GE HealthCare Technologies NASDAQ: GEHC reported second-quarter results marked by strong order growth, a record backlog and continued momentum in its Advanced Imaging Solutions and Pharmaceutical Diagnostics businesses, while Patient Care Solutions remained pressured by operational fulfillment issues.
President and CEO Peter Arduini said orders rose 11% year over year, supported by demand across the company’s three segments and geographies. The company ended the quarter with a record $23.9 billion backlog, up $2.6 billion from a year earlier and $2.1 billion sequentially, while book-to-bill reached 1.15x.
“There really weren't any particular one-timers” behind the order performance, Arduini said during the company’s earnings call, attributing the growth to broad-based commercial execution, its legacy portfolio and contributions from newer products. He said demand was strong across ultrasound, MR, CT, molecular imaging, vascular labs and patient monitoring.
Second-quarter results and outlook
Revenue totaled $5.3 billion, representing 3.5% organic growth from the prior-year period. Product revenue increased 4.7%, while service revenue grew 7.7%, aided by operational performance and the recent Intelerad acquisition.
Adjusted EBIT was $750 million, including $23 million of recognized refunds related to tariffs incurred during the first quarter. Adjusted EBIT margin was 14.2%, down 40 basis points year over year. Adjusted earnings per share rose 6.6% to $1.13, including a $0.04 benefit from tariff refunds and a $0.02 benefit from a lower tax rate compared with the prior year.
Free cash flow was $68 million during the quarter, including $107 million in tariff refunds. The company repurchased about $200 million of shares and continued paying its dividend.
GE HealthCare maintained its full-year outlook, calling for:
- Organic sales growth of 3% to 4%;
- Adjusted EBIT margin expansion of 10 to 40 basis points, resulting in a 15.4% to 15.7% margin range;
- Adjusted EPS of $4.80 to $5.00, representing about 5% to 9% year-over-year growth; and
- Approximately $1.6 billion of free cash flow.
For the third quarter, the company expects organic revenue growth of 3% to 4% and low-double-digit adjusted EPS growth year over year.
Chief Financial Officer Jay Saccaro said the company entered the third quarter with equipment revenue nearly 85% secured, several percentage points above prior quarters. He also said second-half performance is expected to benefit from Patient Care Solutions stabilization, increased radiopharmaceutical sales and growth from Flyrcado.
Imaging and diagnostics drove growth
Advanced Imaging Solutions, which combines the former Imaging and Advanced Visualization Solutions businesses, posted 5% organic revenue growth. Performance was led by cardiovascular and interventional solutions, CT and molecular imaging. Segment EBIT margin expanded 90 basis points year over year, helped by volume and pricing, partly offset by inflation.
Pharmaceutical Diagnostics delivered 14.6% organic revenue growth, driven by contrast media volumes and pricing and by U.S. radiopharmaceutical growth. Segment EBIT margin increased 30 basis points to 29.6% despite planned investments in new products and the innovation pipeline.
Arduini highlighted double-digit revenue growth for Vizamyl, an amyloid PET imaging agent, which he linked to increased therapy adoption and broader diagnostic capabilities for Alzheimer’s disease. The company also delivered 545 Flyrcado doses in the week ended July 24, about 40% above April levels. GE HealthCare said it added customers during the quarter and expects their utilization to increase in the second half.
The company reiterated its expectation that Flyrcado can generate annual revenue of $500 million or more by 2028. Saccaro said current demand for contrast media is approaching total market supply, while Arduini said the company expects the contrast market to benefit from procedure growth over time.
GE HealthCare also cited customer interest in its photon-counting CT platform, Photonova Spectra, and expects CE marking in the second half of 2026. The company said the platform was not a material contributor to second-quarter orders but could become a more meaningful growth driver late this year and in 2027.
Patient Care Solutions under review
Patient Care Solutions organic revenue declined 13.5%, and the segment generated negative EBIT. Management attributed the results to operational fulfillment challenges, including shortages of critical components that constrained the company’s ability to fill certain orders.
Arduini said the company has implemented supply and manufacturing changes intended to improve shipment velocity and backlog conversion for its monitoring and anesthesia product lines. He said July had started well and that management expects sequential improvement in both sales and profitability during the second half.
Despite the revenue decline, Patient Care Solutions reported strong first-half orders growth, particularly in monitoring, driven by new platforms and a sales-force realignment. Demand for premium anesthesia products internationally also contributed.
The company is conducting a strategic review of Patient Care Solutions, considering continued ownership, a sale or other value-enhancing transactions. Arduini said the review will assess the portfolio, geographic footprint, cost structure and whether the business could perform better under another owner. He said it was too early to discuss potential uses of any proceeds from a transaction.
Margins, inflation and leadership transition
Saccaro said inflation created a roughly 120-basis-point headwind to second-quarter margins, reflecting higher memory chip, oil, freight and other component costs. He said the company’s $250 million inflation assumption remains appropriate and that price and cost actions taken during the second quarter are expected to contribute more meaningfully in the second half and into 2027.
Arduini said newer products are being designed with higher clinical value, pricing and gross-margin potential. He cited the Vivid Pioneer ultrasound platform as an example of a product with AI capabilities, lower manufacturing costs and higher gross margins than its predecessor.
The company also announced that Saccaro will leave GE HealthCare for a role that expands beyond finance. George Newcomb, the company’s controller and chief accounting officer, will serve as interim CFO while the company conducts its search for a permanent successor.
About GE HealthCare Technologies (NASDAQ:GEHC)
GE HealthCare Technologies NASDAQ: GEHC is a global medical technology and diagnostics company that develops, manufactures and markets a broad range of products and services for healthcare providers. Its portfolio centers on diagnostic imaging systems, including MRI, CT, PET and X-ray modalities, as well as ultrasound equipment. The company also supplies patient monitoring and anesthesia delivery systems, interventional and surgical imaging solutions, and molecular imaging technologies used in both clinical care and research settings.
In addition to hardware, GE HealthCare offers software, analytics and lifecycle services aimed at improving clinical workflows and equipment uptime.
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