Siemens Healthineers AG (SHL) Earnings Call Transcript & Summary

Welcome back, everybody. I hope [ you're all ] nourished and fed and a bit -- got a chance to digest all of the information from the morning. Now you will be fed with more information in the next 4 sessions, starting off, obviously, with the biggest segment that we have, Imaging. And therefore, I'm welcoming with me today, André Hartung and Christian Klaussner. We will be here throughout the whole day -- the whole presentation. There will be, first, a presentation from André, some 10 to 15 minutes, and then we'll be here for your questions in a dynamic Q&A session. So André, go ahead.

Welcome, everybody, to Forchheim. I hope you enjoyed the tour this morning through the Experience Center [ and the Crystal Growth ] Center, and some of this you will see in the presentation later on as well. Safe harbor statement. So I think it's important to realize that imaging is a growth engine. Imaging is a growth engine, and we are #1 in this business. And at the same time, we have industry-leading margins. The fuel of this is basically innovation leadership. And this is why we are basically #1 in all of the large modalities, be it magnetic resonance, CT, molecular imaging, conventional X-ray. And this leads to our wheel of success because 75% of the revenue we generate is coming out of innovations not older than 3 years. This allows us to ask for [ innovator ] margins. And at the same time, due to our scale, to further improve on the industry-leading margin side. Most of those systems come with multiyear service agreements. This is then resulting in 40% of recurring revenue that comes for a long period of time, typically 7- to 10-year agreements. And that allows us again to invest in order to further increase our market share, and that's basically the way it's been working. And that's the way we have been delivering in the last 8 quarters, and looking forward, we are as well committed and confident that we will stay on that path. And the reason is, a, innovation leadership; and b, the ever-growing demand. The world needs imaging, whatever you do in health care, be it diagnosis, be it screening, be it therapy monitoring, be it follow-up. Everything needs image, and that's true for most of the diseases. And at the same time, the mega trends work into our direction as well. People get older. People get more. They see -- we see more chronical diseases. Chronical diseases are subject to imaging multiple times and therefore is creating additional demand. There's as well some substantial untapped potential. And this is, in particular, when you look into the low-income country arena. So 3 billion to 4 billion people do not really have proper access to health care, and they drive now to get access. But even in developed countries, you have a very -- disparity between availability of health care. This is why, in particular, in the United States, they are going to bring imaging closer to the patients, which we call networked care, which is another driver of the demand. New customer groups striving for access to imaging in the orthopedic arena, in dentistry. And there is an ever-growing clinical value. Just when you take the recent examples, Alzheimer's disease, you need PET/CT. You need MR. And it's one of the highest prevalence dementias that we have on this planet. We do see lung cancer screening is coming up. It's being promoted by more and more governments, will as well drive demand upwards. And there is new techniques like theranostics where you basically use PET tracers in order to not only image something but in order to fight against the disease like in prostate, which is, in particular, driving PET/CT but as well MR. So let's get into one example of untapped potential, and this is our DryCool technology. The first representation of this was the Free.Max, as you're aware, which started in the low field. And why it's so important, DryCool technology, it is: a, about the helium. Normal MR system consumes about 1,000 liter [ first full ] of helium. Helium is expensive, up to EUR 50 per liter, depending where you are. And we could reduce this in a closed-loop type of system to 0.7 liter, from 1,000 liter down to 0.7 liter. This has other implications, too, because at that point in time, you can make everything small, compact, lighter. So construction costs significantly go down, and barriers to get access to MR technology are being decreased. We can take this technology now and expand it through the other segments. So we started with the Free.Max [ in this half ] Tesla arena. We will now move it to 1.5 Tesla to 3 Tesla in the years to come. So there is a huge potential in there. At the same time, there is another challenge in MR, and that's basically the speed. MR is not a particular fast modality. Examinations can easily take 30 minutes plus depending on what you are looking for. With Deep Resolve, we have an AI-driven technique that helps you to speed up this process significantly. You can reduce the scan time up to 70%. And as this is the limiting factor for productivity on the MR side, that's a big lever, and as well available for not all but the majority of the systems we have in the field. So looking at that, we opened basically MR up for everywhere. It's now accessible for low-income countries. We have installations in Yemen, Angola and so on. India, a very attractive point -- area to be as well. We have new customer groups like in orthopedics, interventional MRI. And together with our business area, Varian, we introduced MR to a greater extent into radiation therapy planning. And we can do this because we can integrate the information and facilitate a very, very seamless planning of radiation oncology procedures. So this is now how we basically come with a new technology and evolve this up into all the segments. The next example is about photon counting that you have experienced today and you have seen in [ Crystal Growth ] Center where we just about to construct now a larger manufacturing space over there. And I think [ there, it pays off ] that we are years ahead in photon counting, and it shows an unrivaled clinical impact and will be unstoppable. It is the technology of the future. You are aware, we launched the first system in 2021 at RSNA. And it was, at that point in time, acknowledged by the FDA as the one significant advancement in CT since more than a decade. That shows, if the FDA at all makes any claims, this is really an exception, that it's really being seen as a game changer in that field. And when you look into the clinical impact, and I just brought 3 areas where you relatively easy can pick what the difference is because it's more than double the resolution. It's extremely low dose. You have all the spectral information with every scan. And then you see what happens. In over 250 studies being published already with 0.5 million patients scanned, we can clearly see that people that have been [ excluded ] from coronary CTA, so noninvasive cardiac imaging, can now be included, which makes a big difference because it's quite a large population. In neurology, you really go down to the very, very smallest vessel detail. And when you look into pulmonology, and here, in particular, COPD or restrictive lung disease, which has a very high incidence, it's one of the most popular, most common lung diseases at all, there, it's important that you diagnose it as early as possible because if you diagnose it as early as possible, you have treatment options. And this is what we can do with photon counting. Just to show a couple of clinical areas where the impact already is proven today, so we started 2021 on the very top of the spectrum with the NAEOTOM Alpha, and we will move this down to all segments in the years to come. So it's clear, photon counting is going to be material of the future. And the existing installed base, which is 35,000 systems just for Siemens Healthineers and about 100,000 systems overall, is basically subject to be upgraded at some point in time or exchanged. So there is a lot of data that we produce with both, with MR and with CT, enormous amounts of data. And it takes time to look at this. At the same time, staff shortage in health care workers, I think it's a very, very prominent topic. You are all aware about that. So whatever we can do in order to increase the productivity in the radiology value chain is easing this problem, and automation is clearly key to take work away that can be done by machines and concentrate of the things a radiologist is there for. And the enabler of this is AI, and we are in a leading position there. We have access to the data we need with 2 billion curated cases. We are leading from a patent point of view. We have a very strong portfolio and rich, and it's starting at the scanner. So a lot of this is built into a scanner, and I'll give you a few examples. One is the 3D camera. Typically, when you position a patient, it takes time. You need to be accurate. It depends on the angle you look at the patient. With this, you press the button, and then you release the button at some point in time. And then the patient is ideally positioned, done. It's great time savings, and it's improvement on quality as well. Deep Resolve, I mentioned, to speed up the acquisition process significantly and increase, therefore, productivity. Image interpretation support like with the AI-Rad Companion is an important element to free up time of the radiologists. And we could show that with the technologies today, you can save 20% reading time. And the vast majority of time is being consumed in the reading and reporting process. And this is where Syngo Carbon, our enterprise imaging platform, comes into play, automating this process and at the same time, populate things automatically into reports, which means this is really a significant time advantage you have, up to 50% on an individual case. And then we take this information and can use it as well to prepare, for instance, for radiation oncology therapy like in this example with an AI-Rad Companion radiation therapy. It's a lengthy procedure. You take quite some time to segment all the organs, making sure that you know where is the lung, where is the liver, where is the abdomen, where you can radiate, where you should not radiate, where you have to radiate. And this is basically done in this planning process, and you can fully automate this with AI and save a lot of time there. At the same time, you address staff shortage as well because you need physicists for this and mathematicians, and it's very, very rare people you can hire. So I think from a portfolio point of view, it's great. But the innovation leadership needs to be acknowledged and the value needs to be demonstrated to our customers. And this is why -- and you just mentioned RSNA. A few highlights from RSNA this year. So it was crowded. In the middle, the larger picture you see there, this is how the area around the photon-counting CT is looking like. It's crowded. It's crowded all the time. The same is true for the Free-Max. By the way, the Free-Max just got the German Future Award last week in Berlin, which I believe is a remarkable success as well. And there are 2 new systems on that picture as well, the Pro.Pulse and the MAMMOMAT B.brilliant. I haven't talked about them yet. Just to give you an idea, Pro.Pulse is a midrange, dual-source CT system. So the first time we bring the advantage of dual-source CT in the midrange. And the MAMMOMAT B.brilliant has a new very sophisticated acquisition technique for mammography with a clearly superior image quality and will determine and be the benchmark for technical leadership in mammography in the years to come. And then all this supported with the workflow advantages we have with Syngo Carbon. So people believe and see that we are leading in terms of innovation. And this is the main root cause why they enter into value partnerships with us because they know if they go with us, they're very likely on the forefront of innovation for the years to come, and they can utilize all the advantage that we can generate in a horizontal fashion by utilizing Siemens equipment on a broader scale. That's the one aspect. The other aspect is it's not so easy to realize all these advantages you have on the productivity side without support. Change management in a hospital is one of the very serious barriers that you have to overcome. And we have consultancy and we have people experts in the area of education and operational efficiency gains that we can put into this in order to enrich value partnerships with common goals, right? It's a win-win situation because we help our customers to increase their operational efficiency. Having said that, on the last slide, I think it's about winning together. I think it's important as well to realize what imaging is doing in the context of the other business areas. On the one hand, we [ are the eyes ] for interventional therapies for IT. There is no interventional therapies without imaging in various context. There is no precision in radiation therapy planning without imaging. You need imaging in order to plan correctly. We can now interconnect. We can create workflow advantages, and that will help all business areas to gain additional business. So we are set up to commit as well beyond '25 at least mid-single-digit growth, and we will continue to increase margins at scale. Thank you very much for listening.

So I guess that opens up for Q&A. [Operator Instructions] So I think we'll go first to Veronika and then Oli.

Veronika Dubajova from Citi. Three questions for me, please. The first one is on the 1.5 Tesla helium free. If you can share any time lines for when you think you'll be in the market and then sort of the technical feasibility of it into 3 Tesla as well and how much further behind that is? My second question is on PET/CT and the size of the market. Obviously, you put the statistic on the page for theranostics growth. But I'm just curious how large the installed base you think. And is it big enough to support the type of growth that you expect? And if not, what's the growth rate that we should be modeling for that? And then my last question is just on China and how you're feeling about the anti-bribery campaign at the moment and if you've seen any easing in the order patterns there.

Okay. Thank you very much. Can you hear me still? Is it -- okay. Let's start with the technical feasibility question on the 1.5T into 3T and give you a rough idea when it's going to come. It's not too far away, so I'd put it that way. So -- and the technical feasibility is clarified. So it's really just a matter of now getting it done. So from that angle, we are very, very confident. And it's related as well to the technology. I'm not sure whether you're -- it's maybe not that interesting for you, but the technology of this DryCool magnet and the way we cool it, because that's the miracle behind it basically, helium cools it down and semiconductors needs to be cooled down. Other than that, they will not work. But you can cool down it in flooding it with liquid helium, which we did in the past, or by having a very smart way of get the heat away into a small helium reservoir. And that's basically -- and this paradigm works rather -- relatively independent from the field strength. And this is why we are very convinced that this is not a big deal. So when we talk about PET/CT, I mean, there's 2 areas where I think it's a fair question as of today how will they impact the volumes and demand. One is the Alzheimer's topic because that's -- PET/CT is basically being diagnosed -- needed for diagnosing Alzheimer's and proving that there's amyloid plaques in the brain. And then you need MR because when you treat those patients [ with those ] now available drugs, there are serious side effects, and you need to monitor the side effects on a regular basis. So to what degree? From the Alzheimer's point of view, it will boost volumes. It's a little bit of a question that I would love to answer to you as of today because it is so much depending on how the health care systems around the globe are implementing this as well in terms of reimbursement. And we do not have a very good idea about how much of this is really running within the [ regulatory ] referral paradigms or because somebody said, "I'm afraid, I have it." So there's 2 angles to it that certainly will have quite a significant impact on the additional demand. But depending on how that works out, it can become a more significant driver. And capacities on the PET/CT and on the MR side, there is not unlimited capacity. So I mean, we have capacity [ games ]. Maybe most of you experienced it. If you look for an imaging test, you don't get it overnight unless you are an emergency case. So there is a capacity constraint anyhow. For theranostics, I mean, there's -- on the PSMA side, on the prostate side, it's quite well established. This has driven, in the last couple of years, the numbers of PET/CT up already. And we have as well PETNET, as you know. So we manufactured a tracer in collaboration with those -- with other pharmaceutical companies and distribute them worldwide. And we could see, how the tracer volume was developing into that direction. The more of those therapies are being established now, the more that will put pressure on availability of systems. And yes, as I put it, on the demand side, it is one of these growth drivers that we feel will have an impact in the future.

So with theranostics, if the number of patient's growing 28% -- sorry, if the number of patients is growing 28%, does the number of systems need to grow 5, 10, 15, 20?

Yes, this is tough to say because it's so much depending on the individual workflow, and certainly, there is no direct correlation. But I think it's very logic to say if this is -- if the demand is increasing significantly, you will simply have to invest. There is no way around. China, yes, I think -- I mean, there was a group statement around it, and you know that. I can tell you, yes, we will see this effect on the imaging side to the magnitude that has been communicated already, but it is baked in the numbers. This is in our plan. When I'm talking 6% to 8% growth, it's on our plan.

Oliver Metzger from ODDO BHF. Also 3 questions from my side. First is on the photon-counting CT. What is right now the limiting factor for higher growth? Is it your capacities? Is it about the price point? And how to think about that? Second question is about market growth. So you talked about an overall size of, what, more than 100,000 CTs in the market. And historically, we said there's online growth somewhere, let's say, around 5%. So given the initiatives you see also about lung cancer screening, do you think, conceptually, the expectations for [ market ] growth might become even a little bit higher? Or is it to remain stable? And the third question is also in this context. So if you look on photon-counting CT, which comes at a significantly higher price tag, so historically, volumes and prices -- [ helium ] prices were more or less stable, so volume growth was market growth. Does it -- do you see going forward a higher positive contribution coming from prices?

Can I -- I think I'd combine question 1 and 3, if it's okay for you? Yes, I mean, we started in the very super high end with photon counting because it's not a cheap thing. That's true. But we do know there's so much clinical value that if we're going to introduce this starting from the very top, making sure that the science around is right so that it's proven, that it's indispensable to have it, that is the starting point. And then it's a matter of scale as well because like other materials on the CT side, the more you scale, the more cost advantage you can realize. So for us, of course, we have the aim to do not have significant cost advantages as compared to the technology we use today. And we most likely will as well not be able to just say now a middle class CT or mid-segment CT is [ X percent ] more expensive because this is probably a topic. There is some extra you may generate out of this due to the clinical value, but it's not going to be a massive difference. However, when you ask about this large installed base and so on, yes, I mean, of course, we have models where we think how is this going to work, how is this going to change, how is this going to impact as well our cost internally. But it's as well all baked in. This is in the numbers. This is why we are so confident that we will get [ to this ]. And then there was one, you help me, with the market growth CT. Yes, I mean, when you look into short term, look at quarterly growth dynamic, this is always a little bit tricky thing. When you look long term back, then you can see it's a procedure-driven thing. And the procedure growth is for 10 years, 20 years in a row, there's only one direction. It's procedure growth. It's driving -- it's going up because of the reasons that I have been laying out. I wouldn't see a step shift there. I think it will stay like this. Procedure growth will be there and is even above average market most of the time, but we as well increase productivity. So we can do more with the machines, and this is why it's not just an exponential growth all of a sudden or a significant -- this is kind of compensating. So we will see stable growth pattern. We will outperform that with 6% to 8%. We will definitely win market share in that arena.

It's Falko Friedrichs from Deutsche Bank. My questions are also on the photon-counting CT. On your slide, it said you're years ahead. Can you specify that a little bit further? And how good is your insight into what your competition is doing with that technology? And then also related to that, to what extent is your technology protected by patents whatsoever?

Let's start with there's a huge number of patents behind photon counting. But I think it's important as well to understand that we have patent exchange agreements with the large players to not stall us all the time because that would be -- we have so many IP, right? If everybody would ask every time, everybody, whether there is something like an infringement, you get nowhere. That's the one thing. In terms of technology and where do we stand, I mean, to the degree we can know it, I believe we have quite an okay view on what the competition is doing. And they are talking about it. It's not really a miracle. And in particular, one of our competitors in the U.S. is talking about it. We believe we are a couple of years ahead, and we'll utilize this time advantage. We have said that, by the way, from the very beginning. And that may be an interesting data point when 2 years ago at the Capital Market Day, when we have talking the first time about photon-counting CT, and the first representation of it was NAEOTOM Alpha, we said 2 to 3 years. I would be confident to [ say -- see it ] in a similar ballpark right now. And the indicator that we have, some people say they have now clinical use -- clinical test systems out there, for us, it took quite a while from the test systems to the initial product. So I think there, we are really in a very good position. And from a technology point of view, to just put that into the basket as well, the combination that we can do with -- at the same time, and that is important, at the same time, top resolution, very low dose -- very, very low dose and spectral information there at the full resolution, this, we believe you only can get to with [indiscernible].

Graham Doyle from UBS. Can I just follow up from Veronika's question on China. I think it was like a couple of weeks ago, we talked about in our podcast that Q4 being down 30% in order terms. Now is there any reason to think differently at this point? And is that kind of improving just trajectory-wise and things are easing as some of the hospitals are sort of released? And then one on just ultrasound. You haven't really talked about it. It'd be good to get an update on the strategy and ambitions in ultrasound.

Okay. The first one I have to -- can you put some more light on the first one? I'm not sure whether I get it. China...

So China, I think the thinking was that it will be down about 30% in order terms for Q4. Is there any reason that's changed? And is that improving through the quarter?

No, I think we stick to exactly that. And what has been communicated there by Jochen and Bernhard as well is exactly the scenario we believe is going to happen. So from that point of view, great. And the second, the ultrasound topic, I mean, you see we are yet #5 on the ultrasound side. That's not where we want to be. That's clear. On the other hand, we can't be #1 because we do not play in all segments. We play in GI. We play in cardiology. If you take that, we are already -- only, then we are already positioned kind of #3. But what we did do, we consolidated the portfolio. We did invest in a new platform, which is now there, which is really being appreciated by the customers. So it's moving in the right direction. So from that point of view, we are not at the end of what has to be done, but we are on a good path.

Hugo Solvet, BNP Paribas Exane. Just one maybe big picture question on AI. Just your thoughts on the ability longer term to really retain most of the value from AI and that no software company, let's say, just jump on the opportunity of maybe using everything that you generate and some of your competitors generate.

I mean the reality is we do that as of today. I mean this is -- when you look into what is driving innovation, then a couple of things are related to these topics like smart engineering on the hardware side, like the DryCool technology. Others is then really technology shifts on the detector side like in CT. But when you look deeper into the differentiation of the product, a lot of this smart automation, ease of use is purely driven out of AI techniques. So basically, digitalization is an enabler for innovation in order to build the best imaging devices, and that's important to understand. It is a lever of innovation, and we frequently as well have this then baked into the systems. And then there's this area of imaging interpretation, post processing and so on. And there basically, our AI capabilities are very deeply connected to carbon, and carbon is our carrier of all what you need in order to include AI functionality in your clinical workflow. And this is one of the key advantages because you have hundreds of small shops. They have 1 software or 2. But you have 20 critical topics that you need to deal with at least, and you cannot use 20 different software. It's not going to work. You get never implemented it into your workflow. People will refuse to use it. And we see these uptake challenges. We see this. And there, our advantage comes in because we can do this step by step, workflow integrated in carbon throughout the entire anatomy of the body.

All right. Thanks, André.

Thank you very much.

Thanks. We have a short break now of 5 minutes, and then we have the next [Audio Gap] [Break]

Good. So welcome back. Ready for the second session now. We have diagnostics, the management team here. Sharon Bracken, Michael Bueker, very, very new in the team. Obviously, you know he replaced Martin, whom you also know by now, more in person. So we're very happy to have you here all the way from Tarrytown despite the travel problems that Germany faces all the time at the moment. And Sharon, the floor is yours.

Hi, everyone. I'm glad you made it in too. I know it was quite a trip this week. But my name is Sharon Bracken. I've been with the business about 18 months. I wanted to just point out, I've been in the industry for over 20 years. I -- when I joined, I would say that I saw a lot of similarities based on my experience at Abbott. So when I was with that at Abbott, we competed with Siemens. We had P&L similarities and similar opportunities. And then also during my time at Abbott, we did the Alere acquisition with an integration and synergy plan that's public. So when I joined, I had observed that a lot of the key assets in the business that I had thought were winners from afar were winners from within. So there's a lot of strong assets in the business. We launched a transformation program and the transformation program is designed to drive a step change in profitability in the business. And then, at the same time, double down on our go-to-market. It was a huge opportunity, but also a great foundation in Healthineers. When you looked across our platforms, which we've separated into 3 business lines, when you looked across the talent, we have strong talent, strong presence, great tests and a super offering. So the transformation was about lining up the business, making sure we drive bottom line synergies and topline growth. If you look at our Core Lab business, it's more than 65% of our revenue. You saw some of that downstairs in the experience center, our Atellica offering. We have a very strong presence at Atellica's over EUR 1 billion in revenue, and we can build on that track record now that we have the CI Analyzer. And the CI Analyzer, as you saw, is well designed to cover hub-and-spoke models for our customers and allows them to configure their testing network to the best of their abilities and how they want it to be set up. So we cover the largest volume in the, I'll call it, mega labs or large labs with Atellica. But now with the CI Analyzer, we also cover the mid-volume. If you look at our specialty and point-of-care businesses within the specialty business, there's a lot of unique niche platforms, and they each have a core value to the customer. On our point of care, we've got a great breadth of offerings as well. My observation as I joined the business is both of those businesses are running good, but they have an opportunity to be great. The Atellica was not only an enabler for us for growth, but also enabled us to drive the cost out synergies through the transformation. And it enabled us to make some tough decisions in order to simplify our network and streamline our portfolio. So I'll talk a little bit now about the transformation plan, the transformation savings. As I mentioned, this was designed to drive a step change in profitability. And for those of you, I know many of you know the industry, in the industry, you have a lot of work required to maintain a single platform, right, because you have to maintain the tests, the biologics on which those tests are founded, the manufacturing of the test themselves, a lot of chemistry and life science. Then you have the engineering R&D resource because a lot of the analyzers have over 1,000 parts. Those parts' supply chains need to be managed. And if you dilute your business, you also are running lower volumes across more parts, right? And that takes a lot of engineering work to maintain the business. You have to program the software and maintain the software. You have to maintain the product registrations, the regulatory support. So when you're doing that across all the platforms, you are diluting and requiring a lot of effort across a number of different platforms. But when you move everything to Atellica, you have one team supporting the system, one team supporting the software, one team supporting the test. And by making those decisions as soon as possible, you can remove costs and you can cut down on the work for small legacy platforms, consistent with your plans to migrate over to Atellica. So it was a big enabler for us on the cost savings. We took out, I would say, cost in 3 key areas. Number one is just the complexity of the activity, so taking out less activity. And then with that, the associated labor costs and also the associated operational costs, overhead costs, expense. And so a lot of the transformation savings identified in action was related to labor and activity savings. We reduced -- as an example, you have R&D projects, right? So R&D projects can be new product launch, new assay launches, but they could also be what we call on-market projects, which is I need to change this part because it's obsolete or there is a regulation and I need to change the design of the product. So by simplifying the portfolio, we were able to take our projects list from 200 down to 60, right, and focus on Atellica, critical projects and new assays. We also were able to announce 5 site closures based on the consolidation of manufacturing surrounding Atellica. So that enables a large part of our transformation cost savings and have a long path for our commitment for the EUR 300 million by 2025. In addition to the transformation, call it, cost savings was also part of the program we designed to double down on our go-to-market and focus on growth. And that is by selecting the key platforms that have value, making sure that we have a sales team that can effectively position those products to our customers and drive the topline revenue. And so growth is part of our transformation, and we created 3 separate business lines, so we could clearly see the P&L and the performance of these businesses and the platforms within them. So I'll start with the 2 platforms on the right. Specialty and Point of Care, as I mentioned, they're solid. They have healthy margins, good -- they're in attractive markets. We have an opportunity to accelerate. And I'll just take Specialty as an example. There's a number -- you can see the list in the middle with the number of tests and a variety of different segments we serve, allergy, an important market. Hematology. So many of you know the CBC test, as an example, is the #1 test run worldwide in diagnostics. It's your red blood cell count and your white blood cell count. It's fairly commoditized, but we have a solution in our Scopio offering, where it's basically a digital morphology solution that we do in partnership with Scopio, and you can take what was a slide that's done manually or automated on the system and you take the results and you can project the results to pathologists anywhere in the world and they're able to expand and evaluate the slide, and that creates a lot of efficiency for our customers where there might be limited staff or if they want to send their results to specialists. So that's just one of the platforms. There's many opportunities in Specialty. In Point of Care in the post -- I'll talk about Point of Care in the post-COVID context, but Point of Care, a lot more people are astute about Point-of-Care testing now. They know what a rapid is. They know what a molecular test is. They know what immunoassay test is in Point of Care, which was not always the case pre-COVID, but people became very aware of Point-of-Care testing. And the outpatient setting still continuing to grow as much as the Core Lab. We see good healthy growth in the Core Lab. We see good growth in Point of Care. And customers need to be able to manage their fleet of Point-of-Care devices, whether they be handheld or they be desktop and benchtop. And we have the leading informatics platform in our Point-of-Care business is something that I was aware of in my past life, the solution, and it's a really strong solution. We've got good connectivity to our Point-of-Care devices. We also have another platform you may have read about is called our VTLi, Atellica analyzer, and that produces the high-sensitivity troponin test in a handheld. So good innovation in Point of Care and again, focus on growth and also efficiencies within the business. But the biggest opportunity, as you know, is our Core Lab business and the Atellica being a huge enabler. So in our Atellica solution, we offer easy-to-use scalability for our customers. And a lot of our customers are dealing with shortage of staff or wanting to move staff from one part of their testing network to another and the fact that our system is a standard interface, and it's easy to use, is a huge benefit. The scalability. So our customers -- a lot of our large customers have had their testing network for many years and learned from it and their dynamics have changed, and they want to be able to customize their own testing network. And our solutions enable them to design, they can come to us and say, "Hey, we want to design the most efficient workflow for us. We may want to have smaller analyzers posted out in our mid-hospitals. We may want to have a central lab that could go super high volume, we want to have point of care." They can come to us and one-stop one team and get the configurations that they need and Atellica is the foundation for that. And then I would just go back to at the end of the day people are buying the test. They want the most sophisticated tests, some novel tests and strong test panels, right? So whether it be -- if you get into infectious disease panels. We've got a leaning infectious disease panel, cardiac panel, cardiac markers, specialty, we have our -- you may have read about our ELF test, which is a non-fatty liver disease test, so assessing the health of the liver. So continuing to drive those important tests is also key for us, and we've got a great menu in Atellica. When I look at and say, well, what does this all roll up to from a transformation and for the business. In our 3 businesses, Point of Care, Specialty and Atellica, we've got topline opportunity, and we have focused teams where we've attracted talent. We've hired over 60 people from industry on our go-to-market to make sure that we're driving the topline of the business and also focused on articulating the value of each of the platforms because each platform in itself has tremendous value. We've hired more feet on the street to make sure that we get the presence that we need to support all the platforms. And then at the same time, as you see, we move from legacy over, and we move from a number of platforms. So we had 4 discontinuation platforms announced in the immunoassay chemistry and 3 in the specialty business. So essentially, we've removed 7 platforms as we move over this horizon and that further enables more simplification and more cost out. So with that, I'm going to take questions.

So many questions. So to be fair, I'll start with you, Julien, and then Sezgi, and then afterwards, Hugo and Veronika.

Julien Dormois from Jefferies. Three questions on my side. The first one, the chart that you just showed where you showed the legacy business slowing down basically or slimming down. What is the pace of slowdown you would expect from that business for the next couple of years? That would be my first question. Second question is about Atellica. Now it's been on the market for quite a few years. You used to get some pushback from customers. In that case, what is the pushback they give to you compared to competition? And the last question, could you give us a rough estimate of the profitability of the various segments either now or in 2025 based on your objective of getting that to 8% to 12% just to get a sense of what is contributing to this margin gain?

Yes. Good. So there's 3 questions. Michael, I'll ask for you to make sure we get the margin one. But if I talk about the timing for the legacy, there's 2 approaches. One is a step change, right? We make the announcement, and we move our customer base over. But it's not -- there's a tail to it. And the reason there's a tail to it is some of our customer base is working well with legacy and is profitable. And we want to be measured in our approach. So as each customer has a need or we decide we want to make a deliberate conversion, we evaluate the account for profitability. We make the change, all with the spirit of moving away from legacy. And so there's a push right now for us to do that for the customer -- the large part of the customer base. And that will -- you saw we're already at EUR 1 billion. We've got a great track record. So we're going to continue to do that. And you see the start to taper off. So you see a substantial change by 2025. But then the tail is because there are still customers that are profitable running some of our legacy, the P&L looks good, and so we may deprioritize that change. And so it's a bit of a balance. But you'll see a large migration. You already have, and you can see over the next 2 years, a substantial migration. And then on the margin question, Michael?

Yes. To the margin question. We have our eyes fully on the transformation program. So cost out for us highest priority, as you can imagine. Certainly, within our portfolio, we do have pockets of profitability and our CLS business, our Core Labs business, our Specialty Labs business and our Point-of-Care business will all contribute to the margin improvement over time. The good thing is the latter 2 so Point of Care and Specialty Labs are supporting our margin targets, 8% to 12% already now. So I think that gives you a good understanding.

Yes, you asked about objections customers may have. So each customer, like I said, they have their own configuration that they're trying to manage. And you get -- you can get to standard questions about price, what's your price of your price per test. But if you look at total cost per ownership, that's the important piece is to make sure that as the customer is looking at their labor, their workflow, the turnaround time they need, we've got some great turnaround on the stat test. That gives us the opportunity for value. And because we have the core menu, we usually end up talking to them about is what's next. They want to know what's the future of testing. What's the next new test and the test that we have like ELF is a great opportunity for our customers.

Sezgi Ozener from HSBC. I will have 3 questions. And it's next for VOC for the first time, I have a more expansive presentation from you. So first of all, in the past, you used to give market shares like estimated market share in Diagnostics. It was around mid-teens, I believe, for Siemens Healthineers. Where do you see your market share currently? And how does that defer Core Lab, Specialty Lab and Point-of-Care solutions. So that's question number one. Second, you announced some discontinuations of some portfolios. How many would be remaining based on your current transformation programs post 2025? So how many platforms should remain in addition to Atellica. And number three is how do you project your R&D to sales ratio going forward after all the optimizations? And since diagnostics is the most capital-heavy segment of Siemens Healthineers, do you have a target ROIC on your mind for the long run?

Okay. So we'll take them one at a time just. Okay. So when you talk about share, you could see the breadth of our offerings, right? Most of our offerings are in the top 1 to 3 position in the market. Coagulation, as an example, we have over 30% share. When you look at our combination with Sysmex in our business in that space. We still are in the top 3 in our immunoassay and chemistry look at that position. So holistically, I would just say it's -- it depends on the market, but in all 3 business lines, we're in position 1, 2 or 3 with our core platforms. And second question?

Second question was how many platforms should remain post transformation?

So in the Core Lab, the IA/CC, which is the largest, we moved from 5 platforms down to 1, the one being Atellica. If you look in the Specialty, we have a number of niche platforms. So we have 11 platforms, discontinuing 3. And then Point of Care is a migration of our product families from a legacy platform to new platforms. So there's less -- it's less about family discontinuation as it is to new innovation.

Okay. So in Core Lab, 1 out of 5 remains. In Specialty, 8 out of 11 remain. Okay. And then the third question was the R&D projections for the long run post transformation with the reduced platforms as well as your ROIC projection in the long run.

Yes. So if you look at all the businesses that each of the business lines have their own R&D profile, which is competitive with the market, and will continue to be competitive with the market. As you can imagine, when you're launching Atellica, right, you have a lot of hardware because we had the different formats. We were able to move our Atellica hardware innovation and retain -- and that's already been announced with the transformation. And then we've been able to streamline and maintain Atellica hardware development, novel assay development, informatics development. So each of the businesses have a good healthy competitive R&D profile moving forward.

Can you quantify or...

I mean competitive range, it's competitive within the industry.

And ROIC targets?

Yes, Michael, you want to comment...

As you know, our net capital employed from -- as we started our financial statements, you know that we are -- we saw a spike over the -- over 2022, mostly related to our supply chain issues. However, we have reduced already and we continue to optimize our asset base and at the same time, increase profitability. So we do -- we will see a significant positive improvement over time.

Veronika next and then Hugo.

Veronika Dubajova from Citi. I'll do them one by one. The first one is just on the margin target. Can you talk about to what extent it's dependent on you guys getting into at least market growth rate and your degree of confidence on your ability to do that. You have been underperforming the market pretty substantially over the last couple of years. So I would love to understand that. And then the second part to that is to what extent it's dependent on you meeting that discontinuation of the old platforms and transferring folks at a certain speed to the CI 1900?

Yes. So I think as you know, these -- with the Diagnostics business, having the reagents, like I said, the hardware and the analyzer, there's continuous opportunity for margin improvement. The actions that we've identified in the transformation and the EUR 300 million is largely -- we reached largely to the guidance by the actions internal. And then we continue with growth in the business. So I would say the majority of the cost out is getting us close to the guidance.

So you could keep growing 1% to 2% and still get EUR 300 million out of the business. Is that what you're...

Yes. We we're going to keep focusing on growth and go to market, so growth is important for us as well.

But the 2 things aren't linked.

Well, you always have margin accretion with revenue. So there is a margin accretion that comes from the lift, right? And with the focus on Atellica and the focus on the go-to-market, we'll get there. But like I said, we're in the middle of the transformation, taking the costs out, and we're on track.

Okay. And then sort of my follow-on to that is, look, I appreciate you guys want to go online with the market, but it's been really tricky for you historically. What do you think is sort of the barrier? Is it your reagent pricing that needs to improve? Is it that your installed base needs to grow substantially from where you are today? Like how do we get you guys to that 3% to 5%? Because you've had that ambition for a long time, but it's been very elusive.

Yes. I mean, Atellica got to EUR 1 billion because it was growing well, right? So you look at where we are with the Atellica, where we are with Specialty, where we are with Point of Care, good growth. And we have planned offset of legacy, right? So that migration is important. And then with this move from legacy to Atellica, there's a margin accretion because these analyzers run efficiently. They're the newest, the latest, the greatest. So you get an accretion on your, I'll call it, your revenue reagents per box. So that will continue, and that's happening now. It's the legacy in the short term that we're discontinuing.

And so your expectation will be your installed analyzer base is growing? Or is it staying flat? Or is it shrinking going forward?

Atellica installed base is growing. And then in the legacy, you've got some boxes that are low utilization, low throughput. Those are -- that's not a desirable profile. So it's not about the installed base per se, it's about the utilization and the number of profitable installs that go in. And that's happening now with Atellica, and we see that accretion in the Atellica P&L now.

Hugo Solvet from BNP Paribas Exane. I have 2 questions. Maybe just a follow-up on the Veronika's question about the market growth rate. How CI 1900 is critical? Or is it more critical than it was to get to 3% to 5% in 2025? Or is it part of the growth story beyond 2025 only? And some of your peers are developing Alzheimer's disease diagnostic tests? Is there something that you're looking into? And what would be the potential combination or, say, cannibalization with your pet chem business? Maybe that's not a question for you, but how do you see that?

So the CI Analyzer is part of the complete Atellica portfolio. We've already shipped over 100 CI Analyzers. We had our first install in the U.S. already. So it's part of our growth profile, and it's part of the completeness of our offering, and our customers don't just -- some of our customers buy either or but many of them by both. So it's part of their total solution. So that's happening, and that's part of our growth profile. In terms of neurological health, it's a good space for testing. Beyond Alzheimer's, there's multiple sclerosis testing. There's different novel biomarkers that are really important in neurological health. And it's also combined with other panels or other tests in order to complete a full profile. There's no -- we address customers that need the assay result. There's no -- we don't see any connection to the other businesses when it comes to -- we see there's a growth opportunity. And actually, and I would say, in diagnostic testing, there's also an emerging trend for wellness. And in that wellness trend, people are not only wanting to diagnose for element or morbidity or monitoring health, but also projecting longevity. And so we see a group and some of the demographics are different in terms of age or people who are wanting to -- you could see it on YouTube, but you may hear people more acutely aware of their test results. And I do think COVID helped that too because people, like I said, they know what a PCR is, they know what a rapid is, they know what their values are. They're getting more familiar with tracking their numbers on their Fitbit or in their own personal data. And so using tests in a different way is also increasing demand in the Core Lab. So it's a positive on all fronts from what we see.

Who hasn't gone yet? Dylan then Graham.

Dylan van Haaften, Stifel. So just a question on incumbency system win rate. What would you say is sort of a typical replacement tender win rate is in this sector? And maybe second question would be sort of how has setting antigen and a tight supply chain out? Do you think there's been any pricing tailwind in the diagnostics equipment side over the past few years?

Okay. So I'll answer the pricing tailwind. So there's always price pressure on the Core Lab as you know, with the volumes, reimbursements. So I don't see a tailwind. I see opportunity when it comes to freight. If you look at the commoditized freight pricing, and that's part of what we evaluate even on our transformation and savings is how much do we spend on freight. So those types of things are the kind of tailwinds or opportunities that we evaluate. And then your first question was around -- the mic was...

So I come and see win rates. So let's say there's a system you guys only sell system. It's part of the legacy Core Lab solutions portfolio. And then your -- let's say, there's an RFP, you guys go in, let's say, 2 other peers. How many do you win typically or how many does anybody win if they're the incumbent?

Yes. So there's 3 key players, as you know, when I'm talking about the Core Lab. And so we see good win rates in the Core Lab, and we see it globally. So we have different markets, as you know, in EMEA and China and we see good progress on our win rates and Atellica gives us opportunity to walk in with something new, different, scalable. And the customers don't have to talk to multiple businesses in order to get their Specialty or to get their Core Lab, they can talk to us. So it gives us an opportunity for seat at the table and to talk with them about a broader configuration, broader efficiency, good total cost of ownership.

Graham Doyle from UBS Investment. Bernhard seems very, very confident in the plan that you guys had presented for Diagnostics. And I think he's been confident in the past, but he seems extra confident. Like what are the things that are like you think are visible that make you think that the switch has been flicked and it looked better? Is it that chart where now you just got Atellica being big enough to move the dial over the dilution of Core Lab? Or is there something that we don't know about, but you could tell us about it?

So a couple of things, Atellica being available and enabling us to discontinue some of the legacy platforms is a catalyst. Separating the business lines and the go-to market so that we can take some of the specialty platforms and realize the value in those and study the P&L of those particular assets is an opportunity in addition to Atellica. The Point-of-Care opportunities post antigen, post COVID in blood gas, in outpatient settings, in the expanding networks that are happening and our ability to serve each of those as an opportunity as well.

Could you maybe talk about that last one actually, we haven't heard so much about that as an opportunity. When did that sort of happen, this separation and how big a process -- is it something that you've done in the past and the shed light on where the opportunity is. Like how big an opportunity is it beyond just say, just Atellica?

When you look at each of the business lines, if I go back here and you look at Specialty and Point of Care, they're all in good healthy growing markets. We have good margin profile. We have pipeline, R&D pipeline and launches for those, right? We have our hematology, we have the Scopio solution I just mentioned. We have the VTLi and Point of Care. We have a leading blood gas position. We not only have a blood gas bench top, we have a blood gas handheld. And by adding additional sales force focus that enables us to drive more placements. So we're scaling the business to drive more placements and at the same time, removing cost on the legacy.

Robert?

Robert from Morgan Stanley. Just 2 questions I had. One was I think you mentioned in her opening remarks around site closures. I think is at 5%. Can you just give us an idea where are all 5 of those sites actually closed already? What's the timeline for closing those sites? Are we going to sort of see a step change 1 year, 2 year out where you suddenly close 3 or 4 sites. Just if you kind of map that out was the first question. And then the second one, just on the chart that you put out on the tail of this legacy business against Atellica. Why not squeeze out that tail more quickly? Why not push your customer base onto the new systems if there's such a big difference, if you've got a core BDU business, it's growing 20% or double digit and is profitable. Why keep -- is that just because of legacy contracting with the reagents that you've committed to customers for the next 10 years that you can't get out of? Or what -- how could you twist them to sort of get out of those contracts more quickly?

Yes. I mean we're going to continue to do the discontinuation on a country-by-country basis, right? And it's a measured approach, right? And so you addressed the least profitable or the accounts that you want to strategically convert at scale first and then you migrate over -- some of it should you evaluate for natural migration, right? And so that's why you have the tail. But you still eliminate the platforms one by one. So when you see the longer tail, it's a matter of a few tests or a couple of platforms that remain that are profitable, that aren't dragging the P&L down as much. And so it's in our control, and we throttle how that will happen. There are contractual obligations, but that's in the -- from now to the next 5 to 7 years, right? That's the -- there are some contractual obligations that we maintain, right? And that's part of the plan. But you still serve the customer, you're not placing new ones, you're not designing new ones, you're not maintaining new analyzers. You're not running the factory with new. It's a different model as you move into end of life, but it affords you the ability to take cost out.

Sorry, just one follow-up, maybe a misunderstanding. It seemed in the short- and medium-term guidance on profitability that's effectively getting into the sort of 3% to 5% range and then into the 8% to 12% over time, there was more of an aggressive ramp-up on profitability in the medium term than it was in the short term, yet you're telling us the cost savings are all coming through in the next 2 years, and you're taking out all the lower profitability businesses first. What's going to drive that 3% to 5% into the 8% to 12% margin over the medium term would be my question.

Yes, it's what we've been doing, which is removing the R&D costs, removing the operating costs, shutting down the factories, taking out the, I'll call it, the inefficiency. And then once you're down on one platform, the handoff indirect processes in the business aren't as cumbersome. You're not managing as much volume through those. So the activity as a whole, maintaining this giant kind of organization around these platforms is not as necessary when you move over to your R&D on one analyzer in Atellica. In terms of the fact your question on the factory closures, it's a bit of a mix, right? So it depends -- some of the sites have already taken out some of the costs. Some of them have been fully closed. So -- but they're all in process, I would say, in the transformation.

No exceptions, Hugo. We have a break that -- so you have to face the. No, no, go ahead. We have time but you have to face the anger from your colleagues, yes.

Sorry, guys. Just in terms of that legacy tail of -- from old legacy portfolio, have you assumed in the plan that some won't switch to the new Atellica? And it does represent a risk to your guidance? And the second in terms of R&D, where -- which type of segment would you point now in terms of where you allocate most R&D?

Yes. So I'll answer R&D first. So the R&D is profiled based on the revenue and the profit of the business, and that's the beauty of the separate business lines because you can over-index to Core Lab because it's the biggest business. But at the end of the day, there's value and margin in different profile products, right? So a Point of Care sale is smaller and different in its size than a large network size sale. So each of the businesses have to operate their P&L and their go-to-market, which is why it's important to have them separate, and they each have a healthy R&D profile. And then in terms of the tail on the Atellica, we expect to win with Atellica. You see what the value that we bring. We've invested a lot. We've learned a lot. We've got best in industry assay people, really strong assay people, excellent hardware teams that have evolved over the years in this business software and just us being part of Healthineers and the access we have to hardware, software engineers that has migrated into diagnostics, and we've got strength across all those areas in organic development. It's manifested itself in Atellica, which is the best of everything, right, coming together from all these learnings and now it's available. So I see it more as what are we going to do to win more and accelerate and accrete. And that's why we're investing in this feet on the street that I mentioned. So I see that a positive win for us.

Maybe let me just chip in a short commentary that we have, let's say, the terminology right. So our '25 guidance is 8% to 12% for the margin and the midterm guidance is mid-teens, so that we just have the timelines here correct. So -- and '25, if I'm not wrong, is the next fiscal year? So it's not so far away. And if Sharon says that the things are implemented, that means they are happening in the course of the year and that the cost effectiveness happens then next year. So that's why I'd say kind of the German word would be [Foreign language] between when this really effect is not kind of, say, the detailed discussion that we would like to have today. Okay. Good. Thank you. Thanks for the good discussion.

Thanks for coming back. It seems you're interested in hearing the second half, which we're kicking off now with Arthur Kaindl, Matthias Platsch from Varian, who will be, as in the other 2 rounds, giving you, first, a presentation and will be there for Q&A thereafter. So Arthur, the floor is yours.

Marc, thank you. Good afternoon. Our belief in creating a world without fear of cancer is what unites us at Varian, all the 10,000-plus employees across the globe, and there's [ not ] a few of them who are actually cancer survivors for themselves. Same belief in creating a world without fear of cancer is what unites us with all of Siemens Healthineers, bringing together the #1 in imaging and the #1 in therapy, but is creating a strong momentum. And this momentum leads me to my main message I'd like to convey to you this afternoon, and that is Varian is the global leader in radiation oncology. And in particular, in the combination with Siemens Healthineers, it has strong growth opportunities. So let me first share with you a couple of facts and figures on why Varian is a global leader -- the global leader in radiation oncology. Our foundation is our radiation therapy business with our linear accelerators. We have about 10,000 linear accelerators installed and actively in operation across the globe. With 55% market share, we're a clear #1 in the market. And the nice thing about it is, what we believe at least is, that about half of our revenue is recurring revenue, certainly coming from servicing our equipment but also from our software business with about 140,000 users. And on top of that, we are providing treatment planning services where we delivered around about 35,000 treatment plans last year. So our leadership in radiation oncology makes us confident that we can achieve our targets for this fiscal year, and that means reaching a revenue growth range of 8% to 10% and expanding our margins towards 15% to 17%. An important aspect that fuels our growth here is a globally rising cancer burden. And we, at Varian, are uniquely equipped to address this challenge. Just look at the numbers. In 2020, we have about 20 million new cancer cases globally, and this number is likely to rise towards 30 million by 2040. Again, our leadership in radiation oncology provides us with a significant opportunity and, you might want to even say, with a significant obligation to act upon this rising global cancer burden as 50% to 60% of all cancer patients can actually benefit from radiation therapy either in an individual treatment or in a combined treatment. Now as we are part of Siemens Healthineers, we have a much broader global access. So we're reaching markets these days that we have not reached before. And with our comprehensive portfolio, we can provide efficient and easy-to-use workflows to our customers. By this, for instance, addressing the rising staff shortage not only in cancer care. This goes across the health care business overall. And we can enable our customers to provide precise or personalized therapies as each cancer case is individual. So the specific nature of these individual cancer cases requires the integration of imaging and therapy across the whole cancer care continuum. So you need imaging if you talk about screening, if you talk about diagnosis, if you're talking about therapy, monitoring and follow-up. And let me share a few examples. For instance, on the CT side, lung CT screening, for the famous 30-pack [ a year ] smokers, which are being provided with our colleagues across the street on the CT side. We can also automatically read these images through our AI-Rad Companion chest CT. We're working together with our colleagues in [ Erlangen ], basically working on the treatment planning and screening -- treatment planning systems with the MAGNETOM Free.Max. And by this, we can introduce newest technology to the market on the treatment planning side. We are offering auto-contouring services in our treatment planning software. And what's probably less known, we're also offering precisely calibrated microspheres in our embolization solutions where we are injecting microspheres under image guidance, for instance, together with our colleagues from advanced therapy. We're offering also our adaptive radiation therapy systems. And we're offering patient-reported outcomes applications, for instance, on a consumer basis with our application, Noona. We're innovating in all these aspects. We're innovating because we're bringing together imaging and therapy with digital solutions and services. HyperSight is, what you've probably heard earlier this morning from [ Dee ], one of the innovations where we're bringing imaging competency with therapy competence. By [ combing ] CT imaging, we can actually locate the tumor and the organ. Based on the individual's daily performance, these organs change in its position, also in its size. And by this, you can reduce the margin of the treatment and by this, getting much better outcome. The RapidArc dynamic is, for instance, an intelligent technology where we are applying AI-enabled software together with some modifications on the hardware side to basically do a treatment in one rotation of the beam or the C-arm. Today, it's not like a windshield wiper, but it's going back and forth. So that you can be much faster, much more precise. On the interventional side, we are offering first-in-class CT-guided microwave ablation where you get the CT data onto the device whilst you're doing the procedure. And on our digitally-enabled clinical services, we can combine AI enablement on the auto contouring but also in the automatic treatment reporting and provide much more efficiently such services. All these aspects will contribute towards a high growth on the one hand side but also high margin growth on the other hand side. Let me share an example of where we are combining these individual applications or innovations with one of our global customers that we're having and to show the impact that we can make with providing cancer care there. So the example is Nova Scotia Health. They're providing care to approximately 1 million inhabitants across, obviously, the province of Nova Scotia, and about 50,000 of them are cancer patients. So the burden is actually somewhat higher compared to the rest of the world. We've been partnering with them for about approximately 20 years. And only in the last year, we have been engaged with them on the digital transformation of their cancer service line based on our patient-reported outcome application Noona. And that triggered, in essence, a much broader collaboration to transform cancer care across the province, focusing on efficient and effective early detection on high-quality treatment, but moreover, on well-executed surveillance and survivorship programs. This not only includes providing equipment, imaging and therapy equipment or data analytics. It also includes providing clinical services and moreover, co-creation activities, convinced that this collaboration can be extended way beyond Nova Scotia and can act as a blueprint to change cancer care for everyone, everywhere. So, so far, I've been talking about how we can grow the Varian business as the global leader in radiation oncology. I'd like to finish with an outlook on how we're improving our margins. Talking about margins, I'm fully aware of the fact that our margin performance has not met the initial guidance in 2023, being actually quite volatile over the quarters. We understand the root cause of this volatility basically being driven by sourcing challenges on the supply chain of electronic parts. We can and we will fix this by collaborating much closer with our suppliers but also by step-by-step in-sourcing some of the components, particularly the critical ones. I've had similar experience when I was at MR previously, forgot to introduce myself earlier on. I've been with the company for 20 years, various experiences in -- running various businesses. In the past 5 years, I've led the MRI business within Siemens Healthineers. So I've experienced similar topics there. We fixed it there. And now as we speak, we're transferring people and tools from MR over to Varian, and we will fix it at Varian. Basically, we see 3 aspects contributing towards the margin improvement. On the one hand, it's the productivity. We will continue our procurement initiatives that we have been running for quite a while, but we'll be focusing on productivity gains on the supply chain process optimization. And in addition to that, we'll be leveraging our in-house technology centers basically by vertically integrating critical components into our own supply chain. The second aspect is continuing on our pricing excellence initiative. That means we started out a couple of quarters ago, and this will reach into the next couple of quarters because we have relatively long lead times between order intake and revenue generation. What also will help here is that we're having now high-margin new offerings in the portfolio, such as the HyperSight option that nicely enough, we can also upgrade to our thousands of installed base linacs. The third aspect, and certainly the biggest contributing aspect, is growing above the market and converting -- or providing a conversion of this growth towards our profitability. And in addition to that, so not only driving market share improvement, but also tapping into adjacent high-margin growth areas, such as the treatment planning services that we're having. So in summary, we will be continuing outperforming the market by providing innovations in equipment, in software, in services. And by combining and continuing the strong growth and expanding the margins, in particular, in the winning combination with Siemens Healthineers, we will advance and we will see a trajectory in the midterm towards at least single-digit revenue growth. And we're seeing ourselves advancing into imaging-like margins on the adjusted EBIT side. Doing all this, there will be certainly a significant long-term value creation. Yet we're not only anticipating our ambition to deliver strong numbers. As we all do that, we will be creating 22 million patient touches by 2025, impacting individual lives, their families, friends, communities. So you could argue, in other words, investing into Siemens Healthineers means investing into creating a world without fear of cancer. Thank you very much, and I'm open for any questions.

We start with David. Then next would be Sezgi, and then we come to the rest, okay?

David Adlington from JPMorgan. Just wondered if the Varian service expertise is still separate from the rest of Healthineers and whether you had any plans to integrate with the rest of your service offering. And then secondly, can you talk about the competition using price as a lever to win tenders? How concerned are you about that? And how do you manage that?

So if I understood your question correctly on our services. For instance, treatment planning services, if we are working together with...

No. No. I mean the service offering in terms of your engineers going out and...

[indiscernible] servicing the machines.

Yes.

So currently, we're working with one Varian service organization. There is a strong interaction, interchange between my service organization and [ Chris and Bernhard's ] service organization where we're doing best practice share both ways. And on the competition side, on tender side, I actually cannot comment on pricing on a tender because I'm not aware of any pricing topics from the competition.

And just coming back to the service, I mean, when you took over Varian, it was -- I think [ you made patiently ] clear that you would not play -- that service offering was going to be kept absolutely independent from Healthineers. Has that thought process evolved in the 2, 3 years since you've closed it and...

Yes, evolved in such a way that, as I said, there's -- Varian has a strong service performance as well as Siemens Healthineers has strong service performance, coming from slightly different angles. And as I said earlier, the benchmarking helps us a lot to see what is each organization doing better. So both parties can benefit from it, and that's it so far.

Sezgi, Veronika and then Dylan, I think.

Sezgi Ozener, HSBC. So first of all, in terms of market growth, you've mentioned 10,000 units. I believe that even though like there is growth and talking about 20% growth, that hasn't changed a lot since you've acquired Varian or like if you look into Varian's own presentations 2019. So why haven't the number of units been growing as much? Or is it like have the [ lifetimes ] changed? So where is that coming from? So that's question number one. Question number two, just an update on the proton side. You had announced end of sale in new products. How does the rest of the [ wipeout happen ]? Should we expect any more news flow into '24 from that? And last question, what was the impact of the tenders? Do you think that you've won more tenders than -- compared to your relative market size within 2023 since [indiscernible] [ '23 ] was a heavy year from tenders? And can you quantify the impact in your growth? And how should we consider the impact of tenders going forward?

Okay. So I hope I can remember all questions. So first question was around the market development, in particular, around the installed base. So the overarching sales orders market of linacs is in that range of 5% to 7%. This is what's also been reported out into the market. What you're observing on the installed base is there is a certain replacement of installed base systems. So the installed base doesn't grow in the same trajectory as the orders and sales are going because you're placing existing systems. So that's around the overarching linac market development. We're obviously doing much more than just linacs. We're actually increasing our market share, as I said earlier. On the proton side, we have communicated that we're shifting more towards a service model, focusing very much on to servicing and improving the uptime of our existing proton systems, which, despite the potentially challenging news, was actually well recognized by our customers, and I'm in contact with a lot of them. Because at the end of the day, what they're concerned about is just treating their patients, and they don't want to have any downtime. And each downtime means a massive redirection of patients because you cannot just redirect the patient towards a linac. You need to redirect that patient towards a proton system. So therefore, it's well received by the fact that we are taking care of those systems, keeping them up and running for the years to come, not just for a couple of quarters, for the years and decades to come. And so in that sense, the overall transformation plan is well on track on this one. And I think your third question was around the winning rate. What we are seeing is that we're having a much stronger growth momentum as Varian -- as being part of Siemens Healthineers now. And that growth momentum is certainly driven by the fact that our customers actually very much like that combination. To every customer that I'm talking to, they immediately get it that this combination makes sense. And that gives us, so to say, tailwind on tenders where we are, on the one hand, also already active on the imaging side to come in on the therapy side as, by the way, also vice versa. So there are cross-selling opportunities which gives us a strong momentum, and part of the market share growth that we have seen is certainly coming out of that winning combination effect.

Yes, but more like government tenders, like the big tenders...

The big government tenders, I mean, there's not that many out there compared -- so from a percentage point of view towards the whole business, we're seeing a similar type effect there. But on the one hand, I'm quite happy about the development also on the government tenders.

Then Veronika will be next.

Veronika Dubajova from Citi. Three questions, please. The first one is on China and local competition. Obviously, United are working on entering the linac market, and I'm just curious what your thoughts are about their chances of success in China and how you're kind of thinking about that competitive threat. I'm not asking outside of China, just specifically in China. I mean if you're worried outside of China, tell us, but I'm mostly asking about China. My second question is what is the single biggest risk you see to your ability to hit that imaging-like margin? If you can talk to that, that would be helpful. And then my final question is there's no mention of synergies in your slide deck, and I know it's been a number of years since the deal closed. But maybe if you can just do a mark-to-market for us both on the revenue synergy number and the cost synergy number, where are you tracking against that [ EUR 300-plus million ] that you had put on the page at the time of the deal.

Okay. China first. So what -- first and foremost, China is an important market for us. Just to give you a flavor, there's about 2.5 million new cancer patients each year in China. So more than 10% are coming from China, a bit underrepresented towards world population, but some of them may not have been seen. So there's also underserved in there. So it is driven by the clinical need. It's super important, and it's super critical market. We're doing, in my opinion, quite well in China, overarchingly. Certainly, there are new, as like in all the other businesses, other entrants into this business. And my take on this is we got to be better than all of our competition. And you've seen it, hopefully, in this short glimpse from my side and earlier in this morning, we're investing heavily into innovations. And my philosophy has always been, in the past years, innovation will keep our competitors at distance. And the same thing holds true for China, but also across the globe. Help me out on the second one.

Biggest risk to margin.

Biggest risk to margin, yes, I mean, as I tried to indicate, our margin expansion very much depends on the conversion. So the growth, in essence, if it would, for whatever reason, macroeconomically would not come, that certainly would have an impact. And the third aspect, [indiscernible] synergies. Yes. And so the third aspect was on the synergies. I mean we have 3 aspects through it. We communicated the number that you just said. First and foremost, we're well on track on that number. I mentioned a couple of examples. We have cross-selling synergies. You have seen earlier from André on these value partnerships where we are also part of it. So nice cross-selling synergies. We do have co-development synergies, bringing in imaging into therapy offerings like I've shown you on the HyperSight or on a different scale on the interventional aspect. This is certainly also kicking in as we speak. It needed a bit more time because it needed development. And we're well on track on the cost synergy side as well IT backbone, you name it. So in that sense, we're quite happy.

So are you able to say how much of the [ EUR 300 million ] you have realized so far?

We are on track on the trajectory as we communicated.

Okay. So I think I said Dylan and next, [ Sezgi ] and then -- exactly.

This is Dylan with Stifel. So just 2 from my side. So first one on hypofractionation and FLASH therapy. So outcomes-wise, quite convincing. But obviously, that does mean you do, if you go per [ grades ] or per fraction rather than per course, it does free up, let's say, capacity in U.S. Should we be thinking about your guidance that you're, let's say, growing more outside of U.S.? And could you maybe deconstruct that for us, how you imagine to grow, let's say, in emerging markets? Or am I thinking about this the wrong way? And then secondly, maybe in terms of the midterms you're guiding. So imaging-like margins, could you also maybe deconstruct what's driving that? Is that pure growth? Is that bundling with Healthineers? Is that pricing?

So on the FLASH side, very simple answer. This is -- we're in the early phase of development. [ Dee ] showed you the FLASH development just to show you that we are investing also into future clinical applications where we are at the forefront of the innovation. That means, however, that we have to go through the clinical trials first. Right now we're starting this on the proton side as an R&D project. The big impact will happen once we are transferring this to the electron and photon side of the business, meaning that we can access the linacs. The impact on guidance, I think it will be way, way too early to think about it because this will kick in by the end of the decade or even longer. However, we strongly believe into this. And therefore, we are investing into this technology. And it's all dependent on the clinical viability on the one hand, and then what does this mean for reimbursement and then we can create what does it mean essentially then for the business because there might be different reimbursement schemes behind it as well. On the margin expansion side, as I showed on the slide previously, 3 aspects that are helping us to improve or expand our margins. And in the order of importance, it is certainly the conversion. That's the reason I also said the biggest risk is then the growth. So we will continuously outperform the market, and that will contribute towards conversion and that obviously contributes towards the overarching margin expansion. Second aspect is the pricing excellence topic, which will kick in over the next quarters to come. But also the matter of fact that we have these additional options that we can bring into the market such as HyperSight, so these high-margin options, that will help to increase our overarching gross margins. And thirdly, but not un-importantly, it is the productivity aspect: short term, process optimization; midterm, more [ superseding ] type cost-out productivity measures.

Okay. Next, please.

[indiscernible] Can you quantify your current service margin? [ Are you ] willing to tell the current level? And secondly, where do you think your share of recurring revenue will be in 5 years from now? And thirdly, in terms of technology, do you currently see competition coming closer to you? Or do you think you're [ currently ] even increasing your technological advantage?

So on the service margin side, we're quite happy about it. Secondly, when you're looking into the, matter of fact, how we're growing our installed base as well as how we're growing our software and clinical services business that are contributing towards the recurring business, you will see certainly an increase of that percentage. Right now it's about half. So we'll see a nice development going into that area as well. And the third aspect, my memory span is too short today was the technological advantages. We actually have an unfair advantage there. We have the strongest R&D budget in the market. And as you've heard it this morning as well as what I showed you briefly, we're investing heavily into new technologies on the one hand side, but that's not the only thing. What's really nice, what I learned as our being part of Varian right now, the strong focus on the clinical translation and also investing into clinical trials as part of the R&D budget to basically drive these technologies into clinical routine will help us to keep the distance, not at least at where it is today, because I personally believe that we are increasing that distance towards our competition.

Okay. So Oli and then Delphine and then Robert, if we still have the time.

It's Oliver Metzger from ODDO BHF. First question is about innovation on your side. So conceptually, over a multiyear perspective, do you think that innovation at your side might even increase the share where radiation therapy might work as treatment for some cancer types? Number one. Number 2 is about the combination of novel biologics. Where do you see over a multiyear perspective you're positioned with a lot of drugs might come on the market combined based on novel biologics?

So we're investing heavily into, as I said earlier, heavily on to clinical trials and to see how we can better treat certain tumors on the cancer care side. So I'm not nervous that this percentage that I showed earlier, this 50% to 60% that could be treated, would actually go down. I have gut feeling it's going up. That's the one aspect. You could argue that pharma or even surgery, a competition to radiation therapy. And here, my answer is actually this one that you have more and more combined therapy. So you apply radiation therapy with surgery. You're applying radiation therapy with pharma systemic treatments. But also, there is a new trend towards radioembolization, for instance. And this would typically -- or the trend goes away that one single treatment is doing the trick to attack cancer. There is more the trend towards a combination of various clinical procedures to be most effective in cancer care. And there's one other aspect. As we've heard it earlier in the morning, we're also going beyond cancer care with radiation therapy, for instance, cardio -- radioembolization is one aspect or trauma treatment is another aspect.

Delphine Le Louet, Societe Generale. Just to be back into your productivity measure and on the installed base and purely on an instrument. You show up in -- I think that was on the first slide, you had a 35,000 treatment plan on a yearly basis, all right, for 10,000 installed base. So I was wondering how that has evolved over time when you think about the past 5 years, the past 10 years and what you're looking at tomorrow? So how many new treatment plans can you onboard because it sounds effectively that the productivity of an instrument remains very low, okay? First thing. Second thing, regarding the conversion rates, can you tell us, do you have -- on a regional basis, is there something that is more difficult into some region versus others? If yes, can you explain why and how you plan to accelerate that?

Can I rephrase or ask the question, what is more problematic in certain regions?

I was wondering if the conversion rates that you're facing right now [indiscernible] on a regional basis. Or you have some region where it's more difficult and all than other regions? How should we think in the future and especially into emerging country into China [indiscernible] big countries?

So answering the question first on the sort of developments and productivity on the machines versus treatment plans. So I'm assuming the clinical productivity was your question in here. There is productivity on the system -- on the treatment system side as well from a clinical perspective. I'll give you one example, and it's actually a combination of, for instance, the AI enablement. When you do adaptive radiation therapy treatment, you can adapt a treatment plan, on average, in 12 minutes on a daily basis. So by this, you can shrink the overarching treatment schedule for a patient quite dramatically. Through the adoption, you can reduce the fractionation cycles. So whilst in some cases you have 40 cycles of a patient to be treated, meaning 40 times the patient needs to come back to the hospital, you can reduce it down to 5 or maybe 10. So there is an overarching huge productivity on the machine side because you can do more patients on each machine by reducing, for instance, the fractions. So by this, you're increasing the patient throughput. So there's a couple of aspects where an AI enablement, for instance, can help here as well. On the treatment planning side, there is also productivity on the customer side due to the -- I mentioned the auto-contouring. I touched -- hopefully I touched on the auto report generation as well on the treatment planning side that will help to reduce the time it's needed to generate such a treatment plan. And here, we're talking hours typically how long it takes for a physicist to create such a treatment plan. And it helps us also when we are providing the treatment plan to be more effective on our clinical service. So there's 2 aspects to it. On your second question on the regional differences in the growth and then by this, contributing towards the conversion, if I understood it correctly. There is certainly regional upside because when I'm talking about 55% market share, then this is an average of the whole globe. And there are certain areas where we have more market share, and there are certain areas where we have less market share. And here, I'm seeing opportunities to gain additional market share in well-established markets but also where we have potentially a bit more upside. It's one aspect. Growth is not only on the linac side. Growth comes from tapping into adjacent markets, and we're pretty strong in the U.S. on these treatment planning services side. So there is, obviously, a strong momentum on the services side in the U.S. than, for instance, in the rest of the world.

Maybe one question from you, Robert, [indiscernible] to wrap it up.

Robert Davies from Morgan Stanley. Just a few -- in the presentations this morning, people were making the point that they were moving from these 5-, 6-week treatment schedules down to 1 day, 1 minute, 1 second. How do the economics of that work if a patient walks in and has a treatment, effectively, in 1 [ burst ] or 1 image and walks away for Varian? Are you still comfortable in 5 years' time if a patient can do that, you can still deliver profitability at the same level that you're kind of targeting?

Yes. And I mean, on the one hand, this is our vision. This is -- you're referring towards our [ 222 ] vision to basically reduce the time between diagnosis and treatment ideally to 2 hours. We do have customers that are operating on 24 hours already. So on the one hand, whatever is good for the patient is good for us as well. First statement. Second statement, unfortunately, not every of these schedules is applicable to every cancer. Every cancer is individual. So whilst we might be successful in reducing this for a certain portion of the population, it might not be applicable to other cancer types. If you multiply this with the rising cancer burden, you have still enough big growth momentum that I'm not concerned that we are cannibalizing ourselves.

Sir, maybe if I can squeeze one quick follow-up. Just in terms of the average age of your installed base. You've obviously been growing above some of your peers in the market. I'd just be curious to know how much cannibalization do you think have you seen on the installed base at all? Or how often would you expect to replace your current installed base? Is it coming down at all, or innovation cycle is getting shorter or lengthening?

No, we're not seeing any big changes on the overarching renewal cycles on the clinical side. So I don't see a big change. Again, the bigger driver is actually the rising cancer burden.

Is it a short question, Julien? Okay then. But then really...

Julien Ouaddour, Bank of America. As you -- I mean, you had supply chain issues last year. You mentioned that you are putting some initiatives in place or you're moving people from MR and you in-source some components. This takes time, and especially for in-sourcing component, how can we ensure that we won't see any other supply chain issues this fiscal year? And a really quick follow-up as well. Can you give -- I mean, can you remind us the pricing impact for Varian this year?

So I'll start with the last one. We're quite happy about the pricing impact because we're seeing the first instances of us arriving on the top line as well as on the bottom line. So that's the first answer. Second answer on the supply chain topics. There are short-term, mid-term, long-term measures. Short term is what I mentioned by working very, very closely with our existing suppliers, creating that transparency, how they're doing. We're doing this on a weekly basis. And by this, I'm much more confident that we're on top of these things. Midterm is the in-sourcing topic. We are having initiatives and building on our strength of our existing technology centers. And certainly, there are more mid- to long-term measures, and this is focusing on types of [indiscernible] productivity topics where we are getting more control over more and more components going forward and by just leveraging the strength that Siemens Healthineers brings to the table here.

[indiscernible] because I think Elekta, they were mentioning sort of mid-single digits...

[ We're not talking about what ] Elekta is saying here.

Good try, Julien. So thanks, Arthur.

Thank you, guys.

[ Everyone, have an ] enjoyable rest of the afternoon.

Good. Almost made it to final lap. Last but not least, we have Advanced Therapies with us, Carsten Bertram, Stephan Muller, Head of Advanced Therapies, Finance Head, same procedure as in the previous 3 times. First, we have a presentation, then we have a Q&A. You have time to ask questions. So please go ahead, Carsten.

Yes. Thanks a lot. So, welcome to Advanced Therapy. Welcome to Forchheim. If this would not be blocked, you could see our headquarter and factory over there and our new R&D facility over there. So you are right, smack in the middle of it. We all have loved ones, family and friends, that are confronted with life-threatening diseases; heart attack, stroke and cancer. And we in AT are working every day on fighting these diseases. Our image guidance solutions provide a view into the body. They visualize the body's vessel system. They allow to navigate through the vessel system and enable physicians to better diagnose and treat diseases from within the vessel system, offer better clinical outcomes. So Advanced Therapies is here to better -- to create better care for everyone, everywhere sustainably. So again, I'm Carsten Bertram. I'm with the company now since 32 years and have worked in multiple businesses, on the Imaging and Software side. Advanced Therapies today is a $2 billion business, with significantly growing revenue and increasing margins. Our image guided solutions cover multiple clinical fields from Cardiology to Interventional Radiology to Surgery, and we are #1 or #2 in all the fields that we cover. We are on track to grow revenue by 5% to 8% in fiscal year '24 and will further increase our margins. I think what's important to understand is that our business is highly resilient because it's based on the huge and growing number of installed systems we have, which are the foundation and the driver for our service business that is both recurring and highly profitable. Our growth is driven on the one side by innovation, which is fueled by the high R&D intensity and because the market we are operating in growth structurally. And the market we are operating in growth structurally because of global trends that just continue to gain traction. So you probably have heard about a few of these global trends that are valid for all of Healthineers. So the growing and aging population, access to care demands and staff shortage. In addition, there are a few trends that are very specific for AT. The most important one being the shift to minimally invasive treatments and the continuous innovation in devices and procedures. And our image-guided solutions are key for pioneering minimally invasive procedures because our image-guided solutions are the key ingredients that enable these minimally invasive procedures. Our key differentiators in that field are on the one side; real-time image guidance, outstanding precision and superior image quality. So our market grows structurally and we gain in that market and why is that? Because on the one side of the innovations -- our innovations, but also innovations from partner that we combine with our innovations. And then due to the fact that we address the most critical, most threatening diseases and the most relevant procedures. So our image-guided solutions are a key for these minimally invasive procedures in Cardiovascular Care, in Neurovascular Care and in Cancer Care. At the heart is the continuous move from open surgery to minimally invasive procedures. And why is that shift happening? That's because minimally invasive procedures are faster, they save cost, provide better clinical outcomes and I think this is the most important one, they also enable new treatments. And you see this reflected in the large growth in these procedures, Cardiovascular Care, where you now can replace heart valves minimally invasive. On the Neuro side, where you can do stroke treatment or in minimally invasive procedures on the spine. And all of these new technologies, all of these new procedures are based on the image-guided solutions that we in AT create. So we are in the center of a fast-growing market that is driven by innovations. And we innovate and the world innovates for us. So on the one side, you see that we are continuously innovating. We create new image guidance technologies. We create new AI solutions, and we're innovating in robotics. At the same time, the device companies are continuously innovating, bringing out new devices and new robotic platforms. And the beauty is that these 2 innovation streams, they strengthen each other and then combine with each other and they create a continuous flywheel of innovation. So the next generation image guidance from AT enables new devices because you can now better visualize, position and place these devices. And if you add to this, the new robotic platforms and the AI solution, I think you get an idea that we are just at the start of what we can do with minimally invasive procedures going forward. And as a result, you see a continuous growth of procedures and a paradigm shifting -- a paradigm shift is happening as we speak. We are moving from very manual procedures to more automated procedures that are supported by AI and that are more and more becoming robotic. So Innovations. Let's talk about a few of the innovations that we in AT provide. And our innovations really help and change how these minimally invasive procedures are done. Again as a reminder, we provide the insight into the body and allow to treat these diseases from within and I hope that you have seen 2 of the innovations earlier today, and hopefully remember them and see them. So you have on the left, the ARTIS icono, our flagship product for fixed C-arms, which in one platform covers Cardiology, Interventional Neurology and Surgery. And for this system, providing a better view into the body means; you provide superior image quality, you provide outstanding precision, you provide clinical guidance that really help to steer the procedure and you have automated workflows. All for better and more consistent outcomes. And the example you see here is a tumor embolization. We will see the 3 tumors here. Where from within the body, we embolize the blood supply that goes into the tumor, stop the blood supply and, therefore, kill the tumor going forward. And by the way, the technology to do that is now provided by Varian Interventional Solutions. On the right side, you have the CIARTIC Move, the first-ever self-driving C-arm. And why is this so important? You have to look at how today's situation in hospitals look like. You have multiple operating rooms that usually have 1 OR tech shared between them. So that means that the surgeon within the sterile field, at the table, next to the patient, has to wait for the OR tech to come in if he wants to have -- or he or she wants to have a different position of the C-arm. It means that very often the physician has to wait together with his whole team for 5, 6, 7 minutes until the OR tech comes back. With the CIARTIC Move, now for the first time ever, the surgeon can, from the sterile field, completely and remotely steer and control the mobile C-arm, does not have to wait for anyone, can do everything by him or herself. So you have faster procedures and you have higher precision, requiring less staff. Let's look at the second innovation on the stroke side. Stroke, unfortunately, 12 million people will have their first stroke this year. 1/3 of them will die and 1/3 of them will be permanently disabled. There is a minimally invasive procedure available that significantly improves the outcome of stroke. Mechanical thrombectomy, where you remove the blood clot that causes the stroke from the brain via a catheter. Often that's the difference between leaving the hospital on your own legs or in a wheelchair. Problem is that, even in the U.S., only a fraction of eligible patients today get thrombectomy. The good news is, the number of thrombectomies is growing rapidly and our technology, our capabilities, are a key enabler for that. So what you see here is the ARTIS icono, in a biplane version, who is the gold standard on how you treat stroke today. The system provides cutting-edge image guidance and allows to diagnose and treat stroke on one system, in one session. Which means you are getting faster and better thrombectomy. And faster is the key topic here because in stroke treatment, time is brain. The faster you are, the more brain you can save. Going forward, we will further broaden access to stroke treatment with our Endovascular Robotics platform which will enable on the one side, higher precision for less experienced physicians. And then as a second, in the future, enable remote treatment of stroke patients. So now let's look at the question, how do all of these innovations translate into revenue growth and profitability for AT? And this is all because we create substantial value for our customers. Let's look at revenue growth. One thing is clear, we are operating in a market that is dynamically growing and grows structurally. We are strengthening our position in that market because of our own innovations. Because we bring in and we work together with strong external partners like Boston Scientific or Intuitive, where we combine our innovations with their innovations for even better clinical solutions. And third, by leveraging the complete holistic and unique portfolio of Siemens Healthineers, specifically Imaging and Varian. And if we bring these 3 together, we are able to come up with significant better clinical solutions for a complete care path, stroke treatment or cancer as an example, with significant better clinical outcomes for patients' life, which then create the value for our customers. Advanced Therapies is a very important part of the overall Healthineers offer because we are touching customers in different departments that are not necessarily the ones that Radiology or the Varian departments are touching. So we broaden the portfolio, we make it more attractive, especially for large customers because we now can offer a larger and more comprehensive solutions. And therefore, we win more and more in these larger customers with our value partnerships and what you see here are a few examples of value partnerships we won in fiscal year '23 with AT being part of the equation. Then the second topic. So we talked about growing revenue. Now let's look at profitability. On the one side, we have refocused our Endovascular Robotics business. We continue to invest there, but we made the decision to focus our invest and, therefore, lower -- or we focus our spend and have lower spend because we now focus on Neuro. And we are improving our margin further because we have now better operating leverage with our growth. We have a more modular product design, and we have pricing excellence. So to sum it all up, Advanced Therapies is providing image-guided solutions that fundamentally change and pioneer how minimally invasive procedures are done. We leverage innovation power from our partners. We use the unique and synergistic portfolio we have as Healthineers available, to come up with better clinical solutions that change and save patients' lives and increase value for our customers. And based on this, we will increase revenue by at least mid-single digits beyond '25 and continue to improve our margin returning to industry-leading levels.

Thanks, Carsten. So we can go into Q&A. I don't know. David, Veronika, Julien. And then...

David Adlington from JPMorgan. Just a quick, very quick question. The 12% of patients that are getting, in the years, that are getting a thrombectomy, what are the key barriers to the other 88% not getting thrombectomy?

The key barrier is on the one side, availability of dedicated stroke centers that have the right physicians on staff and the right capabilities. And the other topic is really simply the distance. If you look at -- I mean, if you're living in the more rural areas, it might take 2 or 3 hours. So they probably bring you to a closer hospital where they will not have thrombectomy, but rather LSI. And therefore, you will get not the best treatment available and possible. So these are the key reasons. The good thing is this is changing as we speak because the U.S., like in many other countries, are putting more and more dedicated stroke centers in place. If you have more ability, one thing is important, what is -- if you want to run a dedicated stroke center, you have to do it 24/7, 365 days a year. Well, this is not something where 1 or 2 physicians can team up, but you rather have to have a full infrastructure in place that makes sure that you can run the system for the full year, round the clock.

So given those limitations, where do you think that 12% can get to?

I think, it depends what kind of technologies that you will put into the equation, but I think you can get to at least 50%, 60%, easily.

Veronika next.

Veronika Dubajova from Citi. Three questions for me, please. One, you said you'd like to get to industry-leading margins over time. Just curious if you can define that for us and maybe quantify to what extent that is dependent on Corindus being commercialized versus to what extent it's an internally driven effort, excluding Corindus? My second question is an update on Corindus and when you think we might see the Neuro solution come to market? And then my third question is to maybe challenge you a little bit. Your midterm ambition is to grow at least mid-single digits. But if I look at sort of market forecasts, they certainly look a bit more aggressive than that. And so I'm curious if you're skeptical of some of your peers, who are talking about high single-digit market growth? Or are you just setting the bar fairly low? Or is there something else?

Good. Let's start with the industry-leading margins. I think as of today, we are leading the industry in terms of margin if you look at our key competitors in that field. When we talk about returning to industry-leading margins, we look at where we as AT have been, and we were in the high teens, even in the low 20s, and that's where we want to return to. Second, on the EVR side, we made the decision to focus on Neuro. Because we believe, and I strongly believe, and that goes back to your -- also partly to your question, if you have a robot available that is able to cover the remote part, the distance part, you could even go significantly beyond 50% or 60%. So we are in the middle of still developing that new robot, and it will be -- after the development, it has to go into extensive clinical trials. So it will take a while until this becomes commercially available, and that also then kind of feeds back into your first question. In the midterm guidance, there is no revenue impact from EVR considered. The next term or the last topic -- I mean, least, at least mid-single digits or mid-single digits and above. I'm not aware that the companies that I see as that -- so we have -- we feel confident with that. We feel comfortable with that. I think that's a good growth for us. And I'm not really aware that any of our direct competitors is predicting significantly higher growth rates.

So let's talk about 6% to 8%. So that's I'm asking...

You always have to look a little bit, I mean, our portfolio is not completely comparable. You have to keep in mind, if you compare us with the company you just mentioned that they have a significant part of their revenue now in devices? So it might be that they have different growth ambitions on the device side.

And just to clarify, you can return to the high teens/low 20s, even if you continue with the R&D work for Corindus?

That's our target. And that's what we are comfortable and confident in.

Julien.

That would just be a very brief follow-up on the Endovascular Robotics. What are the main challenges at this time? Why is it taking so long? Is it -- just explain why?

I think the -- what's important to understand is that the clinical requirements of an Endovascular Robotics for Neuro is significantly different than what we had on the Cardiology side. So this is not us taking the robot that we have developed for Cardiology, do a few modifications and then use it for Neuro. This is a complete new development that is really focused on Neuro, that is making sure that all the requirements of Neuro are taken into account and what we hear so far from our key opinion leaders and the customers we are working with is, we are hitting that right on.

Okay. And...

I mean the key technology -- or a few technologies are the same, but there are significantly new requirements as just to give you one example. In Neuro, you have to have the ability to create or to control more devices at the same time than you would have to have on the Cardiology side. So that requires a complete new setup of how you build that robot. And on the Cardiology side, we had 2. So you can kind of imagine that on Neuro, you have to have significantly more to be successful.

Oli and Sezgi, and then Hugo.

Oliver Metzger from ODDO BHF. One very quick question. So you mentioned the penetration rate is at roughly 12%. So how does this number compare if you look for the dedicated stroke units, which are already installed. Can you just give us an indication where the penetration stands at these centers of competence?

I mean, the easy answer is, it's higher. But I think even if you have a dedicated stroke center, you would not necessarily get all stroke patients into a stroke center. And I mean if you look around in Germany, as an example, there is a -- we have a so-called stroke network in here. Nevertheless, you still have a significant amount of leakage where patients don't really get to the dedicated stroke center because it might be that no one really sees that this is what kind of stroke it is. And that they end up in one of the hospitals around that are not dedicated to the stroke treatment.

Sezgi.

Just something, I have two please. One thing on the industry dynamics. I think in 2021, in your presentation, you were estimating your market share at 35%. Today, it's 32%. Were there new entrants? What changed in the market? So that's question number one. And question two is, how different does a value-based agreement on the Advanced Therapies look compared to Imaging or Varian? I would imagine the recurring services is probably lower, but it will be great if you can maybe give us an example, like describe a typical value-based agreement you would have on this side.

Good, market share. Two reasons. One is that the market in the last 2 years grew faster temporarily in the areas where we were #2. Therefore, our market share came down slightly. And the second one is a one-time effect. There was a large pre-pandemic audit that we canceled. It was one that we canceled. But due to the logic of C&J, this is now then booked or is shown as something that goes against your market share in fiscal year '23. Second, overall, I think on the service side, we are roughly at the same percentage as you would see it on Imaging. So roughly 60% equipment, 40% service. And the dynamics, the setup of the value partnerships between Imaging and Advanced Therapy look very, very much the same. There is no big difference in how these value partnerships are being set up. You usually come up, you have something where you say at what point in time do you replace? What system, what kind of innovations do you put in there? So I think the overall mechanics and the overall thought in the value partnerships is very much the same. We also talk about, with customers, we talk more about the customers' targets and goals. For example, taking stroke as an example, how can we lower time between arrival at the hospital door and growing time when you really put the catheter into the patient. So these are the topics we mainly discuss with the customers because this is about how can we create value for the customers. And we now have examples. For example, in Spain, where we can prove that we are able -- taking this example to really bring that down from 45 minutes to 18 minutes. So this is more what we talk about. This is not necessarily about more the transactions, at what point in time do we put in what systems, but more what are the financial and clinical targets the customer has.

Okay. Understood. So the portion of the market where you are #2, that's probably because mobile C-arms grew less than angio systems where you were #1, right?

Then we have Hugo.

Hugo Solvet, BNP Paribas Exane. Two questions. First, some of your competitors have opted for a more vertically integrated model with some devices. Just wondering what are the pros and cons, what drove your strategy not to pursue that path? Second, we saw downstairs, the combination of MRI, IGT seems like a very crowded OR at a time when the feedback we're getting is that they want to be more flexible. So if we add to that robotics, how should we think about the flexibility of the OR going forward?

Okay. Then let's start with the competitor and the devices. Yes, we made the decision to not vertically integrate into devices, which now opens huge opportunities to work with the various device companies. Because from a device company's point of view, very often the competitor of your competitor is your friend. Yes? So that's why, for example, you see us working very closely with Boston Scientific, with Abbott and so on, because they want to work with us. And they want to partner with us to be competitive and further gain -- and further grow their market share. So I think for us, it also means we have access to significantly broad up or we can -- our portfolio that we can work with in terms of devices is significantly broader because we don't have to say, we have our own IVUS and we only do that, but we can really work with everyone. Second question, the crowded ORs. I think there are 2 things you need to take into account. On the one side, in a typical hospital, you would be able to differentiate the rooms. So you would have sliding doors in between. Or that if you have no need for a hybrid OR, you have a CT room, you have an MR room and you have an angio room that you can use independently? That's the typical setup you would find in a hospital, where you really have the ability to separate them. The second one, yes, it's crowded. What we hear from customers is that the clinical capabilities, the clinical advantages are so big that they are more than willing to invest and we see this in our business. The number of hybrid ORs is growing rapidly. And it's not only growing rapidly in countries like Germany or in the U.S., but also especially China, really buys into that. Because they are kind of leapfrogging one technology there.

Thanks. That brings us to the end of the day. Thanks, Carsten. Thanks, Stephan, for being here. Thanks to all of you for coming and looking forward to keeping in touch in the next few months. Thank you.