GE HealthCare Technologies Inc. Q3 FY2024 earnings call

Management Statement and Operational Highlights

• In the third quarter, delivered 1% organic revenue growth. Strong performance in US across all segments and solid growth in Pharmaceutical Diagnostics.
• Organic orders growth was 1%. Excluding China, reported sales growth was ~5%, and orders growth was 4%.
• Strong backlog in the quarter primarily driven by services. Adjusted EBIT margin was 16.3%, up 90 basis points Y/Y.
• Innovation in Theranostics, including establishing a Center of Excellence in Europe and securing FDA clearance for a new software tool in the US. Launched Flyrcado and invested in AI and cloud-based solutions.

Segment Performance

• Imaging: Organic revenue down 1% vs prior year due to China headwinds, partially offset by US strength. Segment EBIT margin up 200 basis points.
• Advanced Visualization Solutions: Organic revenue flat Y/Y, with US sales volume increase offset by China market headwinds. Segment EBIT margin decreased 90 basis points Y/Y due to unfavorable mix.
• Patient Care Solutions: Organic revenue up 2% Y/Y, driven by backlog execution. Segment EBIT margin increased 10 basis points Y/Y.
• Pharmaceutical Diagnostics: Delivered 7% Y/Y organic growth, EBIT margin ~31%.

Guidance

• Full-year 2024 organic revenue growth trends toward the lower end of the 1%-2% guidance due to China market softness.
• Raised the low-end of adjusted EBIT margin guidance to 15.8%-16% and adjusted EPS guidance to $4.25-$4.35.
• Expect free cash flow for 2024 to be approximately $1.8 billion.

Risks

• China market slow to recover with coordination of stimulus funding taking longer, impacting near-term growth in the China market.

Question and Answer

Q: Robbie Marcus on margins and China A: Jay and Peter discuss margins, noting good progress and line of sight to future margin improvements, and on China, stating it's a temporary challenge with limited benefit from stimulus through first-half of 2025 Q: Ryan Zimmerman on Flyrcado pricing and China A: Peter talks about Flyrcado pricing, noting it deserves a premium, and on China, discussing the slow recovery and positioning well to benefit from stimulus when it comes Q: Joanne Wuensch on Flyrcado infrastructure and Vizamyl A: Peter discusses Flyrcado infrastructure needing PET systems and cardiology centers, and Jay talks about Vizamyl's robust growth in the US Q: David Roman on pharmaceutical diagnostics components A: Peter deconstructs pharmaceutical diagnostics into proprietary molecules, capital equipment, and digital integration components Q: Larry Biegelsen on 2025 guidance and Q4 growth A: Jay and Peter talk about 2025 guidance being conservative, Q4 organic growth expected to be slightly above 2%, and confidence in sequential ramp in Q4 Q: Vijay Kumar on Flyrcado and system side A: Peter discusses Flyrcado as a driver for PET systems and future growth opportunities in molecular imaging Q: Navann Ty on China steps and Flyrcado launch A: Peter talks about China being in early steps of recovery and Flyrcado expected to launch in late Q1 2025 with work on reimbursement and commercialization