GE HealthCare’s Solid Q1 2025 Performance Amid Challenges

GE HealthCare, a leading global provider of medical technology and services, has reported its financial results for the first quarter of 2025. The company’s performance demonstrates resilience in the face of ongoing challenges in the China market and the Russia-Ukraine conflict.

Revenue Growth Driven by Strong Demand For the three months ended March 31, 2025, GE HealthCare reported total revenues of $4,777 million, up 3% as reported and 4% organically compared to the same period in 2024. This growth was driven by a 2% increase in product sales and a 3% increase in service revenues.

The Imaging segment was the standout performer, with revenues growing 4% to $2,140 million, led by strong demand for Molecular Imaging, Computed Tomography, and Magnetic Resonance products. The Pharmaceutical Diagnostics (PDx) segment also delivered robust growth of 6% to $632 million, driven by increased pricing and volume.

The Advanced Visualization & Solutions (AVS) and Patient Care Solutions (PCS) segments saw more modest growth of 1% each, to $1,239 million and $753 million, respectively. AVS was impacted by continued pressure in the China market, while PCS faced increased investment and cost inflation.

From a regional perspective, the United States and Canada (USCAN) region was the star performer, with revenues growing 7% to $2,237 million. Europe, the Middle East, and Africa (EMEA) revenues were flat at $1,174 million, while the China region and Rest of World saw declines of 1% and 2%, respectively.

Profitability Improvements GE HealthCare’s operating income for the quarter was $629 million, an increase of 17% compared to the same period in 2024. This translated to an operating margin of 13.2%, up from 11.6% in the prior year. The improvement was driven by higher gross profit, which increased by 120 basis points as a percentage of total revenues.

Cost of products sold as a percentage of product sales decreased by 160 basis points, driven by cost productivity initiatives. Cost of services sold as a percentage of service revenues also declined by 40 basis points, reflecting improved pricing and cost management.

Operating expenses increased by $21 million, primarily due to higher R&D investments. However, as a percentage of total revenues, SG&A expenses decreased by 60 basis points, and R&D expenses increased by 20 basis points.

Net income attributable to GE HealthCare was $564 million, up 51% year-over-year. This strong bottom-line performance was aided by lower interest and financial charges, a decrease in non-operating costs, and a gain on the revaluation of the company’s existing stake in Nihon Medi-Physics Co., Ltd. (NMP) as part of the acquisition of the remaining 50% equity interest.

Segment Performance Looking at the company’s business segments, the Imaging segment delivered the strongest EBIT margin at 9.3%, up from 8.0% in the prior year. This improvement was driven by cost productivity, volume growth, and higher pricing, partially offset by unfavorable mix and increased investment.

The AVS segment maintained a healthy EBIT margin of 21.1%, up slightly from 20.9% in the prior year, as growth in sales volume and cost productivity offset cost inflation.

The PCS segment saw a significant decline in EBIT margin, from 10.9% to 6.4%, due to increased investment, cost inflation, and unfavorable product mix.

The PDx segment continued to perform well, with its EBIT margin improving from 29.7% to 32.4%, driven by higher pricing and volume growth, partially offset by increased investment.

Navigating Challenges in China and Russia-Ukraine GE HealthCare continues to monitor the evolving situation in China, where the government’s 2024 stimulus program and ongoing anti-corruption efforts in the healthcare sector have contributed to delayed orders and revenues. The company expects these factors to have a short-term impact on its China business, but believes the government’s focus on expanding healthcare access will benefit the company in the long run.

In Russia and Ukraine, GE HealthCare had $143 million in assets as of March 31, 2025, none of which are subject to sanctions. The company generated $64 million in revenues from these two countries during the quarter, but the potential inability to repatriate earnings will not have a material impact on its operations.

The company continues to navigate the evolving legal and operational considerations related to the Russia-Ukraine conflict, including the need to obtain licenses to supply certain products and services to customers in Russia. While the implementation of these measures has affected the company’s ability to supply customers in Russia, GE HealthCare remains committed to supporting its business in the region to the extent possible.

Liquidity and Capital Resources As of March 31, 2025, GE HealthCare had $2,473 million in cash, cash equivalents, and restricted cash. The company generated $250 million in cash from operating activities during the quarter, a decrease of $169 million compared to the same period in 2024, primarily due to the timing of employee compensation payments and inventory build-up.

Free cash flow* for the quarter was $98 million, down from $274 million in the prior year, reflecting the decrease in operating cash flow and higher capital expenditures.

GE HealthCare has access to $3,500 million in revolving credit facilities, of which there were no outstanding borrowings as of March 31, 2025. The company also has $8,759 million in total debt, down from $8,951 million at the end of 2024, due to a $250 million repayment of the Term Loan Facility.

The company’s credit ratings from Moody’s, S&P, and Fitch remain unchanged since the spin-off, with a Baa2/BBB/BBB rating and a stable outlook.

Outlook and Strategic Initiatives Despite the near-term challenges in China and Russia-Ukraine, GE HealthCare remains optimistic about its long-term prospects. The company believes the Chinese government’s focus on expanding healthcare access will benefit its business in the country, and it is committed to supporting its operations in Russia and Ukraine to the extent possible.

To drive future growth, GE HealthCare is focused on several strategic initiatives, including:

• Continued investment in R&D to develop innovative products and services
• Expansion of its commercial capabilities, particularly in high-growth markets
• Optimization of its global supply chain and manufacturing operations
• Disciplined capital allocation, including the recently announced $1 billion share repurchase program

The company’s strong balance sheet, access to capital, and diversified global footprint position it well to navigate the current market environment and capitalize on long-term growth opportunities in the healthcare industry.

Conclusion GE HealthCare’s solid performance in the first quarter of 2025, despite the challenges in China and Russia-Ukraine, demonstrates the resilience of its business model and the strength of its market position. The company’s focus on operational excellence, innovation, and strategic initiatives positions it well for continued success in the years ahead.