Prepared remarks
Ladies and gentlemen, welcome to the report on Second Quarter 2026 Earnings Release and Conference Call. I am Valentina, the Chorus Call operator. Operator provided instructions and noted the conference is being recorded. At this time, it's my pleasure to hand over to Dr. Dominik Heger. Please go ahead.
Thank you, Valentina. I would like to welcome everyone to our earnings call for the second quarter of 2026. I appreciate your flexibility to join this earlier call. We felt it is more helpful to have the call earlier given that we had to publish earlier than originally planned. I do apologize for the inconvenience, in particular for those of you who are located in a different time zone or those of you who cover another company hosting a call in parallel right now. As always, I start out the call by mentioning our cautionary language that is in our safe harbor statement as well as in our presentation and in all the materials that we have distributed earlier today. For further details concerning risks and uncertainties, please refer to these documents and to our SEC filings. The call is scheduled for 1 hour. In order to give everyone the chance to ask questions, we limit the number of questions as always to two. Thank you for making this work. Let me now welcome Helen Giza, CEO and Chair of the Management Board; and Martin Fischer, our Chief Financial Officer. Helen, the floor is yours.
Thank you, Dominik, and welcome, everyone, and thank you for joining at this earlier time of the day. I will begin my prepared remarks on Slide 4. We continued our strong start to the year, delivering another quarter of highly profitable growth, supported by solid organic revenue development and further improvement in profitability. Operating income growth accelerated to 23%, in line with our planned phasing for the year, and we realized another quarter of margin expansion. This was also supported by the continued execution of our FME25+ transformation program, which delivered EUR 67 million of sustainable savings during the quarter. We also completed our initial EUR 1 billion share buyback program on an accelerated time line and have already launched a second EUR 1 billion program, underscoring our continued focus on disciplined capital allocation and reigniting shareholder returns. With a net leverage ratio of 2.6x, we remain around the lower end of our target corridor and continue to maintain a strong financial position.
With that overview, let me turn to the key second quarter highlights across our operating segments on Slide 5. Beginning with Care Delivery. The international markets delivered 0.8% same-market treatment growth. In the U.S., same market treatment growth declined by 0.9%. At the same time, I am genuinely encouraged by the progress we are seeing where it matters most for our patients. Our continued focus on quality and patient care is making a real difference. Missed treatments and mortality improved in the quarter. These are outcomes that are deeply meaningful for the patients who rely on us every day and for all of us who are committed to their care. The same market treatment growth declined due to our own clear operational miss in our business development approach to capture our fair market share of referrals. This exposed an execution gap and led to a further softening of referrals in Q2 compared with Q1.
We have promptly addressed this with an organizational change, enabling rapid implementation of the necessary prepared measures. While these measures will take a few months to gain traction, we remain confident in our path to restoring referral rates in the affected areas. Given the compounding effect of lower first half referrals on the rest of the year, we now expect U.S. same market treatment growth in 2026 to be around the Q2 level. I also want to recognize the strong execution driving accelerating momentum across several strategic priorities under our Reignite strategy. We are making significant progress accelerating the rollout of our 5008X in our clinics in the U.S. We have a dedicated slide on high-volume HDF coming up, where I will provide a broader update. As we continue to strengthen our core operations, we remain disciplined in optimizing our clinic network. We have successfully completed the clinic footprint optimization, exiting around 100 select underperforming clinics.
We are realizing favorable rates and seeing contributions from our revenue cycle management initiatives, providing further evidence that our operational improvement efforts are gaining traction. As already indicated, we are beginning to see the impact of our catheter-related bloodstream infection prevention efforts. We saw a 23% reduction in bloodstream infections over the past year, which supports lower infection-related hospitalizations and also translates into lower patient mortality risk. Next, on value-based care. We continue to build on the strong momentum we have established in this business. The quarter reflected continued positive operating income as well as an increase in member months driven by contracting growth. We are demonstrating how our vertically integrated model translates into better patient outcomes. We are seeing meaningful improvements across key clinical measures such as reduced missed treatments, lowered mortality and hospitalization rates when FME patients are managed by InterWell Health.
On October 12, we will host an expert call with Tommy O'Connor, the CEO of Value-Based Care, where we will give more insights into this segment. Information about the call is available on our Investor Relations website. Turning to Care Enablement. The 5008X rollout gained momentum for Care Enablement with growing sales supporting favorable business growth. Overall, we continue to realize positive pricing and volume development outside of China, driving momentum in our underlying business. Despite recent headwinds from regulatory changes, China remains an attractive products market for FME. With refreshed leadership, we are reviewing our strategy to win as well as our product portfolio for this market. We are navigating elevated raw material and logistics costs, driven by the conflict in the Middle East. While these external cost pressures remain a headwind and are something we are monitoring closely, they are currently absorbed in our guidance range.
This further reinforces the importance of our continued execution of our FME25+ program to drive sustainable savings. Before I turn to the 5008X update, there are two other innovations that I want to highlight. Recently, we announced the introduction of TherapyWise, a cloud-based analytics capability designed to provide retrospective program-level insight into kidney replacement therapy delivered in acute and hospital critical care settings. TherapyWise reflects our continued focus on innovation and critical care by applying data analytics. This helps hospital and clinical leaders gain visibility into how kidney replacement therapy is delivered across their organizations, supporting informed discussions around workflow, consistency and quality improvement. We also launched kinexus, marking a significant milestone in our home dialysis strategy and our broader digital transformation journey.
By bringing peritoneal dialysis and home hemodialysis capabilities together on a single platform, we are creating a more connected experience for patients, caregivers and clinical teams. We have already achieved our patient go-live with encouraging initial feedback, and we look forward to expanding adoption as we continue to scale the platform globally. Most importantly, kinexus establishes a global digital foundation that will enable future innovation and help us advance our commitment to delivering high-quality person-centered home care. Next on Slide 6. I'm excited to update you on the progress we are making with our 5008X rollout, which is accelerating as planned. We are firmly on track to meet our 2026 targets, including converting around 20% of our machines in our own clinics. By late July, we had converted 227 clinics across 23 states, representing 10% of our machine base. Of the more than 600,000 treatments on the 5008X around 170,000 have been HDF and more than 100,000 high-volume HDF.
So far, we have produced 4 million consumables for the 5008X, which is in line with our plan and is rapidly ramping up. Our extensive training efforts have covered around 5,000 renal nurses and patient care technicians. It has been a tremendous undertaking to achieve all of this, and I am proud of how much we have accomplished so far. Last Wednesday, we announced BEACON-US, which is a major research initiative designed to generate real-world evidence for high-volume HDF in routine U.S. clinical practice. This reflects our commitment to bringing innovation to patients thoughtfully, responsibly and with rigorous scientific evaluation at scale. We are encouraged by the positive early experiences we are seeing from both patients and clinicians. To give you some examples, patients report feeling better both during and after dialysis. For example, data shows 40% fewer muscle cramps. More than 70% of treatments using AutoSub plus technology in our research cohorts are already reaching the high-volume HDF target of at least 23 liters of convective volume per session.
Clinical experience suggests simplified clinician workflows, optimized resource utilization, including reduced water consumption and a much quieter overall dialysis clinic experience. Early observations are tracking consistently with previously published international, randomized and real-world studies including the landmark EU-funded CONVINCE study that collectively have associated high-volume HDF with fewer hospitalizations, fewer missed treatments and improved survival outcomes compared with conventional hemodialysis. I will now hand over to Martin to walk you through the second quarter financials in more detail.
Thank you, Helen, and welcome, everyone. I will continue on Slide 8. In the second quarter, we achieved solid organic group revenue growth of 5%, supported by growth in all 3 operating segments. At constant currency, revenue increased by 4%. Regulatory pressure in China continued to pose a challenge to revenue development in Care Enablement. Divestitures negatively impacted group revenue development by 50 basis points in the second quarter. For the full year, we continue to assume an unfavorable impact on the year-over-year revenue growth of about 30 basis points from the execution of our portfolio optimization plan in '25 and '26. We significantly increased operating income by 23% at constant currency. This growth was driven by contributions from Care Delivery and value-based care segments and is in line with our planned phasing for 2026. Special items in the second quarter amounted to a negative EUR 103 million, mainly related to the TAVNEOS impact.
As background, the European Commission's recommended revocation of the TAVNEOS marketing authorization led to an impairment of intangible assets at Vifor Fresenius Medical Care Renal Pharma. That resulted in a negative impact on our income from equity method investees of EUR 70 million, which was treated as a special item. Special items further include EUR 42 million FME25+ one-time costs and also positive effects from the Humacyte reevaluation. I will continue on Slide 9. Our group operating margin again expanded and further improved by 180 basis points. Care Delivery as well as value-based care contributed positively. I will cover the drivers of the segment profitability a little bit later. The greater intersegment elimination reflects the growing sales of the 5008X in our clinics in the U.S. With further advancing our rollout, this trend will continue. Corporate costs increased by EUR 47 million, mainly driven by the impact from virtual power purchase agreements and the planned cost of the strategic IT platform investments as we continue to transition to SAP S/4HANA.
In addition, FX translation effects had an impact of negative EUR 19 million this quarter. The average U.S. dollar exchange rate in the second quarter was EUR 1.16 compared to EUR 1.17 in the first quarter and compared to EUR 1.13 in the second quarter of 2025. I will now walk you through the business development in each segment, starting with Care Delivery on Slide 10. Care Delivery realized 5% revenue growth at constant currency and organic revenue growth of 7%. In the U.S., organic growth of 7% was supported by the positive impact from TDAPA reimbursement regulations, favorable rate development and continued progress in revenue cycle management initiatives, further enhancing revenue yield. These benefits were partially offset by lower treatment volumes, driven by the referral dynamics Helen discussed earlier. The international business continued to contribute positively. Divestitures as part of our portfolio optimization plan negatively impacted revenue growth by around 90 basis points.
The main driver here was the prior year divestment of our clinics in Brazil. Care Delivery achieved strong earnings growth in line with planned phasing for the year, accelerating operating income growth to 45% with a 390 basis point step-up in margin. Importantly, underlying operating income, excluding the TDAPA effects, improved by 34%. This improvement was driven by higher rates, FME25+ contributions, in particular from the clinic closures as well as benefits from revenue cycle management. Additionally, the growth was supported by a lower prior year base, which includes effects such as elevated medical benefit costs. This more than offset the impact from lower treatment volumes in the United States. As assumed, benefits from TDAPA reimbursement regulations for phosphate binders and catheter lock solutions were a driver of earnings with around EUR 18 million year-over-year benefit in the quarter.
The TDAPA effects are assumed to be a headwind in the remainder of the year. Moving on to value-based care on Slide 11. Revenue in Value-based Care segment grew by 9% on both organic and constant currency basis. This was driven by an increased number of member months and a favorable effect from premium rates. Revenue increase was partially offset by the change of the risk type for a large contract, which resulted in a different type of accounting treatment and lower revenue recognition. Value-based care delivered a strong improvement in profitability in the second quarter, with operating income increasing to EUR 18 million from a EUR 9 million loss in the prior year. The margin improved by 500 basis points, marking another profitable quarter. Supporting favorable business growth in the quarter was an improved savings rate, reflecting the strength of our contracting. FME25+ savings additionally had a smaller, but positive effect on earnings as well.
Looking ahead, due to the positive business development, we expect '26 revenue for value-based care to decline by EUR 150 million to EUR 200 million, which is lower than the initially assumed EUR 300 million decline. I will finish the segment overview with Care Enablement on Slide 12. Care Enablement delivered organic revenue growth of 3%, supported by continued positive pricing and volumes outside China. Regulatory measures and stricter tender requirements in China remained a headwind as assumed. However, the underlying momentum across the rest of the business continues to be encouraging with growing sales of the 5008X increasingly contributing to that momentum as well. Care Enablement earnings declined by 5% in the quarter, reflecting the adverse regulatory impact in China as well as increased inflationary pressure, including higher raw material costs and elevated logistic expenses related to the Middle East conflict.
As the Middle East conflict continues, we are closely monitoring the increasing inflationary pressures and implementing mitigation measures where possible. Currently, these higher costs, especially for raw materials and transportation, are absorbed in our guidance range. For our Care Enablement China business, as expected, we saw a headwind of around EUR 20 million in the second quarter. These negative effects were partially offset by positive volume and price effects outside of China and continued contributions from FME25+ savings. Next, I will look at cash flow growth on Slide 13. We delivered a strong increase in operating cash flow of 11% in the second quarter, primarily driven by disciplined working capital management. Free cash flow remained stable at EUR 625 million, while we increased our investments in the business, reflecting the continued strength of our underlying cash generation.
Total net debt and lease liability as well as total net debt and lease liabilities increased by 6% year-over-year as expected. After canceling 8.5% of shares, which we bought back as part of the share buyback program completed in April of this year, we initiated a new share buyback program starting in May with a total volume of around a further EUR 1 billion. The new program will be executed in tranches over a 12-month period with the first tranche of up to EUR 600 million expected to be completed by mid-December. By the end of the second quarter, we already repurchased 2.5 million shares for EUR 94 million, representing 0.9% of total share capital and approximately 16% of the first tranche. After initiating our new share buyback program, we continue to maintain a net leverage ratio of 2.6x, remaining around the lower end of our target corridor of 2.5 to 3x and underscoring the strength of our balance sheet and disciplined approach to capital allocation. I will now hand back to Helen.
Thank you, Martin. I will pick up with our outlook on Slide 15. We continue to expect a broadly flat revenue development. For earnings, our priority is to sustain the higher level of profitability established in 2025. Accordingly, we expect operating income to remain at a consistently elevated level in 2026 with an upside, downside range of a mid-single-digit percentage change. While we do not provide quarterly phasing, we communicated that we expected a strong first half earnings contribution in 2026, supported by the mentioned underlying earnings improvement and positive TDAPA effects. TDAPA is expected to become a sizable headwind in the third and fourth quarters, resulting in negative earnings growth in the second half. For full year TDAPA contributions, we now expect a lower year-over-year headwind of around EUR 50 million compared with the previously anticipated negative impact of around EUR 100 million.
The second quarter demonstrates that the strategic actions we are taking are yielding meaningful improvements in underlying profitability in Care Delivery. Despite the headwinds from lower treatment volumes in the U.S. and a tougher base in the second half of the year, we expect continued improvement in the underlying profitability of Care Delivery. Overall, we expect to deliver Care Enablement margin improvement in the second half and full year 2026 as we continue to execute our Reignite strategy while offsetting increased inflationary pressure from the Middle East conflict in our Care Enablement business. And we continue to assume value-based care to perform around breakeven for the year, reflecting the assumed phasing of contributions and prior year effects. Given our strong first half performance and current expectations for the remainder of the year, we are confirming our full year outlook. This concludes our prepared remarks, and I will now hand back to Dominik to begin the Q&A session.
Thank you, Helen. Thank you, Martin. Before I hand over for the Q&A, I would like to remind everyone to limit your questions to two. If we have remaining time, we can go another round. With that, I hand it over to Valentina to open the Q&A, please.
Questions and answers
Operator provided instructions. Back over to you for the first question.
The first one is just on same market treatment growth. If you could just help us to understand really the detail on the deceleration from Q1 to Q2 in that number, specifically on the referral piece. I'm really just trying to understand what you can do to improve the inflow of patients there? And how should we think about the relative impact of clinic closures, referrals and the outflow issues of patients that you previously pointed to. And then thank you for giving the 2026 expectation. So is it fair to assume that you expect same market treatment growth in the U.S. to get worse throughout the year? How do you see the phasing? And where do you expect to exit 2027 from the same market treatment growth perspective?
Thanks, Jonathan. I'll take that question. Recognizing there's probably a lot of similar questions around same market treatment growth, I think it's helpful to walk through that in a bit more detail than normal. As we already outlined, the same market treatment growth declined by 0.9% in the quarter. At the same time, we are encouraged by the progress we are seeing where it matters for our patients and that focus on quality and patient care is making a real difference. We were really encouraged to see missed treatments and mortality declining in the quarter. As we discussed in Q1, we are executing a lot in parallel in the U.S. dialysis business, which is an operational stretch. We obviously exited around 100 clinics with execution speed in the first half. We've closed clinics faster than we ever have before. Progress on HDF is exciting, but at the same time, that does cause a fair amount of work in the clinics that we are impacting there.
At the same time, there's been a major clinic operations reorganization that touched about a couple thousand people with the whole focus here on driving profitable growth. In the same time, recognizing that we had the ACA subsidies expiring, we also implemented some enhanced insurance verification for our patients. While we are pleased with the quality and patient safety initiatives, rolling out these solutions did have an impact on operations. So all of that is to say clinic operations were managing significant change in parallel. I think we saw that emerge on referrals in Q1 with a little softness there. I would say there was an underestimation of the impact that created. As we came out of Q1 into Q2, it was clear that while that disruption may have been understood, it was masking an underlying issue. As I've worked closely with the team there and with Cassie directly, it's clear now that we have an operational miss, specifically in the business development approach to capturing our fair market share of referrals.
We are not seeing a market issue. We are seeing a volume capture issue in terms of getting the patients that are referred into our clinics. That was the execution gap that led to a further softening of referrals in Q2 compared to Q1. We've made organizational changes in the business development group and other areas. That will take a few months to gain traction. Cassie is crystal clear on those priorities, and we remain confident in our path to restoring referral rates in the affected areas. We are looking at this region by region. However, given the compounding effect of the lower first half referrals on the rest of the year, that's why we are now saying we expect the same market treatment growth in '26 to be around the Q2 level. We expect the work to take hold and for that benefit to pull through, but realistically I think we're seeing that more into '27 than we were originally thinking in '26.
In terms of the exit rate for 2027, I'm not going to speak to that today. I need a few more quarters under our belt and we'll be able to give that outlook in February. The areas of focus are making sure that when we get referrals, they're accepted referrals and we are gaining our fair share. Previously we had an outflow issue; we've done significant work on outflows and that's showing up in the mortality and missed treatment numbers. What we have now is an accepted referral and inflow issue that is the primary focus of Cassie and the organization. I apologize for the longer answer; I know this is important to many of you.
The next question comes from Veronika from Citi.
I have two, please. The first one is on same market. Helen, I just want to get a better shape of understanding of the quarter. I appreciate you don't report monthly. But I remember when you were on the road, you were talking about April being down 40 basis points, so not hugely similar, which would suggest that May and June really sort of fell off the cliff in terms of U.S. market treatment growth rate. I was wondering if you could comment on that. And I guess if you have any early indications for how the referral piece is improving in July relative to how poor it must have been in May and June, that might be helpful to give us all a bit of confidence in terms of the forward path. And then my second question is on the TDAPA phosphate binder assumption for the year. By my math, you're probably at around $130 million already for H1. It sounds like the new guidance is $150 million to $170 million. Just trying to understand if maybe you're being a little too conservative on that given how strong the first half of the year has come in.
Yes. Thanks, Veronika. I'll take the same market treatment growth, and Martin will walk us through the TDAPA numbers. When we were on the road in April, we were already indicating April might be a similar level coming out of the softness in Q1. April still had the benefit of the lower flu base in 2025, so that may not have given a clear picture. There's no question that May and June did deteriorate. That's where the focus has been over the last couple months—getting under the root cause and identifying the area of focus. I can buy disruption to a point, but we must ensure the underlying core operation is operating as we expect. We have an operational miss here, which is why we're careful in guiding the rest of the year. In July, I haven't seen numbers yet, but given we are calling the year similar to Q2, I don't expect improvement overnight, but I do expect progress to take hold over the next couple of quarters.
Yes. Veronika, on TDAPA: in quarter 2 we saw about EUR 80 million effect. We expect after the first half the tailwinds to turn into a headwind for Q3 and Q4. Total TDAPA contribution we are now saying will be a negative EUR 50 million overall on a year-over-year basis, reduced from around EUR 100 million in previous expectations. As a reminder, last year we had a EUR 310 million positive year-over-year contribution. We also said there was a EUR 90 million DefenCath effect that is unchanged—positive EUR 90 million in the first half and negative EUR 90 million in the second half, so that nets to zero year-over-year. For the binders, we saw in the first half around EUR 70 million positive year-over-year, but we expect this to turn into a headwind of around EUR 120 million year-over-year in the second half, resulting in the EUR 50 million negative for the full year. The lower headwind is predominantly driven by our Pharma business, where we see lower-than-expected headwinds.
That's helpful. And Helen, can I just follow up? One of the things that really struck me this quarter is the volume growth got worse in the U.S. clinics business. But it looks like your revenue and revenue management is good. Is there a risk here that you're so focused on profitability that you've ended up at a place where volume growth is suffering? Is that the issue we're looking at?
No, I don't believe so. The work we identified on rate and yield were obvious areas to improve where we were lagging, and we've made tremendous strides there. We will look at profitability measures like clinic closures where we can't see a way to make that clinic profitable. That has been a profitability focus for us, but not at the detriment of rate and yield. We knew when closing clinics we'd give up some volume and saw that in Q1 and Q2. That was a smaller piece of the overall same market treatment growth development. The real issue here is the accepted referrals and inflow; it's isolated by area, which is why I'm confident we have the right plans and people in place to fix it.
The next question comes from Oliver from ODDO BHF. Oliver, the floor is yours.
Two questions from my side. First about the ARR commercial mix. Would you describe that your started initiatives to improve the mix since last fall have contributed already significantly to some of this mix improvements? Second question is still very early days, but we saw recently the first indications about the bundle rate, which also caused some volatility in the share price. Could you share with us how you think about the first indications? It will still change, but it would be great to hear your view.
Thanks, Oliver. On the commercial mix, we continue to be encouraged by the improvements we see. The mix improvement is real. We've done a lot of work in that area. It is slightly impacted by ACA developments but overall we're pleased with the progress. On the bundle rate, the 1% is disappointing and preliminary. We're offering comments to the administration on the moving pieces. It's challenging when it's less than inflation. Regarding the TDAPA add-on payments, some of this is preliminary and the government will continue to refine pricing over the next couple of quarters before coming to final. We would expect that payment to come down as more data is captured and rebates are reflected. Right now it's high because of data lags and will adjust as more quarters are included.
The next question comes from Aisyah from Morgan Stanley.
My first one is also on same market treatment growth, but for the International number that was quite weak and the weakest we've seen in 2 years. Were there any reimbursements there in the past that supported growth and has resulted in a lower number in the quarter? And then my second question was on the ACA headwind that you expect—what was the number for the quarter, your expectations for 2026? And any early thoughts on the ACA headwind for 2027?
Thanks, Aisyah. On the International same market treatment growth, we have many markets and mix effects matter. We have exited some markets that had higher growth rates, which affects the overall number. There was also a flu impact in Q2. So nothing we're overly concerned about. On the ACA, we had sized a $50 million headwind for the full year. We watched closely in Q1 to see stickiness once patients had to start paying premiums. It stepped up as expected in Q2; we've seen existing patients leave exchange plans due to affordability issues. Some patients moved to Medicare Advantage or Medicare, and some stopped treating with us. The underlying headwind remains consistent with our initial expectation of about $50 million for the full year. We've been able to reduce impact on our commercial mix by expanding payer relationships and signing new contracts. We won't continue to track ACA separately going forward—its effects will be reflected in our business growth numbers.
So if I interpret your comments, assuming the impact increases over the course of the year towards the $50 million you expected for the full year, would it be fair to assume something like $10 million this quarter, $50 million next quarter, $25 million the quarter after that? Or is it more of a linear progression?
Probably neither; it's been a bit lumpy because of the dynamics between Q1 and Q2, some grace periods and timing of when patients fell out. We're not going to provide quarter-by-quarter granularity, but the $50 million sizing for the year is the right guide and it will develop in line with our half 1 / half 2 phasing within our guidance range.
The next question comes from Hugo from BNPP.
I have two, please. First quick one on tariff refund. Can you maybe help us quantify the impact in Q2, what you expect for the remainder of the year? I think you guys have already a marginal impact, but it would be helpful to have that number. Second, thanks for all the moving parts on 2026. But if we look forward to 2027, you guys have some tailwinds rolling off. U.S. draft reimbursement is 1% and inflation keeps running slightly above that at 3%. Could you walk us through some of the building blocks for 2027 which would lead to EBIT growth next year if that is the plan? Or is EBIT growth off the table next year?
Martin, why don't you take the tariff question, and I will head up the tailwinds and headwinds for 2027.
As we discussed, we had limited tariff exposure in the past due to the breadth of our supply chain and mitigation actions. We expect a limited refund. We have not received or booked anything in Q2. We expect a high single-digit kind of range in the second half of the year, but overall it is rather limited.
Hugo, I won't get into the moving pieces of 2027 guidance in August of '26. The usual building blocks apply: on the positive side, business performance—volume, rate and yield—FME25+, continued margin expansion and benefits from the HDF rollout. On the negative side, inflation and merit increases. A major moving bucket for 2027 is the binders and the TDAPA roll-off and the headwind into 2027. We will size these items and provide guidance by February.
The next question comes from Richard from Goldman Sachs.
I want to follow up on the U.S. treatment growth and in particular your comments about not capturing your fair share of referrals. What was actually, in practice, happening to drive that? Have there been changes in your processes, your competitor processes? I'd like to understand more the root cause. And as a follow-up, what will be top of Cassie's to-do list as she comes in to run that business and tries to steady the ship?
Thanks, Richard. At the end of the day, we could see patients were being referred and we weren't getting them into the clinic. We track incoming referrals and confirmed referrals. When referrals don't get confirmed—meaning a patient isn't in the chair—we know they're going somewhere else. We're clearly expecting share loss because those patients have gone elsewhere. We can see volumes and shares by region and have targeted the areas where we need improvement. There have been leadership changes in that area. Cassie has been with the organization several quarters and she quickly identified this business development and inflow issue. She's already working through measures that need to be executed. We're putting the right leaders in place and the right metrics to focus on this root cause. The operation is complex, we've done a lot of work and we won't dismiss that, but improving inflows is our number one priority.
I appreciate the color. If I could squeeze in one follow-up—International Care Delivery organic was robust. What was driving that? Any one-offs we should be aware of?
Martin, do you want to take that?
When you look at the international organic revenue driver, we had a supporting accounting topic where certain pharmaceutical product business activities that we still had in Care Enablement were shifted. This is neutral for the overall company. To frame it, last year this was roughly around $20 million in revenue and a low single-digit effect on profitability. We did this to have full visibility of the global pharma P&L.
The next question comes from Anna from Bank of America.
I wanted to dig in a bit on the high-volume HDF rollout and how much, if at all, you saw disruption from the rollout of clinics affecting U.S. market treatment growth in the quarter and what the learnings are from the rollout in the first half to take into the second half? Also, I wanted to ask about external sales of high-volume HDF. I realize that's not a near-term priority since the priority this year is internal rollout, but I imagine discussions are in place. How are they evolving, and has that changed after the trial data? Any incremental color would be super helpful.
Thanks, Anna. This is a favorite topic. Many learnings came from the pilot stage last year. Once the rollout began, teams stepped up. It remains a relatively small part of the overall clinic network so it hasn't been a mass disruption to the 2,600 clinic network—it's an impact on the couple hundred converted so far. As we gather momentum, speed, training and staff proficiency improve. That's why you're seeing acceleration to 10% converted. We are tracking the cohort on HDF and announced BEACON-US last week, which we are thrilled about. It's too early to give mortality or missed treatment data on that cohort, but clinical benefits are tracking in line with the CONVINCE study. The fact patients are reaching high-volume relatively quickly gives confidence mortality benefit will ramp up over coming years. Patient and clinician feedback has been positive. External sales are minimal this year because of our allocation plan to clinics; machines are made available to other providers where we have excess capacity, and that is in pilot. If excess capacity isn't taken up externally in the short term, we'll allocate more to our clinics and go faster. We're in good shape two quarters into the launch and very excited by uptake and clinical performance.
The next question comes from Graham from UBS.
Just one quick one for Martin and then a slightly longer one for Helen. Martin, on the TDAPA—is it fair to think of the total contribution for Q2 as about EUR 120 million of EBIT from the full TDAPA, so catheters and phosphates? And Helen, on the guidance for the year: the midpoint would imply something like a 12%–13% decline in EBIT in H2. If H1 '27 looks similar in terms of TDAPA drivers, does that make EBIT growth in 2027 more challenging? I know you don't want to comment too much, but it seems those headwinds are quite big.
Graham, we disclosed this quarter a year-over-year improvement of EUR 80 million in 2026. In quarter 2 2025, we had disclosed a prior-year improvement against the period before TDAPA of the low end of a mid-double-digit impact. When you take those together, you are roughly where you suggested and that constitutes the improvement we saw. We typically think of TDAPA in yearly slices, not as a single total contribution number.
That's clear, thanks.
Graham, I won't get into 2027 guidance here, but note our '25–'28 CAGR aspiration remains. We confirmed guidance for '26 and always said there would be this H1/H2 shift, which has developed as expected. Our '25–'28 aspiration used 2025 as a base which included roughly $300 million of TDAPA benefits, so that's how we're thinking about the multi-year trajectory. We still expect underlying business and margin expansion to contribute over time.
The next question comes from James from Jefferies.
Two, if I can, please. Firstly, you've completed 100 clinic closures this year. If volumes stay at around the Q2 level into next year, would you need to consider other clinic closure programs to manage fixed costs? How should we think about decisions to manage clinic capacity? Second, you renamed an operating cash flow line to 'changes in other assets and liabilities and other noncash items.' Why change the wording now? Was this purely presentational or does it better reflect a broader set of operating assets and liabilities contributing to operating cash flow than historically? The cash flow improvement in this line in H1 was greater than that of the group. It would help to have color on what's driven it outside core operations.
James, on clinic closures: this is the second round of closures over recent years. The deeper you go into the program, the tougher the ROI gets on remaining clinics. We feel good about the 100 closures executed and are well placed with our outlook on expected volumes, as well as the HDF benefits as they kick in. While we're not planning for this not to return to growth, costs are not fixed indefinitely and we would adjust capacity and overhead accordingly if needed. We've been diligent and appropriate in our approach and will continue to monitor and adjust where necessary.
Would it be fair to say if it was more like minus 1.5% that would trigger a discussion on further closures? How much headroom do you have at the current run rate?
I feel we are rightsized for what we expect to see through this medium-term period.
James, regarding the wording change, there is no change in content or accounting. It's only a better representation of the naming of the line. The main drivers of our cash flow improvement were working capital development: improved collections and receivable management, and improved payables. Those were the main drivers of operating cash flow improvement.
I understand—thanks. Happy to follow up offline if needed.
The next question comes from Falko from Deutsche Bank.
First question on Care Enablement China: thanks for pointing out the headwind in Q2. When do you expect this situation to stabilize? Secondly, on the ACA topic, do you have any early view on how we should think about this for 2027 and how much of an additional headwind it could be next year on top of the EUR 50 million this year?
On China, we saw the first half expectations play out as thought. We had a EUR 20 million headwind in Q2. For the full year, we expect this to remain below EUR 50 million. Through the first half we have gone through most of it, and the EUR 50 million assumption for the full year is intact.
Falko, on ACA I won't size 2027 here. The $50 million unfavorable impact this year developed as expected. We are seeing shifts in contracts and where patients are going, and many of those effects will wash into business growth. It will be impossible to track individually for 2027, so when we prepare 2027 we will include these dynamics in the bottom-up book of business build and provide guidance accordingly.
Thank you. Those were all the questions we received. There is no one waiting to ask a question. With that, I'll thank Helen and Martin for answering the questions and for all the interesting questions. We will close the call and wish everyone a great summer.
Yes. Thanks, everybody. Appreciate the flexibility today on the earlier timing as well. Have a good summer, and we'll see many of you on the road soon. Thank you.
Thank you.
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