GE HealthCare Reports Fourth Quarter and Full Year 2022 Financial Results

• 4Q Revenues up 8% year-over-year, Organic revenues* up 13%
• 4Q Net income of $554 million versus $564 million for the prior year, Adjusted EBIT* of $844 million versus $827 million
• 4Q EPS were $1.21 versus $1.24 in the prior year, Adjusted EPS* were $1.31 versus $1.36
• Reaffirmed 2023 guidance disclosed earlier this month; introduced 2023 Adjusted EPS* guidance

CHICAGO–(BUSINESS WIRE)–GE HealthCare (Nasdaq: GEHC), a leading global precision care innovator, today reported financial results for the fourth quarter and full year ended December 31, 2022.

GE HealthCare President and CEO Peter Arduini said, “GE HealthCare delivered strong revenue growth in the fourth quarter and full year 2022 driven by robust end market demand, improved pricing, and easing supply chain pressures. Revenue growth reflects our progress to offset delivery challenges and improve product fulfillment.”

Arduini continued, “Looking ahead, we’re confident that our accelerated investment in innovation, as well as standardization across platforms, will drive revenue and margin growth. We’re seeing customers continue to invest along with macroeconomic tailwinds, such as increasing healthcare digitization, expanding access to care, and an aging population globally. We are well positioned to deliver on our 2023 commitments.”

Fourth quarter 2022 total financial performance

• Revenues of $4.9 billion increased 8% and 13% on an Organic basis* year-over-year, driven by growth in Imaging, Patient Care Solutions (PCS), and Ultrasound. Acquisitions favorably impacted total revenue growth by 1% and foreign exchange negatively impacted growth by 6%. Total company book-to-bill, defined as Total orders divided by Total revenues within a given financial period, was 1.07 times for the quarter, led by strong order growth in Imaging and Ultrasound.
• Net income was $554 million versus $564 million for the prior year, and Adjusted EBIT* was $844 million versus $827 million.
• Net income margin was 11.2% versus 12.3% for the prior year, and Adjusted EBIT margin* was 17.1% versus 18.0%. Both measures were impacted by inflation, mix, planned R&D investment, and foreign exchange headwinds, partially offset by price and volume gains. Standalone Adjusted EBIT margin* for the fourth quarter of 2022 is estimated at 16.1%, which includes the impact of standalone costs.
• Earnings per share (EPS) from continuing operations were $1.21, compared to $1.24 in the prior year. Adjusted EPS* were $1.31, compared to $1.36 in the prior year. Standalone Adjusted EPS* for the fourth quarter of 2022 were estimated at $1.06, which includes the impact of standalone costs, interest, and tax.
• Cash flow from operating activities was $1.1 billion, up $1.1 billion year-over-year, and Free cash flow* was $987 million, up $436 million year-over-year with improvement in supply chain and collections.

Fourth quarter 2022 segment financial performance

Imaging

• Revenues of $2.7 billion increased 11% and 18% on an Organic basis* year-over-year.
• Strong revenue growth was driven by Molecular Imaging and Computed Tomography, Magnetic Resonance, and surgery.
• Segment EBIT was $321 million versus $317 million for the prior year.
• Segment EBIT margin was 11.8% versus 13.0% for prior year, pressured by continued inflation, mix, and investment, partially offset by volume and price.

Ultrasound

• Revenues of $956 million increased 6% and 7% on an Organic basis* year-over-year.
• Solid revenue growth led by Radiology and Primary Care, Women’s Health, Cardiovascular, as well as handheld ultrasound.
• Segment EBIT was $285 million versus $278 million for the prior year.
• Segment EBIT margin was 29.8% versus 31.0% for prior year, impacted by inflation and investment, partially offset by price.

Patient Care Solutions

• Revenues of $786 million increased 7% and 10% on an Organic basis* year-over-year.
• Strong revenue improvement driven by impact of supply chain resiliency and price actions.
• Segment EBIT was $130 million versus $91 million for the prior year.
• Segment EBIT margin was 16.5% versus 12.4% for prior year, improved through price, volume, and lower costs, partially offset by inflation.

Pharmaceutical Diagnostics

• Revenues of $473 million decreased 5% and increased 2% on an Organic basis* year-over-year.
• Revenue was impacted by fewer procedures in China and normalization of U.S. customer inventory.
• Segment EBIT of $109 million versus $139 million for the prior year.
• Segment EBIT margin was 23.0% versus 27.8% for prior year, impacted by inflationary pressures on production materials and lower volumes.

Full year 2022 total financial performance

• Revenues of $18.3 billion increased 4% and 7% on an Organic basis* year-over-year, driven by Imaging and Ultrasound. Acquisitions favorably impacted total revenue growth by 1%, and foreign exchange negatively impacted growth by 4%. Total company book-to-bill was 1.08 times for the full year.
• Net income was $1.9 billion versus $2.2 billion for the prior year, and Adjusted EBIT* of $2.9 billion versus $3.2 billion.
• Net income margin was 10.4% versus 12.8% for the prior year, and Adjusted EBIT margin* was 15.6% versus 18.0%. Both measures were affected by inflationary pressures and planned R&D investments, partially offset by volume and price. Standalone Adjusted EBIT margin* for the full year 2022 is estimated at 14.5%, which includes the impact of standalone costs.
• EPS from continuing operations were $4.18 compared to $4.91 for full year 2021. Adjusted EPS* were $4.63, compared to $5.17 in prior year. Results continued to be impacted by inflation and planned R&D investments. Standalone Adjusted EPS* for full year 2022 were estimated at $3.38, which includes the impact of standalone costs, interest, and tax.
• Cash flow from operating activities was $2.1 billion versus $1.6 billion for the prior year, and Free cash flow* was $1.8 billion versus $2.8 billion, impacted by supply chain pressures and lower Adjusted EBIT*.
• Cash flow conversion, defined as cash from operating activities divided by net income attributable to GE HealthCare, was 111% while Free cash flow conversion* was 87% for 2022.

Growth and Innovation

• Announced agreement to acquire IMACTIS to strengthen capabilities in interventional guidance.
• AIR Recon DL technology recognized by Popular Science magazine in the ‘Best of What’s New’ awards.
• MediView collaboration to integrate medical imaging into mixed reality solutions through the development of the OmnifyXR^TM interventional suite system.
• Introduced SIGNA Experience: a new platform of transformative technologies that leverages the power of AI and deep-learning in MRI scanning.
• Announced $80 million investment to expand contrast media production capacity.
• GE HealthCare and Accuray collaborate to expand access, advance the practice of precision radiation therapy.

Outlook

Today, the Company reaffirmed its guidance for full year 2023 and introduced Adjusted EPS* guidance as follows:

• Organic revenue growth* in the range of 5% to 7% year-over-year.
• Adjusted EBIT margin* in the range of 15.0% to 15.5%, reflecting an expansion of 50 to 100 basis points versus 2022 Standalone Adjusted EBIT margin* of 14.5%.
• Adjusted effective tax rate (ETR)* in the range of 23% to 25%.
• Adjusted EPS* in the range of $3.60 to $3.75. This compares to 2022 Standalone Adjusted EPS* of $3.38.
• Free cash flow conversion* of 85% or more for the full year. The Company’s cash flow outlook assumes that the legislation requiring R&D capitalization for tax purposes is repealed or deferred beyond 2023. The Free cash flow* impact of this legislation is approximately 10 points of Free cash flow conversion* for the year.

The Company provides its outlook on a non-GAAP basis. Refer to the Non-GAAP Financial Measures in Outlook section below for more details.

Non-GAAP Financial Measures

The non-GAAP financial measures presented in this press release are supplemental measures of GE HealthCare’s performance and its liquidity that the Company believes will help investors understand its financial condition, cash flows and operating results and assess its future prospects. The Company believes that presenting these non-GAAP financial measures, in addition to the corresponding U.S. GAAP financial measures, are important supplemental measures that exclude non-cash or other items that may not be indicative of or are unrelated to its core operating results and the overall health of the Company. These non-GAAP financial measures provide investors greater transparency to the information used by management for its operational decision-making and allows investors to see results “through the eyes of management.” The Company believes that providing this information assists investors in understanding its operating performance and the methodology used by management to evaluate and measure such performance. When read in conjunction with the Company’s U.S. GAAP results, these non-GAAP financial measures provide a baseline for analyzing trends in the Company’s underlying businesses and can be used by management as one basis for financial, operational, and planning decisions. Finally, these measures are often used by analysts and other interested parties to evaluate companies within the Company’s industry.

The Company defines these non-GAAP financial measures as:

• Organic revenue: Total revenues excluding the effects of: (1) net sales from recent acquisitions and divestitures with less than a full year of comparable net sales; and (2) foreign currency exchange rate fluctuations in order to present revenue on a constant currency basis.
• Organic revenue growth rate: Rate of change when comparing Organic revenue, period over period.
• Adjusted EBIT: Net income attributable to GE HealthCare excluding the effects of: (1) Interest and other financial charges – net; (2) Non-operating benefit (income) costs; (3) Provision (benefit) for income taxes; (4) Income (loss) from discontinued operations, net of taxes; (5) Net (income) loss attributable to noncontrolling interests; (6) restructuring costs; (7) acquisition, disposition related charges (benefits); (8) Spin-Off and separation costs; (9) (gain)/loss of business dispositions/divestments; (10) amortization of acquisition related intangible assets; and (11) investment revaluation (gain)/loss. In addition, the Company may from time to time consider excluding other nonrecurring items to enhance comparability between periods.
• Adjusted EBIT margin: Adjusted EBIT divided by Total revenues for the same period.
• Standalone Adjusted EBIT: Adjusted EBIT including the effects of recurring and on-going costs to operate new functions required for a standalone company that management believes provide a better depiction of the operations of GE HealthCare as a standalone company.
• Standalone Adjusted EBIT margin: Standalone Adjusted EBIT divided by Total revenues for the same period.

The Company believes Adjusted EBIT, Adjusted EBIT margin, Standalone Adjusted EBIT, and Standalone Adjusted EBIT margin provide management and investors with additional understanding of its business by highlighting the results from ongoing operations and the underlying profitability factors. These metrics exclude interest expense, interest income, and tax expense, as well as unique and/or non-cash items, that can have a material impact on the Company’s results. The Company believes this provides additional insight into how its businesses are performing, on a normalized basis. However, these non-GAAP financial measures should not be construed as inferring that the Company’s future results will be unaffected by the items for which the measure adjusts.​

• Adjusted Net Income: Net income attributable to GE HealthCare excluding (1) Non-operating benefit (income) costs; (2) restructuring costs; (3) acquisition, disposition related charges (benefits); (4) Spin-Off and separation costs; (5) (gain)/loss of business dispositions/divestments; (6) amortization of acquisition-related intangible assets; (7) investment revaluation (gain)/loss; (8) tax effect of reconciling items (items 1-7); (9) certain tax adjustments as described in Adjusted tax expense definition below and (10) Income (loss) from discontinued operations, net of taxes. In addition, the Company may from time to time consider disclosing other nonrecurring items to enhance comparability between periods.
• Adjusted EPS: Earnings per share from continuing operations excluding the per share impact of: 1) Non-operating benefit (income) costs; (2) restructuring costs; (3) acquisition, disposition related charges (benefits); (4) Spin-Off and separation costs; (5) (gain)/loss of business dispositions/divestments; (6) amortization of acquisition-related intangible assets; (7) investment revaluation (gain)/loss; (8) tax effect of reconciling items (items 1-7); and (9) certain tax adjustments as described in Adjusted tax expense definition below.
• Standalone Adjusted EPS: Adjusted EPS including the per share impact of the effects of recurring and on-going costs to operate new functions required for a standalone company and interest expense associated with third party debt that management believes provide a better depiction of the operations of GE HealthCare as a standalone company.

The Company believes Adjusted net income, Adjusted EPS, and Standalone Adjusted EPS provide investors with improved comparability of underlying operating results and a further understanding and additional transparency regarding how it evaluates the business. These non-GAAP financial measures also provide management and investors with additional perspective regarding the impact of certain significant items on the Company’s combined earnings. However, they should not be construed as inferring that the Company’s future results will be unaffected by the items for which the measure adjusts.​

• Adjusted tax expense and Adjusted effective tax rate (ETR): Adjusted tax expense is Income tax expense less the income tax related to EBIT adjustments above and certain income tax adjustments. Examples of income tax adjustments include the impact of tax legislation and the establishment or reversal of significant deferred tax asset valuation allowances. Adjusted ETR is Adjusted tax expense divided by Income before income taxes less EBIT adjustments above. Adjusted tax expense and Adjusted ETR can be used by investors to review the income tax expense and effective tax rate for the Company’s operations on a consistent basis.
• Free cash flow: Cash from (used for) operating activities – continuing operations adjusting for the effects of (1) additions to PP&E and internal-use software; (2) dispositions of PP&E; and (3) impact of factoring programs.
• Free cash flow conversion: Free cash flow divided by Adjusted net income.

The Company believes that Free cash flow and Free cash flow conversion provide management and investors with important measures of the Company’s ability to generate cash on a normalized basis. These metrics also provide insight into the Company’s flexibility to allocate capital, including reinvesting in the company for future growth, paying down debt, paying dividends, and pursuing other opportunities that may enhance stockholder value. The Company believes investors may find it useful to compare Free cash flow performance without the effects of the factoring program discontinuation. The cash flow from operating activity impact from factoring programs discontinued in 2021 represents the cash that the Company would have otherwise collected in the period had customer receivables not been previously sold to General Electric Company (“GE”) in those discontinued programs.​

Contacts

Investor Relations Contact:
Carolynne Borders

+1-631-662-4317

carolynne.borders@gehealthcare.com

Media Contact:
Tor Constantino

+1-585-441-1658

tor.constantino@gehealthcare.com

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