Siemens Healthineers - Update 18/09/2026 - ISIN DE000SHL1006

00:00:07: Last month, a DAX company stepped in front of its investors and said two things.

00:00:35: They build the technology a doctor uses to find out what's wrong with you, and often treat it too.

00:00:41: It starts with the blood test – moves onto big tubes.

00:00:45: they slide into MRI CT scanner all way to machines that target a tumour with radiation

00:00:52: From first hunch…to treatment Almost under one roof

00:00:57: And the scanners are heart of it The biggest business.

00:01:02: Alongside it stand two smaller ones, the blood tests in the lab and the radiation machines.

00:01:08: The story that company tells is one of focus –the weakest link– the blood test's being carved out And the parent-company Siemens which has held majority so far wants to reduce its stake significantly... ...and in future hold only a minority.

00:01:25: What remains…is strong core!

00:01:28: The order books are as full they've been for long time And the profit forecast is rising.

00:01:34: Sounds like good news at first!

00:01:36: Yes, it sounds that way.

00:01:38: and yet for me Siemens Healthineers only reaches a rating of three.

00:01:42: watch list solid but with reservations.

00:01:46: That's why I'll start with The Striking Finding... ...and since this company makes its living detecting diseases.. ..and supporting their cure i'm putting on examination table myself.

00:01:56: The diagnostician becomes patient.

00:01:59: You could put in that way And like any examination, I start with the striking value and that's precisely this announcement.

00:02:07: Higher profit sounds healthy at first.

00:02:09: Now guess when a company raises its profit forecast in middle of year how much increase comes from business running better?

00:02:18: Well if they dare to raise it mid-year maybe three quarters.

00:02:23: In this case practically nothing.

00:02:25: The entire increase comes from tariffs being refunded in the United States.

00:02:30: Real money, cleanly reported – just not a growing

00:02:34: business.".

00:02:35: So one number contains two completely different things...

00:02:39: A good value that doesn't come from the patient's own progress but from outside?

00:02:44: A doctor wouldn't cheer at that!

00:02:46: He'd ask what this value is actually based on….

00:02:49: So we have a company that detects nearly every disease in others, but with its own numbers it makes it hard to arrive at the exact diagnosis.

00:02:58: Then let's arrive at it together!

00:03:00: For anyone hearing us for the first time I'm talking with Warren Wise an AI technology that analyzes and rates equity stories like A Value Investor

00:03:09: Exactly...I am a synthetic stakeholder.

00:03:12: My thinking And my voice are AI.

00:03:15: The basis for today is my report on the twenty-twenty five annual Report of Siemens Healthineers AG.

00:03:43: And I'm Corey Capitol, also AI the voice of The Retail Investor.

00:03:48: This case interests me because the company is breaking itself into pieces right now and Because that's exactly what being sold to shareholders as the best thing That could happen To it.

00:03:57: i want to know whether a Company automatically becomes strong when It sheds everything weak?

00:04:02: And since people often ask every episode Is selected reviewed and approved by an editorial team The responsibility is not.

00:04:14: Then start where you always start, what story does this company tell about itself?

00:04:19: That less is worth more.

00:04:21: the idea a Company made of two strong businesses trades higher on the market than one dragging along A problem child.

00:04:28: so the problem Child has to go the blood tests and the parent companies.

00:04:34: Siemens which So far holds the majority Is stepping back.

00:04:38: What should remain are the two profit generators.

00:04:41: That's the story for the market.

00:04:43: And it doesn't add up?

00:04:45: The story is true, there are just a few things that should be kept in

00:04:49: mind Before you take that apart further.

00:04:52: where would give to company credit?

00:04:54: There always a plus side...

00:04:56: There is quite clearly.

00:04:57: Let me start with money.

00:04:59: In past fiscal year nearly three billion euros were left over after everything had been invested.

00:05:06: A good billion of that went out as a dividend, three hundred million into share buybacks.

00:05:11: And after that there was still room to pay down debt.

00:05:14: Paying-out and deleveraging in the same year.

00:05:17: few managed

00:05:18: it.".

00:05:19: The big acquisition carried so many hopes!

00:05:22: Did this work?

00:05:23: It did…and I'll say without hedging... In twenty twenty one the company bought American Radiation Specialist Varian for around sixteen billion The biggest step in its history, considered too expensive by many at the time.

00:05:38: Today that business is growing faster than anything else in the group and the margin there is rising... ...the thesis behind the purchase is playing

00:05:47: out.

00:05:49: What else's on the plus side?

00:05:50: The order books Last quarter far more came-in.

00:05:54: then was worked off and hospitals ordered such machines years in advance.

00:05:59: This isn't a fad.

00:06:00: it's a planned investment.

00:06:02: And then something almost no one praises, because you can't see it.

00:06:05: This company books its research strictly.

00:06:08: It could push part of the development costs onto a balance sheet and make profit look prettier.

00:06:13: Many do that.

00:06:14: this one barely does.

00:06:16: It voluntarily gives up the prettier number.

00:06:18: Yes!

00:06:19: That's right I note as positive.

00:06:22: I want to emphasise once more before i turn critical Not a single value in the Siemens Healthineers' accounts is a knockout criterion for me.

00:06:30: There's no doubt about going concern, No dangerous debt and no dressed up numbers.

00:06:36: That's why we're talking about A three And not something worse.

00:06:39: Then take apart The story About focusing on the strong core.

00:06:43: What Is there to watch here In particular?

00:06:45: At Siemens healthineers Focus above all means First of All that Something Disappears.

00:06:51: Diagnostics, the blood analysis business is to be carved out and you have to give the board credit for saying that openly.

00:06:59: The CEO's words were we can be the owner of this business but we don't have to

00:07:04: be.".

00:07:05: That's a fairly open sentence for a CEO...

00:07:08: It IS!

00:07:08: And I prefer it to a slogan.

00:07:11: But the reason behind it is uncomfortable.

00:07:13: Cory Last quarter that division's revenue shrank within a single year.

00:07:21: Oh, and what happened there?

00:07:23: Above all China after the United States.

00:07:26: it's their second most important market And the business there dropped by a tenth.

00:07:32: The Chinese state has decided that lab tests are now bought in bundles.

00:07:36: Hmm okay...and What exactly does this bundling mean?

00:07:40: In the past every hospital ordered its own tests at its own price.

00:07:45: Today, the state puts a whole province out to tender at once and takes the cheapest supplier.

00:07:51: The price per test then doesn't fall by a few percent but by several times that.

00:07:57: for a Western supplier with western costs That's often barely a profitable business anymore.

00:08:02: So the division isn't badly run?The market has simply changed.

00:08:07: Yes!That is true.

00:08:09: Both are case And sale may be right decision.

00:08:13: What I care about is what it does to the picture.

00:08:16: Cut the blurred part out of an image and the image looks sharper, but on the other hand you also have less picture.

00:08:23: The rest look better because bad parts are no longer in it.

00:08:27: Right!

00:08:28: Which?

00:08:28: why should you look closely at every focus story?

00:08:31: Whoever gives up their weakest business lifts average for a day that leaves.

00:08:36: The question might mean future.

00:08:39: And there...look at group last quarter only just under three percent growth.

00:08:45: The year before it was more than double

00:08:47: that.".

00:08:48: But the core that stays, you called it the strong part yourself in your report?

00:08:52: Yes

00:08:53: and looking at the margin It really is strong.

00:08:56: Imaging earns a good fifth of its revenue as operating profit In this industry.

00:09:01: That's Strong but last quarter it grew by Only A Good Two Percent.

00:09:06: So the Core Earns Brilliantly!

00:09:08: It Just Isn't Growing Fast At The Moment.

00:09:10: Strong but slow, that's important to keep in mind.

00:09:13: That is the first gap and it isn't an accusation... ...but a correction.

00:09:18: A strong core & full order books sound like growth story.

00:09:22: What has been proven so far is a margin-story.

00:09:25: Those are two different things And stock is paid very differently for one than other.

00:09:30: A margin-storey rather then a growth storey.

00:09:33: Good!

00:09:34: Only THAT still doesn't explain that day at end of July when forecasts were adjusted

00:09:39: True You're right about that.

00:09:41: Revenue forecast down, profit forecast up.

00:09:44: in the same announcement earlier you guessed most of it comes from the business.

00:09:48: In fact an important part comes from tariff refunds.

00:09:52: in The United States Siemens Healthineers had paid duties on imports into US.

00:09:57: Now the company is getting PART OF THAT BACK

00:10:01: But its money all the same.

00:10:02: Why does that bother you Warren?

00:10:04: Because Part Of The Higher Profit Comes From Money That Siemens Healthynears Only Gets Back Once.

00:10:10: To me, that makes the result look stronger at least at first glance than the ongoing business actually is.

00:10:16: So how much does that add up to?

00:10:18: In the imaging segment almost five percentage points of the margin last quarter came from these refunds.

00:10:25: without them The margin would have been considerably lower...to me That's the difference between a good quarter and a brilliant one.

00:10:33: But the tariffs were real burden.

00:10:35: now part of the money is coming back

00:10:37: Right.

00:10:38: only This repayment doesn't make the ongoing business any better.

00:10:42: It lifts the profit once, but nothing more.

00:10:46: for The Profit Outlook beyond this fiscal year... ...the repayment is completely

00:10:50: irrelevant.".

00:10:51: I'll still push back once more.

00:10:53: you praised the full-order books yourself.

00:10:55: if that much has been ordered?

00:10:57: The revenue is still coming.

00:10:59: so the lowered forecast Is just a question of timing.

00:11:02: yes But an ordered scanner first has to be built delivered installed on site and signed off.

00:11:09: Only then does it become revenue.

00:11:11: That can take quarters, sometimes years.

00:11:13: so the order backlog says a lot about the next few years but not why revenue this year comes in lower than

00:11:20: announced.".

00:11:21: So The Good News lies in the future!

00:11:35: This company's entire product consists of separating two things that look like one.

00:11:41: So when it comes to the result and the margin, too I'd expect it to spell out even more clearly what precise share The Tariff refunds account for in each of those figures.

00:11:51: And what should we definitely keep in mind up to this point?

00:11:54: Siemens Healthineers has a clear story... ...and the Company is honestly run.

00:12:00: But looking at the numbers, one has to state plainly.

00:12:02: The focus is above all a subtraction and the raised profit is a refund.

00:12:07: Everything from here on.

00:12:08: for those who want know what this company made of.

00:12:12: A quick word in our own behalf since it fits right now.

00:12:15: What you're hearing hear is short version.

00:12:17: The full Warren-Wise report examines an equity story across eight dimensions, page by page against the annual report.

00:12:25: Anyone who wants this view for their own company on board, supervisory board or investor relations, warren-wise.com.

00:12:34: So and now back to Siemens Healthineers into question of what actually carries

00:12:45: Think about what this company owns.

00:12:47: Plants in Bavaria, machines patents labs.

00:12:51: and now guess Corey how big is the goodwill relative to the equity?

00:12:56: That's The premium Siemens Healthineers paid in acquisitions beyond the value of the assets it took over

00:13:03: with all that industry behind It.

00:13:05: a third maybe

00:13:06: ninety four out of one hundred ninety-four

00:13:09: percent Of the equity as premium

00:13:11: innocence.

00:13:12: yes The largest single block comes from Varian, the cancer treatment specialist acquired in twenty-twenty one.

00:13:19: A good four out of every ten euros of this Goodwill Trace back to that purchase –the rest comes from older acquisitions.

00:13:27: and This Goodwill stays on the balance sheet as long as Siemens Healthineers assumes the purchases justify their value.

00:13:34: But you just told me Varian works.

00:13:37: So far it's working.

00:13:38: No write down…The fastest growth is a rising margin.

00:13:43: So, Varian is delivering.

00:13:45: Still the point remains a large part of the equity Is matched by goodwill from earlier acquisitions The biggest chunk of it from Varian and this value has to be reviewed every year.

00:13:57: Then let me ask the obvious how am I supposed To test that at home?

00:14:01: That's exactly where the problem lies.

00:14:04: You'd need a number.

00:14:05: How far can revenue And margin fall before Part Of This Good Will Has To Be Written Down?

00:14:12: The company calculates that every year.

00:14:14: the auditors insist on it, but isn't published in a form you can do anything with.

00:14:20: I see!

00:14:20: But of course... It would be important to follow this more clearly?

00:14:24: Yes absolutely.

00:14:26: and there's more where the company keeps its cards comparatively close to their chest.

00:14:32: Hmm now i'm curious.

00:14:33: Warren.

00:14:34: In Its Risk Report the Company Names Nine Major Risks.

00:14:38: Only one of them is quantified with a concrete number.

00:14:41: The other eight are described only

00:14:43: qualitatively.".

00:14:45: So, for eight-of-the nine risks I don't learn exactly how big the possible financial damage is...

00:14:51: Exactly!

00:14:52: And that's why Siemens Healthineers gets a three from me here instead of four.

00:14:56: For eight-Of-The Nine major Risks A Concrete Financial Magnitude Is Missing.

00:15:01: Then let us talk about future….

00:15:03: A technology leader lives off next machine.

00:15:06: Where does it come?

00:15:07: It comes from research.

00:15:09: Siemens Healthineers has sixteen thousand patents, photon counting scanners and artificial intelligence in the analysis.

00:15:16: at the same time The share of research spending in revenue Has fallen.

00:15:20: last year it was a good eight percent higher than before.

00:15:25: Research Spending rose by only two percent Revenue By five percent.

00:15:30: So the company is growing faster Than its research spending.

00:15:33: At the same time, dividends and share buybacks are rising.

00:15:37: That's not a big shift yet but lately more money has flowed to shareholders while research spending has grown more slowly than revenue.

00:15:46: We should keep an eye on that development.

00:15:48: Let us move onto next point.

00:15:49: The parent company Siemens is stepping back

00:15:52: Yes...and fully.

00:15:54: According to annual report the parents still holds around sixty nine percent.

00:15:59: So from my point of view The supervisory board of Siemens Healthineers is only about thirty percent independent, and its chairman... ...is the parents CFO.

00:16:09: In an earlier examination that would have been one my single biggest criticisms but for now these are just dates.

00:16:17: in February the Siemens shareholders vote on the spin-off And it's carried out at the earliest to following spring.

00:16:23: until then free shareholders still just in back seat.

00:16:28: But yes!

00:16:29: The direction good And I say that as clearly as the criticism.

00:16:34: Then what's left to fault?

00:16:35: The criticism is being solved!

00:16:37: The one gets solved, and that makes the other bigger.

00:16:41: Think about what a parent company is viewed from the outside.

00:16:44: It's a guarantee...and it's an excuse.

00:16:47: The credit lines came from Munich.

00:16:49: The strategy was rubber-stamped in Munich.

00:16:52: When something went wrong A big balance sheet stood behind it

00:16:56: After separation.

00:16:57: No one stands there anymore.

00:16:59: After the separation, this company is much more on its own.

00:17:03: With credit with staffing The Supervisory Board and so on.

00:17:07: Its own risks then have to be explained To people who can leave more easily.

00:17:12: And of the eight dimensions I examine Disclosure Is precisely one Of those This Company has practiced at least.

00:17:19: So independence raises the stakes At exactly the weak spot.

00:17:23: Yes That's right.

00:17:25: And that too is an important reason why the three isn't of four.

00:17:29: Not a single dangerous number in these accounts, but a company that's about to answer for itself and still describes eight of its nine biggest risks only vaguely with adjectives.

00:17:40: Bring it together!

00:17:41: Where does Seaman's health in ears land?

00:17:43: What's missing from more?

00:17:45: Three out five... The middle rating deserves clear words because a number on its own says nothing at all.

00:17:53: It means a solid equity story with findings you keep an eye on.

00:17:57: No warning, but no recommendation either for a four.

00:18:01: the separation in the literal sense is missing.

00:18:04: that they separate In their report.

00:18:06: what?

00:18:06: They separate so well in Their machines.

00:18:09: show The result and the margin without the refunds.

00:18:12: put numbers On the risks.

00:18:14: Show more precisely how much room there Is in the goodwill from the variant acquisition

00:18:20: And What would push it down a notch

00:18:21: if the core doesn't get faster once Diagnostics is out.

00:18:25: At some point, the group should grow faster again too.

00:18:28: otherwise over time The impression forms that separation was more of a clean-up than truly long term.

00:18:34: strategy.

00:18:35: And price?

00:18:37: Does share price tell you nothing?

00:18:39: It tells me what others expect.

00:18:42: My score says something about quality in an equity story.

00:18:46: it says Nothing about whether stock is cheap today.

00:18:49: Those are two questions, and I answer only one of them.

00:18:52: If the management board were sitting here what would you ask them?

00:18:56: Three things.

00:18:57: first question why don't they report more precisely how much of the results and of the margin in each individual segment really comes from refunds and other one-off effects?

00:19:08: Here the picture is still too blurred in places.

00:19:12: And What Would Be?

00:19:12: The Second Question

00:19:14: How big are the financial risks?

00:19:16: For the risks named in your report, I'd expect a magnitude.

00:19:20: In euros or margin

00:19:21: points?".

00:19:23: And you're third question would be...

00:19:26: And

00:19:43: what do I take with me into the next annual report?

00:20:06: Look at the goodwill.

00:20:14: If it's very high relative to equity, check which acquisitions comes from and whether those businesses still meet expectations of

00:20:21: time.".

00:20:23: I went into this episode thinking a higher profit on day like that is simply GOOD NEWS!

00:20:28: And now?

00:20:29: Now first thing i want know how much actually came form business Like with their machines.

00:20:35: what im?

00:20:35: after getting truly sharp picture you should always be able to separate the one clearly from.

00:20:48: And if you don't want to miss an analysis, warren-wise.com subscribe to the podcast.

00:21:11: have a fine rewarding day and always remember be wise when others go crazy.

00:21:17: yours Warren Wise.

00:21:36: AI supported analytical

00:21:38: approach.

00:21:40: Warren Wise is a fictional, synthetic character – neither real person nor their estate or company connected to such persons.

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00:22:07: All voices and audio content in this episode are synthetically produced,

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