"Very Strong And Growing" Siemens Healthineers Hits Targets

By Jof Enriquez,
Follow me on Twitter @jofenriq

German conglomerate Siemens AG reported better-than-expected third quarter results and raised guidance for 2016 on account of sustained growth by its healthcare unit, Healthineers, and other business divisions.

For the third quarter ended June 30, Siemens posted a net profit of €1.33 billion euros, which topped analysts' expectations of €1.2 billion euros, reports CNBC. Geopolitical risks are likely to linger, Siemens CEO Joe Kaeser told the new outlet, but that did not stop the company from raising guidance for earnings per share from net income for the full year from previous estimate of 6 to 6.4 euros to 6.5 to 6.7 euros ($7.2 to $7.5).

All but one of Siemens' divisions, including its healthcare business Healthineers, hit their profit margin target range for the third quarter, according to MarketWatch.

Analysts have been expecting 2016 to be the year when Siemens' Vision 2020 restructuring plan begins to bear fruit. The healthcare unit – rebranded as Healthineers in May – is touted by Siemens' leadership as a key driver for the turnaround plan, and it has performed strongly in consecutive quarters dating back to last year. Quarterly margin dipped from last year, but executives attribute this to seasonal patterns.

"We are very happy with the overall performance of our healthcare – of our Healthineers. And the fact that the quarterly margin has been a bit down year-over-year does not contradict the fact that this is a very strong and growing business. Especially the imaging part, it's very much benefiting from wins and market share in relevant industries," Siemens CFO Ralf Thomas told analysts during a conference call, according to Seeking Alpha.

"Top-line growth was mainly driven by our diagnostic imaging business. From a regional perspective, we like to see double-digit growth in China. Equipment orders in China were up more than 20 percent, and Healthineers margins were solid and benefited from foreign currency tailwind of around 80 basis points," added Kaeser.

Siemens last week unveiled its next-generation Atellica in-vitro diagnostics platform at the 68th AACC Annual Scientific Meeting & Clinical Lab Expo in Philadelphia. The company claims that Atellica is 10 times faster than conventional conveyors and features a modular, scalable, and flexible setup for up to 10 components with more than 300 customizable configurations, and an immunoassay analyzer capable of handling more than 400 tests per hour. Atellica is under FDA review but shipments are planned during the next fiscal year.

"When it comes to in-vitro diagnostics, before we see the full impact of Atellica, it will take a couple of more quarters in the marketplace," said Thomas.

Healthineers also expanded recently into molecular cancer diagnostics, and is working on several new medical technologies, including a biopsy robot equipped with ultrasound and MRI technology. It also brought to the United States last month its Enterprise Services (ES), offering hospital management and clinical IT solutions.