Siemens Healthineers : continues to post strong growth – outlook raised again

Siemens Healthineers continues to post strong growth - outlook raised again

Erlangen, May 3, 2021 - Siemens Healthineers AG today announced its results for the second quarter of fiscal year 2021 that ended March 31, 2021.

Q2 Fiscal Year 2021

• Very good revenue development continued in the second quarter with 12.9% comparable growth from the prior-year quarter
• Equipment book-to-bill ratio at 1.08
• Development in Diagnostics again outstanding with 29.1% comparable revenue growth - continued high demand for rapid COVID-19 antigen tests
• Strong comparable revenue growth of 7.4% in Imaging; Advanced Therapies with comparable growth of 2.0%
• Adjusted EBIT margin at 16.8%
• Adjusted basic earnings per share at €0.44
• Free cash flow of €359 million significantly above comparatively weak prior-year figure

Updated Outlook for Fiscal Year 2021

• Varian acquisition successfully completed on April 15, 2021
• Comparable revenue growth between 14% and 17% expected (previously 8% to 12%)
• Adjusted basic earnings per share between €1.90 and €2.05 (previously €1.63 to €1.82)

Bernd Montag, CEO of Siemens Healthineers AG:

»The Siemens Healthineers team has done an outstanding job during the past months. While we have further improved our operational performance and have once again made a valuable contribution to cope with this historical crisis, we have at the same time managed to successfully complete the largest transaction in our history. Together with Varian, we are making a leap in cancer care and a leap in our impact on global healthcare. With our even more comprehensive portfolio, we are addressing many of the most important diseases. Against the backdrop of continued strong business development in the second quarter and the transformative merger with Varian, we have again raised our outlook for the current fiscal year.«

Quarterly Statement Q2 Fiscal Year 2021 | Siemens Healthineers

Business Development

Siemens Healthineers

	Q2	Q2		%-Change
(in millions of €)	2021	2020	Act.	Comp.¹
Revenue	3,965	3,685	7.6%	12.9%
Adjusted EBIT²	666	665	0%
Adjusted EBIT margin	16.8%	18.0%
Net income	447	414	8%
Adjusted basic earnings per share³	0.44	0.46	−5%
Basic earnings per share	0.41	0.41	0%
Free cash flow⁴	359	83	333%

1. Year-over-yearon a comparable basis, excluding currency translation and portfolio effects as well as effects in line with revaluation of contract liabilities from IFRS 3 purchase price allocations.
2. Adjusted EBIT is defined as income before income taxes, interest income and expenses and other financial income, net, adjusted for expenses for portfolio-related measures, severance charges and centrally carried pension service and administration expenses (only excluded from adjusted EBIT of the segments).
3. Adjusted basic earnings per share are defined as basic earnings per share, adjusted for portfolio-related measures and severance charges, net of tax.
4. Free cash flow comprises the cash flows from operating activities and additions to intangible assets and property, plant and equipment included in cash flows from investing activities.

Revenue continued to develop very well in the second quarter of fiscal year 2021 and reached almost €4 billion, corresponding to growth of 12.9 percent on a comparable basis from the prior-year quarter. Against the backdrop of continued strong demand for rapid COVID-19 antigen tests, the Diagnostics segment recorded an outstanding development also in the second quarter, while the Imaging segment benefited from a sustained high demand in the Computed Tomography and X-Ray Products busi- nesses. From a geographical perspective, the EMEA region achieved sharp revenue growth, with all segments contributing to this development, particularly Diagnostics. The Asia, Australia region also developed very strongly, while the Americas region posted a slight decline. On a nominal basis, overall revenue rose around eight percent. The prior-year quarter was negatively affected by the first wave of the COVID-19 pandemic in all segments.

At 1.08, the equipment book-to-billratio, i.e. the ratio of new orders to revenue, was again above 1 in the second quarter. The demand situation in North America improved significantly.

In light of the very strong business development, expenses for performance-related remuneration components increased significantly in the second quarter in all segments. This was partially offset by pandemic-related lower cost spending, such as reduced travel costs. As a result, adjusted EBIT of €666 million was at the prior year's level. This translated into an adjusted EBIT margin of 16.8 percent. Valuation effects in connection with share-based compensation programs that are tied to shares of Siemens AG had a positive effect in all segments in the prior year, whereas this year, they had a negative impact.

Net income rose eight percent to €447 million in the second quarter from the prior year. The tax rate was 27 percent, after 29 percent in the prior-year quarter. Adjusted basic earnings per share declined five percent to €0.44, mainly due to an eight percent increase in the weighted average number of outstanding shares resulting from the issuance of new shares in connection with the financing of the Varian acquisition. Currency effects also had a negative effect.

Free cash flow of €359 million was significantly higher than in the comparatively weak prior-year quarter.

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Quarterly Statement Q2 Fiscal Year 2021 | Siemens Healthineers

Imaging

	Q2	Q2		%-Change
(in millions of €)	2021	2020	Act.	Comp.²
Total adjusted revenue¹	2,368	2,309	2.6%	7.4%
Adjusted EBIT³	499	530	−6%
Adjusted EBIT margin	21.1%	22.9%

1. Total adjusted revenue is defined as total revenue adjusted for effects in line with revaluation of contract liabilities from IFRS 3 purchase price allocations.
2. Year-over-yearon a comparable basis, excluding currency translation and portfolio effects.
3. Prior-yearfigures adjusted in line with updated definition of adjusted EBIT.

The Imaging segment achieved revenue of almost €2.4 billion in the second quarter, corresponding to strong growth of more than seven percent on a comparable basis from the prior-year quarter. Computed Tomography and X-Ray Products recorded double -digit percentage increases. From a regional perspective, revenue in EMEA and Asia, Australia, developed very positively, while the Americas region still posted a moderate decline.

The segment's adjusted EBIT margin achieved a good level of 21.1 percent but was below the very strong prior-year figure. It was also affected by negative currency effects.

Diagnostics

	Q2	Q2		%-Change
(in millions of €)	2021	2020	Act.	Comp.²
Total adjusted revenue¹	1,237	1,005	23.1%	29.1%
Adjusted EBIT³	131	66	99%
Adjusted EBIT margin	10.6%	6.5%

1. Total adjusted revenue is defined as total revenue adjusted for effects in line with revaluation of contract liabilities from IFRS 3 purchase price allocations.
2. Year-over-yearon a comparable basis, excluding currency translation and portfolio effects.
3. Prior-yearfigures adjusted in line with updated definition of adjusted EBIT.

The Diagnostics segment recorded revenue of more than €1.2 billion in the second quarter, which is around 29 percent above the level of the prior-year quarter on a comparable basis. As in the first quarter, the again outstanding development was driven by the continued high demand for rapid COVID-19 antigen tests. The segment generated total revenue of €190 million with rapid COVID-19 antigen tests, which were mainly distributed in Germany. At the same time, the core business continued to develop positively. All regions contributed to the revenue growth.

In view of the once again outstanding revenue development, the segment's adjusted EBIT margin rose to 10.6 percent from the prior-year quarter. This figure also includes positive currency effects.

Advanced Therapies

	Q2	Q2		%-Change
(in millions of €)	2021	2020	Act.	Comp.²
Total adjusted revenue¹	408	421	−3.0%	2.0%
Adjusted EBIT³	58	81	−28%
Adjusted EBIT margin	14.2%	19.3%

1. Total adjusted revenue is defined as total revenue adjusted for effects in line with revaluation of contract liabilities from IFRS 3 purchase price allocations.
2. Year-over-yearon a comparable basis, excluding currency translation and portfolio effects.
3. Prior-yearfigures adjusted in line with updated definition of adjusted EBIT.

The Advanced Therapies segment posted second-quarterrevenue of €408 million, corresponding to growth of two percent on a comparable basis from the prior-year quarter. A very strong pandemic-related decline in the Americas region was more than offset by significant growth in EMEA and strong growth in Asia, Australia.

The adjusted EBIT margin of 14.2% was significantly below the prior-year level. This was also due to expenses for the further development of the Corindus business, negative currency effects and an adverse business mix.

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Quarterly Statement Q2 Fiscal Year 2021 | Siemens Healthineers

Reconciliation to consolidated financial statements

Adjusted EBIT

	Q2	Q2
(in millions of €)	2021	2020
Total Segments	688	677
Corporate items, eliminations, other items	−22	−12
Adjusted EBIT	666	665
Amortization, depreciation and other effects from IFRS 3 purchase price allocation adjustments	−27	−42
Transaction, integration, retention and carve-out costs	−19	−7
Severance charges	−25	−17
Total adjustments	−71	−65
EBIT	595	600
Financial income, net	21	−17
Income before income taxes	617	582
Income tax expenses	−169	−168
Net income	447	414

Basic earnings per share

	Q2	Q2
(in €)	2021	2020
Basic earnings per share	0.41	0.41
Amortization, depreciation and other effects from IFRS 3 purchase price allocation adjustments	0.03	0.04
Transaction, integration, retention and carve-out costs	0.02	0.01
Severance charges	0.02	0.02
Transaction-related costs within financial income	−0.03	‐
Tax effects on adjustments¹	−0.01	−0.02
Adjusted basic earnings per share	0.44	0.46

1 Calculated based on the income tax rate of the respective reporting period.

Second-quarterfinancial income, net includes positive effects in connection with the acquisition of Varian Medical Systems, Inc. amounting to €34 million, with purchase price hedging having a temporary positive effect and costs for bridge financing having a negative impact. With the closing of the acquisition of Varian, the deal contingent forward entered into in fiscal year 2020 was settled on April 15, 2021, leading to expenses of €89 million in other financial income, net in the third quarter.

Net income rose eight percent to €447 million in the second quarter from the prior year. The tax rate was 27 percent, after 29 percent in the prior-year quarter.

Adjusted basic earnings per share declined five percent to €0.44, mainly due to an eight percent increase in the weighted average number of outstanding shares resulting from the issuance of new shares in connection with the financing of the Varian ac- quisition. Currency effects also had a negative effect.

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Quarterly Statement Q2 Fiscal Year 2021 | Siemens Healthineers

Outlook

As a result of the very strong revenue development in the second quarter, ongoing pandemic-related demand, higher confidence in the normalization of the business development as well as the closing of the Varian acquisition, we again raise our outlook for fiscal year 2021.

We expect comparable revenue growth between 14% and 17% from fiscal year 2020 (previously 8% to 12% in the outlook from Q1 2021). We expect adjusted basic earnings per share (adjusted for expenses for portfolio-related measures, and severance charges, net of tax) to be between €1.90 and €2.05 (previously €1.63 to €1.82 in the outlook from Q1 2021; comparable prior- year figure: €1.61).

The outlook is based on the following assumptions: The revenue from rapid COVID-19 antigen tests is now expected to be around €750 million, significantly up from the previous assumption of €300 million to €350 million in the outlook from Q1 2021. Given the current dynamic of the pandemic, we assume that pandemic-related demand will not persist to the same extent beyond fiscal year 2021. Additionally, we expect higher demand in the core business of our segments compared to the previous outlook from Q1 2021 as well as revenue and earnings contributions from Varian Medical Systems, Inc. following the successfully completed closing of the acquisition in April 2021. The Varian contribution includes uncertainties regarding effects from the harmonization of accounting methods for revenue recognition. Due to the second capital increase in March 2021, the weighted average number of outstanding shares for the fiscal year 2021 increased to 1.1 billion.

The following assumptions of the previous outlook from Q1 2021 remain unchanged: The expectation that current and potential future measures to bring the COVID-19 pandemic under control will not negatively impact the demand for our products and ser- vices. The outlook is based on current exchange rate assumptions. In addition, it is assumed that there will be no material change in the valuation of share-based compensation programs that are tied to shares of Siemens AG. The outlook also excludes charges related to legal and regulatory matters.

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