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Siemens Healthineers Q1 Non-COVID Revenues Rise 7 Percent, With 2 Percent Diagnostics Growth

NEW YORK – Siemens Healthineers reported on Thursday that its non-COVID revenues rose 7 percent overall and 2 percent in its diagnostics segment on a comparable basis in its fiscal first quarter.

The firm reported revenues of €5.18 billion ($5.60 billion) in the quarter ended Dec. 31, up 2 percent from €5.08 billion a year earlier. It also reported its revenues were up 6 percent on a comparable basis, excluding currency and contract revaluation effects.

Siemens Healthineers CEO Bernd Montag said in a conference call that the Erlangen, Germany-based firm is seeing broad drivers of growth in healthcare spending from aging populations, expanding insurance coverage, and a rising burden of chronic disease. However, the company's customers are challenged to treat more patients at lower costs.

The company's diagnostics revenues declined 8 percent to €1.06 billion from €1.15 billion in the year-ago quarter, or 4 percent on a comparable basis excluding currency and portfolio effects. Excluding rapid antigen tests for COVID-19, which the firm discontinued in fiscal Q4 2023, diagnostics grew nearly 2 percent on a comparable basis. Antigen test sales had contributed €63 million in revenue during the prior-year quarter.

The firm reported strong diagnostics revenue growth in the EMEA region on a comparable basis, a slight decline in the Americas, moderate decline in China, and a sharp decline in the Asia-Pacific Japan region. Excluding COVID-19 antigen test sales, the Americas region showed slight year-over-year revenue growth and the Asia-Pacific Japan region improved to a slight decline.

Siemens also reported a 5 percent adjusted EBIT margin for its diagnostics business, up from about 1 percent in the prior-year quarter, as the firm began to see the cost-reducing effects of an ongoing multiyear transformation of its diagnostics business as well as longer useful life of its leased-out laboratory analyzers.

"In diagnostics, the transformation is well on track to crystallize the full potential of the business," Montag said. "We also saw the positive impacts of the transformation in the Q1 performance."

Siemens is more than a year into that transformation, through which the company has been cutting costs to become a more streamlined business and ending legacy instrument lines in favor of consolidation into the firm's Atellica line of immunoassay and clinical chemistry analyzers including the flagship Atellica Solution instrument. Siemens officials said last spring that they had stopped placing new analyzers from the company's Advia Centaur, Advia Chemistry, and Dimension product lines.

Through the transformation, Siemens aims to deliver cost reductions of €300 million by 2025.

Siemens completed in summer 2023 its lineup of Atellica instruments for high-, medium-, and low-volume labs. The Atellica CI Analyzer, which is designed for immunoassay and clinical chemistry testing in low- to medium-volume labs, received US Food and Drug Administration clearance in July. The firm said the instrument's 1.9-m2 footprint is ideal for smaller laboratories and it offers throughput of up to 1,120 tests per hour.

Siemens reported its imaging revenues rose 2 percent to €2.79 billion in fiscal Q1 from €2.74 billion in the year-ago quarter. The firm said revenues from that segment grew 5 percent on a comparable basis with strong contributions from its magnetic resonance and molecular imaging businesses.

The firm's Varian Medical Systems revenues jumped 18 percent to €911 million from €770 million in the year-ago quarter, or 22 percent on a comparable basis. Siemens said it saw growth in all four regions, especially in China and the Asia-Pacific Japan regions, where revenues in the prior-year quarter had been reduced by supply chain delays.

The company reported revenues from its advanced therapies segment were flat year over year at €475 million but up 5 percent on a comparable basis with strong performances in the Americas and China offset by a slight decline in the EMEA region and a low double-digit decline in the Asia-Pacific Japan region.

The company posted net income of €432 million, or €.38 per share, in fiscal Q1 compared to net income of €426 million, or €.37 per share, in the year-ago quarter. Adjusted Q1 EPS was €.49.

The firm increased its Q1 R&D spending about 5 percent to €464 million from €441 million a year ago while its SG&A spending grew 2 percent to €902 million from €882 million.

Siemens ended the quarter with €1.47 billion in cash and cash equivalents.

The firm confirmed its previous guidance of comparable year-over-year growth of 4.5 percent to 6.5 percent in fiscal year 2024 and adjusted EPS in the range of €2.10 to €2.30 per share.