Asklepios Group: 2020 financial year dominated by COVID-19 pandemic and Rhön acquisition

The year 2020 brought enormous challenges for the Asklepios Group, as for the entire healthcare sector in Germany. Due to the COVID-19 pandemic, the healthcare facilities’ regular operations were considerably impaired, while the situation in emergency departments and intensive care wards was strained. Plannable, non-urgent medical treatments had to be postponed to keep beds free for COVID-19 patients and implement new, stricter hygiene requirements. In this context, the number of patients treated decreased significantly.

In the 2020 financial year, the healthcare facilities of the Asklepios Group (not including Rhön) treated around 2.2 million patients (2019: 2.5 million), while Rhön-Klinikum AG treated another approximately 0.8 million patients (2019: 0.9 million). Staff and material costs rose significantly as a result of the COVID-19 protective measures. For example, consumption of FFP2 masks shot up by more than 2,000% year-on-year to over 1.5 million masks. The cost of materials ratio climbed to 22.4% (2019: 20.9%). The higher number of full-time equivalents combined with wage increases led to a staff costs ratio of 65.0% (2019: 64.2%).

“The pandemic represents an existential test for our healthcare system. Our biggest thanks therefore go to all our employees who worked tirelessly and at their stress limits, particularly in the COVID-19 wards, to permanently ensure security of care in this historic crisis,” says Kai Hankeln, CEO of the Asklepios Group. “While the government reacted fast and non-bureaucratically in the first wave of the pandemic in spring 2020, the support measures were limited considerably over the course of the year. The compensation payments made were far from covering the revenue losses in healthcare caused by the pandemic. Since autumn 2020, several facilities have even been left without any assistance. The financial losses will make conditions more difficult for the hospitals on a long-term basis.”

Despite this challenging situation, Asklepios Kliniken GmbH & Co. KGaA completed the acquisition and integration of Rhön-Klinikum AG. Rhön has been included in the consolidated financial statements since 1 July 2020. Due to its first-time consolidation during the year, the published figures are comparable with the previous year only to a limited extent.

Revenue amounted to EUR 4.3 billion in the 2020 financial year (2019: EUR 3.5 billion). This increase in revenue was chiefly due to the first-time consolidation of Rhön. Around EUR 390 million is attributable to revenue relating to compensation payments for the provision of bed capacity. Due to increased expenses and the necessary remeasurement of the Rhön shares in accordance with IFRS 3, consolidated net income (EAT) declined significantly. A consolidated net loss totalling EUR 65.1 million was reported as of the end of the year (2019: EUR 172.3 million). Due to the pandemic, revenue and consolidated net income were thus significantly below the original forecasts. However, the aspiration of a stable margin development still applies despite the COVID-19 pandemic.

In this exceptional situation, Asklepios benefited from its sound medium- and long-term financial strategy, which guaranteed solvency and sufficient liquidity reserves at all times. As at 31 December 2020, Asklepios had freely available lines of credit of around EUR 770.0 million. Even during the pandemic, Asklepios implemented planned investments of EUR 389.5 million (2019: EUR 325.8°million) in the medical area. The internal financing ratio was 74.4% (2019: 74.5%).

“So far, we have managed to absorb the financial impact of the pandemic by focussing particularly strongly on our liquidity since the beginning of the financial year. Using our financial resources, we both funded the acquisition of Rhön-Klinikum AG and successfully ensured its refinancing with a schuldschein loan agreement of EUR 730 million in the fourth quarter,” says Hafid Rifi, CFO, adding: “We have set the right course to fulfil our healthcare mandate during the pandemic and in the future, too.”

Based on the healthy economic basis that Asklepios has built up over the long term, the Group is entering the 2021 financial year in robust condition. However, Asklepios expects that its revenue and earnings will continue to be impacted by the ongoing COVID-19 pandemic in the current financial year.

 “We have coped very well with the exceptional situation so far. The further development will significantly depend on how quickly arrangements and vaccinations can limit the societal impact of the pandemic,” says Kai Hankeln. “We stand by our offer to the government to activate our nationwide infrastructure and our user-friendly platform for online appointment scheduling at any time for the vaccination campaign. Together, we can succeed in bringing the expected vaccine quantities to patients efficiently and significantly speeding up the pace of vaccination again.”