Dive Brief:
- Siemens Healthineers said Thursday it will rebrand its in vitro diagnostics business and establish the unit as a standalone organization by mid-2028.
- The rebranded business, Olyrian Diagnostics, will sell diagnostics for laboratory and point-of-care testing. Clients include Quest Diagnostics, which recently extended its contract by five years.
- Siemens Healthineers is rebranding its remaining business. Next year, the company will start a three-year transition to rebrand as Healthineers, dropping Siemens from its name. The rebrand coincides with a plan announced late last year for Siemens to give up its controlling stake in Siemens Healthineers. Shareholders will vote about the plan to spin off Siemens Healthineers shares at an annual meeting in February.
Dive Insight:
Siemens Healthineers has laid the groundwork for the carve-out of its IVD business over the past year. One year ago, the company told investors that the diagnostics business would have its own strategy. Executives revealed the planned carve-out of the diagnostics business in May. The actions reflect a belief that the business does not have a synergistic relationship with the company’s other three units.
“We have started the carve-out with a clear intention to separate,” CEO Bernd Montag said on Siemens Healthineers’ earnings call Thursday. “This process will position diagnostics as a market-leading in vitro pure play and help diagnostics to leverage its strength across lab solutions and point-of-care testing, offering a differentiated portfolio that meets the evolving needs of healthcare systems.”
Comparable revenue at the diagnostics business fell 4.2% in fourth-quarter results published Thursday. Sales “stabilized sequentially while still declining” year over year, Montag said. Diagnostics sales in China continue to decline “due to the structural market rebasing” in the country, CFO Jochen Schmitz said on the earnings call.
Siemens Healthineers is preparing to carve out its diagnostics business while working through the split from its own parent company. Eight years after selling shares in the healthcare business, Siemens plans to spin off Healthineers. Shareholders will vote on the separation in February. Healthineers will pay Siemens 300 million euros (about $334 million) for the three-year brand transition phase.
The healthcare business is targeting an additional 400 million euros in savings at the diagnostics unit, Schmitz said. The cost-cutting drive spans operational processes, R&D, sales and every other part of the business, and the company will realize a “significant chunk” of the savings by 2028, Schmitz said.
Building on its cost and pricing initiatives, Siemens Healthineers is launching “additional measures to counter over 300 million euros of stranded costs stemming from the diagnostics carve-out, the focusing of ultrasound and the deconsolidation from Siemens,” Montag said.
The short-term disruption will position the company to “focus capital allocation clearly in the mid- and long-term,” Schmitz said.
