Siemens Healthineers AG (SMMNY) (Q3 2026) Earnings Call Highlights: Revenue Outlook Trimmed, EPS Raised on Tariff Refunds

• Revenue Growth Outlook: Lowered fiscal 2026 revenue growth outlook to 3.5% to 4%, from the prior 4.5% to 5% range.
• Adjusted EPS Guidance: Raised fiscal 2026 adjusted EPS guidance to EUR2.35 to EUR2.45, reflecting tariff refunds of approximately $0.15 per share.
• Q3 Revenue Growth: Revenue growth in Q3 was 5%, against tough comparable growth of 7.6% in the prior year quarter.
• Q3 Adjusted Profitability: Adjusted profitability for Q3 was 15.4%, excluding tariff refunds, despite soft growth and headwinds from foreign exchange and inflation.
• Equipment Book-to-Bill: Strong equipment book-to-bill of 1.17% in Q3, recovering from software softness in Q2.
• Imaging Segment Margin: Q3 imaging margin was 21.6% before tariff refunds, below the prior year quarter's 23.7% margin, which benefited from a government grant shift.
• Precision Therapy Segment Margin: Q3 precision therapy margin was 14.1% before tariff refunds, with growth led by advanced therapies and the new Angio platform.
• Diagnostics Segment Performance: Continued year-over-year revenue and margin decline in Q3, driven by structural market rebasing in China and revenue dilution from legacy platforms.
• China Revenue: China revenue declined by 10% in Q3, with the synergistic core facing tough comparable growth of mid-teens in the prior year quarter.
• Cash Conversion Rate: Cash conversion rate was strong at 1.12, driven by robust cash collection and not by tariff refunds.
• Net Debt: Reduced net debt by around EUR800 million quarter-over-quarter to approximately EUR12 billion, lowering leverage from 3.1 times to 2.8 times.
• Q4 Imaging Growth Expectation: Expects imaging growth to accelerate into the higher single-digits in Q4, driven by revenue shifts and strong demand for the DryCool portfolio.
• Q4 Diagnostics Expectation: Expects diagnostics revenue to decline at a mid-single-digit percentage level in Q4, with sequential revenue levels stable yet low.
• Tax Rate: Expects fiscal 2026 tax rate to be close to 23%, down from the initial assumption of 24% to 26%.
• Inflation Headwind: Inflation in the supply chain, from memory chips, raw materials, and logistics, is expected to intensify in Q4, with a second-half headwind of around $0.05 per share.

Release Date: July 31, 2026

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Siemens Healthineers AG SMMNY reported a strong equipment book-to-bill ratio of 1.17% in Q3, indicating robust demand and order intake.
• The company secured two new large value partnerships with prestigious US institutions, Cleveland Clinic and Vanderbilt Health, strengthening its market position.
• Photon counting CT technology is gaining significant traction, accounting for roughly 30% of total CT equipment order volume and driving market share gains.
• The precision therapy segment, particularly advanced therapies, showed strong momentum with the successful launch and ramp-up of the new angiography portfolio.
• The company raised its fiscal 2026 EPS guidance range, driven by tariff refunds, while underlying earnings remain on track despite lower revenue growth.

Negative Points

• Siemens Healthineers AG (SMMNY) lowered its fiscal 2026 revenue growth outlook from 4.5%-5% to 3.5%-4%, primarily due to weaker-than-expected diagnostics performance.
• The diagnostics segment continues to suffer from a significant year-over-year revenue decline, driven by structural market rebasing in China and revenue dilution from legacy platforms.
• Imaging segment growth was softer than anticipated in Q3 due to tough prior-year comparables and temporary revenue shifts into Q4, including site readiness issues.
• The company faces ongoing headwinds from foreign exchange and initial impacts of supply chain inflation, particularly in memory chips, raw materials, and logistics.
• China revenue declined by 10% in Q3, with the diagnostics market down approximately 40% compared to two years ago, and no clear signs of recovery are expected in the near term.

Q & A Highlights

Q: Can you provide more color on the fiscal 2027 EPS bridge, particularly regarding the impact of inflation, tax rate normalization, and separation costs? Is it fair to assume mid-single-digit EPS growth from the clean base is a sensible starting point for next year?
A: Jochen Schmitz (CFO) confirmed that the bridge is a "very complete picture" based on current knowledge, starting from a baseline of EUR2.25 for 2026 (excluding tariff refunds). He described the assessment as "prudent" and expects net growth from this baseline, though quantifying the exact amount is difficult at this stage. The bridge includes recurring separation costs of around EUR50 million but does not include any branding fees, as constructive discussions with Siemens AG suggest none are expected in the coming years. Potential separation costs for the diagnostics business are also excluded, as they would be adjusted for as portfolio measures.

Q: Can you quantify the impact from inflation on the 2027 bridge, and what drives the acceleration back to double-digit EPS growth beyond 2027 given the mid-term targets?
A: Jochen Schmitz (CFO) explained that inflation, particularly in memory chips and raw materials, is a volatile topic with prices having peaked at six times normal levels before coming down to two to three times. He noted that while this headwind is expected to persist through fiscal 2026 and 2027, it should eventually normalize as capacity comes back online. Once this year-over-year headwind dissipates, the underlying operational profitability improvement should show up as net EPS growth, which is why management remains confident in the mid-term double-digit growth ambition.

Q: Regarding the fiscal 2027 bridge, can you clarify whether the separation costs and potential branding fees are included? Also, is a headwind of roughly EUR0.10 to EUR0.15 from tax, interest expense, and separation costs a reasonable estimate?
A: Jochen Schmitz (CFO) clarified that the recurring separation costs of approximately EUR50 million are included in the bridge, but no branding fees are expected based on current constructive discussions with Siemens AG. He confirmed that potential separation costs for the diagnostics business are not built into the bridge and would be adjusted for if they occur. Regarding the quantification, he acknowledged the analyst's math of approximately EUR0.05 from tax rate normalization, EUR0.05 from higher interest expense, and less than EUR0.05 from separation costs as a reasonable estimate.

Q: You mentioned that CT market share in the US now matches your MRI level. Does this mean you've increased CT share to around 50% in the US, and do you expect similar developments in other regions?
A: Bernhard Montag (CEO) confirmed the analyst's guess was "not very wrong" regarding the US CT market share approaching MRI levels. He explained that CT has traditionally had a more pronounced spread of price points (a factor of 10 between entry-level and high-end photon counting CT), making it harder to achieve super strong market share. However, the unique differentiation of photon counting CT across the entire product line has significantly uplifted market share, particularly in the US, driven by the rollout and market resonance of this technology.

Q: Can you discuss the imaging performance in Q3, the significance of revenue shifts into Q4, and your visibility on Q4 performance? Also, what are the pushes and pulls for imaging growth in 2027?
A: Jochen Schmitz (CFO) explained that imaging growth of 2.3% in Q3 was about 1.5 percentage points below the guided 4%, representing a shift of approximately EUR75-80 million into Q4 due to site readiness not keeping up with factory output for the DryCool portfolio. He confirmed the full-year guidance of mid-single-digit growth (5%+) remains on track, with Q4 expected to accelerate into higher single digits. He sees no fundamental change in the growth trajectory for imaging in the coming years.

Q: Can you provide more detail on the China situation, both on the diagnostic side and imaging, given the latest discussions around centralized procurement?
A: Bernhard Montag (CEO) distinguished between volume-based procurement (VBP) in diagnostics and central bidding in imaging. For diagnostics, the market rebasing in China has led to a market volume decline of about 40% compared to two years ago, though China now represents only around 10% of total company revenue, diluting the impact. For imaging, he clarified that central bidding is a different mechanism than VBP, and while the percentage of orders going through central bidding will increase, the company is well prepared with a refined go-to-market approach. He noted positive aspects, including a better balance between quality and price in the official announcements.

Q: How are conversations going with US hospitals regarding procedure trends and their outlook for the second half and 2027? Are they cautious?
A: Bernhard Montag (CEO) highlighted that major health systems like Vanderbilt and Cleveland Clinic committing to substantial partnerships demonstrates confidence in the healthcare outlook. He emphasized that the debate is increasingly about productivity—how to do more with less in a world of staff shortages. The demand for equipment remains robust because systems help deliver high-quality care efficiently. He noted that procedure-dependent businesses like the ultrasound catheter business are delivering significant growth, and the productivity topic is also gaining traction in Europe, which is positive for the company.

Q: Regarding the 2027 EPS bridge, have you reflected centralized procurement programs for imaging in your assumptions?
A: Jochen Schmitz (CFO) confirmed that central bidding programs have been baked into the 2027 plans, noting that the percentage of orders going through central bidding was actually lower than initial assumptions. He viewed the official announcement's balance between quality and price as positive. However, he stated the company will not base its guidance on a recovery in China without clear signals, though the mid-term assumption remains that the market should return to mid-single-digit growth rates over time.

Q: Can you provide color on order growth trends and the outlook for Varian (precision therapy) growth into next fiscal year?
A: Jochen Schmitz (CFO) noted that with a book-to-bill of 1.27%, Q3 was an order growth quarter, though the company doesn't emphasize quarterly order growth numbers due to distortion from large deals. For Varian, he expects high single-digit growth to continue based on a solid product set, stable service business, and the addition of a procedure-based interventional oncology business. The new platform launching at ASTRO is expected to contribute to top-line growth, though production ramp-up will initially limit supply relative to market demand.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.