So that’s what Michael Sen, CEO of the Dax group Fresenius since the beginning of October, means when he speaks of a “reset” of the company. Although such a company can of course never be restored to its initial state like a defective electronic device, as if nothing had happened. A lot has really happened in the Fresenius Group. He wanted to put everything to the test, Sen had announced. Carla Kriwet did not survive this test either. She only took over the management of the dialysis group Fresenius Medical Care (FMC) at the beginning of October, at the same time as Sen. The largest single shareholder of FMC is Fresenius with a good third of the shares. The head of FMC is also a member of the Fresenius Management Board. It should be a dream team. The dream is over after just two months together.
On the night of Tuesday, FMC announced that Carla Kriwet would be leaving the company with immediate effect “at her own request and by mutual agreement due to strategic differences”. It’s a cliché from the communicator’s text block book. The communication does not reveal exactly what the strategic differences were. Kriwet’s post will be taken over by her previous deputy, Helen Giza, who will also remain CFO until the successor has been settled. It is the second major departure in just a few months. In August, Fresenius announced the separation from long-time CEO Stephan Sturm at the end of September and named Sen as his successor. In the end, too, things went quickly and, as the summer message said, on good terms. Sturm’s contract actually ran until mid-2026.
Helen Giza, CFO of Fresenius Medical Care, will replace Carla Kriwet as CEO of the dialysis specialist.
(Photo: Angelika Zinzow/dpa)
Fresenius describes itself as a health company, its own condition is currently rather ailing. Similar to that of the German healthcare system as a whole. The market is heavily regulated, the cost pressure is considerable, companies cannot set many prices themselves, for example in hospitals, because they are set externally in the form of flat rates per case or the prices of medicines.
In the first three quarters of 2022, Fresenius was able to increase sales by four percent to almost EUR 30.2 billion, but operating profit fell by 13 percent to EUR 2.6 billion. In addition to FMC, the group also includes the Kabi division, which produces biosimilars, i.e. copies of biotechnologically produced drugs, infusions and tube feeding. Kabi was Sen’s entry into the Fresenius world. He started there in mid-April 2021 and will continue to lead the area until a successor is found there – in personal union with his position as CEO of Fresenius. The Fresenius subsidiary Helios operates clinics, medical care centers and medical practices. The Vamed division plans and builds clinics and operates care and rehabilitation facilities. In short: a conglomerate.
CEO Sen must ensure clarity at FMC
Fresenius and FMC have repeatedly missed forecasts. The poor quality of the forecasts was considered by the ranks of investors to be one of the reasons why Stephan Sturm had to go. “The weak performance of FMC was decisive for the corrections,” says Florian Oberhofer, an expert at the fund company Union Investment. The dialysis daughter suffers particularly. “The corona pandemic led to excess mortality among dialysis patients, which also affected sales development.” And that’s not the only problem, says Oberhofer. FMC in particular, but also Fresenius as a whole, felt the cost pressure in healthcare and the shortage of nursing staff.
“Investors want clarity as soon as possible about how things will continue with FMC, which Sen must deliver,” says Oberhofer. In his view, there are several options. Fresenius could reduce the remaining stake in FMC. However, the general conditions for this are not so favorable because FMC’s share price has collapsed in the past few months. In the current constellation, Fresenius FMC has to fully consolidate, the bad numbers also burden the business accounts of the parent company. Possibly, explains expert Oberhofer, Fresenius could at least loosen the connection to the extent that FMC no longer has to be fully consolidated. “That would help Fresenius’ share price,” expects Oberhofer.
He urgently needs help. Fresenius shares cost a good 26 euros on Tuesday afternoon and have lost a quarter of their value within a year. FMC’s stocks fared even worse. On Tuesday afternoon they cost just under 30 euros, a year ago it was around 56 euros.
Sen knows how to dress up parts of a company and take them public
His career to date shows that Sen likes to keep up the pace. At the energy supplier Eon and at the technology group Siemens, he showed how parts of a company can be made pretty and listed on the stock exchange. He was even traded as the successor to Siemens boss Joe Kaeser, which was different.
In communications from companies, there is sometimes more between than within the lines. This is also the case with the one that was sent on Tuesday night and in which Sen is also quoted as a member of the FMC supervisory board. “In a fundamentally healthy industry, Fresenius Medical Care must focus even more on the operational turnaround, further improve corporate performance and concentrate on its core,” it says. The conclusion is not far away that, from Sen’s point of view, Carla Kriwet did not focus enough on the turnaround.
Sen puts pressure on and is also under pressure himself. According to insiders, activist investor Elliott has joined Fresenius. “Sen is not known as a great visionary and renovation specialist, but he is making a lot of steam and speed,” the Reuters news agency quoted an insider from Elliott’s environment as saying. With a reduction in the stake to less than 25 percent, Fresenius could take FMC off the balance sheet.
Kriwet had been brought to FMC by Sen’s predecessor, Sturm. When she took office, she had already announced far-reaching measures. This included “also a culture of performance and clear responsibilities,” she said. FMC is the shortest step in her career so far.