Hello, everybody out there. Today is Thursday, the 13th of November, as we are recording this newest episode of our IR quarterly wrap-up. I hope this message is getting through to you before you come or listen to our CMD, because this is what we want to ensure, that everyone is on the same page when it comes to our messages on Q4, 2025, and the outlook, 2026. We had a solid quarter and a focused roadshow. As usual, we try to distill the key points of discussion on the roadshow and deliver to you a compact summary of what we believe you need to know in case you did not get a chance to speak to us, or if you simply want to remind yourself ahead of our capital markets day in London on Monday, 17th of November.
Today, I have Jochen on my side as we decided to focus topics essentially on numbers. Y ou will see and hear a lot from Bernd on Monday at our CMD, from Jochen, obviously, as well. L et's kick it off. Jochen, what would be the key points you want to bring across on Q4 and on fiscal 2025?
Yeah. Thanks, Marc. Let me start with the Q4. I think it was another very solid quarter. We were slightly shy of 4% growth, but on very strong comps in Q4 2024, if you take, I think there was still an antigen-impacted quarter, it was more than 6% growth than 2024. But a really good book-to-bill ratio with 1.12 again. Margins were obviously impacted by tariffs, about EUR 100 million negative impact, and, when we then move to the fiscal year, I think we achieved all our targets. Book-to-bill ratio for the full fiscal year, even slightly higher than Q4, with 1.14 after 1.1 in 2024, which were already strong. We achieved the upper end of our guidance range on revenue growth with 5.9%.
By the way, we achieved growth in all regions except China, and, with regard to Adjusted EPS, we ended up in the upper half of the range we guided for. Yeah, and, I think also worth noting, yeah, excluding tariffs, you would have beaten our initial guidance from November 2024. M aybe one last aspect was also a very successful year with regard to cash generation. I think that's an important KPI, which shows, I would say, the health of the business. We were able to deleverage clearly below 3x net debt over EBITDA, with ending the year with 2.8.
Thanks, Jochen. I n terms of Q4 performance, we did get some questions on the reasons for, on the one hand, the weaker imaging margin and on the other hand, the somewhat muted growth at Varian.
Yeah, I mean, first of all, let me say again, this was another really good, imaging growth quarter, keeping in mind that, last year, the Q4 2024 was almost 8% in imaging, yeah, and with the 6%, again, a very, very strong quarter. The very strong 2024 Q4 was also a quarter where we had an extraordinary good mix. Therefore, we highlighted that the mix in the current Q4 was not bad, but it was unfavorable to the extraordinary good one from the year before, and you might recall that we waited almost, the entire year up to Q4 to see all the fruits kicking in from imaging in 2024. I mean, obviously, tariffs were an important headwind. Yeah, I mentioned it before, and EUR 100 million of, headwind, roughly, for the company.
Then we had some special items affecting the quarter. One is that the subsidies we normally get in China, we got them luckily already in Q3. Yeah, in 2024, we got them in Q4, and therefore Q3 benefited from it. Q4 was obviously then, so to say, not benefiting from it anymore, a nd we had to build a provision for field inspections, which are ongoing and coming. Nothing to worry about, but an impact in the quarter.
Okay, and on Q4 Varian growth?
Varian was a bit the other way around. I mean, we had a very strong margin, excluding tariffs, well into the 20s. I think a very, very important testament to what is possible, yeah, in this business. Revenue growth was up against very tough comps, with more than 10% in 2024 and around 30% in 2023. So somehow, the lumpiness of prior year quarters also found its way into our recent Q4. Nevertheless, I think we were a bit more hopeful, or we have expected and also guided for a slightly better finish of the year. Here, the reason was a large contract where we initially assumed that we will get to rev rec in a quarter. Unfortunately, that shifted to the new fiscal year. Again, nothing to worry about. It's just a shift.
Thanks, Jochen. People were also asking if this Q4 revenue growth number, you already kind of alluded to it, that it's not the case, but still, people were asking if this was an indication of growth slowing down for Varian.
Short answer: clearly not. When you look at the book-to-bill ratio we have in Varian, and we have, anyway, very healthy book-to-bill ratios on the equipment side, and in Varian, it's normally constantly leading the camp in this regard. Yeah. Therefore, we have a very, very healthy order book, we have a strong, growing service business, we have also a very, very healthy software business and also a nicely growing small business, but nicely growing procedure business in there, which is also recurring. Varian will continue to be our strongest growing business. The revenue growth in October already looking very decent, and the expectation for 2026 are a documentation of this with, again, assuming a high single-digit environment for Varian, and we expect to see also in Q1, high single digit already in 2026.
Yeah, talking about Q1, what is your view, Jochen, on their other businesses for the first quarter?
Yeah, I mean, sure, for the group, we expect revenue in Q1 to be below our outlook range of 5%-6%. On Varian, I've just commented on the high single-digit expectation for Q1. For Imaging growth, we expect Q1 more around the, I would say, assumption for the full fiscal year, which is mid-single-digit. Yeah. However, we expect Diagnostics to be slightly negative or negative due to the volume-based procurement impacts. You might recall, beginning of last year, 2024, there was almost no impact yet from volume-based procurement in the beginning of the year, and we expect this to be a topic for the full fiscal year in 2026. Therefore, we see, in particular in the first half, more pressure on the growth side for Diagnostics. Also, we expect Advanced Therapies to have a softer start to the new fiscal year.
You know, this business is relatively small. It's often a bit more lumpy than the others. That has nothing to do with the general health of this business, but it is unfortunately what it is, a nd, when you look at margins, due to tariffs and the foreign exchange headwind, we expect margins in Q1 to be below the prior year quarter.
Speaking of outlook, another key topic on the roadshow obviously was our outlook for fiscal 2026, especially on the EPS side. What do people need to know for this one?
Yeah, we tried to be very, very clear about the topics in our earnings call last week. First of all, we have two major topics, which create headwind to the EPS line, which is foreign exchange. Here, the strong euro or the weaker dollar, but also other currencies, and for our current thinking that that generates a headwind of about EUR 0.15. Yeah. This came in a bit higher than we initially thought, yeah, but it's also a mix of different variables and so on, which obviously foreign exchange relations, but also how much revenue you get, how the value-add structure looks like, how is the mix in the country? There are a lot of variables that came in a bit higher.
Obviously, we have an annualized effect of tariffs, yeah, and we expect about EUR 400 million net impact from tariffs, which is another EUR 0.15 headwind, and I think that's exactly what we guided for. T hen we have, I would say, a smaller topic. We had one significant positive result in financial income from the valuation fair value accounting of a stake in a smaller stake in a company, which we cannot plan for this fiscal year. This creates another EUR 0.03 headwind, and against this headwind of, if you add that up, EUR 0.33, we expect operationally underlying an EPS growth of around 10%, which entails a headwind from refinancing in 2026 and a slightly higher tax rate at the midpoint of our guidance range. Yeah. Overall, I think it's very straightforward, and none of the factors were really unknown.
We should highlight that on the 5-6 group revenue growth, we have again assumed a flat China development. Of course, also means less support for the business than a growing China business. I mean, this is obvious then.
Yeah, and maybe on that topic of tariffs, we got a lot of questions on the envisaged full mitigation of the EUR 400 million over the next three years. Could you remind our listeners how this is going to be achieved?
Yeah, I mean, first of all, let me highlight the EUR 400 million fully effective in 2026. They are already net of what we can do short term to mitigate, yeah. Keeping in mind, the EUR 200 million in, the roughly EUR 200 million in the second half of 2025, they benefited from 4 months of initially 10% tariff regime and only 2 months with 50%, yeah, which is obviously 50% higher than the 4 months beforehand. A lso, a lot of their early mitigation measures expired logically. What does it mean that we, for example, shifted inventories as much as possible early into the country to avoid tariffs to kick in? N ow we think about the mitigation over the midterm.
I think we have, in generally speaking, three measures in place, yeah, and we look at them in kind of in a programmatic fashion, yeah. First of all, we will look into tight cost management. We launched cost program, which should generate about EUR 200 million of additional productivity over the next 3 years. T hat would make up half of the EUR 400 million, and the other half comes, if everything goes well as planned, comes from pricing. W e need to have, to put this into perspective, you need to have about a percentage point better pricing over 3 years, and it's just a percentage point of EUR 20 billion revenue, and that's what we do. We take our diagnostics because their pricing current is a bit more difficult for us,
That means over three years, on average, 0.3 percentage point better pricing . This is, for me, absolutely doable. Finally, as a joker or we have that still in our hand, we have plans ready to operationalize for footprint adaptation. And let me repeat, this is a firm commitment of the company. We will regain those EUR 400 million over the midterm. B y the way, this is not a new message. This is the message we gave right from the start because we were very convinced that we would get there. Yeah.
Absolutely. Also, on guidance, we got some follow-ups on the imaging guide, where we said, I think we did say in the call, verbally, decent MSD, yeah, mid-single digits. So people asked, "Is this a slowdown that we're implying, or is it conservatism?
Although maybe one fact, yeah, we also guided in 2025, mid-single digit growth for imaging and ended up at 8.5. Yeah. W e, we let it go positively, even if the assumption is lower. I also tried to emphasize in the call, and when we talked about the mid-single digit, I used an additional word, pre-mid single, which was decent. This should give you also, I would say, a glimpse that we also believe that mid-single digit is a very, very good guidance for imaging . The business is, as you know, is still fully intact. We have fundamental growth drivers in this, yeah, like our photon-counting CT, the PETNET business. Yeah, and, but we are running against tough comps with 8.5. That's also a reality, yeah?
Therefore, we are very happy with our Imaging business. We see the growth momentum continuing, yeah, and we are looking forward, first of all, to the Capital Markets Day and Andre's presentation, but also to the upcoming RSN A, and so on, and so on.
Great. Yeah, so I mean, people did also follow up on China, specifically with regards to VBP and diagnostics. You already alluded to it a bit earlier on, so we're trying to get a feeling how far that can go. This is now obviously the second year without growth in the diagnostic segment, so anything to worry?
I mean, we look at the diagnostic business, I think outside China, we are performing nicely and according to plan, and the Atellica growth is really cool. It's impressive. Yeah, it's in the high teens or the low 20s. I think that is really cool. And obviously, after a long period of time of working on it, it's also good that it now really works. And obviously, Sharon will talk much more about it at the Capital Markets Day. The Volume-based Procurement initiative is significant change in the Chinese diagnostic market, and maybe impacted the market more or stronger than we, and most likely, the whole industry, assumed or expected in the beginning, yeah. Man, the Volume-based Procurement goes across all provinces and through all panels, yeah.
I think we expect this to last definitely until the end of this fiscal year, yeah, as an initiative, and, that means more than 1.5 or 1.5 years. I think, again, and you see that, when you talk to diagnostic players and you listen to them, we are here in fully aligned with industry, maybe even slightly less impacted because our diagnostic China business is smaller than this of some of our peers.
Great. Thanks, Jochen. As we initially said, we want to keep it compact, but one further topic I'd like to squeeze in. So with regards to the new flow on the Siemens stake from last night, the real news flow, there was a lot of news before, but this was now the real news flow coming from Siemens themselves. Also, people before wanted to understand, and will most likely want to understand and ask us what implications the consolidation of the Healthineers stake from Siemens could have on our refinancing, on our finance cost.
Yeah, I mean, first of all, and for good reasons, we also are not much smarter with regard to their decision than you are. Yeah, we only just learned also about it, yeah, about the decision, which was taken obviously yesterday, and then announced on an ad hoc basis by Siemens yesterday after the market closed, yeah. I think the intention is relatively clear. The timeframe is not yet fully clear, but we take it the deconsolidation is not yet imminent. I think we are anyway well prepared in any case. I give you one example. I mean, we obviously listening to the rumors in the market, we prepared ourselves. We have started a conversation with rating agencies. Things are running well.
We get a lot of positive signal and help from all leading lending banks to support us in a potential refinancing for the interim period, the bridge loans and so on and so on. What I can say already now is that this decision by Siemens AG will not have a material impact on our financing costs and ultimately, EPS. In our outlook for fiscal year 2026, we have already reflected an impact from refinancing of dollar loans, which are anyway due in calendar year 2026. Yeah, we talk about a bit more than $3 billion, which proves my earlier commentary on the topic, that over time, loans will have to be refinanced one way or the other, and beyond 2026, assuming the current environment prevails, we do not expect increasing total interest costs.
Also, not if we need to refinance all of our loans outstanding towards Siemens. Yeah?
Great. Thanks, Jochen. Very interesting, as always. For me, it remains to say thank you for doing this again with me, and thank you to our listeners for their interest in Siemens Healthineers. Obviously, already alluded to quite a few times today, we have a big event coming up already on Monday, the seventeenth of November in London, our Capital Markets Day. You are welcome to join us online if you have not already signed up for the event, for an in-person participation. So either looking forward to meeting you in the future or meeting you at the Capital Markets Day. Stay safe and healthy. Bye bye.