Wed. Dec 8th, 2021

12082021_Siemens Healthineers

Siemens Healthineers Lifts Outlook

Polen Capital has recently increased its stake in Siemens Healthineers as the company raised its focus for the third time this year after sales of its rapid coronavirus testing kits peaked in the third quarter.

Polen Capital’s approach to investing in a portfolio focused on global companies of the highest quality that offer double-digit targeted annual returns, with a minimum retention period of five years and ultra-low turnover, have a huge appeal.

One company in the portfolio of Polen Capital Global Growth is Siemens Healthineers (ETR: SHL), the healthcare equipment subsidiary of Siemens AG based in Erlangen, Germany. Siemens Healthineers left Siemens AG in March 2018. SHL is the new brand for Siemens healthcare business and remains the property of 85% of the parent company.

Polen Capital believes that Siemens Healthineers currently is experiencing business momentum and improvements in its diagnostic business, through which it sells its highly competitive “Atellica” diagnostic workstation and currently occupies 3.5% of the portfolio.

Siemens Healthineers has three lines of business: imaging equipment, diagnostic equipment and advanced therapies. Siemens Healthineers enjoys a 31% market share in imaging and is the leader in a consolidated three-player market.

Siemens Healthineers has very strong competitive advantages in its close relationships with customers, its large research and development budget (accounting for nearly US $ 2 billion or 12% of sales) and its trusted brand.

The imaging equipment business produces, markets and services large sanitary imaging machines, such as MRI, PET, X-ray, ultrasound and others.

Each machine is sold with a maintenance and service contract, which usually lasts seven years and represents 10% of the price of the machine, paid annually. Siemens has historically successfully tied these contracts to approximately 50% of its sales, generating 40% of recurring revenue.

The diagnostic business produces, markets and maintains in vitro diagnostic equipment, as well as the corresponding reagents to be run with each assay. This business enjoys approximately 90% of recurring revenue. SHL has a market share of approximately 15% and is the No. 2 / No. 3 player, tied with Abbott and behind Roche.

The third business, advanced therapies, is similar to the imaging business, but instead of marketing and distributing individual machines, it sells all imaging equipment for a hospital in an integrated surgery / catheterization lab. This business enjoys a market share of over 30% and is the number 1 player.

The company is already a world leader in imaging for health and is now a leader in linear accelerators for radiation therapy since it recently closed the acquisition of Varian Medical Systems. In April 2021, the acquisition was completed by creating a combined company that offered a unique and highly integrated portfolio of imaging, laboratory diagnosis, artificial intelligence and treatment for the global fight against cancer.

Adding to the acquisition of Varian, the expectation is that the image division should grow at least to mid-digit digits, and overall Polen expects the overall business to generate double-digit underlying earnings growth. over the next five years. The company posted in its third-quarter market update an expectation of comparable revenue growth of between 17 and 19% from fiscal year 2020.

For more information on the Polen Capital Global Growth Fund, visit the fund’s website:

The Polen Capital Global Growth Fund holds shares in Siemens Healthineers. This article was prepared on August 11, 2021 with the information we have today and our vision may change. It does not constitute formal advice or professional advice on investments. If you want to operate Siemens Healthineers you should seek financial advice.


Roger is the founder and investment director of Montgomery Investment Management. Roger brings more than two decades of experience, knowledge and relationships in the financial and investment market in his role as investment director. Prior to establishing Montgomery, Roger held positions at Ord Minnett Jardine Fleming, BT (Australia) Limited and Merrill Lynch.

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