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.

Thank you, operator. Good morning, dear analysts and investors. Our CFO and our CFO, Jeroen Schmitz, who are here with me in our headquarters in Erlangen, will be taking you through the details of our Q2 2024 numbers this morning. The results for the Q2 fiscal 24 were published this morning at 7 a.m. and you can find all the 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 ask questions. And as usual, please let me remind you of the two-question rule for the Q&A session. So let us get started. Bernd, please, the floor is yours.

Thank you, Marc, and good morning, dear analysts and investors. First things first, we reiterate our outlook for comparable revenue growth and adjusted EPS for 2024. Jochen will take you through the details at the end of his part, as usual. In terms of revenues, the second quarter was coming up against very tough comms in the equipment businesses. Imaging was at strong 13%, Varian was at super strong 27% and Advanced Therapies with a very solid 10%. Hence, especially for Imaging and Varian, it is not surprising that this quarter's growth rate is below the full year guidance band. We had flagged this and revenue growth in Qt came in at 3% in line with our expectations. Adjusted earnings per share came in at 55 euro cents in Q2 year over year, up by 13%, with a strong EBIT contribution. In the second quarter, we again expanded our strong order backlog with an equipment book-to-bill rate of 1.08. In detail, imaging growth was 3%, the margin this quarter of 22% sequentially improved by more than 100 base points compared to Q1 and we expect further improvement in H2. Variant revenue was 2% below prior year quarter, which is quite an achievement by the team considering the comp And the margin is well in the guided range of 15 to 17%. Advanced therapies delivered solid growth of 8% at a margin of 16.2%. And diagnostics grew by 4% at a 4.1% margin at the upper end of our guided ranges and is fully on track. Jochen will provide you with more insights in the financial sections. Now how do we execute on our priorities creating value from our two sources of value creation? Imaging, variant and advanced therapies on the one hand are truly synergetic and for these three our recipe is winning together or in other words leveraging combined scale. We are advancing in all modalities and markets with substantial innovations. We are launching new MRIs at the entry level while at the same time innovating procedures in the OR with our C-ARMS. We are boosting our offerings in cancer care with unprecedented imaging quality to enable accuracy in detection and treatment. At the same time, we are making high-end dual-source cardiac imaging available for rural hospitals and outpatient settings. And we are getting good feedback from the market, demonstrated by a further expanding backlog, with the equipment book-to-bill sitting at very good 1.1 for the first half of fiscal 24. Varian is back on track delivering stable performance, manifesting in high growth and less volatile margins. For diagnostics, on the other hand, the recipe is focus and there is only one priority, transforming the business to win. We take advantage of the completion of the Artelika portfolio and are progressing well with the conversion to Artelika. Also, the portfolio simplification and site consolidations are taking shape, which is an important element to ultimately optimize our supply chain. With regard to our guided transformation savings of in total 300 million until fiscal year 2025, we are well on track. The savings find their way into the significantly improved margins and our improved setup translates into solid growth rates for several consecutive quarters now. Now changing flight level a bit. How do we sustain our growth into the future? The secular growth drivers are probably well known to you and you might remember this slide from previous quarterly calls. We are in the pole position to directly tackle the challenges in healthcare systems. Significant innovations help us to further gain market share, accelerate replacement and ultimately lift attractive innovator margins with increasing scale and we are witnessing extraordinary breakthroughs in medical science and technology providing new opportunities for our customers and for us breakthroughs which technically empower healthcare workers to be more productive breakthroughs which enable better diagnosis and better treatment with substantially better patient outcomes. Breakthroughs which will finally help to provide access to healthcare to more than 4 billion people who do not have it today. Let me dive into the implementation of our growth strategy on the next three slides and give you some examples on how we are sustaining our growth ambitions. The first angle is about enabling efficient operations to improve productivity. And some recent innovations showcase very well how we contribute here. Magnetom Flow is the second incarnation of our virtually helium-free MRI technology, bringing it from the entry level over time to the higher field strength platforms in our portfolio. Magnetom Flow has a closed helium circuit and no quench pipe required for cooling, bringing down total cost of ownership and saving resources. Usually, we talk about the trickle-down of new innovations. Here we talk about an innovation from the entry level making its way up in the portfolio. Our AI-enhanced imaging with deep resolve enables shorter measurement times with improved image quality. Magnetom Flow's high degree of automation simplifies the complex MRI workflow and ensures the highest image quality independent of how experienced the user is and increases efficiency. Syngo Virtual Cockpit is not just a multi-vendor remote scanning software, it is a game changer for healthcare systems, enabling virtual access to experts and it increases productivity. It enables higher utilization for e.g. MRIs by allowing additional MRI slots throughout the system, improving patient access, reducing wait times and increasing flexibility for healthcare workers to ensure the highest quality of care at all sites. SyngoCarbon is our enterprise imaging and reporting solution. It provides a holistic platform for image interpretation, reporting, artificial intelligence and data management in one integrated and user-friendly workspace. Thus enabling enhanced knowledge and data sharing across the entire healthcare continuum, helping to connect care teams for better collaboration and outcomes. The same applies to oncology as a service. Our advanced technology-enabled clinical services are designed to optimize the value chain of a cancer center. These tailor-made solutions provide clinics with technology-enabled, value-added services, especially in physics and dosimetry, to provide better outcomes while reducing costs. The second thrust we focus on is innovating continuously for better diagnosis and treatment. With my example, I focus on cancer today. Effective cancer therapy requires diagnosis, constant reassessment and ongoing adjustment of therapy delivery. Our solutions provide superior image quality and more accurate detection for screening programs, e.g. for lung cancer and for breast cancer. Lung cancer has one of the highest mortality rates among cancers as it grows fast and is most often detected quite late. Therefore, the increasing amounts of screening programs are key to identify early stage tumors in risk patients, thus improving life expectancy while reducing treatment costs for the healthcare system. In Germany alone, about 650,000 additional CT scans per year are expected with the screening of risk patients. Our entry-level Somatom GO platform provides leading dose reduction technologies to reduce the exposure for patients over the whole screening and treatment period. In addition, Together with Intuitive Surgical, we provide endopronchial biopsies for diagnosis and treatment of small lung nodules by using integrated image guidance and robotics. These minimally invasive procedures for biopsies are guided by our C-ARMS and reduce complications for patients substantially. Another screening program where our products can make a difference is for breast cancer. Our Mammomat B-Brilliant is a new mammography system with wide-angle tomosynthesis and strong AI capabilities. It offers a scan time of around 5 seconds, around 35% faster compared to other devices. It provides the fastest wide-angle tomosynthesis on the market, creating a 3D image with highest depth resolution in the shortest time possible. In this way, abnormalities and microcalcifications in the tissue of the breast can be identified with a high level of accuracy. Another great example for our innovation leadership for better treatment in cancer care is Variance HyperSight. It combines our strength in imaging and in radiation therapy. Hypersight offers substantially improved image quality at significantly increased speed. It allows for substantially improved treatment planning right in the treatment room and precise diagnostics while the patient is in the Lenac. The FDA has meanwhile also cleared hypersight for TrueBeam and Edge radiotherapy systems, making this groundbreaking technology available for the full range of variant linear accelerators, including the majority of the installed base. is the world's second most common cause of death, responsible for 10 million fatalities a year. Two-thirds of these are from low and middle income countries. Especially in these countries, patients have only very limited access to state-of-the-art diagnosis and therapy. Which brings me to the third growth angle. Thanks to our innovation strength, we play a key role when it comes to expanding access to care. We make state-of-the-art imaging available to underserved countries and communities. We have seen the first installations of the Magnetome Free family in several emerging countries. For example, our partnership in Rwanda includes several Magnetome Free installations in hospitals across the country to provide access to imaging. But decentralized locations are also equipped with ultrasound systems to enable access to imaging, especially for mother and child care in Rwanda. With the launch of the dual-source CT somatome ProPulse, we now make high-end CT technology accessible for smaller and rural facilities as well as outpatient diagnostic centers. our unique dual source technology allows for very high temporal resolution and a super fast scan speed which is for example important for scans of the heart to limit image artifacts from breathing or motion or motion of the heart which otherwise could only be done with medication of the patient A main barrier for the adoption of dual-source CT in rural settings was lifecycle cost. With up to 20% lower lifecycle costs, we are able to break this barrier due to an improved cooling system and more efficient power consumption. By making existing high-end technologies more accessible, we can extend our value partnerships also to underserved countries and communities and with this expand access to care. I already touched on the value partnership in Rwanda. Another example is the partnership in Zambia. In Zambia, we enable access to cancer care by providing products and services from the three segments variant imaging and advanced therapies for the diagnosis and treatment of cancer. And when it comes to underserved communities, I already outlined last quarter that we entered a strategic 10-year value partnership to bring the latest diagnostic and therapeutic equipment to patients across Oklahoma, particularly in rural and underserved communities. On back of all these proof points of innovation strength, holistic portfolio and commercial impact, we feel very well prepared to deliver on our future growth targets. We expect to deliver on our targets from the capital market day of 6 to 8% comparable revenue growth, CAGR for the group as well as 12 to 15% for EPS. Beyond 2025, we expect to keep this very attractive growth profile with mid to high single-digit comparable revenue growth, translating to double-digit EPS growth also on the medium term. And with this outlook, beyond the current fiscal year, 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.