Operator: Good morning, ladies and gentlemen, and welcome to the Siemens Healthineers Q1 Fiscal '20 Conference Call. As a reminder, this conference is being recorded. Before we begin, I would like to draw your attention to the Safe Harbor statements on Page 2 of the Siemens Healthineers presentation. This conference call may include forward-looking statements. These statements are based on the Company's current expectations, uncertain assumptions, and are therefore subject to certain risks and uncertainties.

At this time, I'd like to turn the call over to your host today. Mr. Marc Koebernick, Head of Investor Relations. Please go ahead, sir.

Marc Koebernick: Thank you, Emma.

Good morning, ladies and gentlemen, and welcome to our Q1 conference call. The earnings release as Q1 presentation were released

at 7:00 AM this morning. You can find all documents on our IR website. Next to me are Bernd Montag and Jochen Schmitz, who will be taking you through our Q1 results and be giving you an update on some important developments in our company. Following that, there will be a chance for you to ask your question to Bernd and Jochen.

And may I just remind you to limit your selves for two questions each. Now I pass the word to the CEO of Siemens Healthineers, Bernd Montag.

Bernd Montag: Thank you, Marc, the analyst and investor's. Let me first shed some lights on the financial performance of our Q1 fiscal year 2020. Before I give you a detailed update on where are we stand in the upgrading phase of our Siemens Healthineers strategy 2020.

We had a very good start in the year in terms of top line. The comparable revenue up 5.5% driven by Imaging with around 7% and Advanced Therapies with around 9% growth. Not only revenue had a good start, order intake was even stronger with an equipment book-to-bill up one 1.2. This was the seventh consecutive quarter with a book-to-bill over 1. And this creates a sound foundation for strong revenue growth also in the quarter to come.

In terms of profitability, the quarter was on the weak side. This was due to a margin dip in the imaging segment and a margin development at diagnostics, which has been very much in line with our guidance for the quarter of its few days in November and December. Hence strong effect that kind of one-off characteristics occurred, a very bad mix in Imaging and the Atellica rollout and were the key reasons behind the comparably low margin of 13.5. This also led to end in absolute terms lower adjusted EBIT, which is the key driver behind the 6% EP -- cash reduction in this quarter. In terms of cash flow, the quarter was very positive.

Group free cash flow increase year-on-year, by €268 million. To summarize, Jochen will shed more light on the profit development in his part, we're confirming the outlook we gave to you in November. And let me make one thing clear at this point, the Imaging story is fully intact. Our growth momentum shows that we consistently outperformed in this attractive yield. In November, we introduced to you our internally so-called-- pack quarter six.

The chart summarizing our six strategic priorities in the upgrading phase of our company, we're focusing on three key themes in the segments, and we have kicked-off three group wide initiative. On the following two charts I will shed some light on the inroads we have made there. I just start with the check stressors from the three segments. For imaging, our key theme is continuously innovating and making new markets as a focus on digitalization health care, and we demonstrated this at RSNA. An example for tapping into markets is our new SOMATOM On.site.

With this mobile CT for head, we are bringing the CT scanner up to the patients that beside. The scanner revolution is especially for intensive care patients significantly, reducing the risk of complications and also reducing time and staff intensity of the scanning procedure. The next example is also from OCT business. We are making further inroads when it comes to implementing the benefits of digitalization and artificial intelligence into our products. Our new single-source CT scanner, SOMATOM X.cite, comes with a revolutionary user-guiding system, the myExam Companion.

This is an AI base inclusive user, a simple question allows even the less experienced there, they perform complex scanning procedures with high quality outcomes and in addition it is proofs average quality and saves time. Finally a few words on our progress in AI I spoke already a year ago about the introduction of the AI risks companion routine. And now we have the Chief, the five years adherence for the product. The positive feedback we have been getting from our customers is encouraging and the broadening the application of AI in interpreting the images. As you know, the Rad Companion, is there to reduce workload and increase the speed for the radiologists by taking over routine tests.

At the isolate they have introduced two new applications in AI-Rad Companion prostates and the AI-Rad Companion brain MR.with the new AI-based system, we are expanding our diagnostic offering to help our customers increase efficiency and improve the quality of care. Now over to our diagnostics segment, our focus on manifesting our workflow leadership to successfully getting this business to market growth. Here we have made and important step ahead. Siemens Healthineers will be the solo supplier of Quest's immunoassay testing. A chemical solution will unable to test the significant increase its capacity, productivity as well as chemical performance by not compromising our menu there.

For us, it means having won the globally biggest player diagnostic testing for Atellica Solution with all its growth potential. We are proud that chosen as partner for their future growth and was a great proof point for the unique proposition that Atellica has to offer. Now over to Advanced Therapies, which has continued its strong growth path also in this quarter in revenue as well as in order intake. Our focus here is to take the business to a new level of growth also by tapping into direct procedure growth as well as focusing on growing clinic. For this year, it is very much is innovation from the core business, which would be very supportive, the ARTIS icono.

However, beyond this year, it will be about more than innovations in the core. Corindus will be an important factor in achieving our targeted high-single digit growth rates for the sector. Speaking of Coridus, we've successfully closed the transaction and are happy with the way the integration going. Also the customer's response is very promising. In terms of product development, we have also seen important milestones with the first transcontinental in robotic PCI procedure via 5G, with the first robotic-assisted neuro intervention and the first robotic-assisted coronary intervention in Germany, thus, systematically improving visibility of the remote case by tapping into new clinical fields and expanding geographical reach.

Now let me continue with the second part of our so-called -- pack our group-wide initiatives and please turn to the next chart. As you know the revenue growth targets of the upgrading phase, are supported by two specific group-wide initiatives. Firstly, we have identified additional growth potential in the emerging markets. The key markets here, obviously, is China. For us, this is a €10 billion market.

Further focus areas are the region Middle East and Africa, as well as India. For these three market, we have concrete action plans for above market growth, ranging from go-to-market and enhanced presence, dedicated products and solutions addressing the local needs. In Q1, we have seen outstanding equipment order growth in two out of these focus regions. Both in China and in Middle East/Africa we grew orders double-digits. North of 20% in China and even north of 30% in Middle East/Africa.

In India we are already very happy with the current performance yet. We are very excited about the prospects to come, leveraged by our action plan for this growth market. Furthermore, we also see for potentially from a more focused go-t- markets and from dedicated offerings when it comes to the account. In this second group-wide horizontal initiative, we utilize our products, strength and breadth and market-leading global service franchise as well as our approach to digitalizing health care, in order to drive share gains with the leading providers. In Q1, we have been able to prove again that we have the right product and set up to prevail in the race for the consolidators.

For example, in Canada we have won an important CAD 270 million deal with the Hamilton Health as part of our 15 year strategic partnership, delivering around 200 Imaging modalities as well as the attached services for that period. A similar success was achieved in Russia is with the €100 million deal with the Moscow Healthcare Department in a year life cycle agreement. Again, focus on imaging products and services. And last but not least, I would also like to mention the contract with Quest at this point. This client is really a market consolidator, which we are partnering with here.

The multiyear agreement for the deployment of around 120 Atellica Solution heavy immunoassay analyzes is the largest contract for Atellica deployment for us so far. As I said earlier, this is a lighthouse contract for us that proves that we have the right product in a bifurcating market. On the third chart, result of initiatives driving ahead our own digital transformation. We are also making good inroads supporting our agenda for further digital processes ultimately driving productivity. This brings me to the end of my part.

We are well on track for delivering on our upgrading priorities, and this also makes me optimistic for our medium term perspective, i.e., our ability to grow sustainably over 5% and turn this around into around 10% per annum of adjusted EPS growth. With this, I pass the word on to Jochen, who will run you in more depth to the Q1 results.

Jochen Schmitz: Thank you, Brian, a very warm welcome also from my side and good morning to everyone. After Brian gave you the highlights of the quarter and a deeper inside of the progress and our last strategic priorities. Lets now have a look at our financial performance in Q1.

Starting with order intake, a very strong start into the new fiscal year with 13% comparable order growth, and many contributed to the strong order performance was again the excellent equipment order growth in the high teens. Therein, Advanced Therapies, grew equipment orders impressively pressures in the double digits. imaging had also impressive equipment order growth in the lower teen. As Brian has point out this is the seventh consecutive quarter is a positive equipment book-to-bill, underlying our outlook to grow the top line at above 5%. Obviously, this strong total order growth, i.e., equipment and service grew our order backlog.

Let me point out that this grown backlog fits our pipeline equally for revenue in the remainder of this fiscal year as well as beyond. In addition to our order performance this quarter, our revenue performance in Q1 is also a proof point for sustained revenue growth about 5%, in Q1revenue grew by 5.5% comparable with growth across all of our businesses. Imaging posted strong growth, Advanced Therapy was even stronger and also diagnostics posted solid growth this quarter. Let me remind you that our revenue growth KPI is comparable, which excludes year-over-year effect from foreign exchange and from portfolio meaning revenue from our recent acquisition, Corindus an ECG Management Consultants, are excluded from our growth API. When looking at our regional performance, we achieved excellent revenue growth both in India as well as in Asia, this China again posting excellent growth rate, 17% comparable growth in Q1 In America, we saw a flat development mainly driven by a slight decline in the U.S.

Let me put this slight decline into perspective. Revenue growth in Q1 prior year as well as in the previous quarters were very strong. Hence, we see this rather as a normal fluctuation among quarters in one country. We remain positive on our top line growth in the U.S. for the remainder of the fiscal year.

Now let us move over to adjusted earnings per share in Q1. Adjusted earnings per share decline year-over-year by 6%, the decline in adjusted EBIT and respected to be a lower adjusted EBIT margin was not fully compensated by a very favorable development in the interest expense and tax lines. Lets now look at the development line-by-line, and let me remind you briefly that we adjust both EPS and EBIT amortization from PPA severance and M&A related transaction costs starting this year. The adjusted EBIT margin decreased by 290 basis points year-over-year due to the margin development at Imaging and a Diagnostics in Q1. At Imaging, the margin decrease due to a combination of niche effects and individual negative effects, which one-off characteristics.

At Diagnostic, the margins development was basically as guided in our outlook for fiscal year '20 from November last year. We expected the low Q1 margin related to the ongoing ramp up of Atellica Solution. Imaging and Diagnostic impacted the adjusted EBIT margin on a group level, on a similar level. We think that the 290 basis points margin declined for the group, have a gift, much more color on these developments in the segments later in the presentation. Within the segment margins and in the group margin respectively, we also saw a negative impact from share-based compensation.

There's more technical topic as a significant intake. The way how we account for the Siemens AG stock awards that were already granted to our employees before the IPO means that fair value changes of these awards go as a cost item fully through our P&L because they are considered as debt instruments for us. These valuations changes can be substantial within a quarter depending on the relative performance of the Siemens AG share price. This negative impact year-over-year was in the ballpark of mid €20 million in Q1 for the group. Impacting the year-over-year margin with around minus 70 basis points for the group and the segments.

In addition, we saw several other year-over-year negative effect also adding up to around minus 70 basis points primarily showing up in Imaging. It means about minus 30 basis points, 40 basis points year-over-year from so-called one operation or developments. In addition, we got burdened year-over-year which around minus 100 basis points from negative mix and finally the expected impact from the ongoing ramp up of Atellica Solution. Now moving from the EBIT line to the interest line. In our financing interest, we saw a positive figure of €7 million.

This was firstly driven by lower interest expenses from our tax restructuring from Q3 last year, which reduces our debt interest by making use of the lower Euro interest rates. Secondly, we saw in Q1, higher interest income year-over-year turning the overall financing interest positive. The higher interest income was driven by a positive effect from the international tax procedure. This brings us directly to the tax line. The tax rate in Q1 was 27%, at the lower end of our tax rate guidance for the full fiscal year.

If you do the year-over-year comparison, the tax rate in Q1 '19 be even lower was 23% due to positive discrete effective items in prior year. With our first quarter being already at the lower end or the full year guidance, which 27% we clearly feel more comfortable with that range for the full year. To conclude the slide on the Q1 group performance, let me add that we had a very good start in the new fiscal year in terms of cash. The free cash flow in Q1 amounted to €244 million. In Q1 prior year, we had a rather soft start with minus €24 million negative free cash flow.

More importantly in Q1 we saw a very good cash conversion of 4.87 of EBIT into free cash pretax. This was driven by an excellent converting imaging, Advanced Therapies had a lower conversion due to cash outflows related to the Corindus transaction. And with this let us move on to the segments performance. On the segment level we saw in Q1 top line growth across the board and a mixed picture on the margin side. Let us now have a look at the imaging in Q1.

At imaging we again saw strong comparable revenue growth of 7% driven by significant growth in X-ray products, molecular imaging and MRI both contributed strong growth. The adjusted EBIT margin at imaging declined year-over-year by 250 basis points, 17.4% despite some tailwind from foreign exchange. The decline was driven by a combination of two main factors impacting to one negative mix effects and the various individuals negative effects, which I described a few seconds ago on a total company level on the next side if we look close at this effect impacting the year-over-year margin development as energy. Before taking the deeper guide into imaging. Let us now look at the other two segments.

Diagnostic posted solid revenue growth of 2.6% comparable carrying on the momentum from the previous quarter, and the adjusted EBIT margin we saw as expected to decline primary related to the ramp up of a Telecare solution. The decline is partially a function of high numbers of shipments in the prior quarter. We shipped over 600 instruments in Q4 2019 and associated information cost of these instruments. Consequently, these cost now impact this quarter until the number of instruments under installation normalizes and are compensated by the future healthy reagent revenue streams. Furthermore we also saw direct on the diagnostic margins in Q1 due to a voluntary quality action in relation to our molecular offer.

Together with the previously mentioned effects from share-based compensation this two effects driven the Q1 margin is around additional minus 100 basis points. Now to Advanced Therapies, which got off into the new fiscal year it's a very good start. The Advanced Therapies posted very strong comparable growth of 9% driven by significant equipment growth, especially in our NGO portfolio. The adjusted EBIT margin remain nearly flat year-over-year despite negative effects from Corindus. Since Corindus was closed one month into the quarter, the expected dilution from Corindus for the full fiscal year of 300 base points did not impact the quarter in full.

Positive effects from business mix in some tailwind from foreign exchange then lifted the margin close to prior year quarter level. Let me quickly summarize Q1 regard -- in regards to the segments. All segments posted revenue growth, Advanced Therapies is compensated margin dilution from Corindus with strong growth and positive business mix, diagnostics margin decline as expected related to the ramp-up of the Atellica Solution. And the imaging market decline driven by negative mix effect and other effect with one-off characteristics. Let us now have closer look on these effect in Imaging.

Looking at imaging, we keep this segment on track with our expectations. This continued strong top line momentum position for further share gains and hereby driving further profit growth. The declined in margin in Q1 was a temporary driven by a combination of two main sectors, negative mixed effects and other effects with one-off characteristics. We do not expect these effects to persist and therefore expect Q2 anticipating the imaging margins to be significantly better. The negative effects from unfavorable business mix was the most pronounced in this quarter.

Within our business mix, there are three factors that can impact the financials within a quarter. Businesses within the Imaging geographies and market segments. In our business, we see different margin profile. e.g the strong growth in our X-ray products business as a dilutive effects. In our geography, we saw in Q1 very strong growth in EMEA, which is a very, very complicated -- competitive pricing landscape and tend to the dilutive impact from the margins, now our different segments from low-end to mid-end to high-end, they also different margin profiles between a high-end offering and the value offering.

The mixture of different offerings also impacts the margin development within a quarter. To give a concrete example for unfavorable business mix the bulk order of mid-end X-ray machines to large a hospital chain in EMEA has a different margin profile then a high-end CT scanner in the U. S. However, this can happen material impact within a quarter these effect normalized within the fiscal year. Also let me make here that it is highly unusual for all sectors in the mix to be negative in a single reporting quarter.

We could say we saw the perfect storm in terms of Q1. Those effects drove year-on-year drag of about 100 basis points. As mentioned previously, we also saw a negative impact from share based compensation and imaging of the about minus 70 basis points. In addition, our OpEx spend in Q1 in absolute terms were broadly as expected. This ramp up especially related to investments into the digitalization field.

However, which Q1 being the lowest revenue slide. In the fiscal year, we saw a low economies of scale in OpEx in Q1. Consequently, we will see some positive conversion from OpEx in the coming quarters with the quarterly revenue slightly is increasing and hereby normalizing OpEx relative to revenues for the full fiscal year. Lastly, we also had other negative effects impacting Q1 year-over-year, which one of characteristic that did you not expect to persist in the course of the fiscal year. In the ballpark again of minus 100 basis points for the Imaging segment.

All and all, as we have pointed out, regularly during the last two years, we see some fluctuations on a quarter-by-quarter basis that can be quarters, we're many variables point to work for same direction, which was unfortunately the case in this quarter. Looking at the fundamentals though, Imaging is running like we expected to like Bernd said, the story is fully intact. And this brings me to our outlook for fiscal year 2020 we confirm our outlook for fiscal year 2020 with 5% to 6% comparable revenue growth and adjusted earnings per share growth of 6% to 12%. With the 5.5% revenue growth posted in this quarter, we are well on track to our revenue growth targets. Diagnostics delivered growth within the guided bandwidth for the full fiscal year there is 2.6% growth in Q1.

Diagnostics sees an acceleration of growth yet below the lower end of the group range of 5% to 6%. Imaging and Advanced Therapies were those above the guided bandwidth of growth. For imaging the guidance was lower in the group range in Q1 imaging grew above that with 6.7%. For Advanced Therapies, the guidance was to clearly grow within the group range. In Q1 Advanced Therapies grew clearly above that with 9.5%.

With Imaging and Advanced Therapies now posting growth well above the guide range we see both Imaging and Advanced Therapies being in the position of achieving lowest rather towards the high end of the group outlook of 5% to 6%. This strong top line development will obviously also support the absolute adjusted EBIT development further driving the adjusted earnings per share. Let me briefly run you through the implications of this Q1 on our full year margin expectations starting with the segments. Well Imaging achieving a margin improvement at prior year is -- had obviously become more challenging. However, we continue to expect Imaging to expect margins in the remainder of fiscal year 20 versus prior year.

For diagnostics we continue to expect diagnostics margin to slightly decrease in fiscal year 20 versus 19 due to foreign exchange headwinds the integration the Minicare acquisition and the low Q1 contribution. Therefore we should have see trough in the X margins in Q1. For Advanced Therapies, we continue to expect margins to significantly decrease due to the acquisition of Corindus Robotics, and by the Q1 they have show that the business is in great shape and able to compensate some of the downside organically. Regarding our interest expenses for fiscal year 20 we are outline, €60 million to €80 million interest in fiscal year 20 with the higher interest income in Q1 we would now expect interest expenses to be at the lower end of that range or even below. And regarding our tax rates, we assume it to be in the range between 27% to 30% for the fiscal year.

Overall we confirm our earnings per share growth of 6% to 12% in fiscal year 20, particularly driven by a strong revenue contribution with some support on the interest line on the tax line. And with this I will hand it back to the operator.

Operator: [Operator Instructions] And our first question comes from the line of Scott Bardo from Berenberg. Please go ahead.

Scott Bardo: So just really wanted to explore the softer imaging margin this quarter.

I think Jochen, you mentioned that there were about a100 basis points of non-operational one offs within this quarterly margin, I just wanted if you could provide a little bit more clarity as to what they were placed. And just to understand, I think you were very clear about the various products and geographic mix weighing on the division this quarter, is much feeling that most of the major radio is utilized have been talking about somewhat softer dynamics in the X-ray. I wonder, if you can confirm whether the end market for X-ray has deteriorated to the tool, or does any notable price pressure, which is a little bit more operational than the one-off in nature. Thanks.

Jochen Schmitz: Yes.

Thanks, Scott for the first question. The -- I referred to three aspects in the India imaging development. As you referred to it was mix that minus 100 basis point is what they is. I know, talk what thing on the share based compensation valuation of Siemens AG stock awards was 70 basis points negative impact. And the last topic, I think your question was referred to.

What about the other one-offs? Yes, I don't think that one-off characters. These were the bunch of things here which had a positive impact last year in Q1. Yes. So not so much a negative this year. And we had to also in AG, the similar amount of positive things, very similar in Imaging.

Therefore this was not highlighted last year in '19. But obviously having nothing like this year and referring to what I've said on the mixed side was we got to sort of say perfect stock on the mixed site, this be could additional 100 basis points negative to the Imaging margin. Definitely a topic which is not, -- it's not expected for the -- for the remainder of this fiscal year.

Scott Bardo: Yes, for sure. The other question regarding X-ray, I mean to put things into perspective first of all and the X-ray business what we call key X-ray products, it's about right around 12% of all Imaging business last year.

Bernd Montag: So, it has, had a bit at a very good growth contribution in this -- in this quarter. It is a business which on the margin side is more on the lower side. Traditionally I've been the, let's say, more of more advanced or more higher technologies like MRHGT. And contributed with this also proven mixing, which Jochen explained. I do not see a particular margin pressure or so in the X-ray business itself.

Yep. So it's a normal course of business. And -- and maybe, bear in mind, I mean, -- in the nation, she had, didn't not to mention price as a topic. It then comes to comparable products.

Scott Bardo: Very good.

And perhaps just one follow up. I see you've been announcing some, -- some pretty strong strategic partnerships with, Hamilton and others, can you please just remind us as to the differences in these sorts of contracts as compared to straight capital sale, what that means, you'll cash positioning and predictability of the business and perhaps does that, do these contracts announce meaningfully contribute to your order book growth in the given quarter.

Jochen Schmitz: Scott, thanks for the question. And if you -- I mean your contract, if they are large, then they differ in nature. Generally speaking those large contracts do give you, I would say a better predictability for the future because they are obviously larger and they last for several years.

This is one classical characteristics. Often almost always they are combined with the financing component, which at the end of the day is done by a third-party, not by ourselves, often our historic reason with Siemens Financial Services. So therefore this also not a cash flow rain for us. It does not make a big difference from a cash flow perspective. Obviously when they enter the order book, we book them according to the IFRS rules.

We do not do any adjustment to this. So if we have a clear commitments for a several year contracts, the full contract volumes according to the contract we have signed enter the backlog calculation, yes. Often we see with those contracts over time, that and beyond the signed contract increase in share of wallet in those accounts. But this is obviously not accounted for at that point in time in the backlog, but this is something, which really does help, yes obviously make a huge difference if an institution enters in such a large contract and then we have almost daily interaction on what are the needs of the customer. This gives you an intimacy, which allows you to better understand the customer and ultimately the benefit from this higher share of wallet.

We have experience in those kinds of contracts in certain areas for more than two decades, UK and the Netherlands, particularly in Europe, but this is now a trend, which is generated significantly in the U.S. also. And definitely something that means that your base 12 strengths. Maybe one more comments you haven't, I mean in regarding of what is book does in order and whatnot, yes. So I mean the Hamilton, it is the part of the order book.

And we look at the other two bigger transactions or bigger deals [2.57] mentioned they are not part of the order book here. So the Moscow is one tender, yes which grew over time. And the same holds true for protections. Yes. Some things, so to stay on top giving us confidence for revenues to come.

Operator: Let's take our next question today from Patrick Wood from Bank of America. Please go ahead.

Patrick Wood: Thank you for taking my two questions. The first one is going to be kind of predictable. I'm just questioning around and whether you think, the viral outbreaks can have either an effects on the rate of installations of new systems, like, and obviously the systems people will get them that the rates of installation.

but alternatively, if you think that there's going to be any kind of a, a section on the production facilities that you guys have in the country, just some color on that would be helpful. That'd be the first question. Second question, I'd love to know within the order book roughly what the growth was Ex Hamilton and particularly, the U.S. what you're sort of hearing from is that, how far do you think we're through this larger replacement cycle that we've been going through, sounds like you're still very pretty confident there, but some color would be helpful. Thank you.

Bernd Montag: I mean, Patrick, corona, I mean thank you for putting the disclaimer in front. Yes this is the expected question and probably I need to give you also the expected answer. And so I mean for the time being our priorities of course to -- to safeguard our, our employees and to help whoever we can. So, we have made, rapids donations, installed systems there -- there must be neat and we're very carefully watching our employees in China, as well as globally. So this is priority number one.

The factories are up and running yet. So, so far we don't see an impact. Certainly there can be delays in terms of installation. We don't see this but we have our eyes wide open of course priority is helping every kid help, making sure that our employees are fine. And then making sure that this continuity is fair.

But bear in mind, I mean this is something that you said adverse you've had delay and will be caught up. So from that point of view, I think it's nothing we need to be super concerned about in the long run, yes. The second question, I mean regarding Hamilton and I think --

Patrick Wood: And if you do rough calculation now, all the growth was the ballpark also 13% flat, if you would take and make -- as we very, very healthy at and actually we have to test that you have even put this topic as one of the priorities on how we'll be called -- pack. We can't take it out on the other end. It could be a trend in the market towards larger deal.

And therefore this becomes much more normality, so to say and therefore they ought to be the right approach you've taken it out, generally speaking. At the end of the day, it's part of our business.

Bernd Montag: And I mean, Patrick, then there was the other connotation about the U.S. market in general. Yep.

So, I mean, -- I don't, first of all, I don't really see as the, as much of the discussions of this chemo our replacement rate for whatever a daily pattern in Denmark? I mean, Imaging is a growth technology because of procedural growth because of end customer and clinical demand. The U.S. to put things into perspective here, it's secure. This is more a single digit, lower single digit growth market. But also, bear in mind, this is 30% also of our total market.

You see a very healthy development in Europe. I mean, in the first quarter of course or the spectacular sides with 20% on the revenue side, but definitely, I think the high single digits, plus the growth markets in especially China, India and Middle East Africa. And also bear in mind when it comes to the revenue line, yes we had bit of a shy start in the U.S. and its contributed to the mix effect, you also spoke about, backlog in the U.S., which we will convert in the next quarter. So from that point of view, I'm also very positive about the develop in the U.S.

Operator: Our next question today comes from Veronika Dubajova from Goldman Sachs. Please go ahead.

Veronika Dubajova: Good morning gentlemen. I would like to follow-up on a couple of questions that have been asked. Just trying to understand the better the moving parts in Imaging.

And Jochen, thank you for explanation. I'm just a little surprised because, heading into the quarter you should have had fairly good visibility on the a 100 basis points of one ounce that you had last year, and also fairly good visibility on the mix. So slightly surprised that you hadn't flagged the margin softness the same way that you had done for diagnostics. And maybe he can help us understand what, if anything has changed in Imaging as you look at the business, because it sounds like on a full year basis you're also somewhat more cautious on the margin improvement. I'm not sure I fully understand that so if he can give us some color on that, that would be helpful.

And then my second question is a follow-up on the coronavirus question that Patrick has asked him. Obviously there's a fair amount of disruption to both the supply chain and the manufacturing operations. I think of it pretty much everyone who operates in China. So if you could help us understand kind of what your inventory build is for this market and maybe just remind us how much of your production across the business sits in China today? Thank you.

Bernd Montag: As I said, I mean currently, so far factories are ups and running and producing as planned .

A lot of the Chinese production is from China. And when it comes to export, we also have -- we would have alternatives, yes. And because we have some kind of say, twin factory setting for most of the topics where we can depending on demand and depending on end user location, yes, decide whether especially on the MRI and CT side, whether product are shipped out of the German locations for Shanghai's, next Shenzhen.

Jochen Schmitz: Yes Veronika on Imaging. I mean, first of all, I think this is important and you said that also very, very no change in story lines for Imaging, this is -- therefore yes.

And the top line is any way fully intact, yes. The temporary dip on the profitability side, when the emphasis is on temporary, yes. And the insight into the predictability of dip and it's is clearly on the -- and the one-off was clear, yes. We knew this, yes, no doubt, yes. On the mix side, entering into the quarter, we have hopeful a bit more U.S.

based revenue, which obviously for whatever reason did not materialize, but it's just postpone it to later quarters because actually based on our current backlog forecast, how it will transmits into revenue and the prediction for the full fiscal year we seen the mix effect to fully come back and turn it around in the coming quarters? And therefore we fear, we're very confident on margin improvement versus prior year in Imaging. Obviously with the 17.4% in Q1 might be a bit too prudent, a bit more cautious on how much additional margin we will produce in that business. But what I can see and therefore I am very, very confident is, I see even more momentum, more momentum on the top line, then we've more momentum then we have anticipated entering into the year. I look at the backlog and other backlog and how the backlog reach for this fiscal year relative to our revenue forecast higher than it was last year on Imaging which gives me a lot of confidence in that business. And again, nothing so to say to an announce.

Because the story line is full intact.

Operator: Our next question comes from Ridely Day from Redburn. Please go ahead.

Ridely Day: Good morning. Thank you for taking my questions.

Firstly just on the Chinese situations. On another note, clearly CT and X-ray, are the prime means of the diagnosing the virus. I presume there's also going to be, you're going to be very active in that space. So both either on the Imaging side or the Diagnostic side, would this in any way increase the amount of your business? Secondly on -- on Diagnostics. Can you give somebody information that you have historically given us? I mean, what was the new customer win rates on Atellica, and can you give us, a guide on the third quarter shipment, please?

Bernhard Montag: Yes, in China, I mean, as I said we had -- they're asked to help in the last phase, we helped it was under the headline of helping, and under the headline of generating additional additions.

And then you look into now how would it thinks, you've got overtime. I mean, it's also a concern, it should be infrastructure in place, not only from a -- from a perspective, but also from the are there -- is there the hospital to train staff and so on and so on. And so that, a really a hike in demand is really what I would -- it's not currently our priority, I mean the priority, to help where we can to protect our employees. Then also to make sure that the proper business continuity, then the second question is on Diagnostics, I mean, as we continued to see very good win rates. I mean Quest being one example, and I have one because the flex already in previous communications, when it's comes through the big labs, we are very happy with the rate of above 80% in the case of labs doing more than 30,000 tubes or tests per day.

And it is also for the mid market and from where we been in segments, where we haven't been before, yes. And they just send main message. And that is why we built the system yes. I mean, without Atellica we wouldn't have those perspective. We see good growth geographically in Europe, in Asia and in the U.S., I mean we talked about this ending, it is now about capitalizing on the opportunity and I'm also very happy what I see there you asked about shipments.

I mean, yes, we are -- we don't want to make this key KPI here what I can tell you, we talked about the high amount of shipments we had in Q4 which now under installation. So much we have shipped in this quarter according to plan. It's a number between 350 and 400, yes. So 370 ranges is what I say, recall. Yes, trust confirmed.

And what is also a good aspect is that in this quarter we brought to the more systems life then we shipped because that is also one of the big topics, yes burdening the P& L that we have these instruments in transition, yes, which is certainly the result of shipping and now have been in the relation phase at some point in time yes we need to convert that abstract term, backlog and it is a good development that in Q1 we saw the go-lives beating the shipments here.

Operator: We have a question now from Michael Jungling, Morgan Stanley. Please go ahead.

Michael Jungling: Great. Okay, thank you.

And my first question is about share base payments. Can you comment how this impact profitability for the remainder of the third -- of the next three quarters? If the share price actually decreases, do we see a reversal in charges i.e., does your P&L actually get a tailwind and if that were to happen? And then question number two is, if I look at Q2, over the next quarter Q2, after a fairly tough Q1, can you provide some comfort that you expect the margins for Imaging to show a year-on-year improvement? Is that something that you would endorse a positive year-on-year margin development in Imaging? Thank you.

Jochen Schmitz: Yes. Thanks Michael. I said I was the first question when I tried to expand that share based payment topic, yes, this is everything used to next year is full year related to the scope awards which were ended or graduate to our employees, well Siemens AG stock awards, everything which happened pre IPO.

That means this is over two years now. Generally speaking, but then they are all vested. Secondly it's just a bit complicated. Most likely different things in my life is I have know what the impact would be next year because at the end of the day it just the relative performance of the Siemens AG stock price relative to a peer basket. Yes.

And this difficult to predict. Obviously last call, slight positive, this Q1 whether it's significant negative, which made up the year-over-year minus 70 basis point I was referring to before. It's difficult to say here. And that's Q2 we definitely expect that significantly better as I said, significantly better profitability leverage in Imaging. Maybe -- Maybe you know that their last year Q2 was a relativity strong quarter for Imaging.

One of the strongest. Yes. So I would hope for a better one. I would not say this, I remember remembered was 20.9% last year that was almost on whatever. But what I clearly laid out is that we expect margin expansion for the remaining nine months where that takes place.

Michael Jungling: Okay, great. And just to sum on share-based payment, just to make sure I understand this, so if there was a change even that this related to past grants before the IPO, it's the share price now, moves of Siemens AG, will there be an impact in the remaining three quarters of this fiscal year or is that done and therefore we no longer have to worry about the share price movements?

Jochen Schmitz: We have to worry, so to say with the remainder of two years, yes, because at the end of the day it's the Siemens share price develops positive lead relative to the Siemens AG peer basket is a negative for us generally speaking and vice versa.

Michael Jungling: It's very useful. So just hypothetically speaking, if there was an underperformance in Siemens AG against the basket, would you have to reverse it and therefore the charge that you booked in Q1 would reverse and that means you could hypothetically see a tailwind in the remainder of this fiscal year?

Jochen Schmitz: Yes, absolutely. I mean technically speaking it's not a reversal because it's a fair value calculation every quarter on this topic at the end of the day.

And at the end of the day depending on logic Siemens has build up here. And we have to say this at the end of the day, but generally speaking.

Operator: Thank you. We have a question now from David Adlington from JP Morgan.

David Adlington: Thank for taking the question.

Just to put in fabrication first on the orders. I think you said you've included the Hamilton order that excluded the Moscow and the question order. I just wondered what was difference between those orders winning, which meant you recognize one and didn't recognize the other two. Just to make sure I got that right. And secondly, just on the margin for the year, you started the year with a 17% to 18% margin target.

It doesn't look like you've reiterated that this morning. I just wanted to check, should we be thinking about below for the group level below that 17% margin target?

Jochen Schmitz: Yes, I mean on the order logic, yes, I think I said that we book orders according to IFRS, yes. It means when there is signed order with a clear commitment around it, yes, and this is moving into the order backlog. Obviously, the Quest order was not signed in Q1 but in Q2, yes, so this is an easy one, yes. And then I think Bernd also pointed -- therefore, it's not in the Q1 order book.

And Bernd pointed out to the Moscow, I think this is a tender we won, yes. And the tender has a different commitment level, yes, therefore, we book it as they ask for the equipment based on the tender we won, yes. So that's just the nature of the different wins or the timing of the wins, which makes it a different handling with regard to the order book, yes. On the 17% to 18% profitability level, I mean, first of all, I think we made that clear, our guidance is what's top line 5% to 6% growth and adjusted EPS growth of 6% to 12%. Adjusted EBIT margin is [indiscernible] lever -- operational lever to reach the 6% to 12%.

Obviously, with this relatively weak Q1, it was much more difficult to end up in the upper range of the 17% to 18%, yes, but we are not changing the guidance now, yes, not even in this -- on this level, yes. Well, there are still 9 months to go.

Marc Koebernick: Okay. Thanks a lot for everyone who participate today. And as always, the team and myself will be available for questions during the day.

Thank you.

Operator: That will conclude today's conference call. Thank you for your participation, ladies and gentlemen. A recording of this conference call will be available on the Investor Relations section of the Siemens Healthineers website. The website address is www.corporate.siemens-healthineers.com/investor-relations.