GE HealthCare Technologies NASDAQ: GEHC executives said the company remains confident in its long-term growth prospects despite a disappointing first quarter that led to a reduction in full-year guidance, citing inflationary cost pressures as the primary near-term challenge.
Speaking at a Bank of America Securities healthcare conference in Las Vegas, James Saccaro, GE HealthCare’s vice president and chief financial officer, said the company “ended up having to lower guidance for the year,” a move he said management takes “very seriously.” He attributed the reduction to “very dramatic inflationary costs” that the company needed to reflect in its outlook.
Even so, Saccaro highlighted several areas of strength. He said first-quarter orders grew a little over 1% against a 10% comparison from the prior year, while sales came in at the high end of the company’s expected range. He also said the company’s product pipeline is largely on track and that GE HealthCare has made progress with its Heartbeat management system.
Inflation and Pricing Remain Key Investor Focus
Saccaro said GE HealthCare’s portfolio is particularly exposed to certain cost pressures because its products are highly engineered and include components sourced globally. He cited freight, logistics, fuel, helium, rare earth elements and memory chips as areas of pressure.
According to Saccaro, the company saw about $100 million of impact from freight and logistics costs, along with about $50 million in other costs tied to the Middle East conflict. He also pointed to memory chip inflation, saying the company had seen a $100 million increase in that cost category.
Saccaro said GE HealthCare has assumed current memory chip prices continue through the rest of the year, with additional buffers and contingencies built into its forecast. He said the company has supply locked in and has not seen memory supply constraints to date.
On pricing, Saccaro said the company has limited ability to reprice backlog, but greater flexibility on new orders. “Our costs at this moment in time have structurally changed versus prior,” he said, adding that GE HealthCare is reflecting those higher costs in decisions on new business.
Capital Allocation Includes Buybacks, R&D and M&A
Saccaro said GE HealthCare repurchased shares in the first quarter at around $70, using an intrinsic value model based on discounted cash flow. He said the company views buybacks as part of its ongoing capital deployment strategy, after reinvesting in the business and pursuing targeted acquisitions.
He also pointed to the closing of Intelerad in the first quarter, describing it as strategically and financially accretive. Saccaro said the company also continues to pay a dividend.
Business Structure and PCS Review
Philip D. Rackliffe, president and CEO of Advanced Imaging Solutions, discussed the company’s decision to combine businesses into Advanced Imaging Solutions. He said customers are moving toward a more horizontal care continuum, from initial scans and lesion detection through diagnosis, planning and therapy. Rackliffe said GE HealthCare sees an opportunity to use data and AI to improve workflow efficiency and patient outcomes.
Saccaro also addressed Patient Care Solutions, or PCS, saying the segment had a disappointing first quarter, though largely in line with expectations. He said an 8% decline and the margin level reported by the business were “not an acceptable threshold of performance.” The company is focused on improving the business, while also evaluating “strategic alternatives” and the role PCS plays within GE HealthCare.
Saccaro said PCS is less linked to the company’s other businesses than ultrasound and imaging, and described it as a lower-margin business relative to the newly combined imaging business and Pharmaceutical Diagnostics.
Product Pipeline and Imaging Outlook
Rackliffe said GE HealthCare’s more than $3 billion of investment since its spin-off is beginning to show results. He said the company is entering a period of significant product innovation across CT, MR, ultrasound and image-guided therapies, with material new products expected over the next six to 18 months.
He described photon counting CT as a “blue ocean” opportunity rather than primarily a replacement cycle for GE HealthCare’s installed base. Rackliffe said the company had a potential funnel “well in excess of $100 million” for photon counting CT and expects revenue conversion in the back half of 2026 and into 2027.
Saccaro said new products are expected to support margin improvement because they generally carry higher prices and lower costs than predecessor products. He also cited lean operating improvements through Heartbeat and general cost discipline as contributors to longer-term margin opportunity.
China and Flircado Progress
Saccaro said GE HealthCare has made changes in China, including bringing in Will Song as leader, with a focus on commercial execution, government affairs and targeting market segments. He said the company is improving win rates and seeing a more constructive economic backdrop, though it has not changed its expectation that China will be down.
Rackliffe said sentiment in China has stabilized and noted GE HealthCare’s large footprint in the country, including thousands of employees and multiple manufacturing plants.
Saccaro also said Flircado has made progress, with its annual run rate rising from about $25 million to roughly $46 million one quarter later. He reiterated the company’s focus on reaching more than $500 million in revenue by 2028, while emphasizing that adoption will be managed carefully to ensure customers have a positive experience.
He said the company is working through reimbursement, radiopharmacy manufacturing workflow and customer-site adoption as key factors in the launch.
Looking ahead, Saccaro said GE HealthCare expects higher order growth through the rest of the year and continues to target mid-single-digit sales growth over the medium term. He said the company remains focused on innovation and operating execution while navigating a volatile cost environment.
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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