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Siemens Healthineers Fiscal Q4 Diagnostics Revenues Fall 6 Percent on COVID-19 Impact

NEW YORK – Siemens Healthineers on Monday said that its fiscal year 2020 fourth quarter revenues declined 6 percent year over year, while its FY2020 Q4 Diagnostics revenues also fell 6 percent.

For the three months ended Sept. 30, Siemens Healthineers reported total revenues of €3.88 billion ($4.52 billion) compared to €4.14 billion in Q4 2019.

The Erlangen, Germany-based company said its Diagnostics revenues were €1.04 billion compared to €1.11 billion in the year-ago quarter. On a comparable basis, its Diagnostics revenues dropped 1 percent.

In Diagnostics, Europe, Middle East, and Africa (EMEA) revenue growth on a comparable basis only partially offset declines in the Americas, Asia, and Australia, Siemens Healthineers said. Diagnostics adjusted earnings before interest and taxes (EBIT) margin was slightly down year over year, mainly because of lower testing volumes for routine care and higher costs due to the COVID-19 pandemic, as well as negative currency effects, the company said.

Siemens Healthineers CEO Bernd Montag said in a statement that in the midst of a challenging environment, the company was able to lift its "order backlog to a new record level, supported by major long-term contracts."

Montag said on a conference call to discuss the company's financial results that "in these unprecedented times, our team successfully mastered the challenges of the pandemic, securing supply chains to be able to manufacture and deliver our products ... and rapidly developing new diagnostic tests to address the needs to fight the pandemic."

The firm's CFO Jochen Schmitz said on the conference call that the upside from COVID-19 tests in Q4 only partly compensated for a steep decline in reagent volumes used in routine care testing, which negatively impacted its gross margins.

Reagent sales account for 90 percent of its diagnostics revenue, "which are booked and billed more or less with the actual testing of patients," Schmitz said. "Within the actual testing volumes, testing for routine care is especially important since they make up the base load of reagent volumes."

In other business segments, Siemens Healthineers' fiscal Q4 Imaging revenues fell 6 percent year over year to €2.45 from €2.60 billion, and its Advanced Therapies revenues fell 10 percent to €432 million from €481 million.

Siemens Healthineers reported Q4 net income of €432 million, or €.42 per share, compared to €507 million, or €.50 per share, in Q4 2019. The firm said its adjusted basic earnings per share for Q4 was €.48.

Siemens Healthineers' Q4 R&D expenses were €340 million, down 6 percent year over year from €360 million, and its SG&A expenses were €565 million, down 5 percent from €596 million in the prior-year quarter.

The firm said its FY2020 revenues were €14.46 billion, down less than 1 percent over year from €14.52 billion in FY2019.

Siemens Healthineers reported FY2020 Diagnostics revenues of €3.92 billion, down 5 percent from €4.13 billion in FY2019. Imaging revenues were up almost 2 percent to $9.09 billion from $8.94 billion, and Applied Therapies revenues grew more than 1 percent to $1.63 billion from $1.61 billion.

The company posted FY2020 net income of €1.42 billion, or €1.40 per share, compared to €1.59 billion, or €1.57 per share, in FY2019. The firm said its adjusted basic earnings per share for FY2020 was €1.59.

Siemens Healthineers' FY2020 R&D expenses were €1.34 billion, almost flat year over year compared to €1.33 billion, and its FY2020 SG&A expenses were €2.28 billion, up 3 percent from €2.21 billion in the prior-year quarter.

The firm exited the fourth quarter with €656 million in cash and cash equivalents.

For FY2021, the firm anticipates comparable year-over-year revenue growth to be in the range of 5 percent to 8 percent, and FY2021 adjusted basic earnings per share to be between €1.58 and €1.72.

The outlook is based on several assumptions including the expectation that current and potential future measures to bring the COVID-19 pandemic under control will not negatively impact the demand for its products and services, Siemens Healthineers said.

The company further said that it expects that the environment for routine care testing will continue to improve and that investment activity in the US will begin to pick up starting in January 2021.

The outlook does not account for the firm's planned acquisition of Varian Medical Systems. In August, Siemens Healthineers announced that it is buying the Palo Alto, California-based company for $16.4 billion in an all-cash deal.

Schmitz said that the firm will propose a dividend per share of €.80 for FY2020.