Healthineers-CFO Jochen Schmitz: „Hatten Varian seit Jahren im Auge“

Thank you very much for having me.

We had been keeping an eye on Varian for several years. Even before we went public, we had already had discussions with Varian, but that didn't materialize. Then, after we went through the IPO process and established a capital-market-oriented company, we got in touch again at the beginning of last year.

Of course, you have to look at how the price developed during the pandemic. From our perspective, the deal only became possible because of the pandemic, which we used as an external window. Regarding synergies, we said we want to achieve more than 300 million euros, mainly from revenue synergies rather than cost synergies, because this isn't a consolidation move but an entry into adjacent markets.

Well, as I said, we had looked at the company very intensively beforehand. We knew what we wanted to do. We knew the company from a long-term partnership through our cross-marketing and co-marketing agreement. Then we had certain valuation parameters set for ourselves, and driven by the pandemic, the company actually came into our execution range in terms of price. And that ultimately led to where we ended up. So it was actually the price development due to the pandemic.

I wouldn't correct that, but what we said was that we would finance up to 50% with equity, not exactly 50%. That might have been lost in communication sometimes. And accordingly, 35% is exactly within the corridor we had set for ourselves. I think we took a very sensible path. We didn't overwhelm the market with equity on one hand, and on the other, we always had the side condition of maintaining a solid investment-grade rating territory. We are now at a peak leverage of just over four on a pro-forma basis and have shown during the pandemic that we have the ability to de-lever very quickly. And with the current structure, we are very comfortable.

Well, let's put it this way: I think we're already in good territory with a 'three' before the decimal point, in the lower range. But I wouldn't be against a 'two' before the decimal point, as that would then allow us, in the future, to take the next steps in M&A. And that is naturally a position that gives you the widest leeway to pursue growth not just organically, but also inorganically.

I think we won't be doing a transaction of this magnitude in the next one to three years. But we naturally have a broad field in the medical care area where we can think about inorganic growth. I wouldn't rule out smaller acquisitions in the near future either, but larger ones will take a bit more time.

Ultimately, I don't think the efficiency and effectiveness of the integration process has suffered at all because of the video meetings. Based on experience, the effectiveness and efficiency of virtual settings is actually very high, sometimes at the expense of employees and their stress limits. What is missing is personal interaction; you can overlook that for a certain time, but it's also time to bring it back. The headquarters of Varian is in the USA, which has very high vaccination penetration, so we can hope to shake hands again in the summer. We have also kept a lot of management talent from Varian, as they brought high competence. We've found a great mix of people. Our former head of Imaging is now the head of Varian, and hopefully, she will be moving the teams forward in the coming weeks.

Currently, the advantages clearly outweigh the disadvantages, mainly because of the rapid test topic, which has led to real revenue growth. We are selling rapid tests—not our core business—but we found great partners to do this with. When we initiated it, we didn't expect it to become such a hype. It turned out to be 'best of both worlds.' We have double-digit growth rates, which is excellent after the pandemic. In the previous year up to this point, we had almost no negative impact; it was the other way around. We had planned for about 6% growth but stayed flat, so it was net negative then, but now it's clearly a net positive.

I have two hearts beating in my chest, as they say. On one hand, I hope the need for antigen rapid tests ends soon for all of us, because that means we probably have high vaccination rates and the pandemic under control. I'm also relatively optimistic that we will manage this over the summer broadly. Therefore, we are planning in our Q4, which ends at the end of September, to no longer have large revenues from rapid tests. We might still have some in Q3, but almost none in Q4. If I'm wrong, we'll have revenue but probably less fun in the beer garden.

33%.

14 hours on average.

Yes, of course, and several times. Bonus question: how was it? Well, it's not a morning routine you need in your nose, but it works and gives you security afterwards. It's not pleasant, but it's sensible.