Siemens rebrands healthcare biz as it seeks to expand, adding services and more molecular Dx

Siemens Healthcare CEO Bernd Montag

Siemens ($SIE) has rebranded and will expand its Healthcare business. The imaging and laboratory diagnostics giant has, perhaps a bit awkwardly, rebranded the business as Siemens Healthineers. The group is a separately managed business within the larger corporate structure, a transition that happened early last year.

The rebrand is intended to underscore the company's professed dedication to engineering within healthcare. Its futuristic bent is intended to emphasize the prospects of the business that, oddly enough, legally will remain Siemens Healthcare.

This move, as well as the addition of new healthcare capabilities and the separation of the business, underscore long-standing speculation that Siemens is prepping Healthcare for an IPO. The creation of it as a separately managed business within the company is part of the long-term strategy that was announced almost two years ago.

The Healthcare business will add "new offerings such as managed services, consulting and digital services as well as further technologies in the growing market for therapeutic and molecular diagnostics," the company said in a statement. That's in addition to strengthening its existing medical imaging and laboratory diagnostics business. Last month, Siemens and Thermo Fisher ($TMO) partnered in molecular diagnostics as the former integrated the latter's real-time PCR system into its own technology.

Siemens is also interested in acquisitions to bolster this vision. Earlier this year, Reuters reported that the CEO of Siemens Healthcare Bernd Montag said the business is "hungry" for acquisitions that fit with its strategy.

On its May 4 earnings call, Siemens President and CEO Joe Kaeser offered some details on the type of acquisitions the company is looking for, "So, priorities on M&A, we have a very clear view about where we want to allocate our resources. In general, we have the five strategic priorities. It's about areas of growth. It's about profit pool. It's about the competencies which we can add. It's important that this asset or this investment capital used as synergies to the greater good. Otherwise, better off going it alone."

He added, a bit more provocatively, "And the fifth one is do we see paradigm shifts which subsequently will change the business model of any sort of player."

Early last year, Siemens sold off its health IT business, known as Health Services, to Cerner for $1.3 billion. Despite a series of layoffs that have afflicted the company's workforce as it works to realign itself, the health business continues to employ about 45,000 people globally.

"We have an exceptional track record of engineering and scientific excellence and are consistently at the forefront of developing innovative clinical solutions that enable providers to offer efficient, high quality patient care," said Montag in a statement outlining the rationale behind the newly named Healthineers business. He added, "Our new brand is a bold signal for our ambition and expresses our identity as a people company."

In the most recent quarter, Siemens Healthcare revenues grew by 3% over the same period a year earlier to €3.3 billion ($3.8 billion). Its profit margin widened to 16.7% from 16.4% a year earlier. The company attributed revenue growth mainly to its diagnostic imaging business. Last quarter, Siemens divested its microbiology business for €61 million ($70 million).

Kaeser demurred when asked point-blank about the future of the Healthcare business on the earnings call, saying he could offer more clarity in a year.

"Healthcare is a really good business. It can be even greater," said Kaeser. He subsequently concluded the call, "If you look at the imaging space, you'll see yourself where we are and who we are and what we do. Ultrasound and the life sciences, smaller ticket items, obviously, and that's what we do as we speak. If it comes to the second, bigger piece of the healthcare company, that's more the diagnostics area. If you ask me again in a year from now about how great that business is, you'll be getting a good answer."

- here are the earnings release, slides and webcast
- here is the Healthcare rebrand announcement
- and here is the Thermo Fisher deal release

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