On October 3o, 2018 Allergan plc (NYSE: AGN) reported its third quarter 2018 performance (Press release, Allergan, OCT 30, 2018, View Source [SID1234530580]). Total third quarter 2018 GAAP net revenues were $3.91 billion, a 3.0 percent decrease from the prior year quarter.

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

THIRD QUARTER 2018

Executive Commentary

"Allergan’s performance in the third quarter of 2018 highlights the momentum in our business and our focus on execution. We continued to deliver solid results in the third quarter, driven by double-digit growth from many of our key promoted brands, led by BOTOX Therapeutic and Cosmetic, JUVÉDERM, and VRAYLAR," said Brent Saunders, Chairman and CEO of Allergan. "We also maintained momentum in the R&D pipeline with achievements of significant milestones for key programs including cariprazine in bipolar depression, ubrogepant in acute migraine and abicipar in age-related macular degeneration."

"Despite the 3.0 percent decline in net revenue driven primarily by loss of exclusivity on some brands, our core business, representing nearly 90 percent of our total revenues, grew 5.9 percent versus prior year or 7.4 percent excluding foreign exchange. Allergan also maintained strong operating margins and grew non-GAAP performance net income per share. Our business continues to generate robust cash flows, and we are maintaining a disciplined approach to capital allocation – with a strong balance sheet, strategic growth investments and capital returns to our shareholders," added Saunders. "With this strong momentum in the business and based on our revised expectations for RESTASIS, we increased our full-year 2018 guidance for net revenue and non-GAAP performance net income per share."

"I am proud of what our team has accomplished this year and excited about our potential to create more value for patients, employees and shareholders for many years to come."

Third Quarter 2018 Performance

GAAP operating income in the third quarter 2018 was $257.5 million, including the impact of amortization. Non-GAAP operating income in the third quarter of 2018 was $1.91 billion, a decrease of 3.2 percent versus the prior year quarter, impacted by lower revenues as operating margin remained stable.

Operating Expenses

Total GAAP Selling, General and Administrative (SG&A) Expense was $1.04 billion for the third quarter 2018, a decrease of 10.7 percent from the prior year quarter. Total non-GAAP SG&A expense was $1.03 billion for the third quarter 2018, a decrease of 6.2 percent from the prior year period, driven primarily by a reduction in selling and marketing spending, including the impact of previous restructurings, as well as more favorable foreign exchange compared with the prior year quarter. GAAP R&D investment for the third quarter of 2018 was $424.2 million, compared to $442.6 million in the third quarter of 2017. Non-GAAP R&D investment for the third quarter 2018 was $393.7 million, compared to $405.3 million in the prior year quarter, in part due to reprioritization of R&D programs.

Amortization, Other Income (Expense) Net, Tax and Capitalization

Amortization expense for the third quarter 2018 was $1.59 billion, compared to $1.78 billion in the third quarter of 2017. GAAP other income (expense), net of $130.0 million in the three months ended September 30, 2018 was primarily attributed to a gain on the divestiture of the Company’s Medical Dermatology business sold to Almirall on September 20, 2018. The Company’s GAAP tax rate was 120.5 percent in the third quarter 2018. The Company’s non-GAAP adjusted tax rate was 14.2 percent in the third quarter 2018. As of September 30, 2018, Allergan had cash and marketable securities of $1.21 billion and outstanding indebtedness of $23.58 billion. The Company repurchased $1.76 billion aggregate principal amount of its debt in the third quarter of 2018. It expects to conduct one or more financing transactions in the fourth quarter, subject to market conditions, that are expected, together with any additional repurchases during the fourth quarter, to reduce its outstanding debt on a net basis by at least $750 million.

THIRD QUARTER 2018 BUSINESS SEGMENT RESULTS

U.S. Specialized Therapeutics

U.S. Specialized Therapeutics net revenues were $1.71 billion in the third quarter of 2018 compared to $1.72 billion in the prior year quarter. Growth in BOTOX Therapeutic and Medical Aesthetics, including BOTOX Cosmetic and ALLODERM, was offset in part by a decline in RESTASIS due to lower net pricing, demand and trade inventory levels, as well as decreased revenues in Medical Dermatology due to generic pressure prior to divestiture. Segment gross margin for the third quarter of 2018 was 91.6 percent, impacted by RESTASIS. Segment contribution for the third quarter 2018 was $1.20 billion.

Medical Aesthetics

Facial Aesthetics
BOTOX Cosmetic net revenues rose 13.9 percent in the third quarter of 2018 from the prior year quarter to $216.0 million.
JUVÉDERM Collection (defined as JUVÉDERM, VOLUMA and other fillers) net revenues in the third quarter of 2018 were $127.2 million, an increase of 10.0 percent versus the prior year quarter.
Regenerative Medicine
ALLODERM net revenues in the third quarter of 2018 grew 25.1 percent from the prior year quarter to $105.8 million.
Body Contouring
CoolSculpting net revenues (including both CoolSculpting Systems/Applicators and Consumables) in the third quarter of 2018 were $84.9 million, compared to $83.4 million in the prior year quarter.
Neurosciences & Urology

BOTOX Therapeutic net revenues in the third quarter of 2018 were $407.4 million, an increase of 10.4 percent versus the prior year quarter.
Eye Care

RESTASIS net revenues in the third quarter of 2018 were $298.0 million, a decrease of 18.8 percent versus the prior year quarter.
ALPHAGAN/COMBIGAN net revenues in the third quarter of 2018 were $95.4 million compared with $92.7 million in the prior year quarter.
OZURDEX net revenues in the third quarter of 2018 increased 16.3 percent from the prior year quarter to $28.6 million.
U.S. General Medicine

U.S. General Medicine net revenues in the third quarter of 2018 were $1.38 billion, a decrease of 7.8 percent versus the prior year quarter, impacted by lower revenues from NAMENDA XR and ESTRACE due to generic competition, offset by growth from VRAYLAR, Lo LOESTRIN and LINZESS. Segment gross margin for the third quarter of 2018 was 84.1 percent. Segment contribution for the third quarter 2018 was $890.8 million.

Central Nervous System

VRAYLAR net revenues rose 72.1 percent in the third quarter of 2018 from the prior year quarter to $138.0 million.
VIIBRYD/FETZIMA net revenues in the third quarter of 2018 were $88.5 million, compared to $86.5 million in the prior year quarter.
NAMENDA XR net revenues in the third quarter of 2018 were $16.2 million, versus $114.3 million in the prior year quarter, impacted by loss of patent exclusivity for NAMENDA XR in February 2018.
Gastrointestinal, Women’s Health & Diversified Brands

LINZESS net revenues in the third quarter of 2018 were $204.8 million, an increase of 7.3 percent versus the prior year quarter.
Lo LOESTRIN net revenues in the third quarter of 2018 were $141.5 million, an increase of 17.9 percent versus the prior year quarter.
BYSTOLIC/BYVALSON net revenues in the third quarter of 2018 were $151.2 million, compared to $164.2 million in the prior year quarter.
International

International net revenues in the third quarter of 2018 were $821.6 million, an increase of 7.8 percent versus the prior year quarter excluding foreign exchange impact, driven by growth in Facial Aesthetics and BOTOX Therapeutic. International net revenues were negatively impacted by a recall of OZURDEX in certain international markets. Excluding this impact, International net revenues would have grown by 11.8% excluding foreign exchange impact. Segment gross margin for the third quarter of 2018 was 84.1 percent, also impacted by OZURDEX. Segment contribution was $449.8 million.

Facial Aesthetics

BOTOX Cosmetic net revenues in the third quarter of 2018 were $163.4 million, an increase of 32.5 percent versus the prior year quarter excluding foreign exchange impact.
JUVÉDERM Collection net revenues in the third quarter of 2018 were $138.6 million, an increase of 16.9 percent versus the prior year quarter excluding foreign exchange impact.
Eye Care

LUMIGAN/GANFORT net revenues in the third quarter of 2018 were $94.8 million, an increase of 7.4 percent versus the prior year quarter excluding foreign exchange impact.
OZURDEX net revenues in the third quarter of 2018 were $25.8 million compared to $50.2 million in the prior year quarter.
Botox Therapeutic

BOTOX Therapeutic net revenues in the third quarter of 2018 were $92.9 million, an increase of 16.5 percent versus the prior year quarter excluding foreign exchange impact.
PIPELINE UPDATE

Allergan R&D continues to deliver on its pipeline. Key development highlights in the third quarter of 2018 included:

Regulatory Milestones & Clinical Updates

Allergan announced the completion of two positive safety studies of ubrogepant for the acute treatment of migraine. The first study (UBR-MD-04) evaluated the long-term safety and tolerability of ubrogepant (50 mg and 100 mg) compared to usual care for the acute treatment of migraine in adults for one year. The second study (3110-105-002) evaluated the hepatic safety and tolerability of ubrogepant 100 mg compared to placebo in healthy study participants over eight weeks. Based on the completion of these safety studies for ubrogepant and previously reported efficacy and safety results from the ubrogepant ACHIEVE I (UBR-MD-01) and ACHIEVE II (UBR-MD-02). studies, Allergan will submit a New Drug Application (NDA) to the U.S. Food and Drug Administration (FDA) by the first quarter of 2019.
Allergan announced the FDA has accepted for review the Company’s supplemental New Drug Application (sNDA) for VRAYLAR (cariprazine), seeking to expand the indication to include the treatment of depressive episodes associated with bipolar I disorder (bipolar depression) in adults. The sNDA is supported by data from three pivotal trials, in each of which cariprazine demonstrated greater improvement than placebo for the change from baseline to week 6 on the Montgomery Asberg Depression Rating scale total score.
Allergan announced that the FDA has granted Fast Track designation for AGN-241751, an investigational new treatment for Major Depressive Disorder. AGN-241751 is a novel, oral NMDA modulator in Phase 2 development.
Allergan and Molecular Partners announced two positive Phase 3 clinical trials on Abicipar for the treatment of neovascular age-related macular degeneration. The two identical studies demonstrated that both the 8-week and 12-week treatment regimens met the pre-specified primary endpoint of non-inferiority to Ranibizumab. The Biologics License Application (BLA) filing for Abicipar is planned for the first half of 2019, pending a pre-BLA meeting. Allergan continues to expect results from MAPLE trial using its further optimized formulation in the first half of 2019.
Allergan announced positive results in Phase 2b clinical trials for Brimonidine DDS for geographic atrophy secondary to age-related macular degeneration. The BEACON study evaluated the safety and efficacy of the intravitreal implant and found that Brimonidine DDS significantly reduced mean geographic atrophy area growth at 24 and 30-months. Allergan plans to initiate Phase 3 in the second half of 2019.
Allergan received a Complete Response Letter from the FDA in response to the NDA for ulipristal acetate for the treatment of abnormal uterine bleeding in women with uterine fibroids. The agency cited safety concerns regarding ESMYA post-marketing reports outside the United States. Allergan plans to meet with the FDA by the end of 2018 to discuss their comments and next steps.
Allergan’s CoolSculpting treatment received FDA clearance to treat the submandibular area below the jawline. In addition, the FDA clearance was expanded to include patients with a BMI of up to 46.2 when treating the submental and submandibular areas. This clearance makes CoolSculpting the first and only nonsurgical fat reduction treatment to contour the area below the jawline and improve the appearance of lax tissue in conjunction with submental fat treatments.

THIRD QUARTER 2018 CONFERENCE CALL AND WEBCAST DETAILS

Allergan will host a conference call and webcast today, Tuesday, October 30, at 8:30 a.m. Eastern Time to discuss its third quarter 2018 results. The dial-in number to access the call is U.S./Canada (877) 251-7980, International (706) 643-1573, and the conference ID is 2759968. A replay of the conference call will also be available beginning approximately two hours after the call’s conclusion and will remain available through 11:30 p.m. Eastern Time on November 30, 2018. The replay may be accessed by dialing (855) 859-2056 or (404) 537-3406 and entering the conference ID 2759968.

To access the live webcast, please visit Allergan’s Investor Relations website at View Source;. A replay of the webcast will also be available

On October 30, 2018 Audentes Therapeutics, Inc. (Nasdaq: BOLD), a biotechnology company focused on developing and commercializing innovative gene therapy products for patients living with serious, life-threatening rare diseases, reported that it will host a conference call and webcast to report its third quarter 2018 financial results and provide a corporate update on Tuesday, November 6, 2018 (Press release, Audentes Therapeutics, OCT 30, 2018, View Source [SID1234530357]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

The conference call will be held at 4:30 pm EST, after the market closes. To access a live webcast of the conference call, please visit the Events & Presentations page within the Investor + Media section of the Audentes website at www.audentestx.com. Alternatively, please call (833) 659-8620 (U.S.) or (409) 767-9247 (international) and dial the conference ID# 1473209 to access the call.

A replay of the live webcast will be available on the Audentes website for approximately 30 days

On October 30, 2018 Eagle Pharmaceuticals, Inc. (Nasdaq: EGRX) ("Eagle" or the "Company") reported its preliminary financial results and its Board of Directors has approved a new stock repurchase program providing for the repurchase of up to an aggregate of $150 million of Eagle’s common stock, consisting of (i) up to $50 million in repurchases pursuant to an accelerated share repurchase ("ASR") transaction with JPMorgan Chase Bank, National Association ("JP Morgan") and (ii) up to $100 million in additional repurchases (Press release, Eagle Pharmaceuticals, OCT 30, 2018, View Source [SID1234530375]). This reflects the Company’s conviction in its business strategy.

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

The specific number of shares to be repurchased is based on the average of the daily volume weighted average share prices of the Company’s common stock, less a discount, during the term of the accelerated share repurchase program.

"Based upon our long-term earnings projections and value of our pipeline, Eagle has decided to execute a $50 million ASR. At yesterday’s closing price, this would represent approximately 6% of the Company’s outstanding shares. Upon completion of this share repurchase, Eagle will have bought back a total of approximately $154 million of its stock since its IPO in 2014," stated Scott Tarriff, Chief Executive Officer of Eagle Pharmaceuticals.

"We believe this is a good use of our cash to benefit shareholders and remain committed to expanding our products and pipeline over the long-term. The stock repurchase reflects the commitment of the Board and management to enhance shareholder return," added Tarriff.

Under the terms of the agreement, Eagle will pay $50 million to JP Morgan on November 1, 2018, and receive 702,988 shares, representing approximately 80% of the notional amount of the ASR, based on the closing price of $56.90 on October 29, 2018. Upon settlement of the ASR, the final number of shares repurchased will be trued up based on the average of the daily volume weighted average share prices of the Company’s common stock, less a discount, during the term of the accelerated share repurchase program. Eagle expects the ASR to be completed in the fourth quarter of 2018. As of September 30, 2018, the Company had 14.9 million common shares outstanding.

The Company intends to use cash on hand to fund the ASR program. As of September 30, 2018, cash and cash equivalents were $91 million, accounts receivable was approximately $78 million, and debt was $45 million.

The Company also announced preliminary financial results

Q3 2018 preliminary revenue is expected to be $51 million;

Q3 2018 preliminary net income is expected to be $14 million, or $0.94 per basic and $0.91 per diluted share; and

Q3 2018 preliminary Adjusted Non-GAAP net income is expected to be approximately $18 million or $1.22 per basic and $1.18 per diluted share

On October 30, 2018 Halozyme Therapeutics, Inc. (NASDAQ: HALO), a biotechnology company developing novel oncology and drug-delivery therapies, reported that it has licensed its ENHANZE drug-delivery technology to Roche for exclusive development of a new undisclosed clinical stage therapeutic target, with an option to select two additional targets within four years (Press release, Halozyme, OCT 30, 2018, View Source [SID1234530358]).

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

Under terms of the agreement, Halozyme will receive an upfront fee of $25 million with the potential to earn additional payments of up to $160 million to $165 million per target subject to achievement of specified development, regulatory and sales-based milestones. Additionally, Halozyme will receive a nomination fee for each of the two additional new target nominations. Halozyme will also receive mid-single digit royalties on sales of commercialized products. The company expects to recognize the initial $25 million payment in the fourth quarter of 2018.

"I am delighted to announce another further expansion of our long-term relationship with Roche, covering the selection of these three new targets," said Dr. Helen Torley, president and CEO. This agreement is a strong illustration of our strategy to unlock and grow ENHANZE value through supporting partners in advancing more promising targets into the clinic through the expansion of existing agreements and the addition of new ones."

The Halozyme/Roche relationship dates back to the original global collaboration and licensing agreement for the ENHANZE technology signed in 2006. Under this agreement, Roche developed Rituxan SC ex-U.S., Rituxan Hycela in the U.S., Herceptin SC ex-U.S., is awaiting an FDA action date in 2019 for Herceptin SC in the U.S., and is conducting a Phase 3 study for the fixed dose combination of Perjeta/Herceptin SC. In addition, Roche is in Phase 1 testing with an undisclosed target. More recently, in 2017, the relationship expanded to include the right to evaluate an additional target with ENHANZE.

The Halozyme ENHANZE technology is based on a proprietary recombinant human hyaluronidase enzyme (rHuPH20) that temporarily degrades hyaluronan — a glycosaminoglycan or chain of natural sugars in the body — to aid in the dispersion and absorption of other injected therapeutic drugs. For Halozyme partners, this technology may allow for more rapid delivery of injectable medications through subcutaneous delivery.

About ENHANZE Technology
Halozyme’s proprietary ENHANZE drug-delivery technology is based on its patented recombinant human hyaluronidase enzyme (rHuPH20). rHuPH20 has been shown to remove traditional limitations on the volume of biologics that can be delivered subcutaneously (just under the skin). By using rHuPH20, some biologics and compounds that are administered intravenously may instead be delivered subcutaneously. ENHANZE may also benefit subcutaneous biologics by reducing the need for multiple injections. This delivery has been shown in studies to reduce health care practitioner time required for administration and shorten time for drug administration.

On October 30, 2018 Patient growth continues across all regions (Press release, Fresenius, OCT 30, 2018, View Source [SID1234530376])

Schedule your 30 min Free 1stOncology Demo!
Discover why more than 1,500 members use 1stOncology™ to excel in:

Early/Late Stage Pipeline Development - Target Scouting - Clinical Biomarkers - Indication Selection & Expansion - BD&L Contacts - Conference Reports - Combinatorial Drug Settings - Companion Diagnostics - Drug Repositioning - First-in-class Analysis - Competitive Analysis - Deals & Licensing

                  Schedule Your 30 min Free Demo!

Operating margin in North America improved to 18.5% in the third quarter
Dialysis Care revenue growth in North America of 6% (+5% at constant currency)
Decline in Care Coordination revenue following Sound divestiture
Outlook 2018 reflects lower than expected growth acceleration in Q3 and anticipation of soft business development in Q4 2018

Rice Powell, Chief Executive Officer of Fresenius Medical Care, said: "Our third quarter was affected by several developments whose combined impact on our results was greater than expected. Growth did not accelerate to the extent previously projected. We anticipate the impact from the current level of growth and less acquisitions to continue in the fourth quarter. We have identified countermeasures and have begun implementation. Fresenius Medical Care’s growth will continue."

Growth in Dialysis Care revenue

Revenue in the third quarter 2018 decreased by 6% to EUR 4,058 million (-6% at constant currency), mainly driven by the higher comparable base which included the Q3 2017 revenue contribution from Sound Inpatient Physicians ("Sound") of EUR 253 million as well as the impact from the IFRS 15 implementation ("IFRS 15") of EUR 117 million. Excluding these two effects, revenue increased by 2% on a comparable basis (+3% at constant currency), mainly driven by an increase in same market treatments in North America of 3%.

Health Care Services revenue decreased by 8% to EUR 3,258 million (-8% at constant currency), primarily driven by the two effects described above (Sound and IFRS 15). On a comparable basis, Health Care Services revenue increased by 3%, mainly driven by organic growth in Dialysis Care revenue resulting from higher volumes, partly offset by the largely anticipated revenue decline in Care Coordination. Care Coordination revenue declined by 53% to EUR 354 million (-56% at constant currency), mainly resulting from the sale of Sound and the IFRS 15 implementation. On a comparable basis, Care Coordination revenue declined by 22% (-27% at constant currency). This decline was mainly the result of the shift of calcimimetic drugs into the clinical environment and a higher prior-year revenue contribution due to the initial revenue recognition for the new 2017 ESCOs. Health Care Products revenue was flat at EUR 800 million (+1% at constant currency), mainly impacted by the difficult economic environment in certain emerging countries in the EMEA and Latin America regions. At constant currency, Dialysis Products revenue increased by 2% driven by higher sales of renal pharmaceuticals and products for acute care treatments, partially offset by lower sales of chronic hemodialysis products.

In the first nine months of 2018, revenue decreased by 8% to EUR 12,247 (-2% at constant currency), mainly driven by the effects of Sound and IFRS 15. On a comparable basis, revenue decreased by 4%, impacted by negative foreign currency effects (+3% at constant currency).

Operating income (EBIT) impacted by one-time effects

Total EBIT reached EUR 527 million in the third quarter of 2018, a decrease of 13% (-20% at constant currency). The strong decrease was mainly attributable to the higher comparable base which included the EBIT contribution from Sound of EUR 20 million. In addition, the increased provision for the FCPA related charge in the amount of EUR 75 million and the contributions to the opposition to the ballot initiatives in the U.S. of EUR 23 million (both not tax effected) as well as a EUR 10 million favourable foreign currency translation effect related to the divestitures of Care Coordination activities affected the EBIT growth. The increase of the FCPA provision reflects an understanding with the U.S. Government on the financial aspects of a potential settlement and an update of ongoing legal costs to continue settlement discussions. However, significant non-financial matters are still under discussion with the government and must be resolved to the company’s satisfaction for a settlement to occur. In addition, EBIT was negatively impacted by the difficult economic situation in certain emerging countries, including hyperinflation in Argentina. On a comparable basis, EBIT increased by 5% (+4% at constant currency).

In the first nine months of 2018, EBIT increased by 32% (+39% at constant currency). The strongest contributor to this increase was the gain related to the divestitures of Care Coordination activities. On a comparable basis, EBIT decreased by 7% (-2% at constant currency).

Net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA decreased by 8% to EUR 285 million in the third quarter of 2018 (-17% at constant currency). On a comparable basis net income increased by 20% to EUR 364 million (+19% at constant currency). Based on the number of approximately 306.5 million shares (weighted average number of shares outstanding), basic earnings per share (EPS) amounted to EUR 0.93 (-8%). On a comparable basis the company generated an EPS of EUR 1.19, representing an increase of 20% (+19% at constant currency).

In the first nine months of 2018, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA increased by 76% (+86% at constant currency) to EUR 1,557 million, mainly driven by the gain related to the divestitures of Care Coordination activities. On a comparable basis, net income attributable to shareholders of Fresenius Medical Care AG & Co. KGaA reached EUR 969 million, an increase of 10% (+16% at constant currency).

Patient growth continues across all regions

North America revenue, which represents 70% of total revenue in the third quarter of 2018, decreased by 9% to EUR 2,843 million (-11% at constant currency) and increased by 4% on a comparable basis (+1% at constant currency). Organic growth in North America was 2%.

Dialysis Care revenue increased by 6% to EUR 2,328 million (+5% at constant currency). This increase was mainly driven by an increase in organic revenue per treatment, same market treatment growth of 3% in the U.S. and contributions from acquisitions, to some extent diluted by the implementation of IFRS 15 and the effect of 1 less dialysis day. Volume growth in North America was positively impacted by a strong increase in home dialysis in the third quarter, leading to a home penetration rate in the U.S. of 12.4%. On a comparable basis, Dialysis Care revenue increased by 9%, partly compensated by negative growth in the acute services business following the termination of unprofitable contracts as well as the delay of certain de novo clinics. Care Coordination revenue decreased by 57% to EUR 300 million (-61% at constant currency), mainly driven by the prior-year revenue contribution from Sound as well as the implementation of IFRS 15. On a comparable basis, Care Coordination revenue decreased by 25% (-32% at constant currency). This decrease was mainly driven by the shift of calcimimetic drugs into the clinical environment as well as a higher prior-year revenue contribution due to the initial revenue recognition for the new 2017 ESCOs.

In the U.S., the average revenue per treatment, adjusted for the implementation of IFRS 15 and excluding the 2017 impact of the VA Agreement, increased by USD 15 from USD 341 to USD 356. The increase was mainly driven by the shift of calcimimetic drugs into the clinical environment, partially offset by lower revenue from commercial payors.

Cost per treatment in the U.S., adjusted for the implementation of IFRS 15 and prior-year natural disaster cost, increased by USD 19 from USD 271 to USD 290. This increase was largely a result of the introduction of calcimimetic drugs in the clinical environment, increased property and other occupancy related costs as well as the impact from one less dialysis day.

Dialysis Products revenue in North America increased by 2% to EUR 215 million (+1% at constant currency) due to higher sales of renal pharmaceuticals, peritoneal dialysis products, partially offset by lower sales of chronic hemodialysis products.

Total EBIT for the North America segment was EUR 525 million in the third quarter, an increase of 9% (+2% at constant currency). On a comparable basis, EBIT was EUR 538 million, an increase of 16%. The EBIT margin increased to 18.5% (18.9% on a comparable basis). The increase in EBIT margin on a comparable basis was mainly due to lower personnel expenses and the positive impact from income attributable to a consent agreement on certain pharmaceuticals.

In the first nine months of 2018, North America revenue decreased by 12% to EUR 8,589 million (-5% at constant currency). On comparable basis, revenue decreased by 5% (+1% at constant currency). Mainly driven by the gain related to divestitures of Care Coordination activities, EBIT went up by 47% (+57% at constant currency) to EUR 2,173 million in the first nine months of 2018.

As of the end of September 2018, the company was treating 201,220 patients (+3%) at its 2,486 clinics (+5%) in North America. Dialysis treatments increased by 3%.

EMEA revenue decreased by 2% (+1% at constant currency) to EUR 620 million in the third quarter of 2018, mainly driven by the positive development in Health Care Services revenue which increased by 4% at constant currency. The increase in Health Care Services revenue was driven by same-market treatment growth (+3%) and acquisitions, partially offset by the effect of sold and closed clinics as well as one less dialysis day. Health Care Products revenue decreased by 5% (-3% at constant currency) to EUR 306 million. Dialysis Products revenue decreased by 5% (-2% at constant currency), mainly due to lower sales of dialyzers, partially offset by higher sales of machines.

EBIT was EUR 88 million in the third quarter of 2018, a decrease of 18% (-16% at constant currency). The EBIT margin decreased from 16.8% to 14.1%, mainly due to the favorable prior-year impact from a legal settlement, higher personnel costs in certain countries, the impact of one less dialysis day and unfavorable foreign currency translation effects.

In the first nine months of 2018, EMEA revenue increased by 1% to EUR 1,908 million (+4% at constant currency), while EBIT of EUR 302 million was 10% below the prior year´s level (-9% at constant currency).

As of the end of September 2018, the company had 64,539 patients (+4%) being treated at 769 clinics (+5%) in the EMEA region. Dialysis treatments increased by 4%.

Asia-Pacific revenue grew by 3% to EUR 421 million (+4% at constant currency) in the third quarter of 2018. Dialysis Products showed again a solid business performance, with revenue growing 4% to EUR 227 million (+6% at constant currency). This growth was mainly driven by higher sales of hemodialysis products and products for acute care, particularly in China and Indonesia. Health Care Services revenue in the region increased by 1% to EUR 194 million (+1% at constant currency). Care Coordination revenue increased by 4% to EUR 54 million (+7% at constant currency). The growth in Care Coordination revenue in Asia Pacific was mainly related to a strong organic revenue growth and acquisitions. EBIT decreased by 14% to EUR 66 million (-14% at constant currency). The EBIT margin decreased to 15.7%, driven by unfavorable foreign currency transaction effects and increased costs for business growth.

In the first nine months of 2018, Asia-Pacific revenue increased by 2% to EUR 1,235 million (+8% at constant currency). EBIT decreased by 8% to EUR 218 million (-5% at constant currency).

As of the end of September 2018, the company had 31,152 patients (+3%) being treated at 390 clinics in Asia-Pacific (0%). Dialysis treatments increased by 2%.

Latin America delivered revenue of EUR 171 million in the third quarter of 2018, a decrease of 2%, but an increase of 27% at constant currency. The growth at constant currency was mainly due to a strong growth in Health Care Services (+34% at constant currency) driven by an increase in organic revenue per treatment mainly due to hyperinflation in Argentina, acquisitions and growth in same market treatments (+1%). Health Care Products revenue in Latin America decreased by 5% to EUR 49 million, but increased by 9% at constant currency. The increase in constant currency was due to higher sales of machines and products for acute care. EBIT in the third quarter was negative at EUR -1 million following the effects of hyperinflation in Argentina as well as unfavorable foreign currency transaction effects and higher bad debt expense. The EBIT margin was therefore also negative (-1%).

In the first nine months of 2018, Latin America revenue decreased by 6% to EUR 505 million, but increased by 18% at constant currency. EBIT was EUR 24 million, a decrease of 47% (-56% at constant currency).

As of the end of September 2018, the company was treating 32,174 patients (+5%) at 227 clinics in Latin America (-1%). Dialysis treatments increased by 4%.

Corporate cost in the third quarter were EUR 76 million on a comparable basis (flat at constant currency). Including the increased provision for the FCPA related charge in the amount of EUR 75 million, corporate cost amounted to EUR 151 million.

Net interest expense was EUR 74 million compared to EUR 86 million in the third quarter of 2017, a decrease of 14% (-14% at constant currency). The decrease was driven by a decreased debt level and interest income from the investment of the Sound proceeds. Income tax expense was EUR 104 million in the third quarter of 2018, which translates into an effective tax rate of 22.9%, compared to last year’s Q3 tax rate of 29.0%. The strong reduction was largely driven by the U.S. Tax Reform and the gain related to divestitures of Care Coordination activities, partly offset by non-tax-deductible expenses (mainly 2018 FCPA related charges and U.S. ballot initiatives).

Cash flow

In the third quarter of 2018, the company generated EUR 609 million of operating cash flow, compared to EUR 612 million in the previous year’s third quarter. This slight decrease was mainly driven by higher tax payments and discretionary contributions to pension plan assets in the U.S., almost fully offset by decreases in accounts receivable. Operating cash flow in percent of revenue was 15.0% in the third quarter of 2018. The number of days sales outstanding decreased sequentially by five days compared with Q2 2018 to reach 77 days. Free cash flow (Net cash used in operating activities, after capital expenditures, before acquisitions and investments) amounted to EUR 352 million for the three months ended September 30, 2018 compared to EUR 386 million for the same period of 2017. Free cash flow in percent of revenue was 8.7% and 8.9% for the three months ended September 2018 and 2017, respectively.

Outlook 2018

The company expects revenue3 growth between 2% and 3% at constant currency. Net income on a comparable basis4 is expected to increase by 11% to 12% at constant currency and on an adjusted basis4,5 to increase by 2% to 3% at constant currency.

The targets exclude the effect from the planned acquisition of NxStage Medical.

3 2017 adjusted for the effect of IFRS 15 implementation and the contribution of Sound Physicians in H2 2017
4 Attributable to shareholders of Fresenius Medical Care AG & Co. KGaA, adjusted for the contribution from Sound Physicians in H2 2017 and gain/loss related to divestitures of Care Coordination activities, 2018 FCPA related charge and U.S. Ballot Initiatives.
5 VA Agreement, Natural Disaster Costs, 2017 FCPA related charge, U.S. Tax Reform

Other updates

Regarding the planned acquisition of NxStage Medical, Inc. the parties have agreed to extend their closing deadline to February 5, 2019, but continue to expect closing within this year.

As of September 30, 2018, Fresenius Medical Care had 112,134 employees (full-time equivalents) worldwide, compared to 113,648 employees at the end of September 2017. This decrease was mainly attributable to the divestiture of Sound.

There will be a change to the composition of the Supervisory Board. Deborah Doyle McWhinney will resign effective November 1, 2018 due to private reasons. A replacement process has been initiated.