Siemens Healthineers (ETR:SHL) said its core businesses delivered solid momentum in the second quarter of fiscal 2026, but weakness in diagnostics weighed on overall performance, particularly due to market changes in China.
In a company investor relations update, Marc Koebernick, head of investor relations, said the quarter was “decent” in the company’s core business, offset by “a weak diagnostics result.” Management said investor discussions following the report focused heavily on diagnostics, order timing and the outlook for the second half of the fiscal year.
Core Business Remains Structurally Well Positioned
The equipment business posted a book-to-bill ratio of 1.02 in the quarter, which management said was lower than usual. Bernd said the company views this as a timing issue and expects a stronger third quarter, while continuing to forecast a full-year book-to-bill ratio “in the 1.1 territory.”
Jochen Schmitz, chief financial officer, said total orders declined by a low-single-digit percentage against a strong prior-year comparison, when orders rose 13%, supported by large Value Partnerships such as the Alberta deal. Schmitz said some Value Partnerships shifted into the third quarter and that the company has large deals in the pipeline, with some close to finalization.
“Overall, this is timing, not a structural issue,” Schmitz said.
Diagnostics Hit by China Pressures
Diagnostics was the main drag on second-quarter performance. Schmitz described the quarter as a “perfect storm” for the segment, citing ongoing volume-based procurement activities in China, additional reimbursement cuts, the unbundling of test panels and destocking by OEM partners.
Schmitz said the China comparison was particularly difficult because the business was still growing there in the prior-year quarter. He added that reports from other diagnostics companies also indicated that the situation in China was more severe during the quarter than previously expected.
Bernd said Siemens Healthineers saw a combination of effects leading to a 40% to 50% decline in China diagnostics in the second quarter. Looking ahead, he said the company expects roughly two more quarters before full normalization, with a new and lower structural baseline by the end of the fiscal year.
China diagnostics has fallen from about 12% of the segment’s revenue before the pandemic to about 6% today, Bernd said. He said the “China risk” has largely materialized and is now significantly reduced. Outside China, he said the core diagnostics business is improving, with the Atellica migration largely completed and legacy exposure further reduced.
Diagnostics Strategic Options Continue
Management also addressed its efforts to create strategic optionality for the diagnostics business. Bernd said the business is already largely separated operationally in sales, service and manufacturing. The next step is preparing a legal entity carve-out.
He said the company can engage in discussions across “the full spectrum of pathways” in parallel and is not working toward an artificial deadline. The focus, he said, remains on creating shareholder value. Potential proceeds could be used for deleveraging and/or share buybacks.
Second Half Expected to Benefit From Advanced Therapies
Schmitz said Advanced Therapies is undergoing a material product transition cycle, which reduced revenue contribution in the first half and shifted activity into the second half. He said the softness was expected and was not driven by demand or market dynamics.
In May, Siemens Healthineers received FDA approval for six new angiography systems, Schmitz said. He added that the backlog supports acceleration in the second half and that factories are full, noting the business builds only to order.
“For the full year, we expect growth with strong momentum returning,” Schmitz said. “This is a timing effect due to innovation cycles. Not a structural concern.”
Inflation, Innovation and Siemens Spin-Off Topics
Schmitz said the company has two primary levers to mitigate inflation: pricing and productivity. He said Siemens Healthineers has pricing measures already in place to address tariffs and can increase those efforts if inflation becomes broader or more persistent. The company has also started a cost-savings program tied to tariffs, which Schmitz said is “running extremely well.”
He added that more than 50% of revenue in the synergistic core is recurring and that the company has built stronger pricing capabilities since 2022. Despite current headwinds, Schmitz said the company’s Capital Markets Day ambition to deliver double-digit operational EPS improvement remains intact.
On innovation, Bernd pointed to photon-counting CT, a new LINAC and growth in PETNET as drivers of market share and market expansion. He said Siemens Healthineers is the only company with a full fleet of photon-counting CT scanners and highlighted PETNET’s growth at or above 20%, with annualized revenue approaching about EUR 1 billion.
Schmitz also addressed questions related to Siemens AG’s planned vote next year on the spin at the ordinary annual general meetings of the companies involved. He said investors should not expect a material recurring burden from brand licensing. On financing, he said Siemens Healthineers is prepared if Siemens terminates existing term loans at the deconsolidation date, and expects interest expense to remain within the previously discussed range of negative EUR 380 million to negative EUR 420 million in the current interest rate environment.
Schmitz said other recurring costs and dis-synergies from the final carve-out are manageable, with guidance for a mid-double-digit million euro amount, which he called likely conservative.
About Siemens Healthineers (ETR:SHL)
Siemens Healthineers AG, through its subsidiaries, develops, manufactures, and sells a range of diagnostic and therapeutic products and services to healthcare providers worldwide. It operates through four segments: Imaging, Diagnostics, Varian, and Advanced Therapies. The Imaging segment provides magnetic resonance imaging, computed tomography, X-ray systems, molecular imaging, and ultrasound systems. Its Diagnostics segment offers in-vitro diagnostic products and services to healthcare providers in laboratory and point-of-care diagnostics; and workflow solutions for laboratories and informatics products.
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