Siemens Healthineers Margins Disappoint, but There are Silver Linings That said, the benefits from the successful Atellica platform roll-out could be a timely offset to logistics headwinds in the coming quarters. The continued decline in the Diagnostics business is a concern – while fundamentals have improved post-IPO, the path to achieving the mid-term FY25 target looks to be further out than initially anticipated. This was mainly due to a lockdown-driven decline in antigen testing volumes in China, although even on an ex-antigen basis, sales were still down ~8%. The biggest revenue disappointment for the quarter, though, was the underlying Diagnostics business (excluding COVID antigen tests), which reported a decline of 24%. This was offset by healthy demand for Magnetic resonance and strong sales growth numbers at Varian (+8%) and Advanced Therapies (+6%), despite suffering site access delays in China as well. By segment, Imaging organic revenue growth was a muted 2.5%, negatively impacted by the China lockdowns and related supply chain delays. Beyond the supply side issues, however, demand trends appear intact, with the order book growth at a strong +16%, reflecting the healthy underlying demand for medical equipment globally. Of note, this is the first time that the company has reported being constrained by supply chain challenges in its ability to serve customers. Revenue trends have been a mixed bag for Siemens Healthineers – on the one hand, Q3 2022 saw resilient sales growth of ~4% YoY to EUR5.2bn, but on the other hand, the ~6% YoY organic decline was well below expectations.

With the stock trading at a historical discount despite a strong order book as well, I see ample room for re-rating as the company executes through the transitory headwinds.ĭata by YCharts Recapping the Mixed Revenue Performance Plus, the company looks set to be a key beneficiary of the ramped-up investment cycle in hospitals post-COVID, while its disciplined M&A strategy (e.g., the acquisition of Varian) is helping to unlock valuable synergies. Looking past the near-term hiccups, Siemens Healthineers remains a compelling long-term investment, in my view, given its exposure to global structural trends such as aging demographics and rising government spending on healthcare, as well as its presence in high barrier to entry segments in the relatively non-cyclical MedTech industry.

Siemens Healthineers ( OTCPK:SEMHF), the leading medical technology (MedTech) supplier for the in vitro and in vivo diagnostic markets, has become the latest to suffer an earnings disappointment due to inflationary cost pressures.

Otcmkts semhf