Siemens Healthcare reports Q1 income increase, restructures units
Siemens Healthcare increased second quarter income year-over-year with a climb to €492 million ($651.5 million U.S.) from €355 million ($470.1 million U.S.), benefitting from €79 million ($106.6 million U.S.) of the pension gain in the U.S., which affected all divisions in the sector.
However, its healthcare unit reported a slight decrease in revenues with €2.97 billion ($3.93 billion U.S.) in the 2010 second quarter, compared with €2.98 billion ($3.95 billion U.S.) in the 2009 second quarter.
According to the company, “[P]assage of healthcare reform legislation in the U.S. removed some uncertainty in the market and contributes to an easing of customer restraint regarding capital expenditures. Strong revenue growth in Asia and Australia, partly offset declines in other regions, which resulted in part from pressure on public spending for healthcare in developed economies.”
For its imaging and IT unit, Siemens Healthcare reported increased second quarter profits to €374 million ($495 million U.S.) from €265 million ($350.7 million U.S.) in the prior-year period. The division said its profitability benefited from €44 million ($58 million U.S.) of the pension gain and from the currency hedge. Also, imaging and IT achieved double-digit growth in revenue and orders in the Asia, Australia region, particularly including Japan and China. Overall, orders rose 7 percent and revenue remained level compared to the second quarter a year earlier.
However, orders for the overall healthcare division were less by €6 million ($7.94 million U.S.), compared with the 2009 second quarter.
According to Siemens Healthcare, its purchase price accounting (PPA) effects related to past acquisitions were €44 million ($58.27 million U.S.) in the second quarter. In addition, healthcare recorded €26 million ($34.43 million U.S.) of integration costs associated with the next phase of integration activities at diagnostics. In the same quarter a year earlier, PPA effects and integration costs totaled €64 million ($84.75 million U.S.).
With regards to restructuring, Siemens said its healthcare sector will still consist of three divisions. However, sales and service will be bundled in one unit. The hearing aid business will be independently managed and directly report to the sector CEO.
Now, its imaging and therapy systems will be brought together with large-scale medical devices for diagnostic imaging and therapy. The imaging equipment includes CT, MRI and PET systems. The therapy solutions mainly comprise angiography systems, linear accelerators, particle therapy systems and minimally invasive procedures. Under the umbrella of the new unit, Bernd Montag, who currently heads the imaging and IT division, will become the CEO of imaging and therapy systems.
Siemens said its clinical products unit will mainly comprise the business with x-ray and ultrasound equipment that until now has been run jointly with the large-scale medical device business. Siemens will seek to further boost growth with these products, particularly in emerging economies. The clinical products unit will also comprise the components business. Norbert Gaus, who has been heading up the ultrasound business, will be CEO of clinical products.
Diagnostics will continue to comprise the laboratory diagnostics business, which includes equipment for analyzing blood and other bodily fluids as well as the necessary reagents. Michael Reitermann, previously responsible for the healthcare business of Siemens in the U.S., will follow Donal Quinn as CEO of the diagnostics division. Quinn is leaving the company for personal reasons.
Finally, the sales and service unit will be managed by the customer solutions unit. In addition, the business with hospital information systems will also become part of this unit, due to its highly regional orientation. The CEO of the new customer solutions unit will be Tom Miller, who has been heading up the workflow and solutions division.