NEW YORK – Siemens Healthineers said Wednesday it plans to halve its portfolio of diagnostic instruments by accelerating the retirement of older instrument lines in a cost-cutting measure intended to address supply chain difficulties.
Meantime, the company also announced its fourth quarter revenues grew 16 percent year over year.
On a conference call, Siemens President and CEO Bernhard Montag said of the firm's plans to trim its diagnostic portfolio, "In diagnostics, we have come to the conclusion that the dramatically changed macroeconomic environment demands immediate and comprehensive measures."
Although he did not name specific instrument models to be phased out, Montag said the move will accelerate the company's transition to a "very streamlined, super modern portfolio." It also will help streamline the company's supply chain and service operations, give the company leaner and more clinically focused research and development operations, and transform Siemens Healthineers into an overall leaner organization, he added.
A Siemens Healthineers spokesperson said the company was conducting a strategic review of its product lines and expects to decide on its next steps by early 2023.
CFO Jochen Schmitz said during the call that the Erlangen, Germany-based firm plans to consolidate its immunoassay and clinical chemistry franchises into the Atellica Solution line, which will help the company focus its supply chain, research and development, and market deployment efforts. Montag said completing the Atellica lineup with the launch of the Atellica CI 1900 analyzer for low- to mid-volume laboratories, which the firm recently debuted in Europe and plans for a larger rollout in the coming year, is an important element of the efforts to reduce the complexity of the firm's portfolio.
"Overall, we will create a much leaner organization and footprint with a significant reduction in internal complexity in the coming years," Montag said. "The combination of these measures will allow us to achieve cost savings of around €300 million by 2025 and achieve our updated 2025 targets for diagnostics." The firm expects to incur total one-time costs in 2023 to 2025 of €350 million to €450 million, he said.
Siemens Healthineers reported Wednesday its fiscal fourth quarter revenues rose 16 percent year over year on gains across all four of its business segments.
For the three months ended Sept. 30, the company posted record quarterly revenues of €6 billion ($6.02 billion) compared to €5.16 billion in the prior-year quarter. The firm said its revenues were up 7 percent on a comparable basis, excluding currency translation, portfolio effects, and effects in line with revaluation of certain contract liabilities.
Revenues from the firm's diagnostics segment rose 13 percent in Q4 to €1.44 billion from €1.28 billion a year ago, and rose 6 percent on a comparable basis, partly on the strength of the firm's COVID-19 rapid antigen tests. Revenues from those tests rose to €232 million from €160 million a year earlier, whereas the company's non-COVID-19 revenue declined about 1 percent on a comparable basis.
"The pandemic has shown that our diagnostics business can quickly adapt to unprecedented circumstances by building up an antigen test business which delivered €1.5 billion of revenues in fiscal year '22 alone," Montag said.
Though diagnostic revenues from the Americas region were flat, Siemens Healthineers saw double-digit revenue growth from diagnostics in its Asia and Australia region and company officials credited strong sales of COVID-19 antigen tests in Japan as a driver of that increase. Pandemic-related lockdowns in China had reduced the firm's revenues for routine care but those volumes recovered in Q4 as restrictions eased.
The company's Europe, Middle East, and Africa region, though, saw a double-digit drop in diagnostics revenues with lower contributions from COVID-19 antigen test sales.
Siemens Healthineers' Q4 revenues from imaging rose 17 percent to €3.23 billion from €2.76 billion in the quarter a year prior, and 8 percent on a comparable basis. Its Varian segment revenues also went up 16 percent to €820 million from €709 million in the year-ago quarter, or 5 percent on a comparable basis. And its advanced therapies segment similarly saw a 16 percent revenue gain year over year to €578 million from €499 million, or 6 percent on a comparable basis.
Siemens posted a net income of €636 million, or €.56 per share, for the recently completed quarter compared to a net income of €466 million a year earlier, or €.41 per share, a year ago. On an adjusted basis, EPS for the recently completed quarter was €.65.
Siemens Healthineers' full-year revenues of €21.71 billion were up 21 percent year over year on a reported basis from €18.00 billion in fiscal 2021, or 6 percent on a comparable basis.
The firm's full-year net income was €2.05 billion, or €1.81 per share, up from €1.75 billion in fiscal 2021, or €1.57 per share. Adjusted full-year EPS was €2.29.
CFO Schmitz had said during an Aug. 3 call with investors that the company expected full-year revenue growth of 5.5 percent to 7.5 percent and adjusted EPS of between €2.25 and €2.35, as it anticipated its strongest quarterly numbers in Q4 through seasonal changes in income, rebounding demand in China, normalization of the global supply chain, and rising revenue from rapid antigen tests.
Siemens Healthineers finished the year with €1.44 billion in cash and cash equivalents.
Company officials predict comparable revenue in fiscal year 2023, ranging between a 1 percent gain and a 1 percent decline compared with fiscal 2022. Excluding revenue from COVID-19 rapid antigen tests, the company predicts revenue growth of between 6 percent and 8 percent and adjusted EPS of €2.00 to €2.20.