Siemens raises outlook as COVID-19 antigen tests blast past original sales target

Dive Brief:

Siemens Healthineers has again increased its outlook for fiscal 2021 on the basis of demand for its COVID-19 rapid antigen test.
Antigen test sales over the first half of the year totaled €320 million ($385 million), versus the original full-year guidance of €300 million to €350 million. With the tests now cleared for use by lay people in Europe, Siemens expects full-year sales of €750 million.
The jump in the forecast for antigen test sales, coupled with small improvements in other parts of the business, led Siemens to increase its full-year revenue guidance by around 55%.

Dive Insight:

Siemens went into its fiscal 2021 expecting full-year growth of 5% to 8%. In February, the company raised its forecast to 8% to 12% after completing a first quarter that left it confident imaging would grow at least 7% and diagnostics sales would rise in the mid teens. Three months later, Siemens has increased its outlook again, raising its growth target to 14% to 17%.

The new guidance reflects clearances to provide rapid antigen tests for use by lay people in Germany, where Siemens sells most of its tests, and France, as well as a later CE mark that opened up the rest of the European Union.

"This creates a new opportunity for rapid antigen testing: The self-testing of lay persons. The teams at point of care worked very hard to meet the additional and short-term demand which arose from this opportunity. Therefore, we [have] now updated our assumptions for rapid antigen test sales," CFO Jochen Schmitz said on a conference call with investors.

The bullishness on the prospects of its rapid antigen test business contrasts to the positions of some of Siemens' rivals that are more exposed to the U.S. market. Last month, Abbott reported revenues from rapid COVID-19 tests that fell short of analyst expectations and Quidel disappointed investors.

Siemens has a smaller rapid antigen testing business that is focused on Europe, rather than the U.S. The antigen tests drove Siemens' diagnostics business to 29% growth in the second quarter, leading management to raise the full-year outlook to a 25% increase.

The rapid antigen test contributed 17% to second-quarter growth in Europe, the Middle East and Africa, driving the region to overall growth of 35%. Demand for imaging equipment and products related to the pandemic supported the growth.

In the U.S., by contrast, sales fell 1%. Siemens CEO Bernd Montag attributed the slight decline to the temporary postponement of investment decisions throughout the pandemic. Based on the growth of Siemens' order book, Montag expects the U.S. market to recover over the second half of the year.

The anticipated recovery of the U.S. market is a factor in Siemens' raised outlook. The company bumped its imaging and advanced therapy growth forecasts up one percentage point to 8% and 7%, respectively, based on its order book and the recovery of the U.S. market. Imaging grew 7% in the second quarter, while advanced therapies revenues rose 2%.