This story has been updated from a previous version to include comments made by Siemens Heathineers executives in an earnings call.
NEW YORK – Siemens Healthineers reported on Thursday that its diagnostics revenues fell 21 percent in the first fiscal quarter on softer demand for rapid COVID-19 antigen tests, although its overall revenues remained flat year to year.
The Erlangen, Germany-based company reported revenues of €5.08 billion ($5.58 billion) in the quarter ended Dec. 31, up a fraction of a percent from €5.07 billion in the year-ago quarter. On a comparable basis, excluding currency translation and other portfolio and contract liability effects, Q1 revenues fell 5 percent.
Its Q1 diagnostics revenues declined to €1.15 billion from €1.45 billion a year ago, which company officials partly attributed to strong revenues in the year-ago period, a drop in COVID-19 antigen test sales in its Europe, Middle East, and Africa region, unfavorable exchange rates, increased procurement and logistics costs, and lower revenues from routine testing in China because of pandemic-related lockdowns in the beginning of the quarter and high COVID-19 infection rates late in the quarter. However, that decline was partly offset by strong rapid antigen test sales in Japan.
Siemens Healthineers CFO Jochen Schmitz said in a conference call that the company's diagnostics business also had €34 million in one-time costs during Q1 as it started the previously announced process of simplifying its instrument product lines. The firm continues to estimate the one-time costs will total €100 million to €150 million during the fiscal year.
Siemens Healthineers said in November the firm plans to cut half its lineup of diagnostic instruments to reduce costs and address supply chain difficulties. Although CEO Bernd Montag at the time didn't name any specific instrument models to be phased out, he said more generally that the firm plans to accelerate the retirement of older instrument lines and Schmitz said the firm plans to consolidate its immunoassay and clinical chemistry franchises into the Atellica Solution line. A company spokesperson also said at the time the company would review its product lines and decide on the next steps by early this year.
Montag said in Thursday's conference call that the product line simplification "will ultimately lead to a significant portfolio and organizational simplification and enhanced internal efficiency." The late 2022 launch of the Atellica CI 1900 instrument was key to the simplification plan because it completed the company's Atellica portfolio for immunoassays and clinical chemistry testing, he said. The Atellica CI 1900 is designed as a cost-effective integrated analyzer for low- and mid-volume labs, which can use the instruments in a hub-and-spoke setting in which the hub laboratories are running the high-volume Atellica Solution instruments, Montag said. The Atellica CI 1900 remains in a controlled rollout in Europe and Siemens plans for a full-market rollout this year.
Siemens' Q1 imaging segment revenues were €2.74 billion, up 10 percent from €2.50 billion in the year-ago quarter; its Varian Medical Systems segment revenues were €770 million, up one percent from €763 million a year earlier; and its advanced therapies division revenues were €474 million, up 8 percent year-over-year from €437 million.
Schmitz said supplier-related problems that started in Q4 2022 reduced revenues during Q1 2023 for Siemens' California-based Varian subsidiary, which is focused on cancer diagnosis and treatment. Though Schmitz said that issue resolved during Q1, revenues that would have been booked during the quarter were delayed.
The company recorded net income of €426 million, or €.37 per share, down from €472 million, or €.41 per share, a year ago. The firm ended the quarter with €1.35 billion in cash and cash equivalents.
Siemens also announced Thursday a €200 million-plus multi-year partnership with Swiss firm Unilabs through which Unilabs will acquire more than 400 laboratory analyzers to upgrade its lab infrastructure. Under the agreement, Siemens will install high- and mid-volume immunoassay and clinical chemistry analyzers, including the firm's Atellica Solution and Atellica CI 1900 instruments, as well as sample handling equipment, hemostasis analyzers, and other automation equipment.
Montag said Siemens predicts the company's revenues for fiscal year 2023 will be similar to the total for 2022, plus or minus one percent. When COVID-19 antigen test sales are excluded, though, the company expects 6 percent to 8 percent comparable revenue growth.