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    "transcription": "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 this 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. Marc Koebernick, Head of Investor Relations. Please go ahead, sir. Thanks operator, and welcome dear analysts and investors to today's call also from my side. Our first quarter results were released at 7:00 AM CT this morning, and you can find all the material, presentation, earnings release, and the recording of the call on our IR webpage. I'm sitting here with Bernd Montag, CEO of Siemens Healthineers, and Jochen Schmitz, CFO. We'll be taking you through our first quarter results in the usual detail. After the presentation, you will have the chance to ask questions. Please, may I ask you to limit yourselves to two questions each, some things never change. With this, I pass the word over to our CEO, Bernd Montag. Bernd, the floor is yours. Thank you, Marc. Good morning dear analysts and investors. Thank you for dialing in, um, and expressing your continued interest in Siemens Healthineers. It has been a few months since we last spoke at our 2021 Capital Market Day. In case you missed it back then, and have a few hours to spare, you can still watch it on our webpage. Let me start by shedding some light on our financial performance in Q1, which shows that we have been able to take the momentum from 2021 over into the new financial year, despite our quite challenging environment. We increased our order backlog with an excellent equipment book to bill rate at 1.2, which is for all segments roughly on the same level. Comparable revenue growth was strong with 9.5% driven by an excellent 20% growth in diagnostics, including \u20ac329 million of Rapid Antigen sales. Varian had a very solid start to the fiscal year and contributed \u20ac750 million to the revenue. Imaging continues to be strong with 6% comparable revenue growth and Advanced Therapies with 3% growth. The adjusted EBIT margin for the group came in at 17.6% in Q1. Foreign exchange headwinds, and currently higher procurement and logistic costs were mostly offset by a better than expected rapid antigen contribution. Our adjusted earnings per share increased year on year, and was \u20ac0.55 cents in Q1. Free Cash Flow was strong with \u20ac556 million. We have raised the outlook for the group in terms of comparable revenue. We now expect three to 5% growth from previous knee zero to two, um, for adjusted basic earnings, especially we expect 2.18 to 2.3 Euro cents from previously 2.08 to, uh, 2.20. This increase is the result of higher than expected Antigen revenues. We now assume 700 million of revenues out of Rapid Antigen testing in fiscal year ' 22. So while it looks like it's shaping up to be another successful year at Siemens Healthineers, and Jochen will explain in more depth the numbers of this successful start. Let me recap a bit on what we told you at our Capital Markets Day. What makes Siemens Healthineers so unique? The basis for our success is the set of unique capabilities, which we have systematically built in the past years. A set of capabilities, which we keep strengthening every day, patient twining, physician therapy and digital data and AI. Patient twining means adding more effective and efficient ways to accurately describe the state of an individual patient. Having the ultimate vision of a digital twin of a patient in mind on which diagnosis, therapy selection and response control can be based very individually. This is why we drive imaging to new levels of insights, develop new diagnostics tests and work on making imaging and diagnostics more productive and accessible. Position therapy means using cutting edge technologies to deliver individualized therapies often with sub millimeter, sub millimeter accuracy, whether it's cancer, neural or cardiac disorders. The importance of precision in treating patients is what makes Varian so unique in cancer therapies. It is also why advanced therapies is focusing on making more and more procedures minimally invasive by image guidance and robotic assistance. Precision improves results, reduces side effects, in short makes therapies better for patients. Our third strengths is our unique competence in digital data and AI. It is key for scaling the application of technological advances, for having the next patient benefiting from the knowledge generated by diagnosing and treating millions of patients before, and for connecting patient training with precision therapy. Our unique capabilities allow us to pioneer breakthrough innovation to fuel further growth. Let's look at some of the most recent examples. First, the MAGNETOM Free.Max, our lightest, smallest and most cost-effective MR System. The MAGNETOM Free.Max comes with a basically helium-free technology that's significantly reduces total cost of ownership and therefore makes MR more accessible and consequently improves access to high quality diagnosis globally. Since its launch, we have seen more than 50% of systems being sold into new markets. That means into setting where MR could not go before. Buyer decisions are driven by favorable infrastructure requirements and ease of use, especially for those first time users. It was released in August 21, and we see a steady order ramp up also for the little sister, MAGNETOM Free.Star. The Naeotom Alpha is the first FDA cleared-photon counting CT on the planet. After more than 15 years of development, over 280 patents and over 100 publications, we have successfully launched Naeotom Alpha on November 18th ' 21. Described by the FDA as the first major imaging device advancements for CT in nearly a decade, Naeotom Alpha is seeing an impressive customer interest in both private and academic institutions. Our customers confirm that for photon counting technology has the potential to become the new global technical standard in CT in the decades to come. More than 35,000 patients were already scanned using the new system of, um, as of today. And we started to book orders in fiscal year ' 21 for a selected customer group of early adopters already. Atellica CI 1900, Atellica Solutions' little sister is targeted towards mid-size labs hub and spoke settings in the emerging countries. It brings the Atellica philosophy of combining quality and throughput to even more customers bird wide. Speaking of Atellica, in Q1, we were capable to sign a contract for more than 40 Atellica solution analyzers with Ascent in California, making it one of the country's largest single site Atellica Solution locations. Turning the page over to physician therapy, Ethos, our AI driven adaptive radiation therapy system provides data-driven, personalized cancer care with maximum impact by minimizing side effects. Since launch, we have booked more than 110 orders for ethos already around 50 systems are installed with a remarkable number of over 15,000 adaptive sessions since launch. And with core path, we are on the way to advance endovascular robotics to better and more accessible state-of-the-art/ treatment. All of this is enabled by the glue of digital data and AI. Like our AI-led companion, ovarian oncology as a service offering. As an example, we advanced clinical decision making with a comprehensive AI powered portfolio with our AI companions, providing solutions for anatomies covering 35% of imaging procedures. By 2025, we aim to increase this number to 85%. These breakthrough innovations, our unique capabilities and the focus and scale of our broad products and solutions portfolio allow us to benefit from and to contribute to the three company-wide growth vectors that we presented at our Capital Market Day. These growth opportunities include fighting the most threatening diseases, enabling efficient operations and expanding access to care. Our unique technologies and competencies are tackling exactly these opportunities, and we tirelessly strengthen them even further. As a result, we will have even more impact on global healthcare and accelerated growth. And while we pursue these three company-wide growth makers, each segment keeps a razor sharp focus on its respective targets, and contributes to our midterm targets that we presented at our capital markets day. As a reminder, we aim to grow our comparable revenue growth by 6% to 8% per year, and our adjusted EPS by 12% to 15% per year in the years from 23 to 25. Quickly turning to Varian, I highlighted already before the incredible success of Varian, um, with the rollout of Ethos, taking a lead in the adaptive therapy market. However, besides this, Varian also delivered a very remarkable quarter. Varian had a very solid start with a very positive revenue growth across all regions with revenues reaching, um, \u20ac750 million. At the same time, Varian has been capable to further expand its, its strong order backlog with an equipment book to build off 1.23 in the first quarter. Documentation of this strong performance are two notable long-term partnerships we signed with the Oulu University Hospital and the US oncology network. The partnership with Oulu University Hospital in Finland is a 10 year strategic partnership to build a comprehensive digital diagnostic and therapeutic ecosystem that addresses the entire cancer treatment pathway and advances the quality of care for cancer patients in Northern Finland. Through this partnership, Varian and Siemens Healthineers will provide Oulu University Hospital with a technology and services package that includes both imaging and radiation therapy equipment for cancer treatment, software solutions for improved workflow and decision support, and a range of services from equipment maintenance to staff training and workforce development. This is just one of many proof points of combined deals that we have in our pipeline. So stay tuned for more combined deals to come. At the same time, during the quarter, Varian signed a multi-year agreement with the US Oncology Network further extending the existing partnership. The US Oncology Network is the largest network of community oncologists in the United States. The agreement includes software, service, and equipment solutions across the US, including service support for over 150 linear accelerators. Also, in terms of profitability, Varian achieved a strong quarter. With an adjusted EBIT of \u20ac117 million and a margin of 15.7%, Varian, Varian is already right in the little of its margin target range of 15% to 17% and therefore, very well on track to deliver on what we have committed. So before I hand it over to Jochen for the financials and our updated outlook, let me just say how proud I am on how we as a team have managed the challenging times and that we consistently work and deliver on our target to pioneer breakthroughs in healthcare for everyone everywhere. And with this, over to you Jochen. Thank you Bernd, uh, and also good morning, everyone also from my side, glad that you are joining us again. Let me take you through our financials of our first quarter in fiscal year ' 22. As Bernd highlighted before, we see the momentum from fiscal year ' 21 to continue in the first quarter of our fiscal year ' 22. Let me start with giving some color on the dynamics and the equipment orders first. We continue to post very good equipment order intake growth in the high single digits, a very healthy dynamic both year over year, as well as sequentially. Underpinned by the, again, very good equipment book to build 1.2 in Q1. In revenue, we also continue to see good underlying revenue growth. I.e. excluding Rapid Antigen revenue of 4.5% growth with growth across the board. This is particularly good when you take into account that we grew by around 10% ex-Antigen last year. And this, again, was on the last quarter. In fiscal year 20, which was not impacted by the pandemic. This is for me, a clear testimony, not only to the accelerated gross momentum, and at the same time, and as important to our unique resilience in extremely challenging environments. In particular, the appearance of the Omnicron Varian accelerated the momentum of the antigen business in Q1 with 329 million of revenue, primarily in AMEA, which brings us to the overall 9.55% comparable revenue growth. Bear in mind that we received, uh, the OEA approval for the US market only at the end of December. Therefore, we did not see US revenue from the antigen business in Q1. I will talk later in my presentation in detail on what we have assumed for the Antigen business in the remaining fiscal year. In the geographies, we also see the very good underlying momentum continuing. Also in China, we saw very tough coms in the prior year, quarter. Last year in Q1, we saw significant equipment grows in China due to government-backed preparations for potential second COVID 19 wave. In Q1, we also saw tearing from foreign exchange translation of around three percentage points. So revenue in Q1 grew by around 12%, if you take out portfolio effects only. This growth, we saw also drop through to the bottom line with 12% growths on our adjusted earnings per share this quarter. Obviously, there were some moving part in between. Adjusted EBIT margin came in at 17.6% below the stellar prior year quarter. Bear in mind that last year's Q1 was exceptionally good, since we posted the highest margin of the fiscal year in Q1, which is quite unusual. So we see some degree of normalization in the Q1 margin this year. On top of this, we saw two major headwind this quarter. Headwinds from foreign exchange on the bottom line, and currently, higher costs from procurement and logistics related to the current situation of global supply change in the COVID-19 pandemic. On the other\u2026 inaudible change in the Covid-19 pandemic. On the other side, we saw tailwind from the higher rapid antigen contribution. I will talk in more detail later in this presentation on the different profit impacts this quarter, and what to expect in the course of the remaining fiscal year. Below the EBIT line we posted minus-30 million Euros of financial income, which was above our normal run rate for interest expenses due to a negative impact from the variation of smaller equity investments. We continue to expect the targeted 50-70 million expenses, financial income net for the full fiscal year, unchanged to our guidance from early November. Tax rate came in at 29%, slightly about prior year quarter. Regarding cash, with also a very strong start to fiscal year 2022 in generating free cashflow, with a strong free cash generation of 556 million Euros, despite significantly higher bonus payouts, and the ongoing challenges in the supply chain with its impacts on inventory levels. This was largely driven by excellent cash collection. Now, let us have a look at the dynamics in the different segments. Bear in mind that Varian has no comparable prior year quarter yet, and therefore is not included in the comparable gross numbers yet. We will include Varian in our comparable growth from Q3 onwards. Let us now have a look at our segment performance. As Berndt has already covered Varian, I will commenting the remaining three. Imagining continues to be strong with 6% revenue growth, driven by very strong growth in molecular imaging, CT, and MRI, on the back of very strong prior year growth fueled both by healthy underlying growth in the core business, as well as, uh, some pandemic related demand. On the adjusted EBIT line, imaging showed a good performance of 20% margin. However, it was 340 base points below prior year's record margin, partially due to headwinds from foreign exchange, and procurement and logistic costs. Our marketing and sales activities for the new product launches in the first quarter also impacted the margin slightly negatively. Diagnostics showed excellent growth driven my rapid antigen sales, as well as a very solid core business growth, given the normalization of the test volume for routine examinations. Excluding the rapid antigen contribution, core business continues with solid growth at more than 3%. On the margin side, profitability was up by 530 base points year over year from the highly accretive rapid antigen business. Excluding antigen, the core business sustained solid underlying profitability. I will give more detail what this means for the diagnostic performance going forward on the next slide. At the same time, we also saw an impact of around 300 base point headwinds from foreign exchange, and procurement and logistics cost, which were overcompensated, obviously by the antigen contribution. Advanced therapies saw 3% growth this quarter, a decent performance on a strong comparable of 6% in prior year, and almost 10% in Q1 of fiscal year ' 20. Despite a softer growth quarter, we see advanced therapies well on-track for growth this year with a healthy order backlog. Q1 margin in advanced therapies was down to 14.3% in Q1, versus a very strong prior year quarter, and in the guided range for this fiscal year. In this quarter, the margin was negatively impacted by the headwinds from foreign exchange, and procurement and logistic cost of around 150 BPS, and also by ongoing investments for inaudible. In ier- in our diagnostic business, we now assumed a higher amp- uh, rapid antigen revenue contribution of 700 millions Euros in fiscal year 2022, up from previously communicated 200 million. Since our fiscal year 2022 outlook announced, uh, in November, the situation has changed significantly with the Omicron variant wave. Adding to this, we have received the FDA emergency use authorization approval in the United States, States, both was not factored into our original guidance. The team worked very hard to get the US approval, and meet the additional demand which arose from this opportunity. However, the full year visibility of, on the testing demand is still relatively low and the situation is still very dynamic. Based on the trends we experienced over the last years, we anticipate strong demand in Q1 and Q2, and then softening demand during the Summer month. Additionally, pricing has come down substantially for tenders in Germany, and considering we are not the only player to receive the US approval for its Covid-19 antigen test, we should see our pricing and volumes evolve over time in the United States. So, the overall market becomes more and more competive- -tive, with more capacity overall. Therefore we expect revenues to decline sharply in the second half. Profitability this segment is largely a result of the development in volume and prices. We expect profit accretion from rapid antigen peaking in the first half, to then decline sharply in the second half due to the expected lower demand and price erosion. Finally, a few comments on the Q1 performance of diagnostics core business. Excluding rapid antigen margin accretion, we continue to see that the core business is developing according to our plans with a solid underlying profitability. And this needs to be evaluated taking into account the current global supply chain challenges. Taking everything into consideration, we can be very happy with the steady improvements in our diagnostic segment. We continue to be on track with our plans to turn around the business. Now, let us have a closer look at the different profit impact that we expect to be more material in this fiscal year. You'll see on the slide the four topic that we currently consider material, and the year over year impact on adjusted EBIT in the first half and the second half of this fiscal year. And you also see that they all have somewhat different profiles in terms of year over year comparison over the course of the year. Let me start with what we just talked about, our rapid antigen testing. We expect a very positive accretion in the first half year, turning into a very negative year over year impact in the second half, due to the slowing demand, and at the same time, comparing against the very strong second half of last fiscal year. Regarding foreign exchange, as said before, we see a translational tailwind of around three percentage points this quarter, particular from the strengthening of the US dollar, and we expect this to continue throughout the year. However, since we do hedging on a rolling basis, uh, for three to six months forward, the impact on the EBIT line is usually trading the top line impacts by the said three to six months. Consequently, we expect a negative impact from foreign exchange on the first half bottom line, turning\u2026 in second half. The topic of impacts from incentives followed as during the course of last year. So, let me start that the updated assumption for rapid antigen for this fiscal year is already fully reflected in our books. Also group incentives related to antigen are kept this year. So, any incentive impacts from antigen will be limited to the diagnostic segment from now on as the new assumption is already beyond the set cap. For fiscal year ' 22, we expect an overall tailwind from incentives, skewed towards the second half. We expect the tailwind in the second half the fiscal year to be larger. Since we booked in last year's Q4 the employee bonus provision of 56 million Euros. The tailwind from incentives in Q1 was largely compensated by higher travel and marketing cost. And now to the impacts from procurement and logistic cost, related to the current situation of global supply chains. We are aware that this a big topic currently, also in the capital market. So, let me give you three main messages that sum up our current situation, and what we expect for the remainder of the year. First, very important, we did not see material impacts on our revenues from supply chain issues so far. And we assumed that we will not see material impacts going forward. Obviously, there is uncertainty from the future development of the pandemic and, for example, from new variants which we cannot foresee. Second, we see the headwinds mainly in procurement and logistic cost of around 100 base points in margins year over year, skewed towards the first half of the fiscal year. These headwinds have two main driver. One driver is price p- increases due to shortages, most notable in the lo- electronic components and in certain raw materials like metals. The other driver is logistic cost, including structural changes, e.g. switching from sea to air freight, and mitigation mi- measures in our manufacturing to secure production. And this brings me to the third message. Thanks to our team, we have been managing these challenges extremely well so far, and we expect to continue to manage the situation well going forward. Our procurement, manufacturing, and R&D teams work closely together on mitigation and new solutions, working together with our suppliers who are closely integrated into our value chain. Albeit, we managed the situation, relatively speaking, very well, the hundred base points year over year headwind now reflects the intensified global supply chain challenges. And, of course, this is also reflected in our updated outlook, which brings me directly to the next chart. We raised the outlook for fiscal year 2022 due to the new assumption of 700 million Euros for rapid antigen revenues in fiscal year 2022. Consequently, we raised the revenue target for diagnostics to low single digit negative growth. This race, this raises the outlook for the group to 3-5 % comparable revenue growth. We also raised the outlook for adjusted basic earnings per share. The range for the adjusted EPS is now between 2 Euros and 18 cents, and 2 Euros and 30 cents. This new range obviously includes the different profit impact that we have discussed before, e.g. the headwinds from procurement and logistic cost, as well as the higher rapid antigen contributions in diagnostics. This results in a net impact of around 10 cents higher outlook, by which we increase the outlook for adjusted earnings per share. The diagnostic margin fiscal 2022 is now expected in the low teens, driven by the higher contribution from the rapid antigen business. And all other targets for the segments and the other items of the previous outlook remain unchanged. One comment on the margin target for imaging and the range 22-23 %. We currently expect the imaging margin to be around the lower end of the range, mainly due to the formentioned headwinds from procurement and logistic cost. This reflects an element of caution, since there is uncertainty, especially how headwinds and mitigation meas- measures will play out in the second half of the year. Let me also add a comment on what we expect in Q2 where we have, obviously, better visibility. For comparable revenue growth, we expect momentum from Q1 to continue into Q2 for all segments. On the margin side, we expect imaging margins in Q2 to continue to be somewhat below the 22-23 margin range, whereas we expect the, the other segments some more pressure from procurement and logistic cost. So, margin in the other three segments might end up around what's likely lower compared to Q1. And with this I close my presentation and hand it over t- to you, Mark, for Q&A. Thanks, Johann. So, um, I will be, obviously, managing the Q&A, but let me just hand it also sh- briefly to the operator to start the Q&A session. Thank you, gentlemen. We will start today's question and answer session where we would like to ask you to limit yourself to two questions. If you wish to ask a question, please press the star key, followed by the digit five on your telephone keypad. Again, ladies and gentlemen, please press star-five on your telephone keypad. So, great, I see you're lining up here. Um, first caller on the line would be Veronika Dubajova from Goldman Sachs. Veronika, your line should be open, please ask your questions. Um\u2026 hi, guys, good morning, and thank you for taking my questions. I have two, please. Um, one is on the Covid-19 guidance. I mean, obviously you, you've already delivered 329 million of, of sales, um, in the first quarter. And just looking at the 700, it seems to me like there might be some room for outside e- even just thinking about the second quarter. So, maybe, Johann, you can give us a little bit thinki- a little bit of your thinking on, you know, why Q2 shouldn't be at least as good as Q1, and in that context, why the 700 might be maybe a bit more cautious. I know you mentioned pricing, but I'm just curious, you know, in terms of demand, if you can give us a little bit of insight in- into what you're seeing at the moment. Um, that would be my first question. And then my second question is on the imaging margin. Obviously, coming in at around 20% in, in Q1, and assuming Q2 is similar, that does leave you quite a lot of work in the second half, um, to do. Uh, how much visibility do you have on component pricing, and, you know, transportation costs as you move into the second half of the year? Have you been able to lock in some prices there that help you? Um, and therefore, you know, how de-risked is that 22% on a full year basis? Thank you. Yeah, hello Ven- Veronika. Thank you very much for the good questions. Um, on, let me start with, uh, antigen first. Yeah, I mean\u2026 a- as you, as, as you s- as you know, we were always relatively conservative with assuming in our outlook, uh, an antigen revenue portion, yeah? And, um, w- we have good visibility, uh, o- on, on the 700 millions, yeah? And, uh, I, I would also expect, uh, to see a relatively similar level of revenue in Q2 as, as we saw in Q- Q1. At least, yeah, and, uh, this leaves then, uh, some trailing out antigen revenue for the remainding, remaining quarters, yeah? That's, that our, is our current thinking. I mean, there are a lot of, I would see, variables still open, yeah? Pricing, uh, availability, uh, channel development in the United States, and o- and other things, yeah? Uh, which, uh, led us to give you, I would say, uh, uh, I would say a very balanced, yeah, uh, guidance for 700 million a- assumption for 700 million in our outlook, yeah? On the imaging margin, I mean, you asked here several questions around this. Um, when, last year, uh, you saw, uh, quite some, quite some, I would say, spread in the margins, yeah? From 18% in Q3 up to, I think, 20, 23, 24%, uh, in, in, in the, in the, in, in the highest quarters, um, and, um, we started now with st- and, and ended up on average with 21%, yeah? Um\u2026 inaudible was 20% with significant headwind from, uh, foreign exchange, as well as, uh, procurement and logistic cost. I mean, we expect, uh, those, uh, procurement logistic cost to be skewed towards the first half of the fiscal year. Yeah, this our assumption. Visibility is, is, is not super great in this regard, yeah? But this is what we currently assume, yeah? Um, and, um, and we have, um, a, a clear plan to get, uh, to, to- Uh, a clear plan to get, uh, to, to the lower end of, of the range, yeah, as I highlighted, yeah. Um, but, uh, visibility is, is beside backlog, yeah. Where we have good visibility. Strong, I would say, um, I would say s- s- strong s- I would say, security on the top line, yeah. I think we, we still have some limited visibility on, on, on certain cost items, yeah. But I'm still confident that we can reach, uh, the lower end of the bend. Very clear. Thank you so much, Johan. Thanks Veronica. So, um, then I would, uh, head over to the next, uh, person on the line. This would be Patrick Wood from, uh, Bank of America. Um, Patrick, you should be live now. Please ask your questions. Perfect. Thank you very much for, for taking my questions. Um, I guess the first one, uh, predictably on the, the margin side, I'm just curious as to, you know, you clearly have quite a lot of offset work going on within the business to manage some of those increased costs. Just curious, what are some of the things that you're actually doing within the business to offset those costs? Um, some detail there would be great. The other side, maybe actually on the demand side of things, you know, the near it's, um, good to know it's in the, you know, the early, early launch phases, uh, with early adopters. But if you were asked when, when should we expect it to become more in a full commercial launch, um, is that a, you know, really back off of this year or, you know, when do you feel you're gonna be able to put more, uh, more of the pedal down and, and push the product in a more aggressive way. Thanks. Thank you, Patrick. Um, so maybe I rephrase the question. Yeah. How do we offset, um, the cost? I mean, the other thing is also how do we, how do we preserve margins here? Because margin is the difference of price and costs. Yeah. Um, and, um, I mean, uh, one big topic is, is of course to very fully manage pricing. Yeah. And also to make sure, um, that, um, that, uh, we, we use our pricing power, um, and there I'm, uh, we have, we have good signals. Yeah. That, um, um, that we, we a- we also make good progress on that front. Yeah. I mean, we see it, um, also in the order book. Yeah. That, um, that, that pricing quality is, is, um, is, is, is good. Yeah. So, um, don't only look at the, um, at the, at the cost side. Yeah. And, um, when it comes to the component supply aspects, I'm, I believe that, um, we, we are getting into more, more, uh, uh, stable waters. Yeah. Um, which, uh, which will, which, which, which will also help, um, to, to ease the effect from the area, but in the end, I mean, I think please bear in mind, two things on the one hand, I think we did a great job also compared to some of our competitors in safeguarding, the top line. Yeah. Which is I think the <laugh> first and big topic to achieve. Yeah. Um, and secondly, we will manage very carefully the cost implications, but on the other hand, there's a big topic in, in the, in the in then it comes to pricing power, um, and, and also passing some of these effects, um, um, on, so to say. Um, when it comes to the fortune counting, I mean this, this year is, uh, is, um, the year of a, of a roll out two selected customers, yeah. Where we were, uh, so that the, um, I mean, an early commercial rollout, I would say, um, the, the full commercial effect, you will see, um, in the next fiscal year, but what we, what we see so far in terms of interest, in terms of also, um, real demand, um, but also in terms of price realization is very, very encouraging. And maybe Patrick, one other aspect on that, uh, margin topic, maybe we have, uh, made a deliberate decision to have a clear prioritization to be able to deliver our products, yeah, to our customers, yeah. Currently that is, this doesn't come for free. Yeah. We need to be clear about this. Yeah. This is a deliberate decision. Yeah. And that's also why we currently do not see any material impact on the top line, yeah, because of the strengths of our team, but also based on the decision we made, yeah. Uh, and, um, and I think we feel so far in relatively, in a relative term speaking comfortable with that decision. Yeah. Uh, and, uh, and, uh, we will obviously observe it very, very carefully. Yeah. If things would get, yeah, out of control in this regard, yeah, we would, might need to do the different things differently, but we don't expect this to happen. Fabulous. Thanks for taking the questions. Any questions. So, um, next one on the line would, uh, be, uh, Lisa Cly from Bernstein. Um, Lisa, um, line should be open, please ask your questions. Hi, there, I have two questions on that IVD business. First, on your US antigen revenues, um, are you selling to specific government programs, or are you going to pharmacies, uh, more of a sort of direct to consumer approach, just curious as to the channels and whether you may expand that over time. And then, um, second question, just on the IVD business X, um, antigen, um, nice to hear that there's some, you know, decent revenue growth and, and margin improvement there. If we think about the underlying demand for sort of routine tests, how close are we to getting back to normal volumes? Are we at sort of 85%, or is it more or less than that? Thanks. Yeah, let me, um, go first here. Um, I mean the, the primary, um, um, customer group, when it comes to antigen testing or rapid test in the United States is, is let's say large customers. Yeah. And we are not, uh, and we are not, uh, we don't have the channels, yeah, uh, and, and, and not the ambition yet to go into the, into, uh, too much into, into a scattered ret- retail space. So number one is of course the big government programs. Yeah. This is also what, what our strength is, um, and has been in Europe. Yeah. We had the, the claim to fame. Yeah. For Siemens Healthineers as a super agile company was to make sure to, to deliver a big quantities of super reliable tests with high confidence and certainty. Yeah. So, um, in, in, in terms of millions of tests, which need to be delivered at once, and this is also, um, one aspect, um, we are now living up to in the US when it comes to the government program. Um, we are also, um, um, looking at larger retail chains. Yeah. And, and, and, um, and, and, and we'll see how that, how that market develops, yeah, but that is currently baked into our, into the forecast of the 700 million. Um, when it comes to the, um, core business. I mean, yes. Um, it had a in diagnostics, um, I'm very, um, happy with the, with the, with the start we had here. Yeah. It, it, uh, shows a nice continuation of the trend, um, of, of a step by step, um, um, i- i- i- improvement towards the, the targets we have set, uh, for this business. Um, th- then it comes to how, how close this business is to the, let's say pre pandemic levels. I think it's pretty, um, uh, it's, i- I mean, I can't give you a clear number. Yeah. I mean, but it is more in the, in the, in the 90 to, to a 100% normal. <laugh>. Yeah. But what you still see and which is, which is, uh, uh, when you double click on it is, um, that when it comes to the testing menu, yeah, there might be some shifts, yeah, compared to what normally has been done compared to two years ago, there maybe two years ago, more wellness tests, and now there are still more secondary COVID related tests yeah, which are baked in, yeah, because of some COVID related comorbidities or so. Yeah. But overall, um, we are largely back, um, to, uh, to, to, um, normal, to a normal, uh, situation in that business. Okay. Thanks for that. inaudible. Okay. Um, next one on the line should be, uh, James from Jeffreys. Um, James, your line should be open. So please ask your questions. All right. Thank you so much. It's uh, James inaudible from Jeffreys. Um, two questions please. So just on procurement and logistics, and you mentioned you don't have a lot of visibility, so I'm just curious, what's changed in the past three months when you first gave guidance, you know, where were the additional pressures which weren't initially anticipated and without that visibility, how do you have confidence we weren't the additional pressures in the second part of the year. Uh, and then my second question is, um, just on inaudible, I think, you know, you said it's gonna be included in comparable sales growth from Q3 this year. Um, I think we just looked back a bit, I think in Q3, um, before I think you said it was around 17%, um, can't remember the Q4 number off top of my head, but from April, I think you sort low teens to expect. So just wonder if you can give us a flavor what that was, uh, in Q1, uh, so we can, um, see the, the trajectory for that. Thank you. Yeah. Thanks for the question, James. I think what has changed, uh, since the initial assumption was, uh, that, uh, I think we, we, we saw, I would say the, the shortages and the, the, the necessity to buy, uh, at spot rates, certain components ha- has increased, yeah, relative to where we stand at, at, uh, uh, early November. Uh, um, secondly, as I said before, and we deliberately made the decision to, to, to, to prioritize the ability to be able to deliver to our customers. Yeah. And by this, we had to do because of the difficulties, it's because it's not only price of components, yeah. It's, even when you have shortages, you also need to be super agile and flexible in your internal processes, which, uh, sometimes also lead to, I would say to, to certain disruptions in, in your internal processes, which might also lead to later ability to, to manufacture things. Yeah. And therefore you also have certain logistic challenges following up. Yeah. And that's also why I said structural changes from C to air freight and things like this. Yeah. And I would say the, the tension just increased across the board. But as band said, yeah, what we currently see is that we see a stabilization of some in particular in, on the supply side of component th- things, which gives us, I would say, um, some confidence, yeah, in, in, in, in being able even to manage that even, even, even better than we have already managed it today. Yeah. And there's also, and also the, the, I would say the learning curve we currently walk through, we are being under this pressure, and the organization is helping, uh, to optimize our internal processes, according to the challenging environments. Yeah. On, on the variant side, uh, on a performer basis, yeah, the growth rate on revenue in, in Q1 was in the, in the low teens again. Yeah. So a Super strong start, fully in line what, what we have guided for, for, for varying, for the full fiscal year. That's great. Thank you. Thanks James. So, um, next one online should be inaudible from inaudible. Uh, inaudible yeah, you should be live. Hello. Good morning Dan. Good morning Johan thanks, thanks for taking my questions. I have two. Uh, the first one a- and sorry if you mentioned that in your pre prepared remark, but the, uh, the line was a bit patchy, but it relates to the diagnostics margin, uh, excluding the, the COVID contribution. Uh, I think you have a guidance for, for fiscal year 2022, which is to reach, um, uh, a mid single digit to high single digit margin, uh, for, for the, the underlying diagnostic business. So just curious whether, uh, that was, uh, in line\u2026 whe- whether the Q1 margin was in line with that guidance or, or maybe marginally above and any help in understanding profitability of the COVID tests, uh, uh, i- in Q1 would also be helpful. I think you had previous indicated that the, the pricing had been, maybe halved in some, in some instances. So just willing to understand what the profitability of the underlying business and the COVID test if possible. And the second question relates, uh, sorry for that. Again, to the logistics and procurement costs, uh, it's more looking at the midterm, uh, guidance that you had indicated that your capital market day back in November. Uh, you, you, you have said that you expect an improvement on that side in age two. So, uh, you would say that there is nothing, uh, structural there that could, uh, prevent you from reaching your, your midterm guidance, both in imaging and, and diagnostics for, for, for the, for the next few years? Thanks for, for the questions. Um, as you rightfully said, our guidance for, for the diagnostic business or core business for this fiscal year is on the profitability side, mid-single digit to a higher single digit. And we were at the lower end of, of this range, yeah. In, in, in the range, but on the lower end, also due to the fact that we had significant, as we highlighted, significant headwind form foreign exchange, as well as, uh, the, the procurement and logistic costs behind. In, in diagnostics, it's primarily the logistic cost currently. Yeah. Um, and we feel, but we feel well on track to get, uh, to stay in that line and, and see progress, uh, a- as we proceed through the year. Yeah. Um, on the procurement and logistic front, um, I do not see this as a critical item for our midterm targets. Yeah. We consider this a temporary problem, yeah, which, uh, should, uh, should be dealt with, uh, over time. And as Dan already said beforehand, when we have also mitigation measures, uh, when you, when you extend this topic, not only to COVID 19, but also to the inflation topic, yeah, that we can, uh, that we can also in a, in a, I would say in a very meaningful way, uh, address it by, by significant price discipline. Yeah. And we have initiated the measures and we will see, uh, we expect to see also benefits from this kicking in, in the, in the l- in the, uh, I mean, according to when the, the, the orders come in, yeah, and turn that into revenue, uh, more in the, in the later end of this fiscal year and then in the, in the next years. Yep. Okay. Thanks. Yeah. Um, then I, um, would pass it over now to, um, Hassan from Barclays. Um, Hassan your line should be open. I can't hear you. <silence>. Let me just a second. I dunno if we have any technical issues here, maybe just a second Hassan, I hope we get you into the line in a second or two. Please record your name after the tone, and press the pound key. The conference is in presentation mode. Okay. Um, so we try it again. crosstalk which is in the conference. Um, you're\u2026 yo, are you live now Hassan? Give us- Yes. Yes. Wonderful. Hi. I can hear you now, Mark. Thank you. Thank you. Brilliant. Um, I have two questions please. So firstly, just to follow comments on the top line, uh, your competitors have clearly seen headwinds and have talked about deferred installations. Uh, i- is this something that you are seeing at all or is this, um, getting worse in, in fiscal Q2? And then second, could you elaborate on your comments on pricing burn and, and whether you have any meaningful ability to offset cost increases and pass them on to customers, or are you seeing an overall level of pricing deflation? Thank you Hassan. I mean, um, first of all, and, and here I, uh, c- coming back to Johan's point, yeah, yeah, we say the, we made a decision <laugh> to deliver, uh, um, but on the other hand, we, uh, we have the- To deliver, uh, um, but, on the other hand we are, uh, we have the ability to deliver, you know? Which is I think something which sets us apart. Um. Yeah. Because, uh, here really this organization does a wonderful job here in, in, in extremely, um, quickly reacting new, to new, uh, situations. I mean, it's similar to us and what we do in the antigen tests and so on, yeah? So, um, it is, um, um, very, very, um, encouraging and I'm very proud how the organization is dealing with the, um, with the, with the topics when it come to\u2026 I mean, your question is more about the o- I, I, I understand, is outbound logistics, yeah? The, the, the question of is our customers ready to take reorders and so on. So here we are very flexibly, um, reacting, um, and, um, and, and, and prioritize then one customer over the other. Um. We see we are confident when it comes to the visibility we have in turning order book into, into revenue. Also in the short term that, that this challenge is not increasing, yeah? So, and you can trust us, yeah, that we, that, the way we were able to handle it in Q1, um, um, will, will continue. And here we really stand out in the market and to some extent our ability to deliver, yeah, helps us to, um, to, to, to n- uh, to, to even game share, yeah. Um. Yeah. Because, um, uh, s- some of the, um, the, the, um, some of the delivery times, um, of, of competitors are just not, not what the market accepts. Um. And that brings me also to the other topic, yeah, when it comes to, um, when it comes to pricing. It is, it is, um, i- i- um, i-\u2026 Of course the, the p- some of the pricing which, which, which, um, which we have, um, is set by the, um, you know <laugh> at the point of the order intake. And as you know, in our business, um, typically on the, on the imaging site, um, orders, um, the time between order and, and r- and, and revenue, or between book and bill, is, is in the range of six to nine months, yeah? So that means, yeah, that pricing measures, yeah, which we have initiated, um, and which we see in the order book here, um, will also materialize towards the second half of the year. Um. And we see, um, actually a good acceptance of this, both internally so to say in the sales force, but also that when it, when it, when it, when it comes to, uh, when it comes to customers. Yeah. So, um, and as a last point, please also bear in mind here about 50% or more, 55% of our revenue, um, is recurring revenue. Um. And in\u2026 And f- and especially when it comes to the service, uh, uh, aspects, yeah, we have also, uh, price adjustment clauses and so on, and are also protected, yeah, when it comes to in- uh, when it comes to, um, um, um, infla- inflationary tendencies, yeah. Perfect. Thank you so much. Thanks Ansan. Sorry for the technical problems. Um. So, now we hand over to, uh, Daniel Wendoff. You're the second but last one on the queue. Um. Uh. Daniel, uh, your line should be open. Please ask your questions. Yes. Good, good morning everyone. I hope you can, can hear me well. Thanks for taking my questions. I have a, a question. The first question on the very end top line development. Um. Maybe you can, you can, uh, tell us a bit how the combination, uh, now with inaudible as helped, uh, uh, through that, if at all. And, yeah, maybe give a, give a few examples what, uh, what really drove, drove the revenue line, if it was helped at all by being part of inaudible. Then I have a, I have a question on the, uh, Atellica low to mid throughput, uh, solution, the CI, uh, 1900. Um. What is the key marketing message you would, you would\u2026 Customers hear on, on this front given that the, the end-market is slightly different, competition is slightly different. So, what is really the key, uh, thing standing out for the Atellica solution in the mid to, uh, the low to mid, uh, segment. Thank you. Okay. So, so thank you, Daniel. I mean, looking at, at Varian, um, there is on the one hand, um, when it comes to, um, the revenue development, um, very, a very, very strong, um, A, recovery of the business, yeah, coming from, from, from, from the pandemic. Um. And\u2026 Which, which, which on the one hand is triggered by a c- by a very, very strong competitive situation of Varian as a quote-unquote standalone business. But in addition, and that's what we see on the order book, yeah, we see, um, many bills, yeah, some of them have already been booked, yeah. Like, like, um, the one example I gave on, uh, Oulu in Finland. But many are in what we call the funnel, yeah? Which is the s- project, um, the sales force is working on where there is a, um, a, a super encouraging and, uh, momentum across the entire, uh, globe, yeah, in, in the sales teams to team up and to work jointly on opportunities. And that goes in both directions, yeah? This can be, um, uh, you know, specialty, oncology customers who know, um, i- i- or, or, uh, who are s- s- strongly tied to Varian here, or have strong connections who, and who know when to go into the, um, um, uh, o- a- ha- or expand the, the relationship to imaging and it ca- w- and, and, and it can be, um, using the strength we have in C-level relationships, as inaudible as classic, if you wish, um, to pull in the Varian, um, um, team. Um. And to use this, um, additional, um, additional effect, it is, um, using our strength as inaudible classic, again, yeah, in, in, in parts of the world were Varian hasn't been as strong, yeah, in terms of, um, sales presence, sometimes not even having a direct sales force. Um. So here we are extremely positive about the internal momentum, and it also shows in the numbers. And looking at the order book, we see\u2026 Uh. I mean, uh, it's not only a very strong start on the revenue side in, in, in, in Varian with the 750, um, but, um, you need to look at the, uh, book to bill of 1.23, yeah, so that m- t- that, uh, that the orders have been even 23% more than that, yeah. So, here, um, a clearly very, very strong, um, and, and, uh, uh, i- i- a, um, a start and, and I'm very, very bullish when it comes to this. Um. Second question was\u2026 crosstalk. Uh. The CI 90, what is the, what is the, um, what is the positioning of the product. Basically, um, it, it s- it expands the philosophy of Atellica solution, yeah, which is highest throughput, highest quality, um, uh, uh, at\u2026 So, highest quality test in the, in, in high, um, throughput, yeah. So the, the, the, the unique mix we bring as Siemens Healthineers, as a engineering company in the lab, yeah, to new customer groups. And these are, on the one hand, the mid-size labs in the developed countries, very importantly hop and spoke deployments, that means, um, hospital networks who use the quote-unquote big Atellica Atellica solution in the hop and, um, the small Atellica associated spoke places, which brings them on the one hand, so-called reside concordance, yeah. The same test resides, but also allows them to purchase the same reagents and so on, yeah. So this is a big requirement in the market. Um. And the third, uh, topic is, um, it is an ideal system for, um, for labs in the emerging countries. Very good. Thank you. Thank you. So, um, now we, um, go over to the last one for today. That should\u2026 The last, not, but not least. Uh. Falko Freidrichs from Deutsche Bank. Falko, you should be live now. Uh. Thank you and good morning. I have two questions as well please. Firstly, on your new imaging launches, um, um, how, how would you describe the, the replacement behavior of your customers in light of these launches? Um. So is it that the replacement side, it might actually be shortened a bit now because your customers really want to get their hands on this new technology or, or is that not really the case? And then secondly, on advanced therapies, um, can you just provide a bit more color on the underlying trends you see there at moment, with regard to the recovery from the pandemic, uh, and potentially customer wins. And also was there anything specific that stood out in the quarter that caused this very strong performance in the Americas? Thank you. Okay. Uh. Thank you, Falko. On, on the imaging launches. Two, uh\u2026 I think they come in two different buckets, yeah? On the one hand, um, when it comes to, um, what we do with the Magnetom Free, uh, Max and also Free.Star, which is the smaller version of it, this is about creating new ma- markets for MRI. Um. And it's bringing MR to places where, where it, where, where it couldn't go before, yeah? So to see, to\u2026 From that point of view, it is no- it is independent of replacement cycles, yeah, to answer your question, yeah. Because it, so to say, comes on top of the normal course of business. Um. And we are, um, very happy with what we are seeing, that the products exactly do that, yeah? Bringing MR to the outpatient clinic, which so far m- only had CT. Uh. Or bringing MR to places in emerging countries which didn't do it, or bringing MR to, um, to, um, clinical specialties outside meteorology, yeah? So, irrespective of replacement cycle, this is typically installations where there a- is no MRI before. On the photon counting CT, um, this is\u2026 I mean, I, I commented, um, before, yeah, that, uh, that, uh, uh, um, v- t- th- the f- th- th- this is in the, an early phase of, um, of, of launch, yeah, where we have, um, where we have a lot of excited, um, and exciting customers, um, who are, who come in either from the academic medial centers, um, or, uh, in a very prestigious, um, private institutions. Here, the topic of a, uh, of shortening a replacement cycle can definitely happen, because one of the reasons to buy the product is to be, to stay at the forefront of medical research, yeah. This is more the academic medical center type of thinking, or to be a quality leader in terms of what type of diagnosis you can offer as a private imaging center, yeah. So, and, and when your business model is to be competitive, um, and an early adopter, because you are an innovator as a healthcare provider, it shortens the replacement cycle. And the good thing is that this effect of shortening the replacement cycle will over time migrate into broader segments of the market, yeah. Because, um, I sometimes use this, uh, um, a little bit maybe trivial analogy of comparing photon counting CT to flat panel, uh, TV or to HDTV. When a technology like this is available, people make the decision to go to the next level product earlier than when, um, the next generation offers just little improvements, yeah. Maybe I'll answer your question. On, on the Americas you just highlighted that the, that inaudible a strong quarter in the Americas. I think that is also when this, uh, uh\u2026 As you know, this is not a book and bill business, so it was nothing which happened at the end of the day in, in, in the quarter from a market success. It, it\u2026 This is a success we had o- o- over the last years with the strong order intake also on the AT side, which then materialized in, in, in the quarter as revenue, yeah. Uh. And it\u2026 By the way, it was across th- the both of Americas. This was, it was not US only, you know, so on, on a much lower scale, yeah, uh, uh, there is, uh, very good revenue growth in Latin America on, on the AT side, yeah. So I think nothing what you can really point out too particular in the quarter, but it was a particular driver of the revenue line in the quarter, mm-hmm <affirmative>. Okay. Thank you. Okay. So, um, this ends, uh, our call for today. Thanks for your participation, for your continued interest in Siemens Healthineers and your questions in today's call. We look forward to seeing some of you on our road show in the next days or at inaudible conferences early March, or at the Barclays Conference in Florida in person maybe. Uh. Til then, stay healthy, your health and your esteem. That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. A recording of this conference call will be available on the investor relations section of the Siemens Healthineers website. The website address is corporate.Siemens-Healthineers.com/investor- relations. Please record your name after the tone and press the pound key. The conference is in presentation mode. The conference will begin\u2026 The conference is in presentation mode. The conference will b- uh-\u2026 Healthineers.com/investor-relations. Be available on the investor relation section of the s-\u2026 Stay healthy, your health and your esteem. That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. A recording of this conference call will be available on the investor relations section of the Siemens Healthineers website. The website address is corporate.Siemens-Healthineers.com/investor-relations."
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