Annual Report 2019 siemens-healthineers.com Table of contents Page 03 Report of the Supervisory Board Page 11 To our shareholders A. B. C. Combined Consolidated Additional management financial information report statements Page 16 Page 60 Page 102 A.1 Business principles B.1 Consolidated state- C.1 Responsibility ments of income statement Page 20 A.2 Financial performance Page 61 Page 103 system B.2 Consolidated statements C.2 Independent auditor’s of comprehensive report Page 22 income A.3 Business development Page 108 Page 62 C.3 Corporate Governance Page 28 B.3 Consolidated A.4 Nonfinancial matters statements of Page 116 financial position C.4 Notes and Page 29 forward-looking A.5 Report on expected Page 63 statements developments B.4 Consolidated statements of Page 31 cash flows A.6 Report on material risks and opportunities Page 64 B.5 Consolidated Page 38 statements of A.7 Siemens ­Healthineers AG changes in equity Page 41 Page 65 A.8 Compensation report B.6 Notes to consolidated financial statements Page 54 A.9 ­Takeover-relevant information and explanatory report Siemens Healthineers Annual Report 2019 Report of the Supervisory Board “Siemens ­ Healthineers has further established itself as an independent company with its own profile. We will now strive to raise the Company to an even higher level of performance in the coming years.” Michael Sen Chairman of the Supervisory Board 02 Siemens Healthineers Annual Report 2019 Report of the Supervisory Board Your Company successfully completed the first phase of the ­­Siemens Healthineers Strategy 2025 in fiscal year 2019: ­­Siemens Healthineers has further established itself as an independent company with its own profile. We will now strive to raise the Company to an even higher level “We will now strive to of performance in the coming years. The Strategy 2025 represents the raise the Company framework for achieving this goal. Our aspirations are clear: to shape to an even higher the paradigm shift in the healthcare industry, exploit the resulting growth level of performance opportunities, and sharpen the Company’s focus on profitable growth. in the coming years.” And the overarching aspiration, which was also the central theme of the IPO, remains: shaping the future of healthcare. Siemens ­­­Healthineers is a focused medical technology company with the necessary entrepreneurial flexibility to seize opportunities in a dynamic and highly attractive market. As a market leader in many fields, with a strong diagnostics and therapy portfolio, the Company is in an excellent position to achieve this goal. The further conversion of this excellent positioning into palpable successes will be the task in the coming years. We are therefore beginning the second phase of Strategy 2025, the so-called Upgrading phase, at the start of fiscal year 2020. With Upgrading, the Company aims to rise to an even higher performance level on all levels. We took several important steps to achieve this goal already before the start of the 2020 fiscal year. For one thing, we have developed the Managing Board further and reorganized the responsibilities within the board. Michael Reitermann, who – until the end of fiscal year 2019 – was responsible for Diagnostics, including the market introduc- tion of the Atellica Solution laboratory diagnostics platform, among other things, left the Company by mutual agreement as of September 30, 2019. CEO Dr. Bernd Montag has been the Managing Board member responsible for Diag- nostics since October 1, 2019. He is also responsible for the cross-functions of Enterprise Services and Customer Services and for the regions. On behalf of the Supervisory Board, I want to take this opportunity to thank Michael Reitermann for his huge commitment and to acknowledge his contributions to the Compa- “The Supervisory Board ny’s development. The Supervisory Board remains firmly convinced of the out- remains firmly convinced standing potential for success of Atellica Solution. This conviction has been rein- of the outstanding forced by the excellent customer feedback. However, a few assumptions related potential for success of to the market introduction have changed, including, in particular, the more Atellica Solution.” complex installations of the Atellica Solution systems. Nonetheless, the chances of making Atellica Solution a success in the highly attractive growth market of laboratory diagnostics remain. The Supervisory Board has appointed Dr. Christoph Zindel to the Managing Board of ­­Siemens Healthineers AG, effective October 1, 2019. Dr. Christoph Zindel is an outstanding leader, who will successfully guide the Company’s activities in the Imaging and Advanced Therapies segments. In further developing the Company’s portfolio, he will, in particular, seek to exploit the opportunities of digitalization and artificial intelligence. A physician by training, he also possesses wide-ranging international experience and has held a number of senior management positions within the Company during his career. 03 Siemens Healthineers Annual Report 2019 Report of the Supervisory Board Among the steps that were also taken in the past fiscal year were two acquisitions that fulfil our promise to enter growth fields that are adjacent to and comple- mentary to our established businesses. We announced the acquisition of Corindus Vascular Robotics, Inc. in August. This U. S. company develops, produces, and distributes robotic-assisted systems for minimally invasive procedures. The integra- tion of our digitalization and artificial intelligence solutions with the robotic- assisted systems of Corindus offers promising opportunities. For one thing, Corindus is seeking regulatory approval for robotic-assisted remote treatments in vascular interventions. Given the limited availability of specialists in minimally invasive procedures and the relatively small number of clinical facilities in many regions, remote treatment could substantially improve patient access to therapeutic procedures in the future. In addition, ­­Siemens Healthineers acquired a majority stake in ECG Management Consultants, a leading healthcare consulting firm in the United States. Combined with the strong medical technology portfolio, including the digital platforms and solutions, the collaboration with ECG will enable us to serve our customers’ needs more comprehensively than ever before, while also improving healthcare and achieving better outcomes at lower costs. The Supervisory Board of Siemens ­Healthineers AG closely followed and supported both acquisitions. During the reporting period, the Supervisory Board performed, in accordance with its obligations, the duties assigned to it by law, the ­­Siemens Healthineers’ articles of association, and the bylaws for the Supervisory Board. We regularly advised the Managing Board on the management of ­­Siemens Healthineers and monitored the Managing Board’s activities. We were directly involved at an early stage in all major decisions regarding the Company. In written and oral reports, the Managing Board regularly provided us with timely and comprehensive information on corporate planning and business operations as well as on the strategic development and current state of the Company. On the basis of reports submitted by the Managing Board, the Supervisory Board discussed in detail the business development and all decisions and transactions of major significance for the Company. Deviations from business plans were explained to the Supervisory Board in detail and intensively discussed. We and / or the relevant Supervisory Board committees thoroughly examined and deliberated on the proposals made by the Managing Board. In my capacity as Chairman of the Supervisory Board, I was also in regular contact with the Managing Board and in particular with the Chief Executive Officer and always expeditiously informed about current developments in the Company’s business situation and on key business transactions. On behalf of the Supervisory Board, I want to thank all employees of ­­Siemens Healthineers for their dedicated efforts in the past year. I also want to thank the members of the Managing Board, who successfully led the Company through another demanding year. And I especially want to thank you, our shareholders, who placed your trust in our Company, its management, employees and our technologies over past fiscal year. Finally, I would like to conclude the first part of my report with a personal remark: Effective December 1, 2019, I will hand over the chairmanship of the Supervisory Board to Prof. Dr. Ralf P. Thomas, CFO of Siemens AG and Chairman of the Audit 04 Siemens Healthineers Annual Report 2019 Report of the Supervisory Board Committee of the Supervisory Board of ­­Siemens Healthineers AG. As the future CEO of the independent company Siemens Energy, I would like to focus on this task. I thank you for the trust you have placed in me and the Company. I assure you that I will maintain links to the Company, and I would be grateful if you would continue to support ­­Siemens Healthineers as it shapes the future of healthcare. Topics at the plenary meetings of the Supervisory Board The Supervisory Board held seven regular meetings and two extraordinary meet- ings in fiscal year 2019 and adopted one resolution by written circulation. Topics of discussion at our regular plenary meetings were the net assets, financial posi- tion and results of operations of ­­Siemens Healthineers, together with its employ- ment development. We also concerned ourselves when required with certain risks to