Siemens Healthineers is making strides in AI-driven oncology with the launch of a photon-counting CT scanner, yet its diagnostics division is dragging down overall performance, affecting stock value.
At the recent European Society for Radiotherapy and Oncology congress, Siemens Healthineers introduced the NAEOTOM Alpha Prime RT Pro Edition, an advanced CT scanner aimed at enhancing radiation therapy precision while reducing patient radiation exposure. This innovation highlights the company's strategic focus on AI-enhanced oncology as a key growth area.
However, this optimistic outlook contrasts sharply with the company's current stock performance. Siemens Healthineers' shares recently closed at €33.63, close to a 52-week low, reflecting a 24% decline since the beginning of the year. The diagnostics segment has faced significant challenges, with a 6.5% revenue drop attributed to China's procurement changes and decreased reimbursement rates. This downturn has severely impacted the division's profitability, pushing its EBIT margin down to 0.9%.
While the imaging and Varian cancer therapy segments showed resilience, with sales growth of 6.1% and 7.5%, respectively, the overall group revenue fell by 3.9%. In response, management has lowered its revenue growth forecast for the fiscal year, prompting analysts to revise their stock price targets downward. The persistent struggles in diagnostics are perceived as a structural issue that could hinder the company's valuation until addressed.
Looking ahead, Siemens Healthineers is betting on its AI-Rad Companion software to streamline oncology workflows, potentially improving patient throughput in resource-limited settings. The possibility of separating the diagnostics unit is also on the table, which could alleviate some of the earnings pressure and allow the company to fully capitalize on its AI-driven oncology innovations. Investors will be keenly awaiting the next quarterly report in July 2026 to assess the impact of these developments.