Siemens Healthineers Adr

Good morning, ladies and gentlemen, and welcome to Siemens Healthineers Conference Call. As a reminder, this conference is being recorded. Before we begin, I would like to draw your attention to the Safe Harbor Statement on page two of the Siemens Healthineers presentation. This conference call may include forward-looking statements. These statements are based on the company's current expectations and certain assumptions, and are therefore subject to certain risks and uncertainties. At this time, I would like to turn the call over to your host today, Mr. Mark Kubanek, Head of Investor Relations. Please go ahead, sir.

Good morning, dear analysts and investors. Our CEO, Ben Montag, and our CFO, Jochen Schmitz, who are here with me in our headquarters in Erlangen, will be taking you through the details of our Q3 2024 this morning. The Q3 results for fiscal 24 were published this morning at 7 a.m. and you can find all relevant documents as well as the recording of this call on the investor relations section of the Siemens Healthineers website. After the presentation, there will be a chance to raise questions. Please note the following. Siemens Healthineers will record and transcribe this meeting. It will be published on websites such as www.siemenshealthineers.com If you do not want to be recorded or transcribed, please inform us before asking questions or making comments. Details are found in the privacy policy of Siemens Healthineers. And finally, let me remind you of the two-question rule for the Q&A. So let us get started, Bernd. The floor is yours. Thank you, Marc.

Good morning, dear analysts and investors. Today we present you our quarterly figures. We confirm our outlook for comparable revenue growth and adjusted EPS for fiscal 24 despite China still impacting growth. Varian delivered a very solid set of numbers again and diagnostic significantly further expanded its margin based on a consistent executed transformation program. This is evidence of our decisive measures following up on our challenges from last year and bearing fruit. We successfully stabilized variance performance we are swiftly implementing the Diagnostics Transformation Program. The imaging business is still impacted by the anti-corruption campaign in China, which impacts the entire industry. We expect this to turn into pent-up demand in 2025, as the clinical need for our offerings is not impacted by exogenous factors like this. In terms of growth, we came up against very tough comps in Q3. Please remember, last year's Q3, we grew by 10% ex-antigen, and in particular, imaging was at very strong 15% and advanced therapies at 12% growth. Let me now briefly run you through the third quarter results. In the third quarter, we again expanded our strong order backlog with an equipment book to build rate of 1.07. Revenue growth in Q3 came in at 4%, mainly held back by China. Adjusted earnings per share were 52 euros in Q3, broadly in line with last year's strong third quarter, which benefited from an extraordinary low tax rate. Imaging grew by 4% on very tough comms. The margin was 20% year-over-year, impacted by headwinds from foreign exchange. Varying grew by 10% at the upper end of the guided range. and the margin came in at healthy 16.6%. Advanced therapies revenue was flat on very tough comps. The margin was 14% year over year impacted by headwinds from foreign exchange. Diagnostics grew by 2% at a strong 7.4% margin and is fully on track to deliver the savings from the transformation program. Jochen will provide you with more insights in the financial section. We are very optimistic about our future growth prospects. On the one hand, thanks to our healthy and constantly growing order book. On the other hand, since we have identified multiple sources of growth for our products and services. You are aware of the secular growth drivers such as growing and aging population and the rise in non-communicable diseases. Cancer and cardio and neurovascular diseases especially drive the need for exactly what we offer with our portfolio. Increasing cost pressure in healthcare systems combined with staff shortages further increase the need for substantial innovations. What are we doing about it? We offer breakthrough innovations for better patient outcomes and gain further market share, accelerate replacement, and ultimate ultimately reach attractive innovator margins with increasing scale. But we also benefit from innovations in other fields of healthcare, whether it is in pharma or in the medical device space or in the advancements of robotic treatments. One could say the world innovates for us. This chart you are familiar with from previous communications. To accelerate growth and profitability, we leverage two distinct sources of value creation. On the one hand, we have our synergetic and winning combination of imaging, variant, and advanced therapies. Our focus there is on leveraging combined scale in multiple dimensions. For diagnostics, on the other hand, the formula is rigorous focus. Now let me give you some examples how we are crystallizing value in our two cores. Let me start with the synergistic segments. You know about our substantial innovation leadership in CT imaging with photon counting or in MRI with our award-winning low-helium technology. Both are obvious examples of our innovation leadership and how we are paving the way for future growth. However, growth for us does not only come from our own innovations. It is also the result of the healthcare world innovating for us. We are constantly witnessing extraordinary breakthroughs in medical science, like in pharma or the medical device space, which need better diagnosis and better treatments with substantially better patient outcomes. Outstanding examples are new therapy approaches in cancer care and neurology based on innovations in pharma industries triggering fast adoption of novel procedures. It has a direct impact on growth in our molecular imaging business and further sustains our growth ambitions. Our products are needed to identify the right patients to assess response and to confirm health or to accompany survivorship. One example is Theranostics as a new approach to identify and treat an increasing number of cancer types. Theranostics is a highly targeted and individualized treatment using one radioactive agent, the radioligent, to identify and mark cancer cells and a second agent to destroy those cells. Theranostics has been proven effective in extending lives and improving quality of life of patients, especially also for those who have not responded to traditional cancer treatments such as radiation, chemotherapy, and immunotherapy. As an example, the treatment of prostate cancer has recently significantly advanced by Theranostics. There's also a pharma pipeline covering more than 25 other cancer types. PET CT scans and SPECT CT scans, as well as MRI, play a key role for the clinician to select the right treatment for the right patient and to monitor therapy progress. the clinical benefits of providing individualized cancer care is why Theranostics is gaining momentum among providers. Another outstanding example are diseases modifying therapies for Alzheimer's disease. As you are probably aware, several groundbreaking immunotherapy treatments have recently emerged that work to reduce beta-amyloid plaques that form in the brain and slow down cognitive decline in the early stages of Alzheimer's disease. To qualify for these treatments, the presence of beta-amyloid plaque must be confirmed through diagnostic testing. Beta-amyloid PET imaging plays a critical role in the Alzheimer's disease care pathway as it is one of the only modalities available to evaluate the beta-amyloid plaque burden. We offer the broadest PET-CT portfolio in the market, from ultra-high-end systems primarily installed at larger or academic institutions to systems targeted at bringing digital PET-CT to a broader market. They come with a wide range of innovative technologies, like our latest innovation, the AI-powered Biograph Trinium. But our offering goes beyond molecular imaging scanners. We own and operate the leading pet radio diagnostic pharmacy network in the US, which reliably delivers pet radiopharmaceuticals across the country. What makes this so relevant? These radiopharmaceuticals have a very short half-life and need to be used quickly after production. We invest in our radiopharmaceutical network with new production facilities to increase patient access to PET biomarkers and to support future biomarker development. The availability of new biomarkers will increase access to the latest individualized care and make us an even stronger partner for customers and patients along the entire cancer care continuum and for many of the most threatening diseases. To sum it up, we laid the foundation for another future growth engine helping healthcare providers and patients to deal with non-communicable diseases. When it comes to diagnostics, our full focus for value creation in the last two years has been on successfully implementing the transformation program that was designed to drive a step change in profitability at diagnostics. We started the program in 2022 as a reaction to the changed cost environment, but the key trigger was the completion of the Artelika portfolio with the launch of the Artelika CI Analyzer. This enabled us to embark on a substantial portfolio simplification, the positive effects of which we will see coming in as we wind down the legacy platforms. Next to the portfolio simplification, we pulled many different levers to bring the cost level in the segment to a sustainably lower level in a large one-time effort. We have tightened our belt as a leaner organization in a significant reduction of complexity. We have challenged the way We do things across the organization and successfully focus the entire setup more suited to the needs of the diagnostics business and with the right focus and people to efficiently drive growth. The same holds true in terms of our service approach, which we right-sized and designed to better fit the needs of diagnostics. I will not run you through the detailed initiatives. There are many. I believe the number on the right side of the chart speaks speaks for itself. The numbers on the right side of the chart speak for themselves. The cost cutting is having a substantial impact. This steep ramp in terms of margin improvement is also the result of the super swift implementation of the cost out measures that we are clearly ahead of plan in terms of timing. We are now already on a sounder cost level in the business. Further margin improvement will not happen at a similar speed It will be more a function of the winding down of legacy platforms over the years to come and, of course, of conversion from higher revenue growth in the midterm. Which brings me to the next charge, where I will run you through the key points on why we have the right product in place to really compete in the core lab. In vitro diagnostics testing is at the core of clinical decision-making, and we have the perfect offering. With the completion of the Atellica family with the CI analyzer, we can cater for all settings and all customers, large, medium, small, hub, and spoke. We offer a highly competitive menu of more than 200 tests assessing patient health. And we are adding novel assays on an ongoing basis, like the recent first of its kind neurofilament light chain or NFL blood test for accurate diagnosis and personalized management of multiple sclerosis. Small hospital labs, as well as reference labs, face the same provider challenges from staff shortage to cost pressure, consolidation, and procedure growth. And this is exactly what we address with systems automating and digitizing routine work. At ADLM 2024, the Clinical Lab Expo We cut it short with the claim, do less. Atelika's human-centered engineering and automation delivers highly efficient testing at scale, which enables customers to streamline processes and speed turnaround time. Atelika is reliable with high throughput and therefore drives a high consumable utilization and ultimately our revenue. Healthy development of the revenue per box in our install base shows that we are on the right path. The Atelika franchise already crossed the 1 billion revenue line and continues to grow double digit. To sum it up, we have done our homework and are receiving great feedback from our customers at ADLM. And with this, I hand it over to Jochen for a deeper look into the financials of the past quarter as well as the outlook for the rest of the year.