One quarter after announcing a plan to save around 300 million euros in its diagnostic testing division—namely, by laying off an undisclosed number of workers and exiting less lucrative regions—Siemens Healthineers is still struggling to stanch the department’s losses.
For the first quarter of its fiscal year 2023, a period that ended Dec. 31, fast-dropping revenues in the testing segment dragged down Siemens’ overall earnings: The company posted revenues of 5.08 billion euros ($5.55 billion), representing a year-over-year drop of 4.5% on a comparable basis. But when earnings from COVID-19 tests are excluded, that year-over-year change becomes a 0.7% increase.
Similarly, though the first quarter’s results confirmed Siemens’ previous forecast that its full-year revenues will stay virtually flat—changing only somewhere between -1% and 1%—the company reiterated in Thursday’s earnings report that 2023’s haul would actually register an increase of between 6% and 8% over 2022 if COVID-related sales were left out.
On its own, the diagnostics department saw quarterly revenues plummet 23.7%. At the core of the drop is the quickly declining demand for COVID tests around the world, which has hit most major testmakers particularly hard in recent months.
In Siemens’ case, its rapid antigen tests brought in only 63 million euros ($68.7 million) for the period—a more than 80% drop compared to the 329 million euros ($358 million) they earned in the first quarter of fiscal 2022. The company put the bulk of the blame on lower testing revenues from China specifically, as the country kicked off the quarter in strict lockdown and ended it with a major spike in infection rates.
Even without the massive year-over-year drop in COVID-related earnings, however, Siemens’ diagnostics segment is still on a downward trend. When those antigen tests are removed from the calculations, the division still posted a decline of 7.3% in its quarterly revenues.
The diagnostics disappointment continues from the previous quarter, when CEO Bernd Montag said of the department, “We have come to the conclusion that the dramatically changed macroeconomic environment demands immediate and comprehensive measures.”
Those measures included moving away from less-relevant geographies, per Montag, which would in turn lead to workforce reductions within the teams working in those areas.
As that cost-cutting plan begins, Siemens is on the hunt for other money-making opportunities in its diagnostics business. Case in point: Alongside the latest earnings report on Thursday, the company also unveiled a new partnership with Unilabs focused on reaching more people with its diagnostic technologies.
The deal is valued at more than 200 million euros ($218 million) and will see Unilabs acquire more than 400 of Siemens’ immunoassay and clinical chemistry analyzers to be placed within its network of diagnostic labs.