Despite slipping sales, Siemens passes COVID testing revenue goal a quarter early

Much like the global pandemic that spawned it, the COVID-19 diagnostic testing market has been tricky to predict.

Right when testmakers began scaling back production in mid-2021, highly contagious variants of the virus swept in and surmounted the protections of COVID vaccines, sending diagnostic demand skyrocketing. And even as sales have once again taken a nosedive this year and developers have kept their forecasts conservative, they continue to post higher-than-expected numbers for the segment.

Bolstered by that surprisingly long-lasting demand and a resulting cautious optimism, diagnostics giants have found themselves bumping up their sales predictions with each passing quarter. In late July, for example, Abbott said it’s now expecting to rake in $6.1 billion in COVID testing sales by the end of the year—up from the previous quarter’s $4.5 billion forecast—and in an earnings report (PDF) this week, Siemens Healthineers tacked on about $200 million more to its own 2022 outlook.

That win in the COVID testing department is a bright spot amid an otherwise underwhelming quarter for Siemens. Its revenue clocked in at just under 5.2 billion euros (about $5.3 billion), marking an almost 6% drop compared to the same period last year.

Siemens linked that year-over-year decline to ongoing coronavirus-related lockdowns in China, as well as to the massive COVID test sales it reported during the same period in 2021 that it couldn’t match this time around. In fact, excluding the significantly lower COVID revenues, the company’s quarterly revenue grew by almost 1%.

It follows, then, that the diagnostics segment was hit particularly hard. Its revenue totaled 1.4 billion euros, nearly 24% lower than last year’s testing haul. Though much of that stemmed from seeing COVID test sales slashed in half—from around 600 million euros in 2021 to 300 million euros this year—the rapid antigen test for the virus weren’t solely to blame. Even without factoring in COVID testing, the segment still fell about 7.6%.

But while that year-over-year drop looks less than stellar on paper, Siemens said it was already anticipating being unable to meet the demand of the same period last year—and in fact, this quarter’s 300 million euro haul seems to have surpassed the company’s expectations.

Indeed, those earnings push the year’s COVID testing total to about 1.31 billion euros, sending Siemens past the 1.3 billion euro goal it previously set for the year—well ahead of schedule.

With that in mind, though it doubled down on its previous forecast of overall annual growth between 5.5% and 7.5%, Siemens’ predictions for COVID testing revenues have actually increased. Now, it’s expecting a total of 1.5 billion euros from coronavirus diagnostics for the year, leaving a gap of only 191 million euros for the final quarter of its fiscal year.