Siemens Healthineers : fully on track after successful second quarter

Siemens Healthineers fully on track after successful second quarter

May 10, 2023 - Siemens Healthineers AG today announces its results for the second quarter, ending March 31, of fiscal year 2023.

Q2 Fiscal Year 2023

• Equipment orders continued to exceed very strong equipment revenues; equipment book-to-bill ratio 1.01
• Comparable revenue growth was very good at 11.2% excluding rapid COVID-19 antigen tests; taking into account the tapering rapid antigen test business, comparable revenue declined by 2.5% from a very strong prior-year quarter
• Imaging showed clear comparable revenue growth of 12.7% and a strong improvement in adjusted EBIT margin of 130 basis points to 21.5%
• Diagnostics revenue fell 39.0% on a comparable basis due to the tapering rapid COVID-19 antigen test business; adjusted EBIT margin of -10.1% burdened by transformation costs (€77 million, or 710 basis points)
• Varian achieved excellent comparable revenue growth of 27.0% following resolution of a previous supply-chain issue; adjusted EBIT margin at 14.4%
• Advanced Therapies showed very strong comparable revenue growth of 9.9%; adjusted EBIT margin clearly higher than in the prior-year quarter at 16.8%; endovascular robotics solution will focus exclusively on neurovascular interventions
• Overall adjusted EBIT margin was down to 12.7% due to lower contributions from rapid COVID-19 antigen tests, transformation costs in Diagnostics, and cost increases, particularly for procurement and logistics
• Adjusted basic earnings per share were below the prior-year quarter at €0.43; excluding rapid antigen tests and transformation costs, adjusted basic earnings per share increased by 11%

Outlook for Fiscal Year 2023

We confirm our expectation for comparable revenue growth of -1% to 1% (6% to 8% excluding revenue from rapid COVID- 19 antigen tests) and adjusted basic earnings per share of €2.00 to €2.20.

Bernd Montag, CEO of Siemens Healthineers AG:

»We achieved remarkable sales growth in the second quarter and made important decisions for the future. We are fully on track to achieve our annual and mid-term targets.«

Quarterly Statement Q2 Fiscal Year 2023 | Siemens Healthineers

Business Development Q2

Siemens Healthineers

	Q2	Q2		%-Change
(in millions of €)	2023	2022	Act.	Comp.¹
Revenue	5,346	5,460	−2.1%	−2.5%
Adjusted EBIT²	681	980	−30%
Adjusted EBIT margin	12.7%	17.9%
Net income	108	583	−81%
Adjusted basic earnings per share³	0.43	0.67	−36%
Basic earnings per share	0.09	0.52	−82%
Free cash flow⁴	517	164	216%

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 expenses 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 in the second quarter of fiscal year 2023 declined by 2.5% on a comparable basis. The reason was the materially lower revenue from rapid COVID-19 antigen tests. Excluding the rapid antigen tests, revenue rose 11.2% on a comparable basis - with very good growth in the Varian, Imaging and Advanced Therapies segments. From a geographical perspective, revenue grew sharply in the China region, while in the Asia Pacific Japan region it grew significantly. Revenues in the Americas and EMEA regions fell as the rapid COVID-19antigen-test business tapered off. Excluding the rapid antigen tests, the Americas recorded strong growth and EMEA very strong growth. Nominal revenue was around €5.3 billion.

Equipment order intake continued to exceed very strong equipment revenues in the second quarter; the equipment book-to-billratio was 1.01.

Adjusted EBIT fell 30% to €681 million, resulting in a lower adjusted EBIT margin of 12.7%. This was due to markedly lower contributions from rapid COVID-19 antigen tests and transformation costs for the Diagnostics business. Cost increases, particularly for procurement and logistics, were largely compensated by positive currency effects.

Net income fell 81% to €108 million. Besides the effects already mentioned, it was especially affected by expenses related to the focusing of the endovascular robotics solution exclusively on neurovascular interventions and the associated withdrawal from the robotic-assisted endovascular cardiology business in the Advanced Therapies segment. The tax rate remained low at an unchanged 23%.

Compared with the percentage decline in net income, adjusted basic earnings per share fell by only 36% to €0.43 because the expenses for the withdrawal from the robotic-assisted endovascular cardiology business were adjusted as other portfolio-related measures.

Free cash flow rose to €517 million.

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Quarterly Statement Q2 Fiscal Year 2023 | Siemens Healthineers

Imaging

	Q2	Q2		%-Change
(in millions of €)	2023	2022²	Act.	Comp.³
Total adjusted revenue¹	2,915	2,593	12.4%	12.7%
Adjusted EBIT	627	523	20%
Adjusted EBIT margin	21.5%	20.2%

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. Comparable based on the organizational structure effective October 1, 2022.
3. Year-over-yearon a comparable basis, excluding currency translation and portfolio effects.

Imaging segment revenue was around €2.9 billion in the second quarter. The broad-based revenue growth was at 12.7% on a comparable basis.

From a geographical perspective, Imaging revenue grew sharply in the China, Asia Pacific Japan and EMEA regions. Revenue in the Americas region grew moderately.

Due to the positive revenue development, the segment's adjusted EBIT margin rose to 21.5%. Cost increases, particularly for procurement and logistics, were largely compensated by positive currency effects.

Diagnostics

	Q2	Q2		%-Change
(in millions of €)	2023	2022	Act.	Comp.²
Total adjusted revenue¹	1,081	1,768	−38.9%	−39.0%
Adjusted EBIT	−110	342	−132%
Adjusted EBIT margin	−10.1%	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.

Second-quarterrevenue in the Diagnostics segment fell 39.0% on a comparable basis from the very strong prior-year period to almost €1.1 billion. The reason was the materially lower contributions from rapid COVID-19 antigen tests of €4 million (prior year: €678 million). Excluding the rapid antigen tests, revenue was down 1.4% primarily due to the tapering-off of other Covid-related tests.

In the China region, Diagnostics posted a significant rise in revenues. Revenues in the EMEA and Americas regions fell by a mid-double-digit percentage, and in Asia Pacific Japan by a mid-single-digit percentage, mainly due to lower contributions from rapid COVID-19 antigen tests.

The segment's adjusted EBIT margin fell to -10.1%. The margin decline was largely due to the lower contributions from rapid COVID-19 antigen tests. Transformation costs of €77 million and negative currency effects also weighed on the business. The transformation costs essentially consisted of expenses connected with the derecognition of assets, which was a result of measures to optimize the cost efficiency of the existing product range.

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Quarterly Statement Q2 Fiscal Year 2023 | Siemens Healthineers

Varian

	Q2	Q2		%-Change
(in millions of €)	2023	2022²	Act.	Comp.³
Total adjusted revenue¹	934	731	27.8%	27.0%
Adjusted EBIT	135	114	18%
Adjusted EBIT margin	14.4%	15.7%

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. Comparable based on the organizational structure effective October 1, 2022.
3. Year-over-yearon a comparable basis, excluding currency translation and portfolio effects.

The Varian segment posted revenue of €934 million in the second quarter, representing an excellent increase in revenue of 27.0% on a comparable basis. Following the resolution of delays at a supplier, Varian grew sharply in all four regions, above all in China.

The adjusted EBIT margin fell to 14.4%. This was due to a less favorable product and business mix, and negative currency effects. The very high revenue growth had a positive impact.

Advanced Therapies

	Q2	Q2		%-Change
(in millions of €)	2023	2022	Act.	Comp.²
Total adjusted revenue¹	498	456	9.2%	9.9%
Adjusted EBIT	84	55	52%
Adjusted EBIT margin	16.8%	12.0%

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.

Second-quarterrevenue in the Advanced Therapies segment rose very strongly by 9.9% on a comparable basis to €498 million.

In the China region, revenue grew sharply, while in the Americas region, it grew significantly. The Asia Pacific Japan region posted slight growth. In the EMEA region, revenue fell slightly.

The adjusted EBIT margin of 16.8% was markedly higher, driven by effects from the very strong revenue growth. Positive currency effects outweighed cost increases that were seen particularly in procurement and logistics.

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Quarterly Statement Q2 Fiscal Year 2023 | Siemens Healthineers

Reconciliation to consolidated financial statements

Adjusted EBIT

	Q2	Q2
(in millions of €)	2023	2022
Total Segments	736	1035¹
Corporate items, eliminations, other items	−54	-55¹
Adjusted EBIT	681	980
Amortization, depreciation and other effects from IFRS 3 purchase price allocation adjustments	−101	−186
Transaction, integration, retention and carve-out costs	−8	−11
Gains and losses from divestments	‐	‐
Severance charges	−55	−22
Expenses for other portfolio-related measures	−3292	‐
Total adjustments	−493	−219
EBIT	189	761
Financial income, net	−47	−7
Income before income taxes	142	754
Income tax expenses	−33	−171
Net income	108	583

1. Comparable based on the organizational structure effective October 1, 2022.
2. Including expenses for impairments of other intangible assets in the amount of €244 million.

Basic earnings per share

	Q2	Q2
(in €)	2023	2022
Basic earnings per share	0.09	0.52
Amortization, depreciation and other effects from IFRS 3 purchase price allocation adjustments	0.09	0.17
Transaction, integration, retention and carve-out costs	0.01	0.01
Gains and losses from divestments	‐	0.00
Severance charges	0.05	0.02
Expenses for other portfolio-related measures	0.29	‐
Tax effects on adjustments¹	−0.10	−0.04
Adjusted basic earnings per share	0.43	0.67

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

Amortization, depreciation and other effects from IFRS 3 purchase price allocation adjustments decreased to €101 million. The prior-yearquarter contained higher effects in connection with the Varian acquisition.

Severance charges rose by €33 million to €55 million. These essentially comprised higher severance charges in the Proton Solutions business and related to the transformation of the Diagnostics business.

Expenses for other portfolio-relatedmeasures were €329 million. These were due to the focusing of the endovascular robotics solution exclusively on neurovascular interventions and the associated withdrawal from the robotic-assisted endovascular cardiology business in the Advanced Therapies segment.

Against the backdrop of a rise in interest rates, financial income, net fell by €40 million to a negative €47 million - mainly because of higher interest expenses for loans in connection with the financing of the Varian acquisition.

As a result of the developments described above, net income fell 81% to €108 million. The tax rate remained low at an unchanged 23%.

Compared with the percentage decline in net income, adjusted basic earnings per share fell by only 36% to €0.43, since the expenses for the withdrawal from the robotic-assisted endovascular cardiology business in the Advanced Therapies

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