 2025. On the earnings side, the Renal Care Continuum will also account for at least 80% of operating income in 2025. Critical Care Solutions revenue is expected to deliver a CAGR in the mid to high single digit percentage range. By 2025, this business area will account for up to 10% of revenue and operating income. We saw great momentum in this business during the course of 2020 and plan to further strengthen our activities. Although from a low base, we expect to see a higher growth rate in the area of complementary assets. Here, we expect to deliver a high single digit to low double digit percentage range. By 2025, we expect business in this area to account for 10% to 15% of our overall revenue and earnings. I think it's also worth looking at our projection from a geographical reporting segment view and how it translates to growth in our regions. In terms of revenue and earnings contribution, North America is our largest segment and not unexpectedly will remain so in 2025. We expect a solid compounded annual revenue growth rate in the mid to high single digit percentage range over the next five years. The geographical mix of revenue contribution is expected to shift slightly in the next years. The revenue growth momentum from regions like Asia Pacific remains ahead of more mature markets. In EMEA, the revenue growth is expected to stay around the current level. With this, EMEA would grow slower than the other regions, and we would expect a range of 10% to 15% share in 2025. We expect a stronger growth momentum in developing countries. Here, we have made substantial investments in recent years to capture opportunities, especially in the Asia Pacific region. We expect our revenue CAGR in Asia Pacific to be in the high single digit percent area in the five years to come. By 2025, the region should account for up to 15% of our overall revenue and operating income. Our strategy will continue to deliver sustainable and profitable growth. We are projecting our return on invested capital to be in the range of 7% to 7.5% by 2025. How are we planning to achieve this? The chart shows how we plan to use the available funding from our operating cash flow position in the next five years as part of our growth strategy. Our business model generates strong and stable cash flows. Between 2020 and 2025, we expect to have €17,000,000,000 in consolidated cash flow from operations available. This will provide us with a comfortable basis for the execution of our strategy. As part of our sustainable dividend policy, we assume, based on the projected business development, to pay out approximately €2,600,000,000 from 2020 to 2025, thus creating additional value for our shareholders. For maintaining our clinical infrastructure and manufacturing sites, we plan to invest around €3,500,000,000 And to deliver the growth we have projected in our midterm targets, we will invest approximately €6,000,000,000 to capture potential in the identified strategic growth areas. The proportion for the different business areas are shown, and for sure, the Renal Care Continuum is the most sizable piece here. We have around onethree of the cash flow from operations available to generate potential upside to our projected midterm targets. This is quite some headroom and clearly our firepower for smart partnerships, investments in future growth or for M and A activities. Of course, we do have some ideas in mind that meet our strict hurdle rates. This could include an over proportionate allocation to Critical Care solutions and complementary assets. We do not show an allocation to the strategic areas today as we want to remain flexible in the allocation, timing and investment horizon and stay open to additional opportunities that might arise. To cover the most obvious question of what could be the expected effects from allocating those funds, we would expect that this could add up to 200 basis points of projected midterm growth, both on the top line and bottom line. And we assume this to be roughly neutral to ROIC by 2025. Now let's have a look at the leverage. Based on strong and stable cash flow generation, we delivered a good track record with regard to leverage ratios. Excluding IFRS 16, leverage was at 2.5x in December 2019, up from 1.8x at the end of twenty eighteen. This increase was mainly driven by the Next Stage acquisition. Including the IFRS 16 impact, we were at 3.2 times net debt to EBITDA. Today, I can tell you, we will continue on the path we have taken and remain committed to a net debt to EBITDA target ratio of three to 3.5 times. The resulting financial stability is important for us in two respects: first, to maintain our financial resilience, which is particularly important in current times of global challenges and second, to create headroom for organic as well as for external growth. As CFO, I have a clear focus on working capital efficiency. We will remain focused on OpEx and CapEx management to free up cash flow and identify further opportunities to fuel sustained growth. Our financial stability and commitment to maintain a well balanced financial structure at a competitive cost is, of course, key to me as CFO. We have already taken a couple of measures in respect to early refinancing to take advantage of current favorable market conditions. In the last twelve months, we were able to reduce the cost of debt by 80 basis points to 2.3% and extend the average maturity by nineteen months. Following our recent bond issuance in September, we further improved our average interest rates and our maturity profile. Achieving further profitable growth requires a disciplined approach to cost management and efficiencies. Accordingly, cost efficiency measures were already a major topic at our previous Capital Market Days. I would like to take this opportunity to briefly review what we have achieved with those cost efficiency measures. Since 2014, we have generated net savings of close to 5,000,000,000 across the company. We achieved this by implementing three efficiency initiatives: our Global Efficiency Programme one focused on regional organizational structures, GEP two aims at functional and operational excellence and will be completed in the course of this year. And in 2019, we invested in an additional cost optimization program to further optimize our clinical infrastructure, especially in The U. S, and those related measures have been completed as planned. As a consequence of these efficiency measures, operational efficiency improvements have become an integral part of our DNA and a continued focus of margin expansion. They are now integrated into the operating model and strategic plans of all regions and functions. Through 2025, we want to tap further potentials in our global operating model in four key areas. We will drive holistic OpEx improvements by stringently managing SG and A. The focus will be on standardization, end to end process improvements, automation and cost efficiencies, prioritizing those investments that drive growth. We will further optimize our infrastructure, which will require a review of our footprint and capital allocation. I will comment a bit further on this in a minute. We will continue to leverage our global scale. We already mentioned the importance of our global medical office, a blueprint for value that we are able to generate due to our global presence. We will continue to optimize our other global functions like finance, for example, and accelerate our digital solutions in procurement and HR. And we will apply learnings from the current COVID-nineteen pandemic to adapt to the new normal. This is not only a new normal in the way of use of personal protective equipment, testing of patients or lowering travel expenses, But we have also started a review of our footprint in respect to office space, optimal global and regional manufacturing infrastructure and some other related aspects. We are still working through this, and we plan to give you more information during the course of next year. However, from an investment and payback perspective, this should be neutral to slightly positive on a five year horizon and therewith not impact our midterm guidance but be visibly positive beyond 2025. It does not make sense to go into more detail here or in the Q and A as there needs to be more analysis work done first. To summarize my presentation before I hand back to Dominic, most of you have a longer history with Fresenius Medical Care than I do. Over the first year of my tenure, I found a patient centric company grounded in values, a company that is leveraging its strong core competencies to deliver sustainable results with a resilient underlying growth pattern and a focus on delivering shareholder value. We have presented our midterm targets and outlined a plan that creates significant additional firepower to partner, invest or acquire in those areas where we can generate superior value add in the mid to long term. Of course, we will balance that within the triangle of investing in sustainable growth, paying dividends and managing our leverage ratio within our target range. You have my unwavering commitment as the company's CFO to drive and support the execution of our new five year plan and deliver our 2025 strategy. Our values to be proactive, reliable, collaborative and excellent in what we do drive each of our more than 120,000 employees every day and is at the heart of how we will deliver success on the next level of our strategy and continue to create a future worth living for our patients worldwide every day. Hello to all of our guests. You've already heard from Rice about how we are shaping the future of providing care for patients with kidney disease across the full renal care continuum. I'd like to take the next few minutes to explain how we approach achieving better outcomes for patients and how important a tight coordination of our activities are. Let me start by stating that value is the key element. This is key for our patients and key for Fresenius Medical Care and our role in developing and setting standards of care. Our model for medical care requires that we have a deep understanding of the holistic needs of our patients and that requires a close understanding of and relationship with those patients. A close and active communication between all stakeholders and their care is crucial to provide the best possible care, reach the best possible outcomes, and help our patients experience life successfully despite their substantial disease. The journey through life with advanced CKD will take patients through many aspects of care and modalities for treatment. It is not by coincidence that the environmental component of their clinical care is positioned right in the middle of our graphic. For me, it is not only important to target reduced water consumption or carbon dioxide emissions in our production facilities, but even more important to facilitate the ability to care for people who live with a life threatening disease. That is the heart of the concept of essential work and workers. We must be aware of what it means for patients to live with a severe condition that impacts all aspects of their life, family, job, and finances, as well as their emotional health and well-being. The financial resources of Fresenius Medical Care enable us to provide innovative treatment solutions and to empower our staff to be supportive whether the issues are social, medical, or personal to the patient. We must be open to finding solutions like building a system of care for home dialysis that gives patients and their physicians more power and choice in designing a treatment program that fits the person's unique needs. We create an environment where our patients feel valued and experience the best possible care. Not only in the course of the pandemic, but also in more normalized environments, we are treating sensitive and vulnerable people. Our patients suffer from many connected and associated diseases with few only having kidney disease in isolation. Each of these diseases might trigger a kidney condition. Kidney disease develops usually with associated other systemic illnesses that lead to kidney injury and our understanding of these disorders and associated conditions continues to evolve each year. Many of those comorbidities can be severe, requiring professional medical advice and increasing the complexity of the care needed by an individual. Do you know how many drugs a dialysis patient gets administered? On average, a patient takes twenty four pills a day to mitigate the associated disease states they live with. We treat patients across the entire spectrum of kidney disease. Early stages of CKD can be treated with specific nutritional and behavioral interventions, while many require specific medications. More severe stages can lead to death if not for the required blood cleansing and fluid removal procedures we know of as dialysis therapy. The options for treating advanced CKD include transplant and palliative care at two ends of the spectrum, with renal replacement therapies maintaining life through in center treatments and home dialysis in two forms, home hemodialysis and peritoneal dialysis. We intensify our network with nephrologists to identify patients as early as possible. This is not a threat to our business, but an opportunity to influence the outcomes of our patients, for whom you will hear we are progressively taking more and more responsibility. It is a way to bring more patients into our care paradigm and streamline the onboarding of patients in a smoother way as possible. This is the right way for patients and for Fresenius Medical Care. The continuum includes therapeutics, diagnostics, and connected health solutions that impact the primary kidney disease and the concomitant comorbidities. Renal replacement therapy is now widely accessible in mature markets as a baseline therapy to keep people alive. Those markets are now looking to expand choices and power decision making for patients and their providers with options that provide enhanced patient experiences and a focus on the quality of life of the patient receiving this life sustaining therapy. The push towards more home dialysis use requires that the health systems be adjusted to meet the needs of these patients in the home environment. That includes freedom to choose the modality and timing of their therapy and the ability to use a connected health environment to remain in touch with their care team. The artificial barriers between CKD, ESRD and transplantation are coming down. And we are going to find that spot where we have business interests in each of these elements of the care continuum. In the wheel graphic on the left side, we discussed the connectivity between diagnostics, therapeutic interventions and connected health. As a vertically integrated healthcare company, all three of these features of our product platforms need to be addressed to harmonize our company's access to the healthcare value chain across multiple stages of kidney disease. Close and regular monitoring of patients provides insights that will allow good healthcare decisions, slowing the progression of the disease and positively influencing the impact of other comorbidities. Our clinical and quality agenda provides a framework for our approach, including the clinical issues of cardio protection and the evolution of more personalized and precise care as sentinel framing elements of our approach to the next evolution of a mature healthcare system for kidney disease. All these different aspects on the right hand side sound familiar to you. For sure, the renal care continuum means we do what we know has created value for patients and that we add clinical activities and focus on crucial elements of providing progressively more sophisticated care in the future. Expanding our framework of clinical research and investment in kidney disease research is an area of key interest. We will have a therapy innovation workshop later today that provides more insight into our R and D approach. Innovation is a central core to our position leading the field. We hold high aspirations of our work to evolve health systems around the world to provide access to care, good choices for therapeutic options and the power to live a life that is meaningful with this disease. Fresenius Medical Care is at its best when it identifies, incorporates and standardizes clinical innovations that improve the quality of life of patients. We begin by investing in innovation that develops into translational science that can advance the standards of care. We then deploy these methods to move the field toward these innovations that improve the life of the patient while preserving precious resources of the healthcare system. Our unique structure allows us to help the evolution of the field move faster toward that which improves the care of people, the access to life saving therapies, and the sustainability of systems of care that are delivered. With that, I will end my formal presentation, and I'm happy to answer any questions you might have. You've heard from Reese about global trends that are creating tailwinds and producing the environment for transformation of how we deliver care to patients. The shift to home has been accelerated, and we are ahead of the curve. You also heard about the value we are creating for patients, payers, and for Xenius Medical Care. We've been the unquestionable leader for in center dialysis, in part because we have established ourselves with reliable and predictable results in that space. We've done that by standardizing and routinizing the way we provide care. And we're well on our way to applying those same principles to deliver and manage home therapies. We're activating and empowering patients to be more in control of their own care. And payers are confident in delegating their risk to us because our vertical integration allows us to look at the total cost of care. We know that by creating value for patients and payers, we also create value for Fresenius Medical Care. In short, we have sound plans that we are executing, and we are on track to achieve our growth goals as well as our internal margin improvement targets. The face of dialysis is changing, and we are at the forefront of that change. It starts with our high performance culture. Our over 70,000 employees in North America have rallied around home therapies, whether our direct patient caregivers or our support teams. They are focused on improving the quality of life for our patients. And home therapies is one way that we will accomplish that goal. We continually adapt to an ever changing health care environment, and we do so with speed and flexibility. You'll hear many examples throughout our presentations today, from telehealth to connected health, to changing staffing models, to transitional care units, to adapting our entire care model. We don't take our competition lightly, and we are confident that our agility, flexibility, speed and innovation will help us remain the market leader. We have made a global commitment to the supply chain and production to support home dialysis. We're able to supply high quality home products across the globe, which gives us a real advantage in our ability to innovate and make investments in automation and technology to continuously improve quality and drive cost efficiencies. We're able to be close to our customers and have broader capacity to respond to spikes in demand as public policies around the world align in support of home. As we introduce new products and technologies, we have a fantastic platform within which we can launch these and scale these up as markets develop. Now I'd like to talk about North America in particular, where we've been a long standing leader in dialysis product supply. In the last eighteen months, we've added significant capabilities in Mexico with the NxStage merger and we've also just opened a highly automated solutions facility in Tennessee, which will increase our capacity to support PD patients by over 40%, decrease our cost of production with the novel environmentally friendly BioFine product and increase our distribution efficiency based on the plant and distribution center's strategic location. In addition, this plant can double or triple its output with modest investments as demand increases. All of this is supported through our distribution centers and logistics and customer service networks. Delivering to the home is different than delivering to a hospital dock or outpatient center storeroom. And there are not many organizations in the world that can do this well. We are one of them and we believe we're the best at delivering white glove service to our patients. We're poised to support any growth the market can generate in peritoneal dialysis and home hemodialysis in North America and globally. We've been focused on refining the right approach to home therapies over the last several years. We've invested in best in class product technologies, including the NxStage home hemodialysis platform our PD products portfolio, including our next generation cycler to be introduced next year and solutions technology, including our proprietary BioFine film. You can't deliver home therapies without these, and being vertically integrated is a big part of our future success. Connected health is a game changer for home dialysis, and it's another area where we're leading the way, whether on the product side with our Next to Me and Connexus technologies that enable real time, two way information exchange between patients' homes and our clinics. We're on the services side with our hub portfolio, which creates a seamless environment in which physicians, care teams, and patients can coordinate care. Technology allows our patients to stay connected to us, similarly to the connection they make with our staff when they dialyze in center. We've also invested in the tools and capabilities to educate patients about home. We've added 30% to our direct patient care staff and have nearly 300 dedicated individuals, including patients, nurses, dietitians, social workers, and others whose sole job is to educate patients on their options and ensure they have the opportunity to consider home therapy. In addition, we made a big commitment to transitional care units, which we believe is the best way for a patient to start dialysis. Ultimately, it will increase the number of patients who choose home. But it will also create a better informed, more empowered patient, even if they choose to go in center. Our data shows that approximately half of patients will choose home after their transitional care unit experience, compared to only approximately fifteen percent who did not participate in a transitional care unit. As we have announced in June, that we will have more than 100 transitional care units by the end of the year. Kent talked about our supply chain infrastructure, which is clearly essential to economic and patient success. Our footprint to support home patients in our dialysis services business in North America is unique as well, with over 3,000 training rooms ensuring that over 90% of our patients are within 15 miles of a training center. No one else has this. And between it and our care team investments, we are poised to continue on our growth trajectory. We're able to drive improvements through our global medical office. Our analytics capabilities are unsurpassed. We understand the needs of payers and government customers because we've walked in their shoes in our value based care efforts. There is no organization that is better positioned to achieve this profitably and right now. Growing home can happen three ways. When patients choose home in their first ninety days, or incident patients, which represent 45% of our growth potential in home. When patients start dialysis in center and then choose to switch to home, another 45%. And finally, the smallest segment of patients transition from peritoneal dialysis to home hemodialysis, or existing home patients. Our biggest opportunities are with incident and in center patients. So now let's talk about where we're headed. We set a target in 2017 of at least fifteen percent of our treatments performed at home in The United States by 2022. And we're pleased to report that we are on track to achieve that goal. Our biggest growth has been with in center patients because we've had the opportunity to go back and reeducate patients who did not have the opportunity to start at home. With transitional care units and other programs to educate incident patients, we expect an acceleration of the incident patient category going forward, in line with the aspirations of the President's Executive Order and the goals of the ESRD Treatment Choices Model. And we're improving our processes to ensure that patients for which peritoneal dialysis is no longer an option can stay at home with home hemodialysis. These growth percentages over the last eighteen months are proof that our merger with NextAge and the additional efforts that we've spoken about throughout this presentation have had a tremendous impact. The 37% increase we've seen in home starts since January 2019 gives us confidence that we'll reach our target of fifteen percent plus home treatments by 2022. To wrap up, global trends are creating tailwinds, and we are ahead of the curve. Our standardized and routinized approach to home dialysis is creating value for patients, payers, and us. We are activating and empowering patients in their own care. And we continue to adapt and invest to ensure we stay ahead of the curve. Our vertical integration uniquely positions us to be the runaway leader in home dialysis. And we are laser focused on improving health outcomes for our patients and reducing costs for the health care system. Kent and I would like to thank you for your attention. And now I'll hand it back to Dominic for your questions. Good day and afternoon, everyone. I'm Olaf Schirme, responsible for Global Research and Development. I'm happy to introduce you to the Therapy Innovations workshop together with Harry David, who is responsible for Asia Pacific, and he will provide you with an overview on our overall strategic direction and our innovation force. We all know that as of today, Fresenius Medical Care is the leader when it's about dialysis services and products. Our therapy innovations, however, they rarely get as much attention as large acquisitions. And in the recent months and years, we have introduced numerous innovations in all treatment areas to maintain our leadership position. Some examples are our new 6,008 care system for a more individualized HD therapy and 4,008 A platform for developing economies or our new acute platform, Multifiltrate Pro, which has just been launched in China. With the new FX Correlylaser, we are introducing a membrane with higher hemocompatibility, and we are currently trialing a new PD cycler just to name a few of our recent milestones. However, this would not be the focus of today's session. Today, we want to introduce you to more transformational technologies we are currently working on and demonstrate how they are linked into our strategy. Having said that, I now will hand over to Harry, providing an overview on how our innovation engine complements our mission to provide best possible care every day and worldwide. Thank you, Olaf. Let me start with an overview of our innovation engine and on our approach how Fresenius Medical Care is combining our internal core competencies with external opportunities when it's about the development of innovative products and therapies. First of all, our internal R and D projects, we have an internal R and D network across the world, in The U. S, in Europe, in China, who work together closely and who are deeply connected into the regional business segments. Olaf have mentioned a few examples of recent accomplishments already and introduction of 6,008 HD machine, the CORAL dialyzer and new PD cyclists are just some examples. Beyond our internal development activities, we are closely working together with external partners in specific fields of technology and innovation. There's a continuous R and D effort in our home and critical care technologies and therapies. By acquiring NextStage in 2019 and Xenios for heart lung therapies in 2016, we are complementing our existing solutions for home therapies and critical care. We see excellent synergies by combining these portfolios on both commercial and technology perspectives. In these times, there is a very high demand across the globe for our critical product range due to the pandemic situation, and we are proud to see how our joint teams are closely working together to provide COVID-nineteen patients with life saving therapies. Talking about external source opportunities, we have established our Corporate Venture Capital Unit in 2016 to broaden up the funnel assessing new technologies and therapies by strategically investing into innovative early stage companies. Within the last couple of years, we were able to establish a broad and valuable investment portfolio, complementing our renal care strategies and beyond. With UniCyte, we have established a vehicle that allows us to extend the vertical integration of Fresenius Medical Care also in the field of CKD by regenerative medicine therapies approaches. Olaf will provide you more details on that later. We have a strong focus on continuously expanding our portfolio in our renal business and in complementary areas. With regards to our renal business, we constantly enhance our portfolio of products to treat patients in the value segment as well as in the premium segment, if it is in center as well as at home. Data, in our case patient data, has become the fuel of our industry. Therefore, connectivity, data collection and analytics are significant differentiator that allow an increasingly more patient centric approach and there is further improved quality outcomes. Our vertically integrated business model ranges from manufacturing renal products to the provision of high end clinical services. This, based on our data analytics and predictive modeling skills, makes us the company of choice in value based care business models. Beyond our core dialysis business, we have a strong focus on critical care. I mentioned the two acquisitions, NextStage and again, Seniors, both are complementing our already existing product portfolio. Besides innovative treatment modalities, one of our focus areas in critical care is on collection of patient data via integrated sensors. This forms the basis to provide further personalization of therapies. Earlier today, you have heard in recent presentation that we will continue to leverage our core competencies to expand beyond dialysis. We envision contact with our patients already at earlier CKD stages by means of screening. We want to be the partner of choice for our patients in their journey with chronic kidney disease if this is in home care setting, in center and also if their path leads them to transplantation. As health care in general is evolving, we also have a close eye on future developments, even if they are not likely to impact us significantly in the coming ten years. We invest in promising developments to ensure that if a development is likely to happen, we are leading that change. With that, I come to the end of my pre prepared remarks and hand over to Olaf. Thank you, Harry. The following transformative technologies and therapies in our pipeline all have the potential to set a new standard in Real Care. Let me start with a great example where we are leveraging our core competencies and extensive experience in the development of new renal products and therapies. Please recap for a second that with the development of the Polysulphone hollow fiber, we set a new and still lasting industry standard in providing life saving treatments to patients with renal diseases. And within the last decades, our industry made progress in the advancement of polysulfone and polyethersulfone hollow fibers to continuously improve therapy outcomes. And this was done by the adaptation of the fiber spinning processes or modifications of material compositions, but all still based on the same compounds. At Fresenos Medical Care, we have chosen a different pathway. We have created a transformative membrane surface technology. We call it Optiflux Enexa, and we believe we are able to again set a completely new industry standard here. With the Optiflux and Nexa, we not only adapt spinning processes and procedures, but rather add a new compound into the spin mass that significantly increases the hemocompatibility performance of our products. And we are confident that this transformative surface technology enables us to provide our patients even with anticoagulant free hemodialysis therapies. And this will not only reduce cost and process steps for heparin administration in the clinic, but more importantly, it will reduce the side effects caused by bleeding and adverse patient reactions. And by receiving the five ten now for the Optiflux Inexa, Following a successful IDE trial, we have reached an important milestone some weeks ago, and we are now making significant steps towards additional evidence generation and manufacturing scale up. We are proud that our scientists and engineers could create and mature this new technology to improve the lives of our patients. Beyond innovating our physical products, one of our focus areas is the implementation of an advanced unique digital ecosystem. We are aiming at a full connectivity of all our systems across our entire value chain, and we are in a unique position of leveraging various data pools to provide more individualized and best in class therapies for our patients and to even increase efficiencies in the clinical workflows, production and development processes. So more than 50,000,000 dialysis treatments in our own clinics per year are representing just one, but probably the most important of our unique data assets. No one in the world knows dialysis patients better than we do, and no one has collected more data about these patients than Fresenius Medical Care. And our unique knowledge about dialysis patients, combined with medical excellence and predictive modeling expertise, enables us to provide a more individualized and adapted therapy for our patients. As an example, with our data analytics approaches, we build models to reduce the dropout rates in peritoneal dialysis patients. Another example is the reduction of hospitalization rates of our hemodialysis population by an individualized disease management even beyond renal diseases. By integrating additional data from diagnostic tools, we are confident that we can improve therapy outcomes by dedicated and new transitional care models. The integration of production data though into our data ecosystem is already ensuring highest product quality and intelligent production capacity planning, while automated testing environments are reducing manufacturing refurbishment costs by increasing production stability at the same time. Now the collection of machine and device data out of the field is building the basis for establishing intelligent machines in a smart clinical workflow environment and an automated alarm management is just one of the many examples that enable our clinical staff to spend more time with our patients. To sum this up, our various data pools enable intelligent production, smart machines and clinical workflows and individualized therapies, and they are our unique assets to increase the quality of care across the entire renal care continuum. At the beginning of this workshop, we introduced you on how we leverage external sourced opportunities to get access to the most innovative external products and therapies across the renal care continuum and beyond. Regenerative medicine approaches, they promise access to new and potentially disruptive treatment opportunities for us. This might not be commercialized for the next five years, but we always seek the best in class therapies and best possible treatments for our patients. And with our wholly owned subsidiary, UniSight, and the investment in eGenesis, we are expanding therapy offerings into earlier stages of chronic kidney disease and in the area of transplant to serve the entire renal care continuum. UniSight is focusing on stem cell therapies and has succeeded in confirming the disease modifying potential of nano extracellular vesicles, so called nano EVs, in a variety of preclinical models of chronic kidney disease. And the combined results of these studies demonstrate nanoEVs efficacy in preventing renal fibrosis and the progression to end stage renal disease. Based on these and other promising preclinical results, we have made further investments in Unicite in order to bring the company's assets into the clinic. And in close cooperation with relevant regulatory authorities, Unicize primarily focuses to meet regulatory requirements to start first in human trials in 2021. Egenesis, founded in 2015 as a Boston based gene editing and genome engineering company addressing the global organ shortage by developing a multiplex platform based on CRISPR Cas9 technology. The approach is to enable the safe and effective transplantation of xeno organs from pigs into humans. As one of the first players in this field, Egenesis has achieved major milestones in recent years and has the potential to be one of the first companies overcoming the major challenges in kidney xenotransplantation. We expect eGenesis to start first in human clinical trials in 2022. Beyond renal care, we see our regenerative medicine approaches as unique platforms to enter into additional health care sectors, and we are confident that also patients with liver disorders, diabetes or cardiovascular diseases will be benefiting from our novel and transformative therapies. With that, we come to the end of our presentation. Rice and I are now happy to answer any questions you might have. I'd first like to give you an overview of the key aspects in a value based environment from a patient as well as from a business perspective. Value based care is a combination of payment and care model evolution that looks at both outcomes and costs. A spectrum of payment models that bridge from fee for service through intermediate models to full capitated models has continued to evolve since the earliest days of demonstration projects. This is a path towards maturing the systems of health care delivery to support holistic care and full responsibility for patients with high cost chronic illnesses. The engagement of physicians and patients toward a better advanced readiness to meet their clinical needs is part of the care model evolution. Data and personalized medicine within a framework of standardized care and patient centricity are all features of the more sophisticated models we have seen evolve from the early concepts and the demonstrations of value based care. No one else has the experience and expertise that we do. We have participated in various forms of value based arrangements for over ten years and have identified several key learnings that have positioned us for success as the industry leader in the transition from volume to value. Our transitional care program ensures post discharge follow-up visits and has resulted in a 35% drop in our thirty day readmission rate. And we're able to perform these visits in the most convenient site of care for our patients and their providers, the dialysis center. We understand that upstream education is critical to ensure an optimal start on dialysis. We have demonstrated results here as well, with patients less likely to start dialysis with a catheter, lower hospitalization rates in the first year of care, higher home dialysis adoption, and an overall reduction in costs. We've made the investments. We have the experience. We have the data, the capabilities, the scalability, and we have the network. And perhaps most importantly, we've learned the importance of full integration with our nephrologist partners. We've created a shared high performance culture between nephrologists and our centers, ensuring alignment of clinical, quality, care coordination, and performance measurement activities, improving collaboration and support across the entire patient facing care team. We understand the need to manage the total cost of care, and we pay close attention to decisions that are made both in and outside our centers, remaining laser focused on those actions that reduced hospitalization rates. The physician centric partnership we have established with Interwell Health is a perfect example. This is the most important lesson we've learned on our value based care journey, The shift from physician alignment to true physician integration is critical. Bill mentioned Interwell Health, and I'd like to talk to you about our partnership with them in some additional detail. Interwell is a population health management company focused on supporting the renal patient population across the full continuum of care. It is a materially funded fifty-fifty partnership between physicians and Fresenius Medical Care. With fifty-fifty governance and physicians chairing every subcommittee of the Board. That structure combines the expertise of a diverse and preeminent group of nephrology practices with the experience of Fresenius Medical Care together working toward the goal of advancing value based contracting models to drive better clinical outcomes at lower costs. The formation of Interwell was made possible after years of work to establish Fresenius Medical Care as the most credible and highly integral partner to physicians in practice. The network of physicians understand that theoretical best practices must work in the field where doctors take care of people. Our vertical integration offers the stimuli to have physicians and patients get access to the most current and advanced innovations. Governance and direct involvement from physicians in the partnership is a distinct and strong way to build a high performing clinical model of care that is good for patients and good for the financial and cost components of achieving the care desired. The basic premise is that performance of the network providers is measured, High performance is examined, shared, and scaled, while low performance has a mandate for the provider to do something different in the care to address the suboptimal outcome or the suboptimal use of resources. Interwell Health is building and curating a high performing renal network that creates value for practice participants as well as external stakeholders. It also creates an innovation engine for patients with renal disease. Through past experience and value based programs, we recognize the need to standardize to achieve success. With that in mind, our partnership with Interwell will help build the routinized approach that is necessary to improve outcomes and reduce costs. Scaling the Interwell Health Plan is critical. This extensive network of nearly 20% of the private practice nephrologists in The United States is focused on achieving consistent and predictable results and recognizes the way to get there is through standardized performance management. The formation of Interwell required a lot of upfront work and we are committed to continuing to do the tough and important work now to be able to succeed in value based programs long term. As a physician led organization, Interwell Health has established a high performing network and maintains and improves it through shared accountability to set the standards and continue to raise the bar on value based outcomes yielding higher clinical quality at lower costs. This creates an asset that is impossible to replicate and is indispensable to payers and other stakeholders in the renal space. Our experience and scale also set us apart when we talk about technology. Our approach is not just tech for the sake of tech. It's tech that is focused on improving the patient, employee, and physician experience, improving productivity, improving patient outcomes, and reducing costs. We've embedded technology into the workflows of our providers, clinicians, and patients to improve productivity and reduce costs to deliver this high value care coordination. We have developed several proprietary predictive models that use longitudinal data from hundreds of thousands of patients with millions of data points, providing insights at a scale that others simply don't possess. Our connected health platform, called the Hub, is a workflow solution with the highest adoption rates that we've seen for patients, providers, and clinicians. And not only do they use it, more importantly, they like it. And it's proving to be a key differentiator for us. Our complementary telehealth solution has supported a 5,000,000 telehealth visits over the course of just five months. In March, in response to the COVID-nineteen public health emergency, the Centers for Medicare and Medicaid Services issued emergency telehealth waivers to enable virtual home dialysis visits, physician rounding in our in center clinics, and office visits. Prior to these waivers, Medicare would only reimburse telehealth visits on a limited basis for patients in rural areas. Not only did they expand the patient group that was eligible for telehealth, they also significantly expanded the list of services that were covered. COVID-nineteen created the regulatory opportunity in physician and patient demand, And we were able to respond to that need by executing a telehealth solution in less than one week. Enabling technology solutions is table stakes to be successful, And the investments we've made have enabled us to leverage our scale, operate efficiently and deliver optimal results. Moving the lens from the dialysis treatment to the patients living their lives with this advanced disease has played to our strengths of using science and translational medicine to develop capabilities in a more holistic model of care. The clinical needs of patients are ever being refined to understand what is similar and what is unique to and between individual patients. The impact of social determinants is critical to achieving clinical and financial outcomes in kidney disease care. This includes food security, housing, kinetics, community, intellectual engagement, and the recognition of social inequities. We are uniquely positioned to translate scientific advances into applied and practical applications that become standards of care. Here's a staggering statistic. Forty five percent of Americans living with kidney disease don't know they have it. We recognize the importance of early detection and we're focused on providing an integrated connected care experience to support and engage late stage CKD patients, activating and educating them and aligning them with a nephrologist to improve their overall health. We're building our capabilities in chronic kidney disease to replicate our success in end stage renal disease care. We're reaching patients upstream to join them in a much earlier stage in their journey with renal disease, leveraging data sources to develop personalized care plans and the interventions necessary to improve outcomes and reduce cost of care. One of the ways we're doing this is by implementing care models to address the prevalent comorbidities associated with chronic kidney disease. The ability to influence the outcomes and care utilization of the clinical adjacencies will afford a broader impact on the health of patients affected by this progressive and frequently silent disease. To that end, we've selected Livongo as a strategic partner in applied health signals, a category they pioneered which sits at the intersection of data science, clinical impact, and behavioral outcomes. Partnering with the market leader in consumer digital health will help us become more proficient at managing the most prevalent comorbidities associated with chronic kidney disease, including diabetes, cardiovascular disease and behavioral health. With this partnership, we will activate patients through actionable, personalized, and timely health signals to take an active role in their own health care, improving their health outcomes and reducing overall costs. In short, we share Livongo's desire to make it easier for our patients to stay healthy with better information and more support and guidance. And while we established our partnership before recently announced proposed merger between Livongo and Teladoc, we are encouraged by their continued focus on innovation and the potential that, that merger of these two leaders can mean for consumer centric virtual care. It reinforces our decision to partner with them to achieve better outcomes for our people living with chronic conditions. We have been perfecting our ability to manage total cost of care for over ten years. The sample of data points on this slide demonstrates our extensive value based care experience. With over 10 payer agreements covering value based programs in all 50 states and over $5,000,000,000 in medical costs under our management, we have the infrastructure to produce better clinical and financial outcomes for payers. We have demonstrated lower medical loss ratios. We have demonstrated improved outcomes. We have scale that no one else possesses. We have the most extensive and desired clinical network for regional and national payers. We are the only vertically integrated provider. We have proven results and staying power. Our experience, expertise, reliability in innovation and value based arrangements have moved the conversation away from a rate discussion to a discussion about how we can create value for the patient, the payer and us. We are and will remain at the forefront of evolving and improving the care for all patients living and thriving with kidney disease. With that, I'd like to share a few closing thoughts. Frank and I have taken you through our learnings from our vast value based care experience. We've highlighted the importance of moving from nephrologist alignment to integration. We've shared our views on a standardized and routinized approach. We have provided proof points of the benefits of our scale. No one has the experience and expertise in value based care that we do. But you don't have to just take our word for it. Here's additional support from two of our key partners in this journey, Doctor. William Schrenk, Chief Medical Officer of Humana and Glenn Tallman, Executive Chairman of Livongo. They agree that we are uniquely positioned to be successful in this space. And we will continue to back that up with consistent and predictable results that our partners have grown accustomed to. Frank and I would like to thank you for your attention, and I will now hand it back to Dominic for your questions. Hello, everyone. My name is Harry David, and I already had the pleasure to co host the Therapy Innovation Workshop. I'm happy to co host this workshop with Katarzyna Mazur Hossas. Following our joint introduction, Catasina and I will give you an update on our product business and will use examples from our regions, Asia Pacific and EMEA. Our first slide provides an overview of the global dialysis market. Despite that the growth rate of dialysis slightly declines, the number absolute number of dialysis patients will continue to grow in the years ahead of us. This will be driven mainly by the aging of the population and a growing number of patients with hypertension and diabetes. We expect faster growth, however, in the developing economies compared to the mature economies. Looking at the different treatment modalities, we see a dominance of in center dialysis. But at the same time, we expect an acceleration of growth in home therapies and in particularly home hemodialysis. This will largely be driven by an expansion in The U. S. Outside The U. S, we don't expect a big change in the foreseeable future. Over to you, Katarzyna. Thank you, Harry. Our share of the market proves that our product portfolio provides the right answers to market needs. More than 50% of all dialysis machines worldwide are manufactured by Fresenius Medical Care, and so are 44% of all dialyzers used globally. That makes 52,000 dialysis machines and 157,000,000 dialyzers sold in 2019 alone. We have also built a strong position in acute dialysis, so dialysis performed in critical care environment. Based on this expertise, we are expanding our critical care offering also into heart and lung support. And we are successfully developing and deploying our suite of digital products and services. That's in the area of remote connectivity, renal software, decision support tools as well as patient training and technical operations. The unique strength of our product portfolio stems from our vertically integrated business model because it enables greater customer intimacy. We have, obviously, direct access to key stakeholders, not only to doctors, nurses, patients, but also in a way to payers, because running a clinic delivers daily learnings about the total cost of ownership, impact of instruments, labor efficiency. We also have a firsthand feedback on medical outcomes with therapies performed with our machines and fluids. So we do understand our stakeholders, and we do understand their needs. And this guides development process within our comprehensive offer. Our vision is to build an ecosystem of hardware, software and services that creates value for all our stakeholders. And we do it by continuously improving and innovating our offer. An example of our high end machine, 6,008 care system, it delivers less complexity for nurses. It gives more care time, very important for patients. It also offers additional treatment options and that improves outcomes, doctors' care. With this machine, we have managed to reinforce our clear leadership position in the upper market segment in EMEA. But we successfully compete across all segments, including our economic segment, as Harry can explain. Let me introduce to you the 4,008 A dialysis machine. The 4,008 A was specifically designed for the economic segment. This is the fastest growing segment worldwide and at the same time the most price competitive. We compete here with the many local Chinese companies and the low cost products. The 4,008 A machine has basic features, is reliable and has a low cost price. It complements our current 4,008 platform. As connectivity is becoming increasingly important, we are developing a cost effective cloud based solution, which we will be testing in Q4 of this year. We are the only company offering a comprehensive home portfolio for both peritoneal and hemodialysis products and services. Our strong basis of NephroCare dialysis centers allows us to perform patient training, remote care and also regular oversight over home patients. In the peritoneal dialysis segment, we are a runner-up, And we are prepared to really run up with a focus on connectivity and technological innovations in instruments and liquid solutions. In the home hemodialysis segment, we maintain our very strong market leadership and a clear competitive advantage. We do see a clear intention to move towards home hemodialysis in the EMEA region. However, not all reimbursement systems have already figured out the right set of incentives to really drive this program. Where such incentives exist, for example, in The United Kingdom or in Turkey, we see significantly higher share of patients being dialyzed at home. And as expected, we see better outcomes at lower cost. We expect the pandemics to accelerate decisions leading to more patients dialyzed at home because it's safer for them. And we are well prepared and well equipped to cater to this segment of the market. You have heard from Rice earlier today about our next level strategy. Critical care is one element we already spoke about. What does it mean for our product business? In the medical care of COVID-nineteen patients, alongside respiratory function support, kidney replacement therapy is also of key importance. And accordingly, we experienced strong growth in acute dialysis as well as in the heart and lung support product business in the first half of twenty twenty. We benefited from our global network that enabled us to transport machines as the pandemic spread across continents. And we were also offered accelerated regulatory paths in China and in The U. S. To register certain life saving products much earlier than originally expected. Production capacities have been increased temporarily in those segments by, for example, up to 230% for acute dialysis machines. We have done what was required to save lives. This also has propelled our business in this part. The increase of installed critical care devices on a global level is also a good position to grow beyond the pandemics. Let me remind you at this point that we hold a clear leadership position in acute dialysis in EMEA. And our Multi Filterate Pro system is a state of the art solution. Heart and lung support products, products we acquired with Xenius, are starting to deliver to the promise. As it often happens, after acquiring small and innovative company, we had to spend considerable time and effort on integration. We had to enhance products to meet regulatory compliance requirements to be able to register them in key global markets. And our efforts resulted in competitive product offering in a small but very important and growing market segment. And that complements our core acute dialysis business very well. More than eighty million individuals are suffering from chronic kidney disease stage three to five today. And there will be an even increasing need for dialysis worldwide, especially in the developing economies. In EMEA alone, we have 50 countries which can be categorized as developing economies. The challenge this will bring to healthcare systems around the globe can be summed up in three words: access, availability and affordability. We are working hard to address these challenges either by having a direct presence in the market or by cooperating with reliable business partners. Where economically feasible, we set up local manufacturing or explore OEM opportunities. And as discussed, we have launched a value segment product portfolio to meet the specific needs of developing economies. It is important to recognize that every developing economy has its own unique challenges. I would like to give two examples from Asia Pacific, China and India. China is one of our largest product markets globally. The growing middle class demands quality care and thereby supports the growth in our provider and product business. China has strong growth and a reasonable reimbursement price for a dialysis treatment. In comparison, India is a market with a low reimbursement price for dialysis. Many patients have to pay out of pocket for their treatments. For this reason, many providers are reusing disposables. In the Indian market, we sell our value segment product portfolio. On the Dialys services side of our business, we focus on the premium segment. This allows us to deliver the Fresenius Medical Care Quality Standard in our clinics without the reuse of disposables. So we have explained what we sell and where we sell. And now I want to add some comments on how we sell. So most of our business in EMEA is being made via tenders or some form of public or organized competitive procurement. And here, the trend is clearly towards larger buying organizations with increased purchasing power and covering bigger territories. This can be tricky as it leads to all or nothing tenders. However, especially in more advanced health care systems, we see a clear trend towards value based procurement. And this means the economically most advantageous offering is defined as one that allows for better medical outcomes at cost effective price at the same time. So this offers new opportunities to differentiate from any provider or supplier around the corner because they are competing on price alone, whereas more advanced organizations, like ours, operating across broader portfolio of products and services, are better suited simply to benefit from this trend. To sum up, we are operating in a business characterized by stable, non seasonal growth that is resilient even to such a major shocks as pandemics. And in this business, we have built a strong competitive advantage, which we continue augmenting with technological innovation, service offerings and business process improvements. We see our strong dialysis business as a solid foundation to venture into adjacent therapy fields, such as heart and lung support. That concludes our presentation. Also on behalf of Harry, I thank you for your attention and looking forward to your questions, which Rice and I will answer.

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