Siemens Healthcare is "hungry" for acquisitions as it seeks to recover from cost-cutting and company-wide layoffs of more than 7,000 as a separate company within the conglomerate.
"We are definitely hungry, but not for the sake of growth … but when it fits to the strategy we have laid out," Siemens Healthcare CEO Bernd Montag said at the European Congress of Radiology, adding that deals are "a means to an end," according to Reuters.
Independence from the center is a core part of the new plan. As Siemens' most profitable division and second largest by revenue, the healthcare unit should benefit from a degree of financial autonomy.
"Focusing (Siemens) Healthcare on its own markets, focusing Healthcare on its own resource allocation, optimizing the processes to help the company, in the Siemens company, that this is going to pay off not just in Q1, but also for 2016 compared to 2015," Siemens CEO Joe Kaeser said during the company's most recent earnings call.
Whether the freedom will be used to make big acquisitions, akin to those often made by its industrial businesses, remains to be seen, but Montag's comments suggest it is a possibility.
The healthcare unit has been a bright spot for Siemens, bolstering its case for funds for M&A activity. In Q1 2016, Siemens Healthcare contributed profit of €541 million ($595 million), up 31% year-over-year, on revenues of €3.28 billion ($3.61 billion), up 15%. Siemens reported company-wide quarterly net income up 42% year-over-year to €1.55 billion ($1.7 billion).
Strength in China was key during the quarter for the diagnostics- and imaging-focused unit, though Kaeser said domestic med tech competition and the country's ongoing corruption investigations need to be closely monitored.
Unlike its American counterparts, Siemens Healthcare benefited from currency tailwinds due to the weakening value of the euro vis-à-vis the dollar.
Under its so-called Vision 2020 plan to cut about $1 billion in costs by the end of 2016, Siemens last year announced it would ax 7,800 jobs. That's on top of the 15,000 sackings announced in 2015.
A good portion of the layoffs affected Siemens' industrial businesses, but the company warned when announcing the cuts that "While some Divisions provided excellent performance, Healthcare needs to step up its efforts to quickly resume to its outstanding performance."
To that end, Siemens touted its imaging innovations at European Congress of Radiology, such as Multitom Rax advanced X-ray technology, which enables faster examinations and 3-D images, according to eHealthNews.eu.