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Siemens discontinues cardiology robotics, did not meet expectations

by John R. Fischer, Senior Reporter | May 12, 2023
Business Affairs Cardiology Operating Room
CorPath GRX (photo courtesy of Siemens Healthineers)
Due to not meeting its initial expectations, Siemens Healthineers is removing its endovascular robotics business, Corindus, from the cardiovascular space, stopping the sale and development of its CorPath GRX platform for such purposes and instead focusing on its use for neurovascular interventions, which have been the primary driver for the business.

The CorPath platform was the first FDA-cleared medical device to facilitate robotic precision for percutaneous coronary and vascular procedures, with its GRX version upgrading precision and workflow, and expanding the range of procedures it could perform robotically, according to Corindus, which was acquired by Siemens Healthineers in 2019 for €1 billion ($1.1 billion).

The discontinuation will cost Siemens Healthineers €329 million ($362 million), but margins dilution will not fall to zero, since the company will continue investing in the neuro-vascular space, developing a new version of the CorPath GRX system focused only on this area.
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Chief financial officer Jochen Schmitz says the business will become an R&D project, and expects dilution will be cut in half. Endovascular business investments continued impacting Q2 margins in similar ways they had in prior quarters, but the company expects it will be several years before robots for neurological operations are ready for the market.

“We will not see the positive impact from the discontinuation of the cardio care this fiscal year yet, because we are ramping down activities in the course of the second half. From Q1 of fiscal year 2024, we expect to see significantly less margin dilution in advanced therapies from the investment in the endovascular business,” he said in an earnings call on May 10.

Siemens Healthineers rebranded Corindus in December as Siemens Healthineers Endovascular Robotics, a dedicated business within the company’s advanced therapies area.

Within the €329 million, the largest cost was a €244 million (more than $266 million) impairment for certain intangible assets related to the cardiovascular solution, which was included in the depreciation, amortization and impairment line for the reconciliation of EBITA (earnings before interest, taxes, and amortization). The charges were fully adjusted and were booked in Q2.

While it does not expect any further material charges with this decision, the company experienced losses in other areas, including a 23% to 26% decline in revenue for its diagnostics business, which is mainly due to falling demand for COVID-19 antigen tests, contributing to a 30% drop in Q2 operating profit, a 2.5% decline from a very strong Q2 2022, and an overall loss of 39% for the company’s diagnostic division.

Total revenue for Q2 2023 was €5.35 billion (over $5.8 billion), which was just down 2.5% from Q2 2022 and above the consensus for €5.28 billion (over $5.76 billion).

Growth was seen in revenue for imaging, Varian, and advanced therapies, and equipment orders continued to exceed very strong equipment revenues, at a book-to-bill ratio of 1.01.

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