Siemens Healthineers : Presentation Q1 FY2020 - February 3, 2020 (PDF) 0.53 MB

Q1 Analyst Call

Dr. Bernd Montag, CEO | Dr. Jochen Schmitz, CFO

February 3, 2020

Safe Harbour Statement

This presentation has been prepared solely for use at this meeting. This material is given in conjunction with an oral presentation and should not be taken out of context. By attending the meeting where this presentation is held or accessing this presentation, you agree to be bound by the following limitations.

This presentation has been prepared for information purposes only and the information contained herein (unless otherwise indicated) has been provided by Siemens Healthineers AG. It does not constitute or form part of, and should not be construed as, an offer of, a solicitation of an offer to buy, or an invitation to subscribe for, underwrite or otherwise acquire, any securities of Siemens Healthineers AG or any existing or future member of the Siemens Healthineers Group (the "Group") or Siemens AG, nor should it or any part of it form the basis of, or be relied on in connection with, any contract to purchase or subscribe for any securities of Siemens Healthineers AG, any member of the Group or Siemens AG or with any other contract or commitment whatsoever. This presentation does not constitute a prospectus in whole or in part, and any decision to invest in securities should be made solely on the basis of the information to be contained in a prospectus and on an independent analysis of the information contained therein.

Any assumptions, views or opinions (including statements, projections, forecasts or other forward-looking statements) contained in this presentation represent the assumptions, views or opinions of Siemens Healthineers AG, unless otherwise indicated, as of the date indicated and are subject to change without notice. All information not separately sourced is from internal company data and estimates. Any data relating to past performance contained herein is no indication as to future performance. The information in this presentation is not intended to predict actual results, and no assurances are given with respect thereto.

The information contained in this presentation has not been independently verified, and no representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information contained herein and no reliance should be placed on it. None of Siemens Healthineers AG or any of its affiliates, advisers, affiliated persons or any other person accept any liability for any loss howsoever arising (in negligence or otherwise), directly or indirectly, from this presentation or its contents or otherwise arising in connection with this presentation. This shall not, however, restrict or exclude or limit any duty or liability to a person under any applicable law or regulation of any jurisdiction which may not lawfully be disclaimed (including in relation to fraudulent misrepresentation).

This document contains statements related to our future business and financial performance and future events or developments involving Siemens Healthineers that may constitute forward-looking statements. These statements may be identified by words such as "expect", "forecast", "anticipate", "intend", "plan", "believe", "seek", "estimate", "will", "target" or words of similar meaning. We may also make forward-looking statements in other reports, in presentations, in material delivered to shareholders and in press releases. In addition, our representatives may from time to time make oral forward-looking statements. Such statements are based on the current expectations and certain assumptions of Siemens Healthineers' management, of which many are beyond Siemens Healthineers' control. As they relate to future events or developments, these statements are subject to a number of risks, uncertainties and factors, including, but not limited to those described in the respective disclosures. Should one or more of these risks, uncertainties or factors materialize, or should underlying expectations not occur or assumptions prove incorrect, actual results, performance or achievements of Siemens Healthineers may (negatively or positively) vary materially from those described explicitly or implicitly in the relevant forward-looking statement. All forward-looking statements refer to the date when they were made and Siemens Healthineers neither intends, nor assumes any obligation, unless required by law, to update or revise these forward-looking statements in light of developments which differ from those anticipated.

This document includes - in the applicable financial reporting framework not clearly defined - supplemental financial measures (financial key performance indicators) that are or may be alternative performance measures (non-GAAP measures). These supplemental financial measures may have limitations as analytical tools and should not be viewed in isolation or as alternatives to measures of Siemens Healthineers' net assets and financial positions or results of operations as presented in accordance with the applicable financial reporting framework in its half-year consolidated financial statements and consolidated financial statements. Other companies that report or describe similarly titled alternative performance measures may calculate them differently, which may therefore not be comparable. Please find further explanations regarding our financial key performance indicators in chapter "A.2 Financial performance system" and in the notes to the consolidated financial statements note 29 "Segment information" in the Annual Report 2019 of Siemens Healthineers under the following internet linkhttps://www.corporate.siemens-healthineers.com/investor-relations/presentations-financial-publications. As of beginning of fiscal year 2020, Siemens Healthineers applies the accounting standard IFRS 16, Leases. Comparative figures for the preceding fiscal year were not adjusted. Instead, the overall insignificant transition effects were recognized in equity as of October 1, 2019.

Due to rounding, numbers presented throughout this and other documents may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures to which they refer.

The information contained in this presentation is provided as of the date of this presentation and is subject to change without notice.

Q1 FY2020

Unrestricted © Siemens Healthineers AG, 2020 l 2

Strong start in topline, outlook confirmed

• Q1 comparable1) revenue up by 5.5% driven by strong Imaging business with 6.7% and very strong Advanced Therapies with 9.5% growth
• Equipment book-to-bill of 1.2 in Q1, the 7th consecutive quarter with book-to-bill >1
• Temporary dip in Q1 Imaging margin, Diagnostics with margin development as guided
• Adjusted EBIT margin at 13.5%, -290bps y-o-y
• Adjusted basic earnings per share of €0.35 , -6%y-o-y on lower adj. EBIT
• Free cash flow significantly up vs. PYQ with €244 mio.
• Outlook for FY2020 confirmed

1 Y-o-y on a comparable basis, excluding currency translation and portfolio effects	Q1 FY2020
	Unrestricted © Siemens Healthineers AG, 2020 l 3

Upgrading: driving our company to the next level of profitable growth

Imaging	Diagnostics	Advanced Therapies
Digital	Workflow	Procedures
Continuously innovating	Path to market growth and	Transforming to new
and	expanding workflow	levels of profitable
making new markets	leadership	growth

Drive share gains in growth markets

Drive share gains with leading providers

Drive our own digital transformation

Our priorities

Q1 FY2020

Unrestricted © Siemens Healthineers AG, 2020 l 4

Executing on Upgrading: strategic segment priorities

Imaging

Digital

Continuously innovating and making

new markets

• SOMATOM On.site1)
  New markets for CT: bringing the scanner to the patient
• myExam CompanionIntelligent user guidance with SOMATOM X.cite
• AI-RadCompanions
  Widening our lead in AI with 510(k) approval for chest-CT Companion; new AI-Rad Companions2) for MR examinations of brain and prostate

Diagnostics

Workflow

Path to market growth and expanding

workflow leadership

• Selected as primary supplier for immunoassay testing with Atellica Solution - highlighting strengths in workflow efficiency, automation and clinical outcomes
• Enables Quest to expand immunoassay testing capacity while driving economic efficiencies and clinical performance

Advanced Therapies

Procedures

Transforming to new levels of

profitable growth

• Significant equipment revenue growth
• Successful closing of Corindus acquisition in Q1
• First transcontinental simulated telerobotic3) PCI procedure over 5G, fiber and public internet
• First robotic-assisted neuro intervention3)
• First robotic-assisted coronary intervention in
  Germany

Our priorities

1 SOMATOM On.site is currently pending 510(k) clearance, and is not yet commercially available in the United States. Some products and features are not commercially available in every country, and its future availability cannot be guaranteed. | 2 510(k) pending. This information about this product is preliminary. It is not commercially available in every country, and its future availability cannot be guaranteed. | 3 Solutions are currently under development and not available for sale, and its future availability cannot be guaranteed.

Q1 FY2020 Unrestricted © Siemens Healthineers AG, 2020 l 5

Executing on Upgrading: strategic company-wide priorities

Drive share gains in growth markets

China:		Middle East and Africa:
Double-digit equipment order growth1) in Q1		Double-digit equipment order growth1) in Q1

Drive share gains with leading providers

Hamilton Health Sciences

• ~CAD 270 mio. deal with Hamilton Health Sciences, a leading provider for Ontario, Canada
• 15-yearstrategic value partnership, including ~200 Siemens Healthineers imaging modalities

Moscow Healthcare Department

• ~100 mio. € deal with Moscow Healthcare Department strengthening market position
• 10-year life-cycle agreement providing imaging products and services

Quest Diagnostics

• Quest Diagnostics is the world's leading provider of diagnostic information services
• Multi-yearagreement contemplates the largest immunoassay deployment (up to 120 analyzers) of Atellica Solution worldwide to date

Drive our own digital transformation

Our priorities

1 Y-o-y on a comparable basis, excluding currency translation and portfolio effects	Q1 FY2020
Unrestricted © Siemens Healthineers AG, 2020 l 6

Strong revenue growth, adj. basic EPS down on lower adj. EBIT

Revenue (€m)

Adjusted basic earnings per share (€)

Net Income	345

Comparable	(€m)
+5.5%
Growth1)
Y-o-Y

	3,301		3,587	0.38

304

-6%

0.35

Q1 FY2019

Q1 FY2020

• Revenue driven by strong growth in Imaging, solid growth in Diagnostics and very strong growth in Advanced Therapies
• Growth in EMEA with 10% and in Asia with 9%
• Flat revenues in the Americas on tough comps

1 Y-o-y on a comparable basis, excluding currency translation and portfolio effects

Q1 FY2019

Q1 FY2020

• Adj. basic EPS down -6%y-o-y on lower adj. EBIT
• Adj. EBIT margin decreased by -290 bps y-o-y due to mix-effects and individual negative effects at Imaging; Diagnostics margin development as guided
• Positive net interest expenses
• Tax-ratewith 27% at low-end of FY guidance, y-o-y increase in tax expense due to discrete tax effects in PYQ (tax-rate Q1 19: 24%)

Q1 FY2020

Unrestricted © Siemens Healthineers AG, 2020 l 7

Strong topline at Imaging and Advanced Therapies, mixed margin picture in segments

Imaging (€m)

Comparable	+6.7%
Growth1)
Revenue	2,021	2,221
	Q1 FY2019	Q1 FY2020
Margin Y-o-Y	-250 bps
Adj. EBIT	402	386
(margin)
(19.9%)	(17.4%)
	Q1 FY2019	Q1 FY2020

• Significant growth at X-ray Products, strong growth at Molecular Imaging and Magnetic Resonance
• Margin down y-o-y due to mix-effects and individual negative effects

Diagnostics (€m)

+2.6%

9641,013

Q1 FY2019

Q1 FY2020

-470 bps

75
(7.8%)	31
	(3.1%)

Q1 FY2019

Q1 FY2020

• Diagnostics with solid 2.6% growth
• Margin y-o-y down as guided, mainly due to high number of AS2) shipments in previous quarter (Q4: >600 shipments)

Advanced Therapies (€m)

+9.5%

355404

Q1 FY2019

Q1 FY2020

-30 bps

70	78
(19.7%)	(19.4%)
Q1 FY2019	Q1 FY2020

• Very strong growth in Q1
• Margin y-o-y stable despite dilutive effect from Corindus

Q1 FY2020

1 Y-o-y on a comparable basis, excluding currency translation and portfolio effects | 2 Atellica Solution

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Imaging on track for FY20, margin in Q1 with a temporary dip

Imaging adjusted EBIT margin

19.9%
					17.4%
Q1 FY2019	Mix	Share comp.	OPEX	Other	Q1 FY2020	FY2020

• Negative effect in Q1 from unfavorable mix of different margin profiles in businesses, geographies and market segments; mix will normalize in the course of the fiscal year
• Negative effect from share-basedcompensation in Q1
• Lower economies of scale in OPEX on relatively low revenue slice in Q1 within fiscal year
• Other individual negative effects impacting Q1 year-over-year
• Imaging on track for attractive growth and expanding margins in FY20

Note: Graph indicative only	Q1 FY2020
Unrestricted © Siemens Healthineers AG, 2020 l 9

Outlook for FY2020 confirmed

Comparable revenue growth1)

Adj. basic EPS growth

5.8%

5 - 6%

+8 to +14%2)

ex acquisitions3)

+6 to +12%2)

1.70

2019

2020E

2019

2020E

1 Y-o-y on a comparable basis, excluding currency translation and portfolio effects | 2 The outlook is based on current foreign exchange rate assumptions and	Q1 FY2020
on the current portfolio | 3 Excluding effects from acquisition of Corindus Robotics, ECG Management Consultants and MiniCare
Unrestricted © Siemens Healthineers AG, 2020 l 10

Appendix

Q1 FY2020 Unrestricted © Siemens Healthineers AG, 2020 l 11

Excellent cash generation in Q1, Advanced Therapies cash held back by Corindus transaction

Q1 Siemens Healthineers EBIT to Free Cash Flow

								1)	Imaging		1.0
								CCR	Diagnostics	<0
								Adv. Therapies	0.2
				CCR1) 0.87
		617′	-4′
			-89′
	205′				-66′	16′	475′
412′
						-115′
								360′
										-115′	244′
Healthineers	Amort., depr.	EBITDA 3)	Change in	Change in	Add. to	Other	Operating	Add. to	Free Cash	Income	Free Cash
EBIT	and imp.2)		OWC4)	other assets	operating		Cash Flow	intangible	Flow	taxes	Flow
				& liabilities	leases		pre tax	assets, PPE	pre tax

1 CCR=Cash conversion rate defined as Free Cash Flow pre tax divided by Healthineers EBIT |	Q1 FY2020
2 Amortization, depreciation and impairments | 3 Income before income taxes, interest income and expenses, other financial income, net as well as
Unrestricted © Siemens Healthineers AG, 2020 l 12
amortization, depreciation & impairments | 4 Operating working capital

Q1 reconciliations and KPIs for group and segments

Q1 FY2020		Q1 FY2019

	Healthineers	Imaging	Diagnostics	Advanced
Position (€m)	Therapies
Adjusted EBIT	484	386	31	78
therein adjusted for: Amortization of intangible	-45
assets acquired in business combinations
therein adjusted for: Severance charges	-17	-8	-6	-2
therein adjusted for: Acquisition-related	-10			-10
transaction costs
therein: Amortization, depreciation and	205	40	73	4
impairments (incl. PPA)
EBITDA	617	417	98	71
Assets	22,666	7,203	5,267	2,053
Free Cash Flow1)	244	364	-55	16

Healthineers	Imaging	Diagnostics	Advanced
Therapies
542	402	75	70
-33
-13	-8	-2	-2
142	34	56	3
638	428	129	71
	Assets as of Sep. 30th 2019
19,429	6,840	5,499	997
-24	177	-120	34

1 Q1 FY2019 on segment level adjusted according to the definition of the adjusted EBIT	Q1 FY2020
Unrestricted © Siemens Healthineers AG, 2020 l 13

Q1 adjusted EBIT to net income and adj. EPS reconciliation

Position (€m)	Q1 FY2020	Q1 FY2019
Adjusted EBIT	484	542
therein adjusted for: Amortization of intangibles assets acquired in business combinations	-45	-33
therein adjusted for: Severance charges	-17	-13
therein adjusted for: Acquisition-related transaction costs	-10
Interest expenses, net1)	6	-45
therein interest income	28	6
therein interest expenses	-21	-39
therein other financial income, net	-1	-12
Income before income taxes	419	452
Income tax expenses	-114	-107
Net income	304	345
Non-controlling interest	3	4
Net income attributable to shareholders of Siemens Healthineers AG	301	341
Earnings per share (in €)2)	0.30	0.34
Severance charges	0.01	0.01
Acquisition-related transaction costs	0.01
Amortization of intangibles assets acquired in business combinations	0.03	0.02
Adjusted earnings per share (in €)	0.35	0.38

1 Financial income shown with positive and expenses with negative sign | 2 Earnings per share are computed by dividing net income attributable to the shareholders of Siemens Healthineers AG by the	Q1 FY2020
weighted average number of outstanding shares of Siemens Healthineers AG
Unrestricted © Siemens Healthineers AG, 2020 l 14

Q1 balance sheet and net debt bridge

Net debt overview

Capital structure development in Q1 (in €bn)

in €bn	Sep. 30th 2019	Dec. 31st 2019
Cash and cash equivalents	0.9	0.9
Receivables from Siemens Group	0.7	0.4
(financial cash)
Short-term and long-term debt	(0.1)	(0.5)
Payables and other liabilities to	(4.4)	(5.3)
Siemens Group (financial debt)
Net debt	(2.9)	(4.5)
Provisions for pensions and similar	(1.0)	(1.0)
obligations
Net debt (incl. pensions)	(4.0)	(5.4)

Leverage1)	1.5x	1.9x
		5.4
	4.4	1.0
	0.0
Pensions	1.0	1.5
		-0.4
		4.5
Net Debt	3.4

01-Oct-192) CF from CF from CF from 31-Dec-19

operating act. investing act. financing act. and others

1 Leverage is net debt incl. pension over EBITDA rolling four quarters | 2 Opening balance includes effect from IFRS16 of €0.4 bn.	Q1 FY2020
Unrestricted © Siemens Healthineers AG, 2020 l 15

SHS loan maturity profile

SHS loans with Siemens Group as of 31.12.20191 (in mio €)

Comments

Other	1,866
95
EUR
USD	1,5142
	1,000

881

6672

290 7712

206

84

FY 2020

FY 2021

FY 2023

FY 2027

FY 2046

• Total loan volume ~5''2 EUR equivalent
• Average interest rate ~0.8%3
• Majority of maturities exceeding FY 2020

Top 5 loans

Currency	Volume	Volume	Interest	Maturity
		in €	rate
USD	$1,689	€1,5142	0.26%2	FY 2027
EUR	€1,000	€1,000	0.25%4	FY 2021
USD	$990	€881	3.4%	FY 2046
USD	$859	€7712	-0.7%2	FY 2021
USD	$743	€6672	-0.2%2	FY 2023

1 Maturity profile based on Fiscal Year start October 1 - translation to EUR according to spot rate as of Dec 31th 2019 |

2 USD loans addressed by SHS debt & capital restructuring project resulting in synthetic EUR debt; EUR volume and interest rate are calculated with	Q1 FY2020
Unrestricted © Siemens Healthineers AG, 2020 l 16
underlying hedge rates | 3 Average interest rate for FY20 after implementation of debt and capital restructuring project | 4 Floating interest rate

Funded status unchanged

Q1 FY2020 Key financials - Pensions and similar obligations

in €bn1)	FY2017	FY2018	FY2019	Q1
FY2020
Defined benefit obligation (DBO)2)	(4.1)	(3.4)	(3.8)	(3.7)
Fair value of plan assets2)	2.4	2.6	2.8	2.8
Provisions for pensions and similar obligations	(1.7)	(0.8)	(1.0)	(1.0)
Discount rate	2.8%	2.9%	1.8%	1.9%
Interest Income	0.1	0.1	0.1	0.0
Actual return on plan assets	0.1	0.1	0.3	0.0

1 All figures are reported on a continuing basis | 2 Fair value of plan assets including effects from asset ceiling (Q1 FY2020: €-0.0bn); difference between DBO and
fair value of plan assets additionally resulted in net defined benefit assets (Q1 FY2020: €+0.0bn); Defined Benefit Obligation (DBO) including other post-	Q1 FY2020
employment benefit plans (OPEB) of ~€-0.1bn	Unrestricted © Siemens Healthineers AG, 2020 l 17

Q1 FY2020 Unrestricted © Siemens Healthineers AG, 2020 l 18