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Siemens' Financing Solution for Tri-State

Zacks Equity Research

Siemens Financial Services (:SFS), the financing arm of industrial goods manufacturer Siemens AG (SI), recently offered a customized financial package to medical imaging company Tri-State Imaging Group to refinance its existing debt and fund its expansion plans in Florida. In addition to strengthening the business relationship with one of Siemens’ existing healthcare clients, the transaction is mutually beneficial for both the subsidiary and the parent company.

The Key Takeaways

In order to increase liquidity and boost the working capital requirements, SFS provided Tri-State with a $50 million loan payable in 5 years. Tri-State is likely to utilize a part of the loan proceeds to refinance its existing debt to reduce its interest burden. The remainder of the proceeds is likely to be used to expand its presence in the outpatient diagnostic imaging services market in Florida through the purchase of 16 new medical imaging centers.

The transaction reinforces the long-standing business relationship of Tri-State with Siemens. At the same time, it offers additional revenue stream for Siemens through new orders for medical imaging equipment and extension of equipment maintenance service contract with Tri-State.

On the other side of the spectrum, the transaction augments SFS’ position as a leading financier in the healthcare sector. This Siemens’ subsidiary provides structured finance and commercial finance in the energy, healthcare and infrastructure sectors and plays a key role in financing the supply chain of the industry by leveraging its financial expertise and technical know-how.

Moving Forward

Siemens Healthcare is one of the rapidly growing segments of the company with a healthy underlying profitability. The financing solution package with Tri-State, one of the leading independent providers of outpatient diagnostic radiology services in the Delaware Valley, offers more and new opportunities for the segment to augment its revenues.

Siemens continues to deliver innovative technological and financing solutions for its customers. It aims to provide solutions that give the maximum operational benefit to its clients. Siemens focuses on key areas like information services, automation and controls, medical equipment, power generation, transportation systems, automotive electronics, lighting, and other similar areas. Given its product breadth and geographic diversity, the company is a major beneficiary of increased spending as developing nations build up their infrastructure.

Siemens currently has a Zacks Rank #2 (Buy). Other players in the industry worth reckoning include Garmin Ltd. (GRMN), Control4 Corp. (CTRL) and Mistras Group, Inc. (MG), each carrying a Zacks Rank #2 (Buy).

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